The starting gun sounded in mid-February for the Greater Bay Area when the State Council released its much-delayed blueprint on what it wants to happen next. Here are five themes that featured in a review from Julia Wang, an economist for Greater China at HSBC, on how the GBA is going to prosper…
The metropolitan mix is what will make the GBA a success
Wang sees the “spatial positioning” of the GBA as a key strength. That’s economist-speak for a region that’s home to cities of a mix of sizes and skills. The four leaders – Guangzhou, Shenzhen, Hong Kong and Macau – are the most advanced in the group but the economies of smaller contenders such as Jiangmen and Zhaoqing should be set for an even bigger dividend as reforms take hold. This catch-up process will accelerate growth across the region, Wang thinks.
But diversity brings difficulty as well
One of the downsides to all this diversity is that Hong Kong and Macau have different currencies and different legal systems to the mainland. There are physical borders between the two special administrative regions and the rest of the country as well, adding another layer of complexity. Wang says that rolling these three systems into a single region is going to be a challenge.
Partnerships matter, just as they did in the past
Fortunately cross-border commerce has worked to everyone’s advantage in the past. Another of the lessons from Wang’s analysis is the way that companies in Hong Kong partnered with Guangdong’s factories to turn the province into the workshop of the world in the 1980s and 1990s. Back then Hong Kong was the headquarters for marketing and distributing the goods made in the factories across the border. New partnerships are now going to be forged between all the cities in the Greater Bay Area. But collaboration worked in the past, so why not even more so in the future?
Go with the flow: roads, railways and regulations
The GBA is already criss-crossed with bridges, roads and railways costing billions of yuan. But transport planners are calling for more investment as part of the commitment to a ‘one-hour living circle’ between the major cities. Apart from reduced journey times, another focus for speeding things up is telecom networks, where the region is bound to be at the forefront of the revolution in 5G technology.
But progress also needs to be made in regulation, Wang suggests, especially making it easier for people to live and work outside of their home jurisdictions. Rules and regulations on trade and investment need to be standardised as far as possible too if the GBA is to reach its full potential.
And make way for the middle-class: a huge market in its own right
Much is being made of the GBA’s aspirations to modernise its manufacturing capacity and upgrade its industries. Wang highlights how another trading up is happening in its middle-class economy. The region is already one of China’s wealthiest with a retail market worth more than $400 billion and it’s also going to be a petri dish for policies that spur consumption. For all the talk about GBA as a powerhouse for exports, don’t forget the domestic market, because its consumers are going to be a growing force.