China’s Silicon Valley rival ‘needs market reforms, not grand plans’
- ‘Greater Bay Area’ project aims to transform Hong Kong, Macau and nine other southern Chinese cities into an innovation and technology powerhouse
- But success will hinge on officials loosening the reins rather than rolling out abstract strategies, scholars say
The “Greater Bay Area” concept may be the brainchild of President Xi Jinping, but what the project really needs is less state planning and more free-market reforms, according to experts in economic and urban development.
The grand plan to turn Hong Kong, Macau and nine other cities in southern China into an innovation and technology hub to rival Silicon Valley has been much touted by officials as the region’s next phase of development.
But scholars and professionals who gathered for the two-day International Conference on Global New Cities in Nanjing this week said the concept was vague, and success would instead hinge on the courage of leaders in pressing ahead with economic liberalisation.
“What the Greater Bay Area needs is not planning but a freer market,” said Ni Pengfei, an economics professor at China’s foremost think tank, the Chinese Academy of Social Sciences (CASS). “Companies, talent and capital in free flow will bring the area a nice surprise.”
Ni is director of the CASS Centre for City and Competitiveness and a lead author of its Global Urban Competitiveness Report, jointly produced by the United Nations and released in Nanjing on Monday.
He said Guangdong, Hong Kong and Macau’s economic successes up until this point, which have seen the 11 cities in the bay area plan notch up a collective GDP of US$1.5 trillion, were not primarily the result of state planning.
It’s time to move on the ‘Greater Bay Area’ dream
“The labour distribution model among the cities, under which there has been a ‘sales room in the front [Hong Kong] and production house at the back [Guangdong]’, has been in place since the beginning of China’s reform and opening up era.
“The key to the Greater Bay Area’s success is whether China holds a strong enough resolve to push forward market reforms to release the area’s full potential.”
Observers and researchers have been left guessing on exact policies for the 11 cities. Douglas Zeng Zhihua, a senior economist for the World Bank specialising in trade and competitiveness, had many questions.
“What are the major goals of the Greater Bay Area? What is its action plan? What is each city’s position in the initiative, as they are at different developmental stages?” he said.
“Is the area aiming to create jobs, attract investment, incubate international industries, or conduct experiments on institutional reforms?
In looking forward, policymakers must also look back, experts said. One of the most important lessons learned from China’s reform and opening up process over the last 40 years was the need to remove red tape and allow local governments to set their own policies.
Work needed to sell Hongkongers ‘Greater Bay Area’ dream
Lu Mai, vice-chairman of the China Development Research Foundation, a non-profit organisation under the policy research arm of the Chinese central government’s State Council, said the market would be the best arbiter of the different roles of the 11 cities.
“They should develop the industries they have proven to be better at,” he said.
A healthy dose of pragmatism would be needed to ensure the Greater Bay Area scheme took flight, Lu believed.
“We cannot all rely on one big plan. It’s better to have less politics in economic development,” he said.
Zeng said it was critical the region braved difficult reforms to social institutions and governance structures. China would have to loosen the reins to allow the cities to realise their full potential, he said.
“Shenzhen is the leading technology and innovation hub in China. But it can do even better if it’s given more autonomy over governance,” Zeng said.
“The Greater Bay Area could be a new highland of reform.”
