21 October 2016
The Hong Kong–Zhuhai–Macau Bridge project will increase business cooperation between Hong Kong and the mainland. Photo: Xinhua
The Hong Kong–Zhuhai–Macau Bridge project will increase business cooperation between Hong Kong and the mainland. Photo: Xinhua

How HK, Macau and Shenzhen can collaborate

Shenzhen, Hong Kong and Macau should explore new ways to deepen cooperation to build four world-class industry clusters — finance, high-tech, high-end logistics and shipping, and modern global professional services — during the period covered by China’s 13th Five-Year Plan of National Development (2016-2020).

On top of that, the three cities should develop into a region with leading global economic power that can gather and make use of the world’s top talents.

First, Shenzhen, Hong Kong and Macau should leverage growth on the “One Belt, One Road” strategy. For example, they should build the administrative headquarters in Qianhai and the operational capital in Hong Kong to attract more funds and a non-official global organization to establish presence in the region.

The region should also develop a yuan-denominated bonds and global equities market, and explore opportunities to build a Silk Road Global Board through the cooperation of the Shenzhen and Hong Kong stock exchanges.

Second, the three cities should enhance financial cooperation and innovation. Shenzhen should try to be the link between the mainland and the offshore renminbi market in Hong Kong and Macau, and test two-way capital flows, including cross-border yuan loans, securities markets, insurance, wealth management, cross-border private equity, internet finance and foreign direct investment.

For example, authorities could expand the coverage of the Shenzhen-Hong Kong Stock Connect to cover fixed-income, bonds and commodities, and explore an industry fund platform that will match Hong Kong investors with start-up companies in Shenzhen.

Shenzhen’s Qianhai should be more flexible in granting cross-border renminbi loans and relax quotas for the Qualified Foreign Limited Partnership program.

Third, the region should build a cross-border “innovation corridor”. Hong Kong has advantages in legal and tax systems as well as education resources that can attract tech firms in Shenzhen to set up R&D centers in Hong Kong and lure overseas talents. That will pave the way to the establishment of a global talent center for information technology, biotechnology and robot industries.

The plan could leverage on the existing Lok Ma Chau-Hetao Technology Park and extend it to connect with the Nanshan Science and Technology Park, Futian Bonded Area and the Kwu Tung North R&D Zone.

Fourth, establish education and healthcare zones in Shenzhen. That would break the existing model of inter-university cooperation between Shenzhen and Hong Kong. Instead, Shenzhen could directly introduce internal management teams and expertise from Hong Kong and Macau, and learn from the example of the Hong Kong University of Science and Technology.

Also, there are excellent healthcare groups in Hong Kong and Macau, which can be introduced into Shenzhen in order to establish private hospitals that can hire international doctors and build a healthcare service center in the Asia-Pacific region.

Fifth, build environment-friendly cities in the region. To this end, authorities should push cooperation between Hong Kong and Shenzhen on carbon trading, and encourage organizations in Hong Kong to join the carbon trading market in Shenzhen voluntarily.

Both governments should work together toward capping carbon emissions.

Shenzhen can also learn a lot from Hong Kong’s public transport system in order to tackle its long-festering traffic jams and excessively fast growth in the number of motor vehicles.

Shenzhen should also plan, construct, complete and release residential units each year to stabilize the housing market.

Sixth, the region should step up efforts in upgrading infrastructure and build a three-tier rail transport system between Hong Kong and Shenzhen, which will include a high-speed railway, an inter-city fast railway and a subway connection between the two cities.

The region should also explore the viability of establishing Shenzhen-based airline joint ventures, and launch more domestic flights from Hong Kong. The Macau airport should position itself as a budget airline base for the Pearl River Delta region.

Seventh, Shenzhen, Hong Kong and Macau should explore a tourism cluster on the current “one trip, several stops” route.

Also, these cities should further simplify entry visas for foreign visitors and explore cooperation on yacht and cruise terminal operations.

Eighth, the three cities should deepen regional integration. For example, investors can invest in a separate company in Qianhai and Hong Kong, and set up a management company in accordance with shareholding structure and investment quota.

The company could explore opportunities in “common development areas” to develop industry clusters, modern professional services, talent training and apartments for the youth in Hong Kong and Shenzhen.

This article appeared in the Hong Kong Economic Journal on Oct. 5.

Translation by Julie Zhu

[Chinese version中文版]

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chief research officer of the One Country Two Systems Institute

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