The Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (The Outline Developmnent Plan was released by China’s State Council on 18 February 2019, offering a blueprint for the future of the region.
Hawksford analyses this latest development below.
China's Belt & Road Initiative
The idea emerged in 2015, as part of the China Belt and Road Initiative. In 2016, it was isolated as a distinct project and included in China 13th Five-Year Plan for 2016-2020. On February 18th, 2019, the Chinese Government eventually issued its Outline Development Plan for the GBA, which intends to guide current and future developments within an ecosystem integrated both physically and digitally.
Numbers speak for themselves: with a population of more than 70 million and a total GDP of USD 1.56 trillion, the size of the GBA economy is close to Russia’s, larger than Spain’s and Australia’s, and just behind that of Korea; Guangdong Province alone generates 14% of China national GDP; and the Pearl River Delta region is now the largest urban area in the world, overtaking Tokyo. The goal of the GBA initiative is to create a city cluster offering regional competitive advantages, rivalling with international existing bays such as those of San Francisco, Tokyo, or New York.
Outline Development Plan
The Outline Development Plan issued earlier this year intends to foster cooperation in four key areas:
- innovation and technology
- infrastructural connectivity
- financial integration
- and social betterment.
At this stage, the plan is still embryonic, but it will undoubtedly create new opportunities and better conditions for entrepreneurs and investors to innovate and start businesses in the region.
This is also the opportunity for Hong Kong to redefine its regional role. On the one hand, Hong Kong's status as international connector should naturally enable the city to promote the GBA initiative overseas and attract more capital and talents therein. On the other hand, Hong Kong should take advantage of its financial leadership and of the opportunities offered by the 9 Mainland Chinese cities of the GBA in terms of market reach, industrial system, and technological developments.
Challenges and opportunities
Critical factors for the success of the GBA initiative will include cross-border payments and transfers of data, regional taxation, and regulations on foreign-direct investments. The example of data transfers illustrates well enough the scale and complexity of the challenge: while Hong Kong regulations on data privacy try to draw a balance between the protection of individuals and the promotion of trade and economic developments, China Cybersecurity Law emphasizes the protection of national interest and security. Stakeholders wonder how these two approaches will merge within the GBA. Similarly, appropriately designed and implemented tax measures will be necessary to address the challenges faced by people living and working across the GBA, especially Hong Kong and Macao cross-border workers. Some harmonization will also be necessary to ensure the ease of doing business in the region, and it remains to be seen how the current regulatory barriers to foreign investments in China, including Chinese Company Law and Negative List, will be adjusted in the future.
Last, the GBA has the potential to extend its reach beyond the Pearl River Delta region. In the longer term, it should be able to act as a catalyst for China’s broader Belt and Road Initiative, where Hong Kong should strengthen its role as a global offshore RMB centre and as dispute resolution hub for resolving investment and commercial disagreements dealing with Belt and Road projects.
Future will tell us whether or not the GBA Initiative is just an announcement effect, but growth and economic data tend to tell that this is not mere advertising. The GBA Initiative is a long-term strategic project and we shall certainly keep an eye on the upcoming actions undertaken both regionally and locally, which shall make it easier in the future to operate within the region.