Previously, I have discussed how the Hong Kong Special Administrative Region is becoming an important greentech and Web3 hub, and the potential that Hong Kong has in the area of Central Bank Digital Currencies (CBDCs), especially when it comes to the electronic Hong Kong dollar (e-HKD).

However, one of the key reasons for the success of all these initiatives is not only the fact that Hong Kong has for decades been, still remains and will continue to be one of the world’s most important financial centers and the gateway to China, but also the fact that Hong Kong is part of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

The GBA undoubtedly enhances Hong Kong’s future potential and, at the same time, enhances the potential of the rest of the bay area.

In this sense, financial cooperation between the special administrative region and the rest of the GBA is growing every day and will without any doubt become the key in the coming years.

Right from the start, the GBA brought together the two SARs of Hong Kong and Macao with nine municipalities in Guangdong province into one economic entity that is expected to be a leading growth engine for the nation.

The GBA has a combined population of over 86 million and a GDP of around $1.9 trillion (comparable to that of the Tokyo Bay Area and the New York Metropolitan Area). It has been called by some media “China’s plan to beat Silicon Valley”, and not without reason.

There are sufficient data pointing to this affirmation. Suffice to say that the Chinese government never skimps on expense 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 role as a financial center, while Shenzhen will leverage its technological prowess, where cutting-edge technology companies including the big names like Huawei and Tencent are based.

Why is the GBA important to Hong Kong? While Hong Kong benefits from being “the gateway to China”, this role is admittedly diminishing 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 seize every opportunity to do so. And the GBA is, without any doubt, just the ticket to the many good opportunities it offers.

There are many clear examples of financial cooperation between Hong Kong and the rest of the GBA.

For example, last year, the mutual stock market access between the mainland and Hong Kong (Stock Connect) was extended to eligible exchange-traded funds (ETFs), allowing Hong Kong and foreign investors to trade ETFs listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange, and those from the mainland to invest in Hong Kong-listed ETFs, thus enhancing Hong Kong’s role as an offshore capital hub for the mainland.

Hong Kong’s new links with the mainland’s financial markets will definitely strengthen not only its position within the GBA, but also its role as a world financial center

More specifically, the ETF Connect allows global investors to tap 83 exchange-traded funds on the mainland — 53 in Shanghai, 30 in Shenzhen — via the accounts in Hong Kong, an opening that may attract up to 200 billion yuan ($27.5 billion) of investments within one to two years, according to a forecast by China Asset Management.

Stock Connect was first launched in November 2014. Trading began on the Connect in the Shanghai and Hong Kong exchanges. Shenzhen joined two years later. In 2017, Bond Connect was launched. And, in September 2021, the Cross-boundary Wealth Management Connect Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area was launched.

The Stock Connect program is now considered a great success, and market data shows that mainland investors now account for about 10 percent of daily stock transactions on the Hong Kong Stock Exchange.

Actually, the Hong Kong stock market has more than tripled in size. HKEX is currently betting that more mainland companies will list in Hong Kong, and that mainland companies that have been forced off US bourses will move to the city.

As stated by the Hong Kong SAR government, the Outline Development Plan for the GBA confirms and supports Hong Kong’s status as an international financial center, a global offshore renminbi business hub, and an international asset and risk management center.

It also supports the city’s development as a green financial center and an investment and financing platform serving the Belt and Road Initiative.

Still according to the government, in May 2020, the central government promulgated the Opinion on Providing Financial Support for the Development of the GBA, which supports promoting financial liberalization and innovation, deepening financial cooperation between the mainland and the two SARs, and elevating the role of the GBA in supporting and leading the country’s development and opening-up.

We will continue to cooperate closely with the State authorities and implement policy initiatives along the broad directions as set out in the Outline Development Plan, and the Opinion.

In addition, as I have already mentioned, Hong Kong is betting big on other areas that, despite not being part of the Connect programs, will undoubtedly benefit from Hong Kong’s growing importance in the area, such as green technology and green finance.

Hong Kong Financial Secretary Paul Chan Mo-po made a strong pitch in February to attract investment to Hong Kong, saying he hoped the city could become a regional hub for green technology and finance.

Hong Kong is already home to a burgeoning list of greentech firms, and in February it issued its first tokenized government green bonds — the first of their kind in the world.

Moreover, Hong Kong was also Asia’s top issuer of green and sustainable debt last year, raising $80 billion. According to Chan: “Our aspiration is much higher and bigger. We are determined to position ourselves as the center of green tech and green finance.”

To sum up, Hong Kong is currently involved in many projects, especially those associated with the GBA development, which will not only help it maintain but also enhance its status as one of the world’s leading financial centers.

In the country’s 14th Five-Year Plan (2021-25), the central government has again recognized Hong Kong’s potential at the national level and has reaffirmed its commitment to support the Hong Kong SAR in strengthening its status as an international financial, trade and logistics hub.

Hong Kong’s new links with the mainland’s financial markets will definitely strengthen not only its position within the GBA, but also its role as a world financial center.

Moreover, Hong Kong’s tapping into areas like greentech and green finance will also be beneficial to both Hong Kong and the rest of the GBA.

The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.