HK looks for a boost in new economic zone
Hong Kong stock investors are adding two new jargons to their vocabulary regarding China concept stocks. One is Xiongan concept stocks, which is related to the construction of the Xiongan New Area.
Another is Greater Bay Area concept stocks, which is related to the development of the Guangdong- Hong Kong-Macao Greater Bay Area scheme.
This is part of an economic integration plan for nine cities of Guangdong Province, Hong Kong and Macao, which Chinese Premier Li Keqiang endorsed as a national strategic project in his annual work report last month.
In nature, the Greater Bay Area development is a process of regionalization inside China. Economically, it involves the relocation of resources to maximize regional profitability.
Nevertheless, Xiongan requires investment, construction, operation and development. In this sense, the cultivations of these two zones are very different.
Hong Kong was returned to China around 20 years ago. The Bay Area’s economic integration plan was implemented when the conditions were ripe. Hong Kong has, thus, entered the Greater Bay Area Era three decades before 2047, by which time Hong Kong is predicted to cease to be a special administrative region.
The GDP of the mainland was around five times more than that of Hong Kong in 1997. Thanks to China’s economic expansion, it surged to around 50 times in 2016. And the trend will remain unchanged in the near future.
Hong Kong was as an entrepot between the Chinese mainland and foreign countries in history.
Nowadays, China is the engine of the global economy on which many other countries are trying to catch a ride. It is doubtful that Hong Kong would curtail its economic ties with the mainland as the move will cost them a fortune.
In the past 20 years, economy in the Pearl River Delta and the whole country developed steadily. Shenzhen’s GDP in 2016 was 15 times of that in 1997. Macao’s GDP increased 6.2 times; but Hong Kong was around 1.8 times.
What’s worse, in comparison with Singapore and other rivals, Hong Kong’s competiveness is declining.
Yet, Hong Kong still has its advantages. It is the only internationalized finance hub in China. Hong Kong practices common law and its accounting system is in conformity with international rules.
Even up to now, many corporations from the mainland treat their entry to the Hong Kong Stock Exchange as a first step toward the overseas markets.
Under the Bay Area scheme, the flows of labor, capital and goods between cities in the area will be facilitated, particularly after the opening of the Hong Kong- Zhuhai-Macao Bridge, Shenzhen- Zhongshan Highway and regional inter- city high- speed rails. Other than infrastructure hardware, software should also be suitable for the new market environment and the new mechanism, so that Hong Kong’s financing and marketing sectors can collaborate with Shenzhen’s hightech start- ups. Chief Executive Leung Chunying, along with a Hong Kong delegation, paid a visit to Guangdong from Wednesday to Friday last week, to study how Hong Kong can integrate and participate in the development of the Bay Area. The success of the Bay Area scheme hinges on whether China can improve its national interests and whether Hong Kong can improve the well- being of its society. These two improvements are related to each other. The special administrative region government had made some economic stimulus plans in the past two decades. Unfortunately, they did not have the desired effects. The Greater Bay Area is expected to provide solutions to social problems as well as boost economic efficiency in the region. Hong Kong can certainly benefit from this. But it may also lead to a real estate boom, massive influx of visitors to the tiny city and income inequality. Dealing with these challenges as Hong Kong evolves in the coming years will be one of the city’s major challenges.
The author is a commentator based in Hong Kong. opinion@globaltimes.com.cn