Enough debate: Hong Kong must be part of Greater Bay’s explosive growth or risk being left behind

The challenge for Hong Kong is to begin by clarifying our unique differentiating strengths, and leverage these in ways that will benefit the whole.

PUBLISHED : Sunday, 05 November, 2017, 9:00am
UPDATED : Sunday, 05 November, 2017, 10:30pm

Forgive my little bemusement over all the recent fuss in Hong Kong about building our links into the Greater Bay Area.

Don’t get me wrong: I think it is a great idea. But I need to ask a simple question: what do people think we in Hong Kong have been doing for the past three decades, if not building our linkages to mainland China?

Hong Kong and the Pearl River Delta region have been highly interconnected for many centuries, even during British colonial rule. Quickly after mainland China began opening up in 1978 under Deng Xiaoping, thousands of Hong Kong manufacturers swarmed onto the mainland municipalities of Shenzhen and Dongguan, coming to account for a large proportion of the region’s manufacturing output, and laying the foundations for the Pearl River Delta region to become a national economic powerhouse.

Infographic: The evolution of the ‘Big Bay Area’

When I first visited our four closest municipal neighbours in 1982, the combined population and economy of Zhongshan and Zhuhai was identical to Shenzhen and Dongguan added together.

Today, Shenzhen is one of China’s biggest economies, with a gross domestic product (GDP) of 1.95 trillion yuan (US$294 billion), and a population almost twice that of Hong Kong. Its 2016 economy expanded 9 per cent, putting Shenzhen on track to surpass Hong Kong by next year with US$350 billion in output, according to a forecast by Sanford C. Bernstein.

It is three times larger than Dongguan. But add Shenzhen and Dongguan together, and they are economically about five times bigger than Zhuhai and Zhongshan combined.

Why have Shenzhen and Dongguan surged so far ahead? Of course, Hong Kong. Anyone who thinks Hong Kong has not been a huge force in the development of the region over the past three decades has been deeply asleep. And anyone who underestimates the future value of Hong Kong to its hinterland region is making a serious mistake.

It is nevertheless fair to recognise that the level of economic interconnection remains constrained – by the boundary, by two political systems within the one country, and by the practical challenges of incentivising rivalrous governments to cooperate.

Too many Hong Kong people still see “Chinese interference” at every turn, and see any Hongkonger looking to build links as brown-nosing Beijing, or compromising our hard-fought separateness. As we now turn in earnest to the task of building our role in our hinterland region, much valuable time has been lost.

Explainer: China’s Bay Area is the Next Big Thing, but where is it?

For the past decade, planners mainly in Beijing and Guangdong have dominated the shape of development. But now, better late than never, Hong Kong and the private sector have been invited to join the fray. With mega infrastructure projects like the High Speed Rail and the Zhuhai-Macau bridge soon to begin operation, timing is perhaps good.

But the challenges of coming late to the game are not small. The Greater Bay Area of 2017 is not the Pearl River Delta of 1997. Back then, Hong Kong accounted for almost 20 per cent of China’s GDP and was a clear leader in most economic areas. Today, Hong Kong accounts for just 2 per cent of China’s GDP, and cities like Guangzhou and Shenzhen have GDPs to match us.

Back in 1997 we would have been joining an economic region that we would dominate. Today, the Greater Bay Area boasts a population of more than 60 million, and a GDP of around US$1.3 trillion, putting it alongside Australia, South Korea or Spain.

Back then, the region was Hong Kong’s back-door manufacturing base. Today it is a huge and diverse economy in its own right, and we are lucky to be part of it.

We are now dealing with confident and assertive regional leaders who are no longer in awe of Hong Kong as an economic leader or powerhouse. So too its business leaders.

One big change from a decade ago is that the Greater Bay Area concept has been adopted by Beijing as a national priority. Xi Jinping at the recent Communist Party congress provided three clear messages: the region is critically important to the development of the country as a whole; the area needs the distinct and unique characteristics and contributions of Hong Kong; and Beijing is adamant that the governments across the region cooperate more closely.

Given the area’s unique diversity, development is going to require national strategic and coordinated planning, to leverage the strength of each city and unleash the region’s full potential. A founding premise in Beijing is not that Hong Kong, or Guangzhou or Shenzhen is a leader, but that each component of the area has unique and distinct strengths which are valuable in their own right, but can create a whole that is stronger than the sum of its parts.

So the challenge for Hong Kong is to begin by clarifying our unique differentiating strengths, and leverage these in ways that will benefit the whole. These would include our unique legal and regulatory infrastructure – pivotal for the Bay Area’s growing linkages to the global markets – as well as strengths as a regional transport hub, a leading commerce and professional services centre, and a home for intensive application of innovation and technology.

A whole menu of urgent priorities quickly become obvious: a centralised Big Bay Area Commission led by a vice-premier level official will need to be created, whatever the trepidation over erosion of Hong Kong autonomy, with sector-specific working groups beneath it, bringing together private and public sector in key areas like transport and aviation, tourism, and financial services.

We are going to need harmonisation of regulations, standards and legal processes, with us arguing the merits of our own systems, to eliminate or at least reduce the frictions arising across so diverse a region. Perhaps the existing mechanism under the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the mainland could provide a valuable role here.

Infographics: The world’s most competitive urban centres

Given the importance of improving physical connectivity, priority will have to be given to transport and aviation linkages, including coordinated aviation planning, to avoid inefficiencies, and to release more airspace for civil aviation. Another urgent priority will need to be freer movement of people, with specific focus on the pressing challenge of labour shortages.

The new administration of Chief Executive Carrie Lam Cheng Yuet-ngor is to be commended for grasping a nettle predecessors have been afraid to grasp. Effective engagement with the colossal economy that is now our backyard is imperative for the future strength and relevance of our economy. If we fail, we will play a diminished role at the margins of one of the world’s most important economic regions.

If we succeed, the relevance of “One Country, Two Systems” will be questionable in 2047. The answer must surely be clear: it is time to roll up our sleeves.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view

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