The Bottom Line.
In this Insight, M&A specialist Daniel de Blocq van Scheltinga comments on the development of the Greater Bay Area project. Although it has been around for some time, what the Greater Bay Area really is about remains unclair for many. although “it took a few years for the world to become familiar with the Belt and Road Initiative”, the author writes, “it will not take as long for the world to be impressed by the Greater Bay Area as it witnesses the area’s transformation into a vibrant, prosperous, and green world-class city cluster”.
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Greater Bay Area: When opportunity knocks, it must be seized.
The ongoing development of the Guangdong-Hong Kong-Macao Greater Bay Area shows the central government’s commitment to continue to speed up its reform agenda.
The Guangdong-Hong Kong-Macao Greater Bay Area, which has now formally been ushered in with the release of the outline of the development plan, heralds the beginning of a new era for the region, especially Hong Kong.
As a catalyst for deeper economic reform, the cluster of cities to be an economic engine, and a high-tech model region for the world, the development plan is very ambitious, covering a broad range of sectors and presenting many future opportunities.
Greater Bay Area: the big picture.
The Greater Bay Area plan envisages the close integration of Hong Kong and Macao special administrative regions and nine Pearl River Delta cities – Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing.
Altogether, the Greater Bay Area covers an area of 50,000 square kilometers and has a combined population of over 70 million people (slightly bigger than France with 67 million, or Italy 61 million), and a combined GDP of just under $1.5 trillion (almost five times the GDP of Singapore, and half the GDP of Germany).
The general aim, as described, is to develop this economic powerhouse area into “an international first-class bay area and a world-class city cluster” in which each separate entity can play to its respective strengths to enable a greater whole.
It is repeated many times that this plan in no manner weakens “One Country, Two Systems” or the Basic Law. On the contrary, the outline suggests that Beijing understands the unique strength and character of Hong Kong and wants to maintain that, in order to not only add to the greater good, but in fact to assist in fostering change and reform in the rest of China.
Greater Bay Area on the reform agenda.
The plan underlines the Chinese government’s commitment to continue and speed up its reform agenda.
The Greater Bay Area becomes the catalyst for deeper economic reform for the rest of China, “provides support for national supply-side structural reform”, through the accelerated development of a new system of an open economy.
This is a positive confirmation that the reform agenda is on track, with an eye on the future benefits it will bring.
Hong Kong is one of the four core cities in the plan (along with Macao, Shenzhen and Guangzhou), but seems to have been designated a more important role than the others.
Hong Kong will play a leading role in a number of ways.
Being the natural international finance center of the Area, it will have to expand its role as an offshore renminbi business hub, and strengthen its asset management and risk management capabilities.
It must also enhance its status as an international aviation hub, and become the center for international legal and dispute resolution services for the Asia-Pacific, and play a leading role in managing the legal aspects of the Belt and Road Initiative, IP protection and dispute resolution.
These are all areas in which Hong Kong can excel and lead the way for the rest of the country.
The Greater Bay Area also offers ample opportunities for Hong Kong companies and residents to benefit from certain aspects of closer integration with the other parts of the GBA, thereby making it more convenient for Hong Kong residents to study, live and work within the mainland part of Area.
This covers many aspects such as enabling Hong Kong research institutions to cooperate more closely with their mainland counterparts and obtain funding from the mainland.
This could also lead to a reduction in mobile phone roaming charges when in Guangdong or Macao, or to giving Hong Kong schoolchildren in mainland schools some of the same benefits as their mainland counterparts.
Of the 11 chapters in the plan, it is extremely encouraging that there is one solely dedicated to the environment: “Taking forward ecological conservation.” In fact the plan stresses China’s desire to pursue green development and ecological conservation, and move to a low-carbon lifestyle. As the outline puts it, to “cherish the environment as we cherish our own lives”.
This translates into a number of proposals to cooperate further and strengthen regulations regarding water pollution, air pollution (including more stringent clean shipping policies) and regional cooperation regarding waste management. This is an important element of the Greater Bay Area development plan and hopefully will become visible sooner rather than later.
It took a few years for the world to become familiar with the Belt and Road Initiative. But I suspect that it will not take as long for the world to be impressed by the Greater Bay Area as it witnesses the area’s transformation into a vibrant, prosperous, and green world-class city cluster. Hong Kong and other cities have been granted a life-changing and golden opportunity that must be grabbed with both hands.
[ This insight submitted by the author was originally published as an article on China Watch, a think tank powered by China Daily.]
Daniël de Blocq van Scheltinga | China Expert Contributor, Polarwide Managing Director.
Daniël de Blocq van Scheltinga is the Founder and Managing Partner of Polarwide, a Hong Kong-based corporate advisory firm specializing in cross-border corporate strategy and the execution thereof. Polarwide has built op over a decade of experience acting as the liaison between Asia and Europe, advising senior decision makers in both private and public sectors, most notably with regard to their strategy and in cross-border mergers and acquisitions.
As an example, Polarwide was mandated by one of China’s largest State Owned Enterprises, ChemChina, to establish their Finance Company, whereby Van Scheltinga became the first foreigner ever approved by the Chinese authorities to be the CEO of an SOE Finance Company, assisting in developing and executing the Group’s outbound investment strategy.
Disclaimer: The views expressed are those of their author(s) only and do not reflect those of The Asia-Pacific Circle or of its editors unless otherwise stated.
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