Why Guangdong-HK-Macau Bay Area matters to ASEAN nations

September 07, 2017 13:09
Hong Kong has established a ministerial conference with ASEAN nations since 2016, strengthening its close ties with the booming region. Photo: ASEAN

Since Chinese Premier Li Keqiang put forward the idea of developing a city cluster in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) in March 2017, the concept has gained increasing momentum over the past months.

Originally discussed as a regional initiative, the concept was mentioned for the first time in the premier’s annual work report, which signals the central government’s endorsement as a national strategy in the next decades.

Like the world’s other major bay areas in New York, San Francisco and Tokyo, China’s version of GBA aims first and foremost to promote internal development.

The GBA is essentially an integration plan encouraging economic cooperation between the two special administrative regions of Hong Kong and Macau as well as nine cities in Guangdong province (Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Huizhou, Zhaoqing and Jiangmen).

The idea is to develop a city cluster that could rival the world’s major bay areas through integrated and coordinated development in infrastructure, services, finance, innovation and technology, etc.

But what makes China’s GBA unique is the external objectives that it bears for China’s place in the world.

Following the setting up of special economic zones in 1970s, its entry into the World Trade Organization in 2001 and the establishment of free trade zones in 2013, the GBA marks China’s fourth step in opening up to the world.

Meanwhile, the GBA is also expected to serve as a key portal in support of the One Belt One Road initiative. There has been internal competition within China among different regions in pushing forward the initiative, and the central government’s approval of the GBA plan could be seen as a recognition of its unique status in the country's broader engagement with the world.

Therefore, the GBA initiative matters not only to China but also to the external stakeholders, in particular the members of the Association of Southeast Asian Nations. Here is why.

First, the GBA could be used as a bridge between ASEAN and China.

Geographically, the Pearl River Delta (PRD) where the GBA lies is close to ASEAN countries, and it is economically and culturally connected to the Southeast Asian region. For ASEAN, the PRD has long been a major entry point into the Chinese market, and China has been taking advantage of developments in the PRD to tap into markets in Southeast Asia as well as South Asia. The GBA initiative will certainly consolidate the PRD's position as a gateway between China and ASEAN.

Secondly, ASEAN countries could share growth and development opportunities in the GBA.

China has put in place a Closer Economic and Partnership Arrangement with Hong Kong and Macau since 2003, and a free trade zone with ASEAN was also established in 2010. As Hong Kong is expected to sign a free trade agreement with ASEAN by the end of 2017, a "10+1+1" free trade zone is on the horizon, which will open a new corridor for trade and investment flows between ASEAN and GBA.

Moreover, since the GBA plan is designed to be the guiding development strategy for the region in the next decades, it provides huge potential for growth and development opportunities that ASEAN countries could also capitalize on.

A recent example is China’s decision to open its doors to Filipino domestic helpers, a large proportion of whom are expected to work in Guangdong.

Last but not least, some ASEAN countries could also benefit from industrial upgrading in the GBA.

The GBA has been the "world factory" with a highly developed manufacturing industry. But as the population is aging and labor costs are rising, the world’s workshop is also facing significant challenges. Recent years have seen a gradual shift of some manufacturing sectors from the PRD to Southeast Asian countries.

It is within this context that China put forward the GBA initiative with a view to upgrade its economy to a technology and innovation-driven one. As the GBA moves up the industry chain, this process will create more opportunities for the manufacturing industry in some ASEAN countries.

A prospective process of technology transfer from the GBA to ASEAN countries could also follow to spur growth in the region.

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The Greater Bay Area initiative can capitalize on China's existing economic partnership with ASEAN nations, such as the annual China-ASEAN Expo. Photo: Xinhua
Chief Executive Carrie Lam calls on Thai Prime Minister Prayut Chan-o-cha during her visit to Bangkok in August. It was one of her first two official visits, both to ASEAN countries. Photo: GovHK
The Hong Kong government opens an economic and trade office in Jakarta in July. It has also opened similar office in Singapore, and will open another one in Bangkok. Photo: GovHK

Assistant Professor, Guangdong University of Foreign Studies