GREATER BAY AREA MAKING GLOBAL WAVES

Dynamic trading region aims to become major economic driver

In the Pearl River Delta in South China, two mammoth projects are nearing completion, and when they are finished they will constitute the final stages of the transportation backbone of one of the most dynamic trading regions in the world.

The Guangdong-Hong Kong-Macao Greater Bay Area, made up of nine cities in Guangdong province plus the special administrative regions of Hong Kong and Macao, will become the largest of the world's top four bay area commercial regions as well as a top industrial, high-tech, financial and transportation zone.

By the end of this year, travel time by high-speed rail between Hong Kong and Guangzhou South Station will be reduced to 48 minutes, cutting an hour from the current travel time on the Guangzhou-Kowloon line.

Meanwhile, the 120 billion yuan ($18.4 billion) Hong Kong-Zhuhai-Macao Bridge will become a key link along an expressway between Hong Kong and western Guangdong.

The bridge is expected to carry 29,100 vehicles and 126,000 passengers daily by 2030, and 42,000 vehicles and 175,000 passengers per day by 2037.

In October, Xi Jinping, general secretary of the Communist Party of China Central Committee, said in his report to the 19th CPC National Congress that the central government would give priority to developing the Greater Bay Area, and boost cooperation between Guangdong, Hong Kong and Macao, in order to enhance regional cooperation throughout the Pearl delta.

"We will formulate and improve policies and measures to make it more convenient for people from Hong Kong and Macao to develop careers on the mainland," Xi said.

At about 56,000 square kilometers, the Greater Bay Area is larger than Tokyo Bay, the second-largest bay area worldwide, at about 36,900 sq km. It is more than two times larger than the New York Metropolitan (21,500 sq km) and San Francisco Bay (17,900 sq km) areas, according to the Hong Kong Trade and Development Council.

The Greater Bay Area population is estimated at about 68 million, more than the population of France, one of the world's wealthiest industrialized nations. Last year, the total GDP contributed by all 11 cities in the Bay Area stood at 11.7 trillion yuan. According to the latest estimate by real estate consulting firm CBRE, the Greater Bay Area will become the world's top bay area by 2020, when its regional GDP will surpass that of all other bay areas.

It is estimated that about 60 percent of the global economy is generated in river delta regions, according to the World Bank. In the Tokyo Bay Area, the integrated hub covers only a small percentage of Japan's land mass. In 2015, the region's GDP was $1.77 trillion, accounting for more than one-third of Japan's GDP of $4.4 trillion at the time.

The San Francisco Bay Area is hailed as the world's leading center for high technology and technology startups. Several international tech giants, including Google, Apple and Intel, have their headquarters there.

The Guangdong-Hong Kong-Macao Greater Bay Area has become a hot topic among businessmen, politicians and scientists. The buzz is not confined to the Bay Area, however, but reaches around the globe as corporations seek new opportunities in innovation and technology, international trade, finance and shipping.

Novelist and Nobel laureate in literature Mo Yan sees the vibrant interaction in Guangdong, Hong Kong and Macao as the key to innovation.

"It works like cooler and warmer waters colliding under the ocean surface, where the intersection breeds a wide diversity of aquatic species," Mo said.

Reduced travel times will lead to more vigorous exchanges among business experts, entrepreneurs, academics and new graduates, becoming the engine for fresh synergy, greater collaboration and new ideas.

The cities in the Bay Area, commonly known as the"9+2", comprise the Guangdong province cities of Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing, plus the two special administrative regions of Hong Kong and Macao. Hong Kong, Guangzhou and Shenzhen have dominated the region for decades, with the highest GDPs and economic growth.

Last year, Shenzhen generated record annual GDP of 2.2 trillion yuan, eclipsing Hong Kong and Guangzhou, both of which reported GDP of 2.15 trillion yuan.

However, Hong Kong continues to play a major role as one of the world's leading financial centers. There is also an overflow of technological companies from Hong Kong into Shenzhen. The vibrant import-export market of Guangzhou gives the Bay Area an early advantage in the race with global competitors.

Technology focus

In May, President Xi Jinping set an important directive for the development of Hong Kong's information and technology sector, declaring that national funding would be made available to help in the region's industrial development. Part of the objective is to help Hong Kong diversify its economy, building the city into a global innovation hub while maintaining its status as a global financial center.

As one of the top three economies in the Bay Area, Hong Kong enjoys steady economic growth, with a 3.8 percent increase in full-year GDP last year.

It has stepped up efforts to drive its tech engine, earmarking the highest amount ever - HK$50 billion ($6.3 billion) from 2018 to 2019 - to upgrade its information and technology sector.

A total of HK$20 billion will go toward development of the first phase of the Hong Kong-Shenzhen Innovation and Technology Park. The park, a cross-border technology and research center established last year, is situated at the Lok Ma Chau Loop bordering Hong Kong and Shenzhen.

"Innovation and sci-tech are widely expected to be the main development focus for the Greater Bay Area. People expect the region to become the world's leading sci-tech center," said Margaret Fong Shun-man, executive director of the Hong Kong Trade Development Council, at a forum last month.

Shenzhen, the leading economy in the Bay Area, saw impressive GDP growth of 8.8 percent last year. Since the mainland opened up for overseas investment in 1978, the former fishing village has become a high-tech "promised land" for 12 million residents, earning it the accolade of the "Silicon Valley of China".

Shenzhen bustles with individual startups alongside internet giants Baidu and Tencent, smartphone maker Huawei and drone manufacturer DJI. It is estimated the metropolis manufactures about 90 percent of the world's consumer electronics.

Guangzhou, the capital of Guangdong, is China's pivotal commercial distribution hub. The city's port has an annual cargo handling capacity of 590 million metric tons and a throughput capacity of 20.3 million standard containers. Guangzhou is investing 100 billion yuan in the port over the next three years, determined for it to become one of the busiest global shipping centers.

By 2020, the annual container throughput of Guangzhou's port is forecast to surge to 25 million Twenty-foot equivalent units (TEUs), and its bulk shipment capacity will reach 650 million tons.

Guangzhou is also the nation's central hub for cross-border e-trading. In 2016, the import-export value of Guangzhou's cross-border e-commerce stood at 22.77 billion yuan, a 55.1 percent year-on-year increase.

Appeal to visitors

Tourism is another booming market for the Bay Area. Macao will be at the forefront of the push to attract more visitors to the area.

Tourism in Macao has grown steadily. Last year, 32.61 million visitors stayed at Macao hotels, a 5.4 percent year-on-year increase. Annual earnings from Macao's gambling industry - one of the four pillars of the city's economy - were strong at 265.7 billion Macau patacas ($32.9 billion) during the same period, according to research by the University of Macau.

Based on the framework agreement on developing the Greater Bay Area, signed by the National Development and Reform Commission, Guangdong, and the Hong Kong and Macao SARs last year, Macao will become a pivotal training base for tourism professionals for the Bay Area.

It is also anticipated that completion of the two high-speed transportation links later this year, the Hong Kong-Zhuhai-Macao Bridge and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, will help attract a substantial number of tourists to all local areas on multi-destination itineraries throughout the Bay Area.

This view is held by Bernard Chan Pak-li, Hong Kong's undersecretary for commerce and economic development.

Work for the young

Young people are a key factor in such planning, with a series of programs being implemented to keep young talent at home as well as to draw fresh talent from elsewhere.

Prospects appear bright for young people in the area. The opening of the bridge and express rail link will provide additional potential, allowing for greater workplace mobility.

Mandy Tam, a young entrepreneur from Hong Kong, along with her partners, has moved her unconventional aquaponics (a novel technique combining aquaculture and hydroponics) farming project to an agricultural innovation center in Jiangmen, on the west side of the Bay Area. "After failing to find the right place in Hong Kong, we decided to try our luck on the mainland with so many available land resources," Tam said.

The partners were rewarded with a 400-square-meter plot of land, rent free, and a startup fund of 50,000 yuan. These would not have been available in Hong Kong. Their success proved an inspiration for 15 other Hong Kong and Macao startups, which had been drawn to Jiangmen by last year.

The Bay Area holds promise for established businesses. Steven Lam Hoi-yuen is one example. The co-founder and chief executive of GOGOVAN, a company in Hong Kong offering an app-based platform for van hire services in Asia, joined a Hong Kong youth delegation and visited mainland cities late in June.

He said the Greater Bay Area development plan has presented a wide opening for Hong Kong's young people, and he suggested young people be more open-minded about embracing China's developing economic power and flex their muscles in the Bay Area.

Leung Chun-ying, vice-chairman of the National Committee of the Chinese People's Political Consultative Conference and former chief executive of Hong Kong, also sees greater opportunities.

"People will soon be able to visit the mainland daily within an hour," he said. "Talent in Hong Kong, for instance, can pursue careers on the mainland without having to give up their homes in Hong Kong and live on the mainland."

Business hurdles

Roadblocks remain as the Bay Area gradually takes shape. There are different taxation systems on the mainland and in Hong Kong. For example, Hong Kong companies are required to declare their income once a year. On the mainland, companies are required to report once a month, or once per season. There are also substantial differences in tax categories between Hong Kong and the mainland.

Tony Tse Wai-chuen, a lawmaker representing Hong Kong's architectural, surveying and city-planning sector, suggested that the city launch a tax exemption pilot plan for local entrepreneurs who might otherwise be deterred by the intricate red tape of cross-border taxation.

Another snag lies in the differences between e-payment systems on either side of the border. The mainland is rapidly becoming a cashless society, with the mobile payment apps of Alipay and WeChat Pay dominating the market. In 2016, the mobile payment volume on the mainland was about $5 trillion, with Alipay responsible for 54 percent and WeChat Pay 40 percent.

People in Hong Kong still use conventional e-payment tools, such as credit cards, debit cards and stored value cards. To create fast and smooth capital flows between the mainland and the two SARs, adjustments will be needed to synchronize the different payment systems.

Mobile-app developers are trying to narrow the gap. "We are still exploring the 'sore point' of Hong Kong's mobile payments," Royal Chen Qiru, vice-president of Tencent Financial Technology, stressed earlier.

"We will introduce more pilot schemes with local stores, companies and institutes for both Hong Kong and mainland users in the second half of this year," he added.

Setting the tone

Over the past year, numerous cross-border organizations have been inaugurated throughout the Bay Area to safeguard the health of the 68 million people living there. A cross-border cooperation program in postgraduate medical education has been launched by the University of Hong Kong, and the Greater Bay Area's biotechnology hub has been spearheaded by Hong Kong Polytechnic University.

The central government is mapping out measures to reduce carbon emissions in the Bay Area and to develop a global standard, low-carbon economic hub, according to Xie Zhenhua, the special representative on climate change.

Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor is pinning high hopes on the Bay Area to take some of the strain out of Hong Kong's scarcity of land, and its beleaguered housing market. Lam believes that deepened intercity integration will mitigate long-term problems such as the city's sky-high housing prices combined with the land shortage.

Construction is about to start, or is underway, on two other major construction projects, the Shenzhen-Zhongshan Bridge and the Guangzhou-Dongguan-Shenzhen intercity railway.

Vice-Premier Han Zheng said at a meeting with Lam in Beijing last month that the Bay Area will take cooperation among the three areas involved to new heights for joint progress and shared benefits. In response, Lam said development of the Bay Area promises to become a new growth engine for the cities' economies.

Chan Ching-chuen, the first academic from Hong Kong to be elected a member of the Chinese Academy of Engineering, one of the nation's top scientific think tanks, said at a forum in June that cities in the Bay Area should avoid duplication of industrial development, and cutthroat competition. Instead, people should look for complementary development and maximize each other's advantages.

honeytsang@chinadailyhk.com