Caixin
Jun 08, 2018 03:45 PM
BUSINESS & TECH

Coordination, Integration Key to Success of China’s Greater Bay Area

The southern city of Shenzhen (pictured on April 13) sits in the middle of the Guangdong-Hong Kong-Macau Greater Bay Area. Photo: VCG
The southern city of Shenzhen (pictured on April 13) sits in the middle of the Guangdong-Hong Kong-Macau Greater Bay Area. Photo: VCG

Coordination and improved communication between different administrative regimes in Hong Kong, Macau and the Pearl River Delta will be key to fulfilling Beijing’s vision of creating a South China Greater Bay Area economic powerhouse, experts said on Friday.

The Greater Bay Area plan now being crafted by Beijing represents one of China’s boldest attempts to build an economic zone comparable to similar areas centered on New York, San Francisco and Tokyo. It aims to bring together Hong Kong’s strength in finance, Macau’s in entertainment, Shenzhen’s in high-tech and the broader Pearl River Delta’s manufacturing prowess to create a region that can churn out the world’s next generation of high-tech products and services.

But a number of obstacles lie in the path of achieving that dream, experts said during a discussion on the topic at the Caixin Summit Hong Kong on Friday. Most notable are the three very different political and economic systems in the special administrative regions of Hong Kong and Macau, which use European-style systems reflective of their former colonial status as well as that on the adjacent mainland in the boomtown of Shenzhen and the adjacent Pearl River Delta cities like Dongguan and Guangzhou.

“Right now there are several cities in the Greater Bay Area each with its own strengths. But if you don’t combine those then there won’t be future opportunities for development and the results won’t be optimal,” said Xu Ze, president of the Chinese Association of Hong Kong and Macau Studies. “The Greater Bay Area infrastructure needs mechanisms that can cultivate and foster development of new strengths, such as bringing together Hong Kong’s strength in finance with Shenzhen’s in high-tech.”

Consisting of nine cities in Guangdong province, notably Shenzhen and Guangzhou, the region being called the Greater Bay Area accounts for less than 1% of China’s territory and 4% of its population. But it generates nearly 10% of the nation’s gross domestic product (GDP). Its population of 58 million also means that it has more people than far larger countries like Canada or Australia.

Envisioning even greater potential for the region, Beijing unveiled a strategy to develop the Guangdong-Hong Kong-Macau Greater Bay Area in March to enhance connectivity, capital and talent flow and expand regional cooperation and growth.

Some of the biggest obstacles to achieving this vision include different systems among the three regions involved, as each brings its own currency, taxation and immigration systems and local priorities to the table, said Li Tong, CEO of BOCI, the international arm of Bank of China, one of the nation’s big four state-owned banks that has some of the longest experience operating outside China.

Li pointed out that the new Greater Bay Area will have some natural strengths due not only to its various resources, but also its geographic ties that link it to other parts of China as well as Southeast Asia. But she said further steps will be needed to make the plan work, both in terms of coordinated planning and also better movement of resources between the three areas.

She said integration of physical space, allowing for the freer movement of resources throughout the region, is one key element that needs to be considered as the area’s formation moves forward. The other involves integration of capabilities, requiring different regions to coordinate with each other to better leverage their strengths rather than competing.

“In terms of space, we recommend promoting the free movement of various elements,” Li said. “That means giving the three areas enough time, encouraging the three governments to innovate within their own systems and set up regular channels for cooperative communication.”

Cooperation within the Pearl Delta area dates back as early as 2009, but the concept of an integrated Greater Bay Area didn’t begin appearing in central government documents until 2015. The idea drew broader attention in 2017 when it was written into the annual government work report delivered by Premier Li Keqiang. A year ago the governments of Guangdong province, Hong Kong and Macau signed a framework agreement to develop the Greater Bay Area.

“Our biggest challenge that we face is that in the past these three places were relatively separate and independent,” Li said. “There was no real cohesion, which is just something that’s just now taking shape.”

Contact reporter Yang Ge (geyang@caixin.com)

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