Can China’s Greater Bay Area initiative really work?

The Greater Bay Area (GBA) has become a buzzword for governments and corporations, but there remains doubt about how it will materialise.

King & Wood Mallesons says the area’s GDP will exceed US$4.6 trillion by 2030. In the works is the development of a new “Silicon Valley”, combined with the growth of sports, cultural and convention centres meeting increasing mainland Chinese tourism figures and population demand.

Some practical difficulties arise in the new GBA, however. At its heart stands a “one country, three systems” dilemma of merging the three jurisdictions of Hong Kong, Macau and Guangdong, not just economically, but from a cultural, political and legal point of view.

Differences in border controls, environmental protection, currency, legislation, taxes, and rules on investment need to be resolved. Bridging the gap in cities’ education and health care is crucial, along with having a sustainable talent pool to develop the necessary infrastructure for success. And all this comes before placing measures to avoid protectionism and local government silos between regions.

A 2017 PwC report, New Opportunities for the Guangdong-Hong Kong-Macau Greater Bay Area, points this out by quoting scholar Zheng Yongnian.

“The failure to achieve smooth connection in the areas of education, medical care, finance, and security hindered [sic] the rational allocation of resources within the Great Bay Area”, it said, adding that the initiative “is not a patch on the EU in terms of integration, such as labour market, staff mobility, customs pass management, and scientific research cooperation”.

Pro-establishment group Hong Kong Youth Power Association interviewed 878 local young people from March to April 2018. The results, reported in this newspaper, showed 58 per cent of respondents would not consider working or living in mainland cities covered by the GBA initiative. Given that the initiative is focused on creating a new “Silicon Valley”, the practical details of participating have not been articulated to young people, who are the drivers of tech ecosystems.

Issues of concern for entrepreneurs may include protecting intellectual property and having access to legal advice; understanding which jurisdictions contracts can be enforced; gaining access to mediation in case of contract disputes; getting across the GBA in a speedy manner; finding affordable accommodation; discovering viable business opportunities on a start-up budget; and staying within legal bounds, particularly as tech projects may be subject to legislation that the creating parties may be unaware of.

According to established financial bodies, the potential is there. As the 2017 Hong Kong General Chamber of Commerce and KPMG’s The Greater Bay Area Initiative: A Survey on Key Drivers for Success report points out: “Companies can take advantage of Hong Kong’s one country, two systems – and also tap into Hong Kong’s status as the gateway between China and the world and as an international financial centre for fundraising, asset and risk management, corporate treasury services, insurance and reinsurance and, more recently, offshore renminbi services.”

With Hong Kong as the financial and services hub, Shenzhen’s technology expertise, Macau’s entertainment options, Guangzhou’s manufacturing base (in tandem with supporting regions), and the Pearl River Delta’s general logistics and transport network, everything looks ready-made for success. Yet, the opportunities are dependent on established industries, operated and owned by older generations – and not the millennial demographic who drive tech globally.

The onus on making the GBA initiative work for young people in Hong Kong should thus fall on the established companies that can act as a conduit-providing buffer for the legal and financial risks faced by start-ups.

Aside from the practicalities, there is the issue of defining the goals and vision of this new “Silicon Valley”. In 2017, this newspaper reported that the Proactive Think Tank and the Hong Kong Guangdong Youth Association found that 55.2 per cent of 833 young people aged between 15 and 34 had never heard of the GBA initiative.

The great question lies: “What is the plan, and will it be achieved?’ For the GBA to succeed, these questions need to be answered.