transfer labor in the lagging regions from the primary sector to the secondary and tertiary sectors, including transfer of high-skilled labor to the PRD.

The paper is structured as follows: The next section focuses on the hub-periphery development pattern between the PRD and the rest of the economy. Section 3 highlights the large concentration of FDI using statistics from the China Statistical Yearbooks. Section 4 examines the massive inflow of migrant workers in the province, with a focus on the unique composition of the migrant labor force in different cities drawing from the 5th and the 6th national population census data. Section 5 examines the industrial specialization and spatial concentration of the capital-, labor-, and resource-intensive industries in the province. Section 6 discusses, in the context of “double transfer”, the challenges and opportunities facing the economy and presents a four-prong approach to support inclusive growth in a sustainable manner.

# **2 Hub-periphery development pattern**

The development pattern of Guangdong, to a certain extent, is a miniature of that of China. Guangdong province has witnessed rapid development since the reforms. Its average growth rate has been higher than the “four Asian dragons” during the periods when they took off. Since 1989, Guangdong has topped the total GDP rankings among all provincial-level divisions. In 2013, the province's GDP reached 6.2 trillion RMB (or 1 trillion USD) and accounted for 11 % of China’s GDP. Guangdong is also the largest exporter and importer in China. Its foreign trade accounted for about 28 % of the country and the actual use of foreign investment accounted for about 22 % of the country's total; both rank first of all the provinces. In addition, Guangdong’s many major economic indicators, including total fixed assets investment, total retail sales, savings deposits of residents, per capita disposable income of urban and rural residents, and local revenues, and non-income welfare indicators, such as life expectancy, education, and health services, both rank high (see annex 1 for additional statistics of Guangdong).

The Pearl River Delta, drawing from its first-nature comparative advantages in factor endowments and proximity to Hong Kong SAR, China and Macau SAR, China, and the secondnature advantages as first-movers in the reforms in attracting and retaining domestic and foreign resources, has developed into a regional economic center and well-known world factory, with many highly specialized towns and cities (Tuan and Ng, 2004).<sup>2</sup> Its regional GDP exceeded that of Singapore in 1998, Hong Kong SAR, China in 2003, and Taiwan, China, in 2007 (National Development and Reform Commission, 2008).

The economy is highly concentrated: the Pearl River Delta produces 80 % of the regional GDP and over 95 % of the exports and imports, attracts over 90 % of the foreign direct investment, and hosts 90 % of the migrant population. The development gaps within Guangdong widened between the Pearl River Delta and the rest (the Northern Mountainous Area and the East and West Wings), and within the PDR between economic hubs (Guangzhou, Shenzhen and Zhuhai) and the other seven cities. We illustrate this regional development gap in 2000-2013 in the following three figures: the Kernel distribution of the real GDP per capita (figure 1); Gini coefficient (figure 2), and growth incidence curve (figure 3).

> 2 The Pearl River Delta region, including Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Zhongshan, Jiangmen, Shunde, and Zhaoqing, has been the pioneer since the opening-up.

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