GREATER BAY AREA: a 2030 OUTLOOK Opportunities and Challenges Over the Next Decade

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GREATER BAY AREA: a 2030 OUTLOOK Opportunities and Challenges Over the Next Decade GREATER BAY AREA: A 2030 OUTLOOK Opportunities and challenges over the next decade 1 SUMMARY & RECOMMENDATIONS The Greater Bay Area (GBA) is a national initiative highlighted in the Chinese government’s 13th Five Year Plan, aiming to build a globally competitive mega-region, and by 2035, build a productivity cluster, serving as a key facilitator of the Belt and Road Initiative. The Chinese term for a mega-region, 城市群, translates to cluster of cities, and may serve as the most appropriate definition in the context of the GBA. Opportunities: While Hong Kong SAR*, Shenzhen and Guangzhou shall become the future key office clusters for the GBA, we forecast that there could be a total of 21 million sq metres of office space needed given the forecasted economic growth and the prolonged decentralisation trend. The improved connectivity of the cities’ ports, which are three of the world’s top 10 largest, should result in synergies to facilitate further growth. Challenges: The differences between the Hong Kong and Chinese economic systems, legal structure, and labour costs may become a challenge to attract the right balance of skilled labour into the GBA. Meanwhile, the cost of commuting across cities still exceeds that of intracity travel. Bridging these gaps will be crucial to unlock the untapped potential for the next stage of economic development in the GBA. Notes: *Hong Kong Special Administrative Region of the People’s Republic of China 2 The GBA comprises nine cities in the Guangdong province (Guangzhou, Shenzhen, Zhuhai, Dongguan, Huizhou, Jiangmen, Zhongshan and Foshan) as well as two Special Administrative Regions (SARs) (Hong Kong and Macau). The GBA is set to drive the Chinese economy together with the mega regions including Jing-Jin-Ji area surrounding Beijing and the Yangtze River Delta region surrounding Shanghai, and compete with other mega-regions globally including the Tokyo-Osaka mega-region in Japan, Northeast Corridor of the United States and San Francisco Bay Area. The GBA encourage the flow of young, talented workers into the tech sector as well as more general research and development activities, distinguishing itself from by forming a mega region around one dominant hi-tech productivity cluster. 3 4 CONTENT CHINA’S NEXT ENGINE 6 OF ECONOMIC GROWTH PRODUCTIVITY CLUSTERS 9 VS MEGA-REGIONS HOW DOES THE GBA 11 STACK UP? OPPORTUNITIES 16 RISKS 20 5 CHINA’S NEXT Chart 1: The Greater Bay Area Road Map ENGINE OF JUN 2004 The first Pan-Pearl ECONOMIC GROWTH River Delta Regional Cooperation and Development The Greater Bay Area (GBA) is a national initiative Forum held highlighted in the Chinese government’s 13th Five-Year APR 2010 Plan aimed at building a world-class city cluster in Southern Study on the Action Plan China and a key facilitator of the Belt and Road Initiative - for the Bay Area of the the 21st century maritime Silk Road designed to enhance Pearl River Estuary was China’s trading network. The region comprises nine cities commenced in Guangdong province (Guangzhou, Shenzhen, Zhuhai, Dongguan, Huizhou, Jiangmen, Zhongshan, Foshan and MAR 2015 Zhaoqing) as well as the two Special Administrative Regions The GBA plan was (SARs) of the People’s Republic of China, Hong Kong and formed in the Belt Macau. The initiative was signed with President Xi Jinping as and Road Initiative a witness in July 2017 and was followed by the release of the conceptual framework Outline Development Plan in February 2019, which identifies the proposed role of each city in the GBA, and the release of the three-year action plan in July 2019, which details 100 MAR 2016 GBA was highlighted measures in nine key action areas as shown in Chart 2. in China’s 13th Five-Year Plan Under the three-year action plan, by 2022 the GBA is planned to be an incubator for world-class innovation, have MAR 2017 the infrastructure to facilitate the smooth flow of people and GBA was mentioned goods and improved liveability. Under the plan, the GBA is at the 12th National planned to be a globally competitive mega-region by 2035. People’s Congress As part of the jigsaw of the GBA plan, the Chinese government of the PRC further announced its plan in August 2019 to make Shenzhen JUL 2017 Framework a model city for China and the world. Agreement on GD M HK Deepening Guangdong- Hong Kong-Macau Cooperation in the GBA Cities in Tiers Development of the Bay Area signed OCT 2017 GBA was emphasised at the 19th National Congress of the Communist Party of China Zhaoqing FEB 2019 Guangzhou Outline Development Huizhou Plan for the GBA released Foshan Dongguan Zhong- Shenzhen shan Jiangmen Zhuhai Hong Kong Macau JUL 2019 GBA three-year action Core Cities Tier 2 Tier 3 plan released 6 Chart 2: Summary of the GBA Three-Year Action Plan (2018-2020) that released in July 2019 Optimizing 1 Establishing an 2 Establishing 3 development international innovation a modern structure and technology centre infrastructure system • Supporting the cooperation • Developing R&D and an • Developing and improving of urban and rural development international innovation and regional transport and logistics technology centre infrastructure • Supporting the development of digital world • Developing a high-level platform • Enhancing the efficiency and for innovative technology lowering costs for regional information transmissions and communications • Ensuring the quality and stability of natural resources Developing a globally 4 Promoting the 5 Developing a 6 competitive modern development of quality circle for living, industrial system ecological civilization working and traveling • Expanding modern • Strengthening the • Supporting the exchange of servicing and insurance supervision of air, culture, education, and talents industries water and land pollution • Providing incentives and • Collaborating with Hong • Establishing a green taxation subsidies for young Kong to develop an demonstration zone professionals from Hong Kong international financial hub and Macau in GBA • Supporting the • Developing the ocean- transformation of • Enhancing cooperation of the based industry green economy development of the medicines and insurance industries Accelerating the 7 Developing a 8 Safety 9 open up of business pan-Guangdong-Hong measures and economy Kong-Macau cooperative development platform • Deepening the development • Supporting the collaborative • Encouraging public of the business environment development of Hong Kong engagement and Free Trade Zones and Shenzhen’s innovation and technology industry • Strengthening the • Accelerating free trading operational coordination and investment convenience • Supporting the collaboration between Hong Kong, Hengqin, • Setting risk control policies • Facilitating the Belt and Macau and Nansha Road Initiative • Strengthening the modern servicing industry in Qianhai 7 Chart 3: GBA cities’ positions and roles GBA Cities in Tiers: Core Cities Tier 2 Tier 3 Guangzhou A leading state-level city of political, economic and cultural hub Huizhou, Zhaoqing Jiangmen, Zhaoqing Zhongshan, Foshan Guangzhou Clean energy and Huizhou green agricultural Transport, garment, production centre pharmaceuticals, food and Foshan Dongguan beverages and high-end equipment Zhong- Shenzhen and high-tech shan Dongguan Jiangmen manufacturing hub Hong Kong Electronics Zhuhai Macau and high-end manufacturing centre Macau, Zhuhai Hong Kong Shenzhen Tourism and leisure hub, electronic and International financial, Innovation and technology bio-pharmaceutical centre shipping, trading and hub, R&D centre aviation hub The heart of the GBA initiative is the development of a Chart 4: Mega-regions in China: productivity cluster amongst the four core cities: Hong GBA – Jing-jin-ji – Yangtze River Delta Kong, Shenzhen, Guangzhou and Macau. Whilst the productivity cluster should emphasize intercity corporation, it should also be supported by hubs specializing in financial services, logistics, transport and tourism. The other cities, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing should feed off of the strength of the core cities and specialize in high-value-add manufacturing, pharmaceuticals, energy and other industries supporting Jing-Jin-Ji the development of the core productivity cluster. These cities plan to be connected through a vast investment in infrastructure to facilitate the free-flow of people between Yangtze cities, as the collective strengths of each centre synergize River Delta to spur economic growth in the mega-region. The aim of the Chinese government is to leverage the development of the GBA, and along with China’s other mega-regions, the Greater Bay Area Jing-Jin-Ji and Yangtze River Delta, to support broader national economic growth and development. 8 PRODUCTIVITY CLUSTERS VS MEGA-REGIONS The GBA initiative aims to form a productivity cluster The spillover effects may be even more impressive. Despite around the four core cities, which should act as a nexus only employing about 1,500 employees in 2010, according to in the development of the broader mega-region. The University of California Berkeley Professor Enrico Moretti, formation of a productivity cluster is key to the success Facebook apps have created at least 53,000 new jobs and of the broader initiative, but what exactly is a productivity indirectly created an additional 130,000 in the services sector2. cluster, and how does it differ from a mega-region? Chart 5: Production cluster – multiplier effect Productivity clusters The concept of a productivity cluster is fairly straightforward. It is a concentration
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