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September 09, 2011

Hong Kong-Shenzhen integration plan progressing

Shenzhen, a city in southern Guangdong province, became a special economic zone following the country's reform and opening-up in the late 1970s. The city is now one of the richest and fastest-growing Chinese cities, with a per capita GDP of 93,000 yuan ($14,560) last year and a GDP that grew 12 percent year-on-year to hit 951.09 billion yuan.

In the past three decades, many Hong Kong businesses have used their neighbor as a springboard to access the resources of the Pearl River Delta (PRD) and the Chinese mainland to help the region become an economic powerhouse of the country through low-cost manufacturing. The PRD is China's largest export hub, making up more than one-quarter of the national trade volume.

Hong Kong, as a special administrative region with its own legal and monetary systems as well as an established international financial and services hub, has provided investment and management expertise to support the factories and labor force of the mainland. Hong Kong's GDP hit HK$1.744 trillion ($223.8 billion) and boasted a GDP per capita of HK$246,733 in 2010.

Last year, about 505,000 people crossed the border between Shenzhen and Hong Kong by land every day.




Anthony Wu, the chairman of the Hong Kong-based Bauhinia Foundation Research Centre, an independent major policy think tank, says the authorities must have a bigger vision to continue growing the two sides together and avoid focusing on "the small things and short-term gains".

"Ten years from now, Hong Kong and Shenzhen are going to be very integrated with the increased flow of people, information and goods. It is going to create a lot of value for both Shenzhen and Hong Kong. Both authorities must look forward and move on, not say 'I have 60 percent of the pie and you have 40 percent. I want to retain my share of the pie'. You have to look at the much bigger pie so that both sides win," says Wu.

In an August 2007 report, the Bauhinia Foundation Research Centre had already identified the importance of promoting the economic integration of the two sides by working toward a "Hong Kong-Shenzhen metropolis with global competitiveness".

The report first singled out barriers to that growth, including gaps in the flow of people, capital, goods and information and services.

Proposed solutions for these barriers included strengthening infrastructure links to create a "Hong Kong-Shenzhen one-hour metropolitan life cycle" with three major crossing systems in the western, central and eastern parts of the border and connecting the railway networks of the two cities for a "seamless interface".

Anthony Wu also cites the development of the Qianhai area as another example of how innovative thinking can carry the Hong Kong-Shenzhen link further. Qianhai is a proposed 2.18 square kilometer cooperation zone located in the Shekou peninsula in western Shenzhen and east of the Pearl River estuary. The area is being planned as a modern services zone developed by Hong Kong and Guangdong with four pillar industries - modern logistics, information services, and science and technology services. Shenzhen plans to pour at least $5.9 billion into Qianhai to build the area's infrastructure, establish a legal framework and woo services firms in Hong Kong, especially in the financial sector.

"We need to think out of the box and take all of this forward. If nothing is done, then Qianhai is just another town between Hong Kong and Shenzhen. Can we be more innovative, maybe have a set of new rules, a set of special taxes? In Qianhai, can we adopt all the laws and regulations of Hong Kong, including taxation laws, and meanwhile the criminal law and so on remain as mainland ones? Can we allow the free flow of residents into this area to work?" Wu says.

"Or even, if there is a hospital in the area and a mother from the mainland is giving birth there, can these people get a Hong Kong ID card? We have to be innovative," he says.

"If you look at the bigger context of the whole of Guangdong as well, you have Hong Kong and Shenzhen, you have Guangzhou, as well as Zhuhai and Macao you can have these centers within the PRD," Wu says.

"When the bridges are built and the high-speed rail network is complete, the growth potential will be unlimited. And look at what the PRD has done for China in the last 30 years. It is still going to be the engine of growth in the next 30 years."

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