Oriol Caudevilla says the Bay Area vision offers much to SAR residents who can both contribute to and benefit from the national development plan
When, in 1992, Deng Xiaoping embarked on his famous Southern Tour of China, visiting Guangzhou, Shenzhen and Zhuhai, he permanently changed China’s direction toward free market economic development, pointing out how this area would be a game changer in future. The Southern Tour was Deng´s final large political act of his remarkable career.
Almost 30 years later, the paramount leader’s bold predictions were borne out by China’s breakneck developments. Not only has China grown to become the world’s second-biggest economy, all those cities he visited have achieved phenomenal economic growth and prosperity for its citizens. For example, Shenzhen, which was the first of the special economic zones to be established under Deng’s blueprint, had in 2017 an economic output of US$338 billion, surpassing that of Guangzhou and Hong Kong, and ranking No 3 in China, just behind Shanghai and Beijing, not to mention having achieved almost overnight a reputation as a leading research and development, innovation and technology and high-tech manufacturing hubs.
While Hong Kong profits from being “the gateway to China”, this role will admittedly diminish as the Chinese mainland keeps opening up its economy and financial system, making it progressively easier for foreign investors to make direct contact without going through a middleman. Thus it would be wise for Hong Kong to diversify its economy as much as possible. It must therefore grab hold of any opportunity to do so
However, the Chinese government decided to take a step further by creating the Guangdong-Hong Kong-Macao Greater Bay Area, bringing together the two special administrative regions of Hong Kong and Macao plus nine municipalities in the Guangdong province.
The Bay Area has a combined population of over 69 million people and a GDP of around US$1.5 trillion (comparable to that of the Tokyo Bay Area and the New York Metropolitan Area).
The Bay Area has been called by some media “China’s plan to beat Silicon Valley”, and not without reason. I could add countless data to support this affirmation, but it would be pointless for the purpose of my article. Suffice it to say that the Chinese government never skimps on expenses when it comes to big projects that would bring prosperity to the country.
As per the 11 chapters of this project, each of the cities will play an important role based on its respective strength. For example, Hong Kong will play a key part as a financial center, while Shenzhen will leverage its technological prowess, where cutting-edge technology companies like Huawei and Tencent are domiciled.
Why is the Bay Area project important for Hong Kong? While Hong Kong profits from being “the gateway to China”, this role will admittedly diminish as the Chinese mainland keeps opening up its economy and financial system, making it progressively easier for foreign investors to make direct contact without going through a middleman. Thus it would be wise for Hong Kong to diversify its economy as much as possible. It must therefore grab hold of any opportunity to do so. And the Bay Area is, without any doubt, just the ticket for the many good opportunities it offers.
One of the main concerns expressed by Hong Kong people is how will the Bay Area benefit them. In response, the central government introduced early this month eight policy measures to facilitate Hong Kong and Macao people in engaging Bay Area projects.
Chief Executive Carrie Lam Cheng Yuet-ngor wasted no time in welcoming these new measures, stating that they will greatly benefit both Hong Kong and Macao residents living and working in the Bay Area. According to Mrs Lam, these are only the first batch of new measures and more will follow. Specifically, Beijing has promised lower taxes and more subsidies for professionals and entrepreneurs from the SAR. Furthermore, a stay that lasts shorter than 24 hours will not be counted as one day when the mainland authorities calculate a Hong Kong resident’s personal income tax due under the mainland’s taxation code.
Our professionals working in the Bay Area cities will be allowed to pay the same amount of tax as they would for equivalent jobs in their home city. The mainland’s top personal income tax rate is 45 percent, compared to Hong Kong’s 17 percent.
Other new measures will allow universities and research institutes in Hong Kong and Macao to obtain funding from the provincial and municipal governments in Guangdong.
There are also measures to introduce immigration facilitation reform pilot schemes in the Bay Area that would facilitate vehicles from Hong Kong and Macao to enter and exitmainland ports.
According to Lam, these measures will enable Hong Kong residents to work and reside in the mainland cities of the Bay Area, strengthening the flow of people and goods and information exchange.
The Bay Area master plan provides a unique opportunity for Hong Kong to be part of a national development plan that will bring wealth, jobs, R&D and untold opportunities to the area. Let’s make no mistake about it: The Bay Area project would proceed with or without Hong Kong. I think it is far better to ride the wave of prosperity than to be a timid bystander.
The author holds a doctorate in Hong Kong real estate law and economics (UAB). He has worked as a business analyst for a Hong Kong publicly listed company.
HONG KONG NEWS