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.
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 center of finance, shipping, trade and the offshore yuan business.
Yet several thorny 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.
“The vagueness of the 11-chapter document suggests that officials will struggle to realize the initiative’s goals,” said Yue Su, China economist at the Economist Intelligence Unit. “The difficulties in agreeing reforms that both advance the cause of regional integration and are palatable to officials in Guangdong, Hong Kong, Macau and the central government will be the key challenge.”
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 percent 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.
Tencent’s co-founder Pony Ma couched the plan in political terms in 2017 when his company organized a summit specifically to spur debate on the topic during the 20th anniversary of Hong Kong’s handover to China from Great Britain.
“Our Greater Bay Area is different in one big way from other Bay Areas: we have one-country two-systems,” Ma told hundreds of people including government officials, academics and investors. “We have more than 100 years of segregation and now we are entwining.”
The plan released Monday emphasized the importance of maintaining the “one country, two systems” frameworks meant to ensure a high degree of autonomy for Hong Kong and Macau. But it also identified diverging social, customs and legal systems as a challenge to the Greater Bay Area’s success, without providing details on how they would be integrated.
“Economically a kind of blurring of the boundaries of ‘one country, two systems’ is inevitable,” said Sonny Lo, a politics professor at the University of Hong Kong, who has authored books on the city’s relationship with Beijing. “But given the fact that Hong Kong and Macao have legal and political differences with China, ‘one country, two systems’ will be retained.”
China has already spent billions of dollars on infrastructure projects linking the cities, and the plan now envisages a strategy for the region that stretches to 2035. Xi last year inaugurated a $15 billion, 55-kilometer (34-mile) bridge, the world’s longest sea crossing, linking Hong Kong with Macau and the mainland city of Zhuhai.
A comprehensive blueprint can “add new impetus into the development of Hong Kong and Macau” and help build a “world-class cluster of cities,” it said.
“In some ways the concept of the Greater Bay Area is a manifestation of things that have already been happening in terms of economic connectivity,” said Tim Summers, whose book “China’s Regions in an Era of Globalization,” was published last year. “The plan gives the development of the region more strategic importance within the Chinese system.”