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China’s “mega city” corridor plans

February 20, 2019 | Expert Insights

China’s long-awaited plan to create a high-tech megalopolis on its southern coastline rivaling California’s Silicon Valley generated optimism among Hong Kong’s business community even as key details remain unclear.

Background 

Hong Kong is an autonomous territory that holds a separate political and economic system from China. Under the principal – One Country, Two Systems – it exercises its own independent executive, legislative and judiciary powers. However, it comes under China for foreign affairs as well as military defence.

In 2014, there were a series of mass protests that took place in Hong Kong that came to be known as the Umbrella Revolution. Largely organized by students, it was against the kind of reforms that had been proposed for Hong Kong’s electoral system. Those protesting it claimed that was a move to curtail the region’s democratic values.

Carrie Lam, the current Chief Executive of Hong Kong was China’s preferred candidate and won a highly restricted election. She has been criticized by detractors for being a pro-Chinese government.

The Pearl River Delta Metropolitan Region is the low-lying area surrounding the Pearl River estuary, where the Pearl River flows into the South China Sea. It is one of the most densely urbanized regions in the world and is often considered an emerging megacity. The region's economy is referred to as Pearl River Delta Economic Zone, while the Chinese government's development plans consider it part of the Guangdong-Hong Kong-Macau Greater Bay Area.

Analysis 

The blueprint for the Greater Bay Area linking China’s southern coastal cities with Hong Kong and Macau, a signature policy of President Xi Jinping first articulated in 2017, boosted stocks after it was published late Monday. It said the government would turn the area into a leading global innovation hub, boost infrastructure connectivity and strengthen Hong Kong’s role as an international centre of finance, shipping, trade and the offshore yuan business.

The 2008-20 plan, released by China's National Development and Reform Commission, is designed to boost the pan-Pearl River Delta as a "centre of advanced manufacturing and modern service industries," and as a "centre for international shipping, logistics, trade, conferences and exhibitions and tourism." Goals include the development of two to three new cities in the Guangdong-Hong Kong-Macao Greater Bay Area, the development of 10 new multinational firms, and expansion of road, rail, seaport and airport capacities by 2020.

They include construction of the 31-mile (50 km) Hong Kong–Zhuhai–Macau Bridge linking Hong Kong, Macau and the Pearl River Delta. The construction of 1,864 miles (3,000 km) of highways in the region was to be completed by 2012, and rail expansions of 683 miles (1,099 km) by 2012 and 1,367 miles (2,200 km) by 2020.

Yet several issues were left out of the plan, including complex questions about which customs, tax and legal systems would predominate. In Hong Kong, the concept of the Greater Bay Area has led to worries that further integration will erode the “one country, two systems” framework that allows the city to maintain separate legal, monetary and political systems from communist China.

If all goes as planned, the economic benefits could be substantial: HSBC Holdings Plc says the move to knit the cities of Hong Kong, Macau, Shenzhen and Guangzhou together could boost a trillion-dollar economy that exports more than Japan. Earlier, the announcement drove stocks in the region higher, with Guangzhou Port, Zhuhai Port and Shenzhen Yan Tian Port all climbing by the 10 per cent daily limit.

Still, China’s major tech companies based in Shenzhen, which borders Hong Kong, haven’t made the Greater Bay Area central to their future growth plans. Shenzhen has become an Asian tech mecca home to giants such as Tencent Holdings Ltd. and Huawei Technologies Co. largely due to its hyper-competitive industry culture, and neither Hong Kong nor Macau is known as a wellspring of global tech talent.

Assessment 

Our assessment is that a comprehensive blueprint can add new impetus into the development of Hong Kong and Macau" and help build a world-class cluster of cities. We believe that the integration of Shenzhen, Macau and Hong Kong will be a herculean task but it will result in massive economic benefits if carried out carefully. 

 

Image Courtesy: Eduardo M. C. (https://commons.wikimedia.org/wiki/File:ZhujiangTown.jpg), „ZhujiangTown“, https://creativecommons.org/licenses/by/2.0/legalcode