Asiaweek.com | ECONOMY: Coming Together

*All figures from 1999

On Feb. 21, the SAR government released a report outlining its vision for Hong Kong's development over the next three decades. A central theme: strengthening links with the mainland, in particular Guangzhou, Shenzhen, Macau, Zhuhai and the other key cities of the Pearl River delta. "The objective should be to successfully create an integrated city-region," says Hong Kong businessman Victor Fung who helped write the report. "The SAR's economy cannot expand indefinitely on its own."

Indeed, local business leaders constantly talk about the prospects for a "Greater Hong Kong," a single integrated market of tens of millions of consumers. Bank of East Asia chief executive David Li Kwok-po has envisaged a "Pearl City," in which a Pearl River Delta Authority administers infrastructure and overall planning. One model could be the New York Port Authority, which crosses borders from New York City into the adjacent state of New Jersey.

Even so, such grand visions and glib talk about regional synergies come up against some hard realities. Though under China's flag, Hong Kong and Macau are separate customs territories. Every resident of the SARs who travels to Guangdong must pass by a customs officer. In many other ways, Hong Kong and Macau function almost as separate countries, thanks to the "one country, two systems" arrangement. Both SARs, for example, have their own currencies, even if Hong Kong dollars are as welcome in Shenzhen as Chinese renminbi notes.

History stands in the way also. For the better part of 150 years, Hong Kong developed politically and even economically in isolation from China. Murray MacLehose, in 1979, became the first British colonial governor to visit the mainland -- and he traveled to Beijing, not Guangdong. The British went to enormous expense and trouble to build an artificial island for a new airport inside Hong Kong borders, rather than take advantage of the abundant, flat land just across the frontier, linked to the territory by an express train.

Tung Chee-hwa, Hong Kong's first Chinese leader, paid closer attention to developing ties with Guangdong. Two days before the territory's mid-1997 return to China, Tung called on Governor Lu in Guangzhou. "We discussed everything from public security and environmental protection to technology development," said Lu. Yet official intercourse remains sparse. The once-bruited semi-annual meetings between Hong Kong Chief Secretary Anson Chan and Guangdong Vice Governor Wang Qishan have not been held since September 1998.

Ma Lik, a Hong Kong delegate to the National People's Congress (NPC), says both local and Guangdong officials may be overly sensitive about "one country, two systems": "Both sides interpret 'non-interference' [in each other's affairs] as being 'no communication.' " Adds Cheng Yiu-tong, another NPC deputy from Hong Kong: "I asked [Tung adviser] Edgar Cheng about cross-border cooperation -- but he had a blank face. It's the same with most civil servants."

A "Pearl River Delta Authority" is unlikely to be formed for a long time to come. For the moment, authorities can point to few concrete, new examples of government cooperation across the border. Hong Kong is lending Guangdong money to upgrade the pipeline through which the province supplies the SAR with fresh water. And the two sides are working together to improve the water quality of the Dongjiang River. Hong Kong purchases most of its drinking water from a mainland state-owned company.

The burning issue of environmental pollution cries out for joint action. Though Hong Kong and Guangzhou set up a joint committee last year to identify problems and recommend solutions, progress has been slow. An official report is not expected until late next year. Deputy director Wang Zikui of the Guangdong Environmental Protection Bureau said recently that it would be another five to 10 years before anyone would see a marked improvement in the air quality of the Pearl River delta region.

Clearly, the first thing that must be done to foster greater economic integration is to improve transportation networks and to streamline customs. The traffic through the Hong Kong-Shenzhen gateway may seem imposing, but the George Washington Bridge linking New York City and New Jersey carries five times as many automobiles a day -- and it's just one of several bridges connecting Manhattan and its environs. Probably the only comparable project is a long-mooted 40-km link across the Pearl River estuary from Hong Kong to Zhuhai.

Another proposed bridge over Deep Bay would allow Shenzhen to direct traffic around the congested inner city, facilitating communication between Hong Kong and Guangdong. Construction of a Shenzhen Western Corridor to provide rail and road links between Yuen Long in northern Hong Kong and Shekou will reportedly get underway soon. A Hong Kong-Mainland Infrastructure Coordinating Committee is billed by SAR authorities as a "useful forum to exchange views," but it has little real authority to formulate plans.

Shenzhen officials are pushing ahead with a new border station at Huanggang (Lok Ma Chau on the Hong Kong side). It would accommodate an additional 250,000 visitors a day. The post would be served by the Kowloon-Canton Railway, which will compete its Lok Ma Chau link by 2004, and the Shenzhen Metro Corp., which plans to open a Huanggang spur in 2003 to its new subway system.

Then there is the problem of processing each individual passing through customs. Currently, the opening hours are from 6:30 a.m. to 11:30 p.m. Establishing a single, 24-hour border checkpoint has recently been under intense debate on both sides. Some influential Hong Kong property developers and retailers are said to oppose the idea because it might mean more people moving to Shenzhen, thereby lowering real-estate prices in the SAR. Even so, insiders predict that round-the-clock passage will become a reality this year. That, plus better transport links, would allow more and more people to live in Guangdong and commute to jobs in Hong Kong. Given adequate highways and reasonable traffic conditions, a person can drive from Guangzhou to Hong Kong island in 90 minutes.

Indeed, Hong Kongers have in recent years begun to eye mainland property as an investment. At Country Garden, a huge residential project in Shunde, 90% of the units have been sold to SAR residents. Prices are a mere tenth of those in Hong Kong.

Since a third of Hong Kong's people still live in public rental housing -- and must wait years to qualify for government subsidies to buy flats -- much cheaper property in Guangdong may seem a godsend. Yet most of the purchases are for second or retirement homes. Hong Kongers are famously reluctant commuters, preferring to live in crowded high-rises closer to the bustle of the city. That may prevent Guangdong from becoming Hong Kong's bedroom community (though, of course, many SAR men have long maintained second families across the border).

Yet a recent survey by the Hong Kong government's Strategic Development Research Fund found that about 18% of respondents aged 51-60, as well as those between 31 and 40, would consider retiring to Shenzhen. Moreover, 15.6% said they would consider moving there within the next ten years. That could translate into a million out of Hong Kong's population of seven million. To meet anticipated demand, the SAR government has already begun to auction land near the border.

Hong Kong has also taken the initiative to attract more talented mainlanders to work and live in the SAR, especially those with skills in the rapidly growing technology sector. Normally 150 "one-way" visas are issued a day for those wanting to settle in Hong Kong permanently. Now, mainlanders with special skills will be admitted on top of that. Says Tung: "Our immigration policy toward China has always been strict. We are adjusting an aspect of it, trying to attract the best brains and talent to join us in Hong Kong." The SAR need not look far. Fully a fifth of China's Ph.D.s work in Shenzhen.

Hong Kong has set its sights on becoming a center of technology, but so has Shenzhen. Will their strategies mesh -- or clash? The SAR may have its Cyber-port, but Shenzhen has its own "Cybercity," owned by Jiang Xiaoming, son of former NPC chairman Qiao Shi. "We may have a less desirable operating and infrastructure environment, but companies wishing to make it in China have to come here to get past policy obstacles," says Andrew Lee, executive vice president of Cybercity. "Even with the supposedly borderless Internet, you still need to be in the mainland to gain access to customers."

Cheng Cheng Wen, chief executive of the Hong Kong Science Park, notes that the average monthly income for technology workers in Shenzhen is only about $500, against Hong Kong's $3,300. "We cannot compete with Shenzhen on the same level. Instead, I look at Hong Kong competing with Silicon Valley." So Cheng sees more synergy than competition between SAR and SEZ. "What Shenzhen is to us is a manufacturing force just 40 minutes away," he says. Turning such promise into reality will thoroughly test business and government leaders on both sides of the border for years to come.

Write to Asiaweek at mail@web.asiaweek.com


Back to the top		© 2000 Asiaweek. All Rights Reserved. Terms under which this service is provided to you. Read our privacy guidelines.