Peter Wong

Macroscope | How the Greater Bay Area can supercharge an economic dynamo

Hong Kong will complement Guangdong under the bay area plan, with the city’s strong banking and financial sectors thriving alongside the province’s hi-tech manufacturing and growing services sector

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A long-exposure photo of boats passing a business area along the Pearl River in Guangzhou, Guangdong province. The Greater Bay Area plan puts Hong Kong in a stronger position to finance and collaborate with Shenzhen’s and Guangzhou’s innovative and internationally minded hi-tech manufacturing and services sectors. Photo: Reuters

Peter Wong

Published: 3:30pm, 6 Mar 2019Updated: 10:24pm, 6 Mar 2019

The Pearl River Delta is at the epicentre of China’s shift towards hi-tech and innovative manufacturing and services, and ranks among the most economically vibrant areas in China – if not the world. Beijing’s unveiling of the “Greater Bay Area” development plan starts the next chapter of this region’s extraordinary story.

The vision is both ambitious and sweeping: its goal is to shift this regional economic dynamo up a gear, creating a powerhouse of global significance by strengthening economic partnerships between nine cities in Guangdong province as well as Hong Kong and Macau, with their respective legal, judicial and financial systems.

Over time, the initiatives that this plan will foster can help to make the regional economy more than the sum of its parts. This makes it one of the most important economic integration initiatives in the world – and a historic opportunity for Hong Kong’s mature service industries to access new growth drivers.

The Greater Bay Area’s success will depend on the ability of talented people to work across the area. Hong Kong’s world-class financial, logistics and professional services specialists could be valuable assets to many mainland enterprises, but many are reluctant to take jobs with these firms because of higher tax rates in Guangdong and the perceived inconvenience of managing personal finances on the mainland.

So expect tax incentives for Hong Kong residents, such as those we already see in the Qianhai free-trade zone, as well as capital account measures to make it easier for them to open a bank account or set up a mobile wallet in Guangdong. The proposed “Wealth Management Connect” scheme could also allow all bay area residents living and working in Guangdong to have access to Hong Kong’s strengths in investment management and financial services.