Many people in Hong Kong cannot understand why we should be so excited about the Qianhai project, which is officially called the Plan for Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.
Some people ask whether the project will suck out our talent away to Qianhai. They fear that with our professionals and entrepreneurs seeking opportunities in Qianhai, Hong Kong would be hollowed out, so in the end we would lose competitiveness.
Hong Kong’s past attempts at diversifying our economy have failed mainly because we had too little developable land. The land shortage happens to be the most serious impediment to our diversification attempts. Statistics have shown that of all the real property types, housing happens to be a laggard, even though our housing prices have become among the most unaffordable in the world. Commercial properties and industrial properties have seen much more rapid price and rent surges. Unaffordable prices and rents for businesses have not only hurt our competitiveness but also stunted the entrepreneurial effort.
With a lower land cost, the Hong Kong economy has a much better chance to diversify. Aspiring entrepreneurs can survive. If they need talent, they should not have any problem attracting professionals and retaining them, as long as their businesses are viable, because Hong Kong is an open international city
The Qianhai project aims at uplifting innovations in the Guangdong-Hong Kong-Macao Greater Bay Area, and the areas of innovations targeted include both “system/institutional innovations” and “technological innovations.” The Qianhai project is bold in its readiness to adopt institutions and practices that have been proved to work in Hong Kong. An early article, published in the South China Morning Post in 2011, was headlined “HK law may rule in Qianhai test zone”. A document in the Legislative Council this March, which discussed “Recent developments for Hong Kong’s legal and dispute resolution services in the Greater Bay Area (GBA), including the GBA Legal Professional Examination and other initiatives”, had a section called “Wider application of Hong Kong law in Qianhai”. It clearly offers the prospect that wholly owned Hong Kong enterprises will be allowed to choose Hong Kong law as the applicable law, and also choose Hong Kong as the seat of arbitration in case of need.
The focus on modern services, similarly, looks as if it is tailor-made for Hong Kong, given that Hong Kong has established itself as a service economy, with the percentage of services well past 90 percent in contributions to GDP, and all of Hong Kong’s four pillar industries in services. These are financial services; tourism; trading and logistics; and professional services and other producer services. Interestingly, a Census and Statistics Department article on the four pillar industries also included cultural and creative industries and innovation and technology. Although Hong Kong, unlike Shenzhen, does not have leading technological companies that can match the likes of Huawei and Tencent, it does enjoy a very good name in innovations and it has nurtured or contributed to the development of highly successful technological firms in the past, such as Da-Jiang Innovations and SenseTime. The stress on system innovation and technological innovations in Qianhai fits Hong Kong’s strengths.
Going back to the concern over “hollowing out” Hong Kong so our city might lose talent to other cities in the Greater Bay Area, the truth is that Qianhai is very much like an extension of Hong Kong. Hong Kong is short of developable land, so land costs are often too high for new entrepreneurs who have yet to prove themselves. In 2005, Hutchison Port Holdings Group and Shenzhen Yantian Port Group signed a joint-venture contract with a total investment of over 10 billion yuan (US$1.55 billion) to develop the Yantian Port Expansion Project. The result is that Shenzhen Port has developed into one of the world’s top four container ports. If Hutchison did not take up this initiative, it would have fallen behind many competitors. In any case, if Hong Kong were to struggle to compete for a top place in the container business within the territory of Hong Kong, it would have taken up much more land, leaving even less for housing and other purposes.
Given this “extension of Hong Kong”, the pressures on land prices will be much relieved. Although lower commercial and industrial land prices and rents may appear to be a negative factor for property developers, it is a fantastic opportunity for users. With a lower land cost, the Hong Kong economy has a much better chance to diversify. Aspiring entrepreneurs can survive. If they need talent, they should not have any problem attracting professionals and retaining them, as long as their businesses are viable, because Hong Kong is an open international city.
Meanwhile, for those businesses and individuals that decide to take the plunge and tap into the potential that Qianhai and the Greater Bay Area offers, a bright future beckons. After all, the GBA is a big market, and the mainland market is the biggest and also a fast-growing market too. The GBA also is a manufacturers’ paradise, due to the easy availability of parts, skilled labor, logistics, and infrastructure.
There is only so much that governments can do as a facilitator. The success of the GBA and Qianhai depend on the entrepreneurs and professionals who want to take advantage of the emerging opportunities.
The author is director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.
The views do not necessarily reflect those of China Daily.
HONG KONG NEWS