The South China Morning Post, Hong Kong’s most prestigious newspaper has defined the Greater Bay Area project as ‘The next big thing’ for China. However, few people outside Asia are aware of what the project really entails.
The Greater Bay Area (or GBA) is a project to connect 11 cities in the South of China: Hong Kong, Guangzhou, Shenzhen and Macau plus another seven supporting cities in China into a single economic and business hub. With an area slightly larger than the Netherlands, a population greater than Germany and a GDP equivalent to South Korea, the block has a larger economy than either Spain or Russia. If it were a country, it would be among the world’s top 10 economies.
The GBA project is one of the most notable developments in the global economic playing field. It can be better understood as part of a push to make China a technological powerhouse. It brings together the factory of the world (Guangzhou), China’s Silicon Valley (Shenzhen), one of the world’s main financial centres (Hong Kong), the ‘Las Vegas of Asia’ (Macau) and a hinterland of various industrial cities, all within a short distance of each other, to create a megalopolis of 86 million people. China’s plan is to turn the region into a new engine for growth and innovation with a GDP that could reach the size of Germany’s in less than 20 years and set the standards in many advanced industries, such as 6G, AI, FinTech, Smart Cities, robotics, biotech and ESG, among others.
In fact, the development of the GBA is accorded the status of a key strategic plan in the country’s development blueprint and is expected to play a pivotal role under the current Five-Year Plan (2021-25). It is a vital topic of discussion and is contemplated as a priority by all levels of the administration and across the business world. So much so that the powerful National Development and Reform Commission (NDRC) has created a special fund from the Central Government’s Budget to directly finance some of the most ambitious projects in the GBA. The fund will complement the municipal and regional level budget allocations.
The GBA project involves promoting integration across many fronts: infrastructure, legislation, visas, taxation, work permits, company set-ups and stock exchange connections. In all, there are 12 official policy areas.
On the infrastructure front the key objective is to achieve a ‘one-hour living circle’. Some of the main projects have already been completed. A good example is the Hong Kong-Zhuhai-Macau Bridge. The 55-kilometre bridge-tunnel system is both the longest sea crossing and the longest open-sea fixed link in the world (as a reference, the English Channel is 33.3 km at its narrowest point) and is symbolic of the kind of infrastructure that will soon interconnect the area. The high-speed rail connecting Hong Kong, Shenzhen and Guangzhou is another iconic example.
Financial services also stand out as a major area of development. In late 2021 the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) signed a Memorandum to provide a one-stop platform to allow financial institutions and tech firms to launch pilot tests either side of the border. Similarly, another major landmark was the launch of the ‘Wealth Management Connect’, allowing residents across the GBA to invest in wealth management products in each other’s markets.
Another pillar of the strategy is to promote entrepreneurship and STEM education (science, technology, engineering and mathematics), especially among the young. To achieve this the Youth Development Commission has rolled out two funding schemes under the Youth Development Fund: the Entrepreneurship Scheme (which will subsidise entrepreneurship projects); and the Experiential Scheme (which will subsidise short-term experiential projects with special emphasis on IT). The region has world class Technology Parks in Guangzhou, Shenzhen, Zhuhai and Hong Kong, which provide incubation, acceleration and funding programmes to further propel start-ups to become scalable businesses.
Some of the most notable future developments involve innovation-related projects such as the ‘Lok Ma Chau Innovation and Technology Park’, which will be managed simultaneously by the Hong Kong and Shenzhen authorities. On the same border between the two cities, the Hong Kong Government recently announced its intention to build a ‘Northern Metropolis’. The plan, which would take 20 years to complete, is seen as a major strategic change for development, moving the city’s centre of gravity away from its traditional centre on Hong Kong Island up north, to integrate it into the latest national development plan. There are also plans to allow Hong Kong citizens to work and live visa-free in the GBA while continuing to pay taxes in the SAR.
The level of governmental and business support for the project indicates that it will continue to move forward. China is likely to succeed in making the GBA a more coherent whole and in leveraging the process to spur growth and innovation. The initiative will have a notable impact on the global economic scenario and will play a key role in China’s overall strategy for the 21st century.