In his budget speech last week, Financial Secretary Paul Chan Mo-po stressed that Hong Kong must seize the opportunities presented by the Guangdong-Hong Kong-Macao Greater Bay Area initiative.
As he put it, the Bay Area is home to 68 million people with a total GDP output of US$1.4 trillion. Given that, he believes the area would prove an enormous and untapped market for Hong Kong’s financial and high-end service sectors going forward.
Secretary Chan may be right about the market potential of the Bay Area, which in time, according to Beijing’s blueprint, may become as successful as the Tokyo and New York Bay areas, or even surpass them.
However, before the Bay Area can truly bear fruit, there is one critical issue that needs to be resolved promptly, which is, the question of “One Country Three Systems” of the Bay Area, since the Guangdong province, Macao and Hong Kong have so much difference in terms of their social and economic systems, their law, currencies and customs policies.
To address this fundamental issue, it would not only take the resolve and intelligence of our Beijing leaders, but also the willingness and determination among the Guangdong, Macao and Hong Kong authorities to set aside their localist mindset so that the three places can coordinate their development efforts efficiently and complement one another in the days ahead.
Observers have suggested that a high-level standing body be established to coordinate the development efforts of the Bay Area.
One of the imminent issues that Beijing and the Hong Kong government must work out is whether Hong Kong will have to contribute part of the revenues it generated from the Bay Area to the central authorities as tax in the future like the nine Guangdong cities in the area will have to.
This question has raised considerable concern in Hong Kong society since under Article 106 of the Basic Law, the HKSAR is entitled to the right of collecting and keeping all of its taxes and doesn’t have to contribute a penny to the central government.
And that automatically begs the question: does the Article apply to the city’s investments in, and the revenues we are going to make from, the Bay Area as well?
Secretary Chan has pointed out that currently a lot of Hong Kong people are already working and living in the so-called Bay Area.
He is confident that the opening of the Hong Kong-Zhuhai-Macao Bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) this year will enable more young Hong Kong people to pursue careers in the Bay Area.
However, a poll conducted last November seemed to suggest otherwise. According to its findings, at least over half of the young people in Hong Kong haven’t paid any attention to the development of the Bay Area project.
Even among the Hong Kong youth who are now studying or working in the Guangdong province, nearly 60 percent haven’t even heard of the project at all, which calls into question whether the Bay Area is really as appealing to young career seekers from Hong Kong as Secretary Chan thinks.
That said, it appears the government will have to substantially step up efforts at promoting the Bay Area project among Hong Kong people, as the area would otherwise hardly draw any talent from our city in the future.
In order to encourage more young people to pursue careers in the Bay Area, chairperson of the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), Starry Lee Wai-king, has put forward some pretty bold ideas.
For example, she has proposed that the Hong Kong government rent a piece of land in Zhuhai, on which a “Hong Kong Village” will be built in order to provide homes for Hongkongers working or studying in the Bay Area.
She has also suggested that Beijing should ease the existing regulation on income tax rates applicable to Hong Kong citizens working in the mainland so that in the future their income taxes will be calculated according to Hong Kong’s tax rates rather than those of the mainland.
Meanwhile, she has also recommended that Beijing issue special ID cards for Hong Kong citizens working and studying in the mainland.
Ma Huateng, chairman and CEO of Chinese tech giant Tencent, too, has put forward some similar suggestions over special arrangements for Hongkongers working in the mainland.
As far as tax is concerned, Wang Ruijun, director of the Guangdong Science and Technology Department, also suggested that Hong Kong citizens working in the Bay Area be offered special concessions.
These suggestions might be both well-intentioned and feasible, but they might also raise complicated issues that need to be dealt with.
For instance, should buyers be subject to mainland or Hong Kong laws when they purchase properties in the “Hong Kong Village” in Zhuhai?
The Bay Area project will undoubtedly provide huge business opportunities for Guangdong, Macao and Hong Kong.
However, in order to achieve a win-win situation, authorities in the three places must come up with solutions to the challenge posed by “One Country Three Systems” so as to facilitate “organic synergy” among the “9+2″ cities in the Bay Area.
This article appeared in the Hong Kong Economic Journal on March 5
Translation by Alan Lee
[Chinese version 中文版]
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