China’s not-so-special economic zone embodies a harsh new reality

SHENZHEN, Nov 16 (Reuters): Tony Xiong is among the latest arrivals to the glitzy office towers in the newest part of Shenzhen, built to showcase China's economic miracle. He won't spend any personal time in the area.
Most lunch breaks, he drives 20 to 30 minutes to more-established parts of Shenzhen to slurp beef noodles in family-owned restaurants before racing back to work.
"In Qianhai, it's either a 10-minute walk in the sun to the mall or the terrible cafeteria food," said the 30-year-old, a finance worker in a state-owned property firm. "I don't like being there."
Office workers are not the only ones grumbling about the unattractiveness of Qianhai, a special economic zone where Chinese dreams of global financial might and economic prosperity that once seemed inevitable are now darkened by half-empty skyscrapers and shopping malls as well as barely used motorways.
This Shenzhen appendix opened for business more than a decade ago after an initial investment of $45 billion, with state media calling it mainland China's own Hong Kong: a future international tech and finance hub; a testbed for liberalising markets and information access.
But Reuters interviews with 10 executives and investors, as well as real estate experts, diplomats and economists and 10 workers in the area during six visits between September and November paint a picture of a largely deserted district that has given up on its reformist ambitions. At the same time, these people said, Qianhai is struggling to stand out among 2,500 other special zones across China dangling various subsidies at reluctant businesses.
Five economists and three diplomats told Reuters Qianhai's travails reflect the limits of China's old "build it and they will come" growth model - one that worked wonders a generation earlier for wider Shenzhen, among the country's first and most successful special economic zones.
The office vacancy rate was 28.9 per cent in the third quarter, near the highest in three years, versus 23.2 per cent in Shenzhen overall, and 15.1 per cent to 17.1 per cent in Beijing and Shanghai, according to Knight Frank, despite Qianhai's lower rental prices.
And that's before China's tallest skyscraper of over 1,000 metres and a cluster of other towers are completed. The relentless supply has driven up vacancies, but newcomers other than state-connected firms are hard to find, three real estate executives told Reuters on the condition of anonymity due to the subject's sensitivity.
With China entering a new era of sluggish growth, Qianhai may never reach the international status to which it aspires.