In recent years, regional economic integration has accelerated, resulting in a new form of competition among countries and territories. A notable example is China’s Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”), widely regarded as the next world-class metropolitan cluster to compete against other renowned bay areas.
The GBA has been an integral part of Mainland China’s continued “opening up” strategy to the world. Together with Macao, Guangzhou and Shenzhen, Hong Kong is considered a core city in the Outline Development Plan of the GBA. Moreover, as a world-renowned international business hub, Hong Kong can act as an Asia-Pacific business headquarters and a financial and innovation center for the GBA, focusing on finance, international trade, logistics, and professional services.
In this article, we highlight a few progress Hong Kong has made in the past year to keep pace with the development of the GBA.
The Wealth Management Connect Scheme
The GBA has experienced exceptional economic progress due to its advantageous natural geographical setting and export-oriented development model. The increase in inter-regional ties has broken down administrative boundaries and altered the cities’ respective development strategies. Each area has begun to investigate the development path of coordination and collaboration, setting the groundwork for the area’s increased competitiveness. The successful launch of the Wealth Management Connect Scheme in the GBA is a testament to China’s commitment to enhance the mutual market access between the capital markets of Hong Kong, Macao, and the Mainland. Launched in September 2021, eligible Mainland, Hong Kong and Macao residents in the GBA can invest in wealth management products distributed by banks in each other’s market via a closed-loop funds flow channel established between their respective banking systems.
The Completion of the Third Runway in Hong Kong Airport
The GBA currently has six matured ports in Hong Kong, Guangzhou, Shenzhen, Zhuhai, Zhongshan, and Nansha, and a world-class airport cluster including Hong Kong, Macao, Guangzhou, Shenzhen, and Zhuhai. In September 2021, Hong Kong marked the completion of the third runway, a major milestone of the Three-runway System (3RS) project at Hong Kong International Airport. The new runway is 3 kilometers long and expected to be operational this year. Once it is fully functional, the new runway will boost the city’s annual passenger handling capacity to 120 million people and yearly cargo throughput to 10 million tons.
Hong Kong’s Northern Metropolis Project
Hong Kong plans to move forward with its Northern Metropolis Project, which is set to develop an IT hub with 2.5 million people throughout the next 20 years in the current northern New Territories near the border with Mainland China. The Project is seen as a strategic move to shift Hong Kong’s city center further closer to the north and more integrated with the Mainland. Moreover, the Northern Metropolis will include a new cross-border railway linkage to the Qianhai Economic Zone of Shenzhen, which is already home to over 11,000 companies with Hong Kong ties. Leaders from the financial sectors such as banks, asset managers and professional services firms are particularly optimistic about the recent development of Qianhai because the region serves as a gateway between Hong Kong and the Mainland market for local and international investors. In addition, due to Qianhai’s preferential tax policy, many professional firms chose to set up offices in Qianhai with a Hong Kong investment structure.
At the heart of the Northern Metropolis Project is also the construction of the Shenzhen-Hong Kong Innovation and Technology Cooperation Zone. Hong Kong and Shenzhen joined hands to develop a preeminent global innovation and technology hub in the GBA through the signing of the Co-operation Arrangement on the Establishment of “One Zone, Two Parks” in the Shenzhen-Hong Kong Innovation and Technology Co-operation Zone (“Co-operation Zone”) at the Lok Ma Chau Loop in September 2021.
The Fintech Supervisory Sandbox
On 21 October 2021, the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) signed the “Memorandum of Understanding on Fintech Innovation Supervisory Cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area”. The cooperation allows the two authorities to link up the PBoC’s Fintech Innovation Regulatory Facility with the HKMA’s Fintech Supervisory Sandbox in the form of a “network”. As a result, eligible financial institutions and tech firms can conduct pilot trials of cross-border fintech initiatives in a controlled environment on designated groups of customers and obtain early supervisory feedback and user opinions.
Looking into the Future
Looking forward, China’s Greater Bay Area has been booming and remains excellent potential globally. The region’s gradual success shall soon ensure its position as one of the leading global supply and value chains. While the 9 Mainland Chinese cities shall continue to take in the vast amount of past knowledge in reforming themselves, Hong Kong remains critical to the complex. Indeed, substantial efforts are made in bringing the participating cities together to leverage their resources, with the ultimate goal of integrating into the global business map and setting a worldwide example of a national legacy.