Only 12 months after the official launch of President Xi Jinping’s personal master plan for an integrated economic powerhouse of nine Chinese cities combined with Hong Kong and Macau, the Greater Bay Area (GBA) project appears to be dead in the water.
Since last February, when Beijing published the Outline Development Plan (ODP) for what is officially called the Guangdong-Hong Kong-Macao Greater Bay Area, there has been no shortage of corporate leaders lining up to heap superlatives upon the project.
However, some admit to reservations in private and the combination of the US-China trade war, prolonged social unrest in Hong Kong and the deadly coronavirus risk sinking the project as a viable economic entity. There are many in Hong Kong who think that the GBA is looking increasingly like an unpopular political manifesto masquerading as a business plan.
“The GBA is just a horrible concept for me,” says Carmen Li Ka-man, due to graduate from Hong Kong’s Shue Yan University this summer, who has been involved in the pro-democracy protests both as a participant and as an intern reporter for a local news agency. She says despite the economic problems in Hong Kong, she will not be looking to cities in the GBA for employment or further education opportunities.
“If you go to the GBA you will not have a bright future,” she says, “I just don’t trust the government, the legal system or the policies in the GBA cities.”
Media reports of a survey published in January by the Hong Kong Guangdong Youth Association indicate these views are by no means exceptional. More than 70 per cent of the young people in Hong Kong interviewed held that the city should keep its distance from mainland China and almost 60 per cent said the GBA plan would bring more harm than good to Hong Kong.
“Cities like Shenzhen may be modern and affluent and maybe I can get a good job but it only takes one new policy from Beijing and I could lose everything overnight,” Li says.
Asked if her friends feel the same way, Li just laughs. “None of my friends would ever go to mainland China to develop their career path; the social movement over the last eight months has changed all that,” she says.
Many local politicians concur. “After the social movement in the second half of last year, our younger generation find it difficult to integrate into the living of GBA,” says former lawmaker and Democratic Party treasurer, Sin Chung-kai.
Sin thinks that the vast majority of young people will not pursue opportunities in the GBA and while not totally against the project, he questions the economic sense of Hong Kong being assimilated into Guangdong province.
Some outside the pro-democracy camp have also questioned the speed of integration with other GBA cities. In January, property tycoon Adam Kwok Kai-fai suggested to the Guangdong Chinese People’s Political Consultative Conference (CPPCC), in Guangzhou that the daily quota of people from mainland China relocating to Hong Kong should be halved to 75, to ease cross-border tensions.
While the corporate business and real estate sector have the most to gain from the GBA, recent surveys suggest that even their enthusiasm is waning.
KPMG China, HSBC and the Hong Kong General Chamber of Commerce (HKGCC) commissioned YouGov to conduct a survey in July-September 2019, of 747 business executives in mainland China, Hong Kong and Macau, about the GBA.
The headline findings were generally warm in that about half (52 per cent) of surveyed executives plan to expand geographically into the GBA by 2022 but fractures in confidence were also exposed.
According to the report, survey respondents highlighted a “number of challenges to realise growth” and almost three-quarters of executives (73 per cent) cited policy or regulatory ambiguity, uncertainty and unfamiliarity as the most significant risks to their GBA business plans, up from 68 per cent in 2018.
It is a highly complex task to integrate three different economies with variant laws, customs regulations, tariffs, business subsidy schemes, environmental regulations, immigration rules, quality control accreditation and currencies. Experts say little progress is being made on the important details essential for the free movement of goods and people.
In one glowing official tribute to mark the one-year anniversary Chinese state media Xinhua described how “cities in the bay area have built increasingly close ties with each other and achieved much easier flows of talent, goods and capital” but this seems an extremely optimistic assessment.
“I am not that optimistic, maybe even pessimistic about the GBA. So far, it’s just piecemeal progress,” says Dr Collin Wong, Associate Dean (External) of the School of Decision Sciences at Hang Seng University of Hong Kong.
Wong is an expert in trade, logistics and supply chain management who generally supports the concept of the GBA but thinks recent events have slowed down progress, or even put it into reverse.
“The GBA is all about integration and cooperation within two SARs and nine cities, but the social unrest in Hong Kong raised issues of separation and isolation. This won’t help,” she says, and thinks trust and confidence in government is a crucial challenge for the GBA.
However, her biggest concerns are about the poor execution of the GBA vision, the lack of a strategic plan and the failure to persuade citizens that it is of any tangible benefit to them.
“Central government really want this to succeed but I don’t see at a working level the coordination required to make it feasible and viable,” she says adding there are four international airports and three of the world’s top ten ports in the GBA but currently they have no idea how they should collaborate.
She says her research indicates that key businesses and other stakeholders typically only hear about the latest initiative when it is released and there is a complete absence of transparency in policy-making, or consultation with key stakeholders.
And there is another perceived obstacle to the free movement of business expertise in the GBA zone. Even before the current coronavirus health scare, seasoned expatriate business people in Hong Kong were becoming more wary about travelling in Mainland cities, after a rash of detentions, arrests and refusals of entry to foreign nationals. In December, two senior American officials at the Hong Kong American Chamber of Commerce were detained and refused entry to Macau for no given reason.
Despite the evidence of political resistance to the GBA, the failure to sell its benefits to ordinary citizens, its inept implementation, and the lack of trust in legal and political systems, there are still experts who think it is unstoppable and corporate leaders who perceive it as an economic panacea.
In a tribute to mark the first anniversary of the GBA, Xinhua reported KPMG China’s Hong Kong partner Maggie Lee as saying, “the policies have created tangible benefits for Hong Kong businesses and residents.” The quote referred to efforts to reduce the tax burden for Hong Kong people working in the GBA and to make it easier for them to educate their children and purchase homes there.
But unless the welfare and social systems compare favourably with those in Hong Kong and citizens have trust in the political system as a whole, there remain insufficient rational reasons for people to relocate.
Christer Ljungwall is an economist with longstanding research experience in China and a senior country economist at the Asian Development Bank who has studied the GBA. He maintains that the GBA concept will not be damaged by trade friction with the US, social unrest in Hong Kong or the more recent coronavirus health scare. He says this is simply because the GBA Outline Development Plan (ODP) is part of a long-term structural transformation of the region.
“Mainland China would never allow that plan to derail – perhaps slow down, but never stop, it is way too important,” he says. The plan has already slowed to a virtual stop though, and despite its importance to Beijing looks in imminent danger of sinking without a trace, at least with Hong Kong as a central part of it. The energy and resources required to deal with the coronavirus public health crisis will mean the GBA will slide further down the political agenda, at least temporarily.
Conferences may still be held, familiarisation trips staged and glowing surveys published but sometimes the GBA looks like the mythical emperor’s new clothes, as corporate leaders rush to heap praise on a conceit that does not really exist except in the mind of the Emperor.
The lack of tangible progress does offer Beijing the opportunity to review its approach and employ a more transparent, consultative and engaging approach. The flaws of politically driven, top-down authoritarian policy implementation were exposed in the early stages of the Wuhan public health crisis.
“The GBA concept is still good to reduce internal competition and establish a long-term dream, but the execution has not been so good. Recent events may not have completely sunk the GBA project but it might have temporarily left [mark] and a re-think is required,” says Wong.