Great expectations

Plan to integrate southern China’s Bay Area will draw on various strengths of the region’s dynamic cities

China is moving ahead with plans to create a cohesive economic zone in the south of the country that can challenge its global rivals and emerge as a world-class driver of economic growth.

During his annual work report as part of the dual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference — known as the two sessions — earlier this year, Premier Li Keqiang announced that Beijing will press ahead with plans for the Guangdong-Hong Kong-Macao Greater Bay Area.

The initiative aims to establish globally competitive ties between these three strategic geographical areas by developing infrastructure that enables stronger economic connectivity and cooperation.

The Greater Bay Area will integrate the Hong Kong Special Administrative Region, the Macao SAR, and nine cities in South China’s Guangdong province, namely Guangzhou, Shenzhen, Zhuhai, Dongguan, Huizhou, Zhongshan, Foshan, Zhaoqing and Jiangmen.

Guo Wanda, executive vicepresident of the China Development Institute, a Shenzhen-based think tank, believes the plan is the Chinese government’s attempt to come up with an all-in-one economic zone.

“The Greater Bay Area draws on the different strengths of the cities within it to be globally competitive,” Guo told China Daily. “They offer a variety of options for investors due to the diverse nature of the economies involved and cover almost all aspects from innovation and logistics to business and manufacturing.”

Ma Xingrui, governor of Guangdong province, has great faith in the initiative’s ability to give the regions involved a competitive edge globally.

“I’m confident that the Guangdong-Hong Kong-Macao Greater Bay Area will see fast development into a strong competitor with some of the world’s most famous bay areas such as the New York Bay area and Tokyo Bay area,” he said after a conference of the Guangdong delegation to the fifth session of the 12th National People’s Congress in March.

James Wang, an associate professor at the University of Hong Kong, applauded the plan to encourage the cities to work together.

“Rather than just having one city to compete with more developed counterparts from around the world, China is cleverly combining a few of these into city clusters as outlined in the 13th Five-Year Plan (2016-20),” Wang said.

The Greater Bay Area’s size covers less than 1 percent of China’s massive land area with a population that is less than 5 percent of the country’s total. Yet, its already impressive economic performance has the potential to drive further growth.

In 2014, the combined trade for the region was $1.5 trillion, three times that of the Tokyo Bay area. That same year, its $1.2 trillion GDP was double that of the San Francisco Bay Area.

The GDP of the Greater Bay Area rose to $1.36 trillion last year.

Work is already under way to connect the territories through infrastructure development.

Integration efforts between Hong Kong and Shenzhen include setting up the Qianhai New District in Shenzhen and development of the Lok Ma Chau Loop on the border between Hong Kong and Shenzhen into an innovation and technology park. Macao has been doing the same with Hengqin, an island in the neighboring city of Zhuhai.

There is also the Hong KongZhuhai-Macao Bridge — a series of bridges and tunnels across the Lingding Channel that connects the three cities.

The idea to develop the Greater Bay Area has been in the works for a few years. It was first brought up in 2011 in a proposal titled the Action Plan for the Bay Area of the Pearl River Estuary. Beijing urged Hong Kong and Macao to coordinate growth and develop a “world-class metropolitan cluster” in the 12th Five-Year Plan (2011-15).

In the current 13th Five-Year Plan, Hong Kong was designated as a global offshore yuan business hub. Hong Kong is expected to capitalize on that role by strengthening cooperation with cities on the Chinese mainland and engaging more actively with policies such as the Belt and Road Initiative.

Ben Simpfendorfer, CEO of strategy advisory firm Silk Road Associates, feels the Greater Bay Area’s key location at the heart of the maritime route of the Silk Road means it is well placed to be part of the ambitious Belt and Road Initiative.

“The region is more international and the private sector plays a bigger role relative to other regions in China. And that’s a major strength. The Bay Area also enjoys proximity to the Belt and Road’s largest regional market — Southeast Asia,” Simpfendorfer said.

“I would expect the Bay Area to be a springboard for China’s private sector into the Belt and Road region.”

Frank Pan, an associate with the law firm Baker McKenzie in Shanghai, believes the Greater Bay Area will naturally feed into the Belt and Road program.

“Although the initiative is primarily focused on infrastructure projects, the improved infrastructure will facilitate trade between countries in the Belt and Road Initiative.

“We expect that a lot of the infrastructure will also have some elements that are produced in China or with Chinese technology and knowhow. Thus, increasing China’s outbound trade flows,” Pan said.

“The Belt and Road Initiative will be critical to the need for a carefully planned urban expansion and infrastructure development in order to create a sustainable and resilient Pearl River Delta. Energy considerations will also be important as the demand may outpace supply when the area grows.”

According to Wang at the University of Hong Kong, the diversity and differences in the cities of the Greater Bay Area provide both advantages and challenges.

The two SARs involved, Hong Kong and Macao, have a “one country, two systems arrangement with the central government, whereby both are locally governed with a high degree of autonomy.

Guo at the China Development Institute said: “With three different systems for legal matters, taxes and even languages, the Greater Bay Area’s diversity means it is well equipped to cater to different business needs.”

Wang echoed that sentiment by citing examples of the ways that some of the major players in the Greater Bay Area can contribute.

“Hong Kong can provide financial services as a yuan hub and its reputation can help with quality control and international trade. Shenzhen can contribute with innovation and manufacturing. Guangzhou can provide logistical assistance and a springboard into markets like Africa,” he said.

“But with differences in the legal systems, there are lots of issues that still need to be ironed out and streamlined such as the customs checking process at the borders, visa issues, recognition of qualifications, environmental concerns, and many others.”

However, a difference in administration may not be the only challenge.

“The Greater Bay Area faces challenges of integration as the Pearl River Delta’s major cities have not always grown in a coordinated fashion,” said Simpfendorfer.

But the plan may actually ensure that development in the region is spread out in a more balanced way.

“This initiative not only gives the developed cities a shot in the arm, it also allows the lower tiered cities to piggyback on the progress and not be left behind,” said Wang.

Unity seems to be the main theme of the Greater Bay Area initiative.

“It’s not just about city development — we need to close the livingquality gaps in the region,” said Wang.

Guo added that connectivity “in both the literal and figurative sense” is the main theme of the Greater Bay Area.

“With its strategic location, smart planning and an already-established performance from some of the cities, the sun is just rising for the Greater Bay Area’s future.”

Associates CEO of Silk Road

AFP Skyscrapers are seen dominating Hong Kong’s financial district. The city is expected to capitalize on its role as a global offshore yuan business hub as plans take shape to integrate cities within South China’s Greater Bay Area.