Greater Bay Area: Ambitions, realities and the position of Hong Kong

Activated with the touch of a button, the flat, round robot comes out of its base station and starts to wipe the floor vigorously with the rotary mops on its underside. Smarter than most of the other similar products on the market, this mopper-cum-sweeper returns to the base station automatically to take a "bath" every now and then, rinsing its mops clean before emerging again to continue working.

"This is the first of its kind in the world. A robot that rinses its own mops and executes fully automated mopping." As he demonstrates how the two water tanks in his robot's base station work, the young entrepreneur explains how dirty water is pumped out on one side while being replaced by clean water on the other. Five litres of water can clean about 300 square metres of floor space. A high-speed rotation of the mops and a firmer, more powerful wipe means that one round of cleaning from this robot is equivalent to three from a human mopper.

At Songshan Lake Xbot Park at Guangdong Dongguan, graphics on the walls shout out the centre's great ambitions: it wants to be the new Silicon Valley, situated in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA).

As it hosts a group of visiting reporters from Southeast Asia, the park shows off many newly developed products, including outdoor robots capable of logistics deliveries and agricultural and security monitoring tasks. Also on display are aquatic sports equipment, such as an electric-powered surfboard.

The Narwel mopping robot demonstrated earlier in the day is a product soon to be released by Narwel Intelligence Technology. The company was incorporated only three years ago. According to Li Youlong, the company's director for overseas markets, crowdfunding was recently sought in the US for the robot, attracting investors from several Southeast Asian countries, including Malaysia and Vietnam with seven coming from Singapore. Narwel will be sold in China by the end of September 2019. By the end of this year, it will be showcased at the Taobao Store at Singapore's Funan Mall. The overseas retail price is about 700 US dollars.

To the enterprising and resourceful, the Songshan Lake Xbot Park is a cradle for entrepreneurship - or, in professional lingo, a start-up incubator platform ("from lab to start-up").

It was Chinese researcher Li Zexiang who spearheaded the creation of this base in 2014, with the support of the Dongguan municipal government and the Songshan Lake Administrative Committee. Mr Li, a returnee from overseas, was a renowned professor at the Hong Kong University of Science and Technology (HKUST) and mentor to Wang Tao, the founder of SZ DJI Technology, a company specialising in the manufacture of unmanned aerial vehicles.

By 2018, the Xbot Park was recognised as China's national model for start-up incubator platforms.

But what exactly does a start-up incubator base do? According to the park's operations director Yang Xi, "What goes on here is really the process of innovating."

Yang explains: "First, you need to have a creative idea. Then you produce a prototype with manufacturing support. Next, you get feedback from the customers and consolidate your data learnings. This is the process of innovation, a continual spiral. You keep going until you find a window for a breakthrough, which means you might have found a good direction for a product. What we hope to do is to provide a good platform to help drive this process."

This start-up incubator base is divided into a research institute, an incubator, and an accelerator. This corresponds to the needs of entrepreneurs at different phases, from the inception of an idea, to incorporation, and finally product launch. The park provides mentoring for entrepreneurs, free first-year office rental, and resource link-ups to supply chains and institutions of higher education. It has its own entrepreneurship fund to invest and nurture promising talent.

"We do all we can to help. We hope to see an international brand walk out of here eventually," says Yang Xi.

The site has incubated more than 50 robotics and smart hardware entrepreneur teams and companies to date, including groups of HKUST graduates. The best of two worlds are combined-the industrial edge of Dongguan's and Shenzhen's manufacturing on the one hand, and Hong Kong's scientific research talent on the other. The park seeks to plug into the world's quality businesses and attract young people from around the world to join its platform.

Close to Hong Kong, Dongguan was once world-famous for churning out low-end products like jeans, electrical appliances, and furniture. It was known as a global base for manufacturing. However, due to the 2008 financial crisis and outsourcing of the manufacturing industry, it has worked to transform itself. The Chinese government has chosen to set up the China Spallation Neutron Source, a world-class scientific facility, in Dongguan. In addition, the outlined plan for the GBA, issued by China's State Council, calls for the development of "a globally influential and competitive cluster of world-class high-end manufacturing industries, such as electronic communications, on the east bank of the Pearl River, with Shenzhen and Dongguan as its core."

All in all, the entrepreneurial atmosphere at Songshan Lake offers a glimpse into the Greater Bay Area's developmental vitality.

At the beginning of this month, the CPC Guangdong Provincial Committee's Office of Cyberspace Affairs invited ten Southeast Asian journalists from Singapore, Malaysia, Indonesia, Vietnam, and Thailand to visit five cities in the GBA.

The "Greater Bay Area" refers to a cluster of cities located along the Lingding Channel of the Pearl River Delta (PRD). This includes a total of 11 cities-the Hong Kong SAR, Macau SAR, and nine cities in the Guangdong Province.

While the idea of pan-PRD regional cooperation was suggested by scholars very early on, it was in 2015 that the Chinese central government spoke of the "Greater Bay Area" for the first time in its official documents. By 2017, the development of the GBA was elevated to a national strategy. In February this year, major strategic orientations were set forth in the development plan for the Guangdong-Hong Kong-Macau GBA. The plan includes the mandate to transform the GBA into "a vibrant world-class city cluster", with "a global innovation and technology hub". It will also be made an important "pillar for the Belt and Road Initiative", a showcase for "Mainland, Hong Kong, and Macau cooperation", and a quality residential area.

The political mission included in the development plan means that the GBA should help facilitate the two SARs' integration into the Mainland. It should help Macau move towards a suitable level of industrial diversification (given that it is currently overly reliant on the gaming industry) and provide Hong Kong's young people with career and entrepreneurial opportunities.

For long-time observers, one development plan after another seems to sweep across China. Nevertheless, there is almost unanimous agreement among interviewed scholars-including Singapore investors-that the GBA is unparalleled among Chinese locales in terms of its level of internationalisation, degree of openness, economic vitality, and transportation conditions.

Zheng Tianxiang, a retired professor from Sun Yat-sen University's Centre for Studies of Hong Kong, Macau, and the Pearl River Delta who has studied Hong Kong- and Macau-related issues for over 30 years, makes a straightforward assertion, noting, "This area has the best conditions anywhere in the country." Its rationale is that in areas such as the Beijing-Tianjin-Hebei Metropolitan Region or the Yangtze River Delta Economic Zone, a single city (Beijing and Shanghai respectively) holds sway, while in the GBA, there are as many as three world-class cities, which can generate many synergies among them. This is a rare configuration.

According to the 2018 ranking of the world's cities by Britain's GaWC, three of the GBA's cities were of Alpha level, with Hong Kong ranked third, Guangzhou 27th, and Shenzhen at 55. To put this in perspective, the top two cities on GaWC's list were London and New York, with Beijing in fourth place and Singapore fifth, followed immediately by Shanghai.

The GBA also has a well developed transportation infrastructure and five major airports (Guangzhou, Shenzhen, Hong Kong, Macau, and Zhuhai), along with a high concentration of institutions of higher education and key state laboratories. The percentage of tertiary industries has reached 65%. The Bay Area's economic aggregate in 2018 stood at 1.6 trillion US dollars. If the GBA were a country, it would be the world's 12th largest economy, slightly ahead of South Korea.

Each of the 11 GBA cities has its own unique position in the central government's plans, with its own developmental focus and mission. Hong Kong, Macau, Guangzhou, and Shenzhen make up the core, while the other seven are node cities.

From the Mainland's standpoint, one cannot help but highlight one of Hong Kong's neighbours on the other side of the bay, Shenzhen. In the 1980s, this forerunner of China's economic reform changed from a small fishing village into an investment hotspot. It lost traction during the early 2000s, but managed to fire up again and become one of China's technology startup and venture capital centres. Many of the most well-known Chinese tech firms, from Huawei to Tencent to the new energy vehicle producer BYD, first started out in Shenzhen. SZ DJI Technology, which was set up there in 2006, commands up to 70% of the global drone market today.

DJI's founder Wang Tao was originally from Hangzhou. After graduating from HKUST's Department of Electronic and Computer Engineering, he came under Li Zexiang's mentorship and started his own business with Li's support. Li Zexiang and his team now lead another incubator base in Shenzhen known as the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub.

When walking around Shenzhen's prosperous districts, visitors can sense the city's optimism and vitality. Iconic buildings reach into the clouds, reflecting the scarcity of land. Shenzhen's population density is the highest in China, reminiscent of Hong Kong. However, Hong Kong's linguistic and cultural homogeneity is not found here. Shenzhen is a migrant city where people converge from many different places to carve out their fortunes. It is also a young city. The average age of its residents is 33, ten years younger than the officially published median figure for Hong Kong's residents.

And the Shenzhen story is still unfolding. Take, for example, Shenzhen's Qianhai New District, which received the central government's support to implement a pilot initiative more privileged than the special economic zones (SEZs). As part of the China (Guangdong) Pilot Free Trade Zone, the Qianhai-Shekou Free Trade Zone was officially established in 2015, and Qianhai is today hailed by the local government as "a SEZ within the SEZ", "the most concentrated and quintessential" core engine, and a "dream factory" for realising the "Chinese dream".

During a talk on a morning visit to the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub, vice-director Wang Jinxia of the Qianhai-Shekou FTZ's Administrative Commission said: "The site where you are now standing was part of the sea just nine years ago. Company registration was permitted here only six years ago. Huge landscape-altering changes have taken place in the past six years. [...] We went from being a part of the sea-from nothing-to completing a most beautiful picture."

Numbers reveal much about the achievements of the Qianhai-Shekou Subdistrict, an area of 28.2 square kilometres. The corporate added value in 2018 from the companies registered here grew by 25.6% to hit 255 billion RMB, while tax revenue saw a year-on-year growth of 30.3% and amounted to 45.6 billion RMB. In the first half of this year alone, the Subdistrict's actual use of foreign capital increased by 12.1% to reach 2.53 billion US dollars, equivalent to 3.7% of China's national figure. The subdistrict has also become the area where cooperation with Macau and Hong Kong is most intensive. Hong Kong-funded companies registered in Qianhai now number about 12,000 and produce about a quarter of the economic aggregate in the subdistrict.

Long-time observers of Shenzhen's development from Singapore's investment community offered an analysis to Lianhe Zaobao. They note that assessing the economic efficiency of a locality requires one to look at the ratio between GDP growth and government revenue growth. This ratio is exceptionally high in the case of Shenzhen. Because of this, the Shenzhen government's revenue is comparable to that of an entire province. Chinese netizens jokingly observe that when consumers around the world purchase Huawei's mobile phones, they are paying taxes to Shenzhen, perhaps illustrating why the local government is not motivated to intervene too extensively in the city's corporate and market development.

There is a romantic air about entrepreneurship in Shenzhen. The city is fond of tossing somewhat literary-sounding slogans around to express its spirit of embracing outsiders completely. Some of the well-known slogans include, "He who comes to Shenzhen is a Shenzhener", or "Thrive and stay put in Shenzhen", and more affectionately, "I'm longing for you in Shenzhen".

Ultimately, the characterisation by an unnamed interviewee says it all. "All the adventurers are in Shenzhen, the ones who made it and the ones who failed. Isn't that capitalism?"

It is often said in Chinese that "ambitions are well-fed, but realities are malnourished". Journeying through Guangzhou, Dongguan, Shenzhen, Zhongshan, and Zhuhai, I have gained a clearer understanding of the geographical demarcations and industries of the Guangdong-Hong Kong-Macau Greater Bay Area. However, it is different from what I'd imagine a world-class GBA to be.

According to the academics I interviewed, the crux of the issue lies in the gap between expectation and reality. The GBA's development may be backed by top-level design from the central government, but this plan is not followed through by the local government. Details are not ironed out, nor are there systematic interconnections.

Prof Zheng Tianxiang, who has advised several local governments on project plans and designs says: "What the central government has provided is just a general conceptual outline. In order to actualise these plans, local governments must do their own planning, and it must be specific and purposeful."

Professor Zheng Yongnian of the National University of Singapore, who frequents the Pearl River Delta for investigation and research, asserts: "Top-level design comes from the central government, but details must come from the local governments. The current system is severely lacking in interconnectivity, and transportation connectivity remains at the physical, superficial level. Take the Hong Kong-Zhuhai-Macau Bridge for example. A mere ten thousand vehicles are licensed to cross the bridge. This figure is statistically insignificant. Can we break even?"

He also points out that the customs, enterprise, and tax systems of Mainland China, Hong Kong, and Macau need standardisation and coordination. Effective new system designs will encourage the growth of new working mechanisms and organic relationships. While the infrastructure development of the GBA in recent years has been impressive, it is "far from enough". Establishment of infrastructure is merely a "physical reaction", not yet a "chemical" one.

Related to the inadequacies of the local government in its planning, but much more problematic, is social unrest in Hong Kong society that lasted from June until now. This has clearly affected the central government's plans for the GBA. Following protests against the extradition bill, the future of Hong Kong turned bleak overnight. The protests have taken a toll on its tourism and catering industries and sent investments out the door.

In the area of high-level policies, the first important change that the 2019 Hong Kong protests have brought about is the central government's full support for Shenzhen in becoming the "pioneering demonstration zone of socialism with Chinese characteristics". This was stated in a document that was released in August. Shenzhen stocks in China rapidly rose, and politically-sensitive investors were quick to catch on to the implicit message that the central government intended to replace Hong Kong with Shenzhen as the leader in the GBA.

Prof Zheng Tianxiang observes that the Anti-Extradition Law Amendment Bill Movement will definitely hinder the GBA's development, delaying the central government's plan to form an "international first-class bay area" and a "world-class city cluster" by 2022. Furthermore, he states that "the initial plan was to merge the GBA with Hong Kong and Macau, under the lead of Hong Kong. This is no longer happening. For Hong Kong to not go into decline is already a miracle. Expecting it to lead the GBA merger is just wishful thinking."

All signs have made clear that Beijing is taking the Hong Kong protests very seriously. The protests are no longer just about the Hong Kongers' displeasure with the Hong Kong government and Beijing. It implicates the whole strategy of China's rise, and the US is already using Hong Kong as a bargaining chip against China, waging another "war" alongside its ongoing trade war.

Prof Zheng Tianxiang points out that Hong Kong is currently facing a "bigger problem" because the China-US strategic competition has entered a new phase. An all-round strategic confrontation has emerged between the two countries, and China wishes to avoid it at all costs. Yet, the situation is pressing, and China has been forced to come up with counter-measures.

He notes that America's last trump card is to annul Hong Kong's status as a separate customs zone from Mainland China. The Chinese government has formulated a two-pronged response to this situation. On one hand, China hopes that America will not annul Hong Kong's status as a separate customs zone and will exercise patience in handling the situation. On the other, China is pushing Shenzhen to advance in areas such as offshore trade, financial centres, and freeport constructions, so that it will not be at the mercy of the US.

Prof Zheng Tianxiang notes that the annual US goods trade surplus with Hong Kong can be as large as HK$240 billion, which is "very painful" for the US as well. He states: "Should Beijing deploy military troops to Hong Kong, the US will then have an excuse to do so. But, China has learnt its lesson. Never will there be another 1989 Tiananmen Square protest." If Hong Kong's status as a separate customs zone is annulled, China is likely to relocate a portion of its trade to Macau.

He says: "In the past, Macau was but a gambling den, but the central government is determined to support Macau. Alongside the four central laboratories that are situated there, the central government is also keeping a close watch on its scientific and technological advancements."

However, Prof Zheng Yongnian believes that with Hong Kong's century-old status as a trading centre and an agglomeration of financial industries inherited from its past colonial government, its status will not be replaced by other cities, and there is no reason for a replacement either. Each is "only complementary" to the others.

When asked if the Hong Kong protests will hinder the development of the GBA, Prof Zheng Yongnian responds: "I don't think it matters. Mainland China must first be open, and I mean, truly open. You can't coerce another to do your bidding, and happiness can't be forced. You should provide people with economic incentives. Suppose there are job opportunities in Guangdong, and people can't find jobs in Hong Kong, I don't believe Hong Kongers will continue to protest. How long can anyone parade? Even in the case of Taiwan, Taiwanese people are flocking to the Mainland. Mainland China should strengthen itself. It should truly open up."

An important mission of the Chinese central government's conceptualisation of the GBA is to provide young Hong Kongers with opportunities for employment and entrepreneurship, but it is obvious that these goals have not been achieved. In this interview, I met Mainland Chinese graduates from the HKUST who were pitching their new products. They admit that very few of their Hong Kong classmates will head to the Mainland to start their own business, as "remuneration is not appealing enough".

Digging deeper into the situation reveals that current average salaries in Hong Kong are still much higher than salaries in Guangdong. In the first half of this year, the preferential Individual Income Tax policies were finally implemented in all nine cities of the Guangdong GBA (tax rates of other regions in Mainland China remained 30 percent higher than tax rates in Hong Kong). Yet, housing policies and social security benefits for Hong Kong youths who have decided to live permanently in China are still inadequate, which explains the low appeal to these young people. On the flip side, this demonstrates the huge potential of the policy.

Considering this, Prof Zheng Yongnian mentioned that Mainland China could launch more targeted policies and incentives that encourage young Hong Kongers to seek employment in the GBA. Years of experience have proven that anything that jeopardises the "two systems" part of the "one country, two systems" constitutional principle is bound to fail. He remarks: "Under these circumstances, changing the 'two systems' is out of the question. We should instead work on what 'one country' can do. This becomes a matter of what we can do to improve, not to weaken."

On the other hand, Prof Zheng Yongnian highlights that the goal of the GBA's development is not a simple integration of these three regions. The ultimate goal is to form an international platform that draws capital from Europe, America, and the rest of the world. "You're at a dead end if you only target Hong Kong and Taiwan. Nobody will come. Fujian's Pingtan County is one example. But, if Europeans and Americans came to the GBA, Hong Kongers and Taiwanese people would be fighting to come. If you were to say it's specially reserved for them, they would think it is a trap instead."

He notes that under good economic conditions, European and American capital "is sure to come". The key lies in real openness, transparency, and the rule of law, not merely theoretical openness.

A Singaporean businessman has shared another anecdote with Lianhe Zaobao. He says that when the central government confirmed Shenzhen as the "pioneering demonstration zone of socialism with Chinese characteristics", the first thought that came to the minds of business executives in Shenzhen was to "visit and study Singapore the following week".

A sudden change in the situation in Hong Kong has resulted in the elevated status of Shenzhen. People with strategic vision are quick to realise that Shenzhen's goal is no longer Hong Kong, but Singapore. In other words, the elites in Shenzhen see Singapore as its top competitor.

In the course of this interview, a few Shenzhen officials told me that Shenzhen is envious of Singapore's public housing policy and is trying hard to emulate it. In fact, it is widespread knowledge amongst Shenzhen's high-level officialdom that Shenzhen is putting forth its best effort to match up to Singapore. With China's national support, can Shenzhen do better and develop faster than Singapore?

A Singaporean businessman paying close attention to the GBA reminds us that Singapore cannot become complacent and remain stagnant. Although Shenzhen is lagging behind Hong Kong in terms of nomocracy and financial systems, if China is forced to build Shenzhen up, the central government may be committed to advancing Shenzhen in terms of nomocracy and transparency, along with other areas, to boost confidence in foreign investments. Similarly, foreign investors may also be forced to place Shenzhen on their list.

He left this journalist with a question, "Shenzhen was already able to attain such a level of development 41 years ago, when China had nothing. Fast forward to China's powerful status today. How far do you think it can go with the GBA?"