Hong Kong’s new role in “dual circulation” strategy
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The ongoing integration of Hong Kong into the Greater Bay Area (GBA) and its growing economic ties with the rest of the world will enable Hong Kong to play a significant role in the dual-circulation economic model.
Drawing on Hong Kong’s comparative advantages, expertise and talent, the business sector, especially tech start-ups, SMEs and professionals, will benefit from the renewed initiatives and policies directed towards “internal circulation”, according to Prof. Witman Hung, principal liaison officer for Hong Kong at the Shenzhen Qianhai Authority.
China’s 14th five-year plan for 2021-2025 has once again included the GBA as part of the national strategy since it was first announced in March 2016. Beijing further issued the “Opinions Concerning Financial Support for the Establishment of the GBA” in May last year, supporting the deepening access between Hong Kong and mainland financial markets.
Other GBA initiatives included in the five-year plan are considered to be supportive of the “dual circulation” strategy, including promoting co-operation between Hong Kong and Shenzhen on innovation and technology research and strengthening intellectual property (IP) protection. In response to the national strategy, Hong Kong’s 2020 Policy Address also reiterated efforts to strengthen the city’s integration into the GBA, most notably the Outline Development Plan.
Stronger in branding, advertising, design and packaging, Hong Kong SMEs are in a favourable position to tap into the domestic markets or help Chinese products and services build their brand.
The continued financial integration between Hong Kong and the mainland will also result in stronger demand for professionals from Hong Kong, who are recognised internationally for integrity and professionalism. They are well qualified to provide advice and services to mainland investors, such as those involved in Belt and Road projects.
“Hong Kong’s financial sector, professional and trade-related services are among our most significant and irreplaceable comparative advantages. We can and we should continue to play our role as an international hub for financing, investment and trade activities on the external front.”
To further consolidate Hong Kong’s role as an international business hub, the Hong Kong SAR Government has been proactively expanding external trade and economic co-operation by signing Free Trade Agreements (FTAs) and Investment Promotion and Protection Agreements (IPPA) with various economies.
While Hong Kong is not one of the signatories of the recently signed the Regional Comprehensive Economic Partnership (RCEP), Beijing strongly supports Hong Kong in joining the trade pact as soon as possible. Even before Hong Kong’s accession to RCEP, Hong Kong companies with manufacturing activities in the region are set to benefit from it, says Prof. Hung.
“More Hong Kong companies are planning to shift part of their supply chain from the mainland to the Asean countries. They will benefit from the lower tariffs, streamlined rules and procedures, and easier market access offered by RCEP.”
Beijing said earlier that it is willing to consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), whilst the Hong Kong SAR Government also said it keeps an open mind on accession to the CPTPP as a separate customer territory using the name “Hong Kong, China”. “I think there are some sort of synergies that we might get out of both the mainland and Hong Kong looking to join the CPTPP.”
There are a lot of synergies Hong Kong can explore with other GBA cities. Citing last year’s Policy Address, Prof. Hung says the Airport Authority Hong Kong will commission a third runway in 2022 and acquires more shares in Zhuhai Airport to build a “world-class aviation cluster”. The Hong Kong SAR Government will also continue to invest in infrastructure and support Hong Kong’s insurance industry by establishing after-sales service centres in the GBA.