Hong Kong right on money with Greater Bay Area development

Last month Chief Executive Leung Chun-ying led a high-level delegation to visit several Guangdong cities on an exploratory mission to identify opportunities for Hong Kong in the Guangdong-Hong Kong-Macao Greater Bay Area, a regional integration and development project recently unveiled by the central government. Based on my observation, the Greater Bay Area - spanning nine Guangdong cities, Hong Kong and Macao - has unique meaning attached to it. First, it entails a deeper level of regional cooperation and integration under a new national strategic development plan. Second, it happens in an era when the inter-dependence between the Chinese mainland and United States economies might be diminishing, and when application of the internet and technology in conventional industries becomes a norm on the mainland. Against this background, Hong Kong is expected to reap tremendous benefits from Greater Bay Area regional collaboration, if Hong Kong's strategies for its own socio-economic development can dovetail with the national strategic plan for regional cooperation and integration. This article will briefly discuss the opportunities and potential hindrances that could arise for Hong Kong in the process of collaborating with Guangdong for the bay area integration, and what Hong Kong can do to take full advantage of the opportunities.

One of the most prominent opportunities for Hong Kong in the Greater Bay Area initiative is that its financial sector could have a big boost by providing diversified platforms that would channel a wide variety of external financing to support the sustained growth of mainland technology conglomerates and startups. Given the increasing importance of technology conglomerates in pioneering industrial research and development and economic growth on the mainland, it is highly likely that Guangdong's authorities will encourage more mainland enterprises to make use of Hong Kong's advantages in financing and set up listed companies and overseas investment offices in Hong Kong. It is therefore critical for Hong Kong to provide diversified platforms for mainland companies to tap into external financing, a process that will also benefit Hong Kong's economy as well as its reputation as a regional financial hub. Considering that technology companies are usually undervalued when they pursue initial public offerings in Hong Kong, and that many of them have difficulty in obtaining other low-cost financial facilities, Hong Kong should accelerate the setup of the planned Lok Ma Chau Loop tech park, which can provide financial consultation services to the technology startups operating in the Greater Bay Area. In particular, the future tech park can hire seasoned professionals as project consultants providing services in areas of industrial networking, startup financing and new product commercialization. Besides, the tech park should invite financing companies and supply chain financing servicing companies to station themselves in the park.

Another great opportunity that Hong Kong can seize in the Greater Bay Area initiative is the chance to strengthen its status as a regional knowledge hub by playing a role in the many cross-border issues such as research and development (R&D), industrial technological investments, industrial collaboration, technology education and welfare of Hong Kong professional service practitioners working on the mainland. This is extremely important for Hong Kong's technology sector, especially when Shenzhen has surpassed Hong Kong in many aspects of technology businesses except for robotics, smart-city applications and elderly healthcare. To avoid being marginalized by innovative mainland cities, Hong Kong should proactively deepen regional technological collaboration by setting up a Greater Bay Area project fund with the Guangdong government, with the aim of investing in potential industrial R&D projects, cross-border industrial big data and smart industrial systems, as well as city infrastructure in the bay area. Considering that the popularity of technology education is generally low in most regions of Guangdong except for Shenzhen and Guangzhou, Hong Kong should take advantage of the potential opportunities by encouraging cross-border technology education and university research collaboration to support commercialization of cutting edge technologies and promote the use of these technologies. Equally important, the Hong Kong government should set up liaison offices in other cities of the bay area to serve Hong Kong residents living, studying and working there. It can appoint the Chinese People's Political Consultative Conference members who are also Hong Kong permanent residents and highly reputable as key representatives of the liaison offices.

Collaboration and cooperation among cities in the Greater Bay Area will no doubt help strengthen the financial and technological sectors, generating a host of socio-economic benefits, but efforts could be compromised if the regional governments and their people in the bay area only pursue initiatives that yield optimal results for their own city instead of optimal benefits for every city involved. Considering past separatist activities in Hong Kong and anti-mainlander sentiments among some local residents, it is likely that any initiative associated with Greater Bay Area collaboration will spark further controversy, especially when freer flow of capital results in higher imported inflation and greater cross-border personnel mobility brings fiercer competition. To minimize obstruction, the special administrative region government should consider providing subsidies to the disadvantaged as well as the young people to encourage them to embrace opportunities in the Greater Bay Area. For instance, the government should provide travel and medical subsidies to full-time Hong Kong students studying in the bay area. Meanwhile, the regional governments should work together to lower charges for cross-border telecommunications.

(HK Edition 05/23/2017 page8)