Huge and spacious
Hong Kong and Macao can’t deny they are much favored in China. After all, the “one country, two systems” principle was designed to enable the two special administrative regions to retain their autonomy and respective distinctive features.
Moreover, Hong Kong and Macao don’t have to contribute taxes to the central government, and they don’t have to cover the cost of the national armed forces stationed there.
With the passage of time, however, there are more opportunities on the mainland and thus more Hong Kong and Macao residents are studying, living and working on the mainland, and they have complained they felt discriminated.
While the two SAR regions retain day-today operational autonomy, their residents — a subset of Chinese nationals — are treated differently from mainland residents when on the mainland. They are more like foreign nationals in terms of administrative treatment.
Hong Kong’s latest by-census in 2016 showed there were about 82,500 Hong Kong people working on the mainland. This group in particular, together with those from Macao, have to navigate the mainland system since they live there. There are all sorts of requirements related to tedious permit applications that mainland residents don’t need — such as for work — and they are unable to use social services and free schooling for children available to local residents. There are also longstanding complaints about the bureaucratic red tape such as for registering companies, buying property and getting financial and credit services.
While it is understandable that Hong Kong and Macao residents would like to arbitrage their positions while on the mainland to be the same as for mainland residents, this is a politically sensitive topic on the mainland because the regions already have many privileges mainland people don’t have that are tied to Hong Kong and Macao as special administrative regions.
Since mid-2018, a major step was taken by the national government to remove a range of hurdles to give equal privileges to The author is former under-secretary for the environment and a legislative councillor. She is the chief development strategist, Institute for the Environment at the Hong Kong University of Science and Technology. Hong Kong and Macao residents living in mainland cities that local residents enjoy. For example, Hong Kong, Macao and Taiwan residents no longer need work permits when they are hired by enterprises on the mainland. This also means it is less of a hassle for companies on the mainland to hire them.
Last week, after a State Council-level meeting in Beijing, it was announced that there will be greater and faster easing of barriers in 2019 for Hong Kong and Macao residents as part of the implementation of the recently released Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area.
The plan is designed to give Hong Kong and Macao a much larger field of socioeconomic opportunities in Guangdong. The central government’s aim is to enable closer cooperation among Hong Kong, Macao and Guangdong for a large metropolitan neighborhood to evolve that can be on par with other great metropolises in the world, such as Greater Tokyo, Greater London or the San Francisco Bay Area.
In many ways, the Bay Area is already a major urban conurbation but unlike the others, it has three distinct systems that function quite differently from each other. Total harmonization is not easy but it is clear that much greater effort will be made and at a faster pace in this defined locality.
The new benefits are attractive. They relate to taxation, subsidies, travel and access to public services for Hong Kong and Macao residents. Taxation is likely the most important to higher-income talents.
Whether someone is liable to mainland tax is calculated on the number of days spent on the mainland. The new rule provides that a stay shorter than 24 hours won’t be counted as one day for Hong Kong or Macao residents for calculation on income tax liability. Thus, frequent day-travelers visiting factories or conducting meetings will not have day-trips counted for tax purposes. In light of the ease and speed of travel crossing the Hong Kong-Macao-Guangdong boundaries, day-tripping is entirely possible by road and ferries.
Another significant new privilege enables Hong Kong and Macao professionals working in the Bay Area cities to pay the same amount of tax as they would for equivalent jobs in Hong Kong or Macao. The extra amount will be reimbursed by the provincial government, since mainland income tax rates are higher. The mainland’s top personal income tax rate is 45 percent, while Hong Kong’s is just 17 percent.
There are also job-related benefits. Public institutions in the Bay Area can recruit Hong Kong and Macao residents. Young entrepreneurs can receive the same subsidies as mainland residents when they set up startup enterprises in the Bay Area. There will be more support to universities from Hong Kong and Macao to participate in Guangdong’s technology research projects. A pilot project will allow Hong Kong and Macao residents to access more public services using their travel permit to the mainland.
Other benefits are related to easing travel. The Hong Kong-Zhuhai-Macao Bridge will be open to more private vehicles traveling from Hong Kong to the mainland but cars coming the other way will still be limited to ensure Hong Kong will not be overwhelmed by a large number of mainland vehicles. Custom clearance will be faster too for people and goods.
These new privileges should be welcomed.