How to deepen ties between Hong Kong and Shenzhen

Zhang Yuge January 01, 2016 08:00

Hong Kong and Shenzhen have achieved huge progress in the scope and depth of their cooperation over the past three decades.

Generally speaking, Hong Kong has played a dominant role in the process.

However, the Occupy Central movement and the debate over political reform have exerted pressure on the Hong Kong government and therefore affected cooperation between the two cities.

Hong Kong officials will take a wait-and-see approach on various initiatives.

As a result, the cooperation between the two cities is likely to be narrowed and slowed down in the future.

At present, any policy initiative proposed by the Hong Kong government will be attacked by opposing political groups.

Also, Shenzhen is playing an increasingly active role on the back of its rising economic power.

The city’s gross domestic product is likely to surpass that of Hong Kong soon.

As a result, Shenzhen is more confident now instead of being passive as in the past.

The cooperation between Hong Kong and Shenzhen is likely to go through a deep correction in the next three to five years. And we might see another breakthrough five years later.

Hong Kong has to realize that the neighboring city is different now, either as a partner or as a competitor.

It should understand and evaluate Shenzhen more objectively.

Meanwhile, there has been some bad-mouthing of Hong Kong in recent years because of rising tensions between the mainland and the city.

In fact, the problems preoccupying Hong Kong have existed for the last couple of decades, and they have not seriously affected the city’s global status and its multi-faceted competitiveness.

While the ranking of Hong Kong on almost all lists in the mainland has been falling, its global ranking has not yet plummeted.

Hong Kong ranks second in the world for competitiveness in the annual IMD study.

And it was ranked seventh as the world's most competitive economy for the third consecutive year in the latest Global Competitiveness Report released by the World Economic Forum.

The US Heritage Foundation has ranked Hong Kong as the world's freest economy for the 21st year in a row.

Clearly, Hong Kong retains its strong competitiveness despite the various issues it faces.

So, Shenzhen may take some time to catch up with Hong Kong, and it can learn from Hong Kong and leverage the advantages and resources of its neighbor during that process.

As Shenzhen moves up the development ladder and optimizes its industry structure, it will rely more on the economic and social resources of Hong Kong.

So, governments in Hong Kong and Shenzhen should strive to deepen their cooperation in the next three to five years.

Cooperation between Hong Kong and Shenzhen should be planned at the state level, comply with national sovereignty and safety, and benefit the overall development of the country.

Meanwhile, both cities play equal roles in their cooperation, and horizontal collaboration will replace the vertical division of the past.

Benefits to each city and mutual benefits will be taken into account.

The economies of both cities will become more interlinked, and they will consolidate resources and factors in an integrated market.

Also, both cities will play key roles in regional technological innovation.

And cross-border services like education, healthcare and financial services will become more popular among residents in both cities.

Multilevel governance in the cross-border region will become dominant, as social organizations, interest groups and residents will all be deeply involved.

Mutual understanding and tolerance will be critical in driving cooperation between the two cities, so as to forge a consensus.

This article appeared in the Hong Kong Economic Journal on Dec. 28.

Translation by Julie Zhu

[Chinese version中文版]

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Zhang Yuge

Director of the Economic and Social Development Research Centre at the China Development Institute