Beijing has ostensibly Okayed the blueprint to create the much-awaited IT-driven economic powerhouse – Greater Bay Area (GBA) – in southern China, which would rival San Francisco’s Silicon Valley and the bay areas of New York and Tokyo.
Guangdong-Hong Kong-Macao GBA is Xi’s another grand plan to link Hong Kong and Macao – the two Special Administrative Regions of China – with nine cities of Guangdong province, establishing a mega science and technology hub by 2035.
The stupendous zone covers 56,500 square kilometers and has a combined population of about 67.6 million people. The total GDP of GBA was estimated at $1.8 trillion in 2017. China is expected to release the documents on February 21.
In October 2017, President Xi inaugurated the world’s longest cross-sea bridge that connects Hong Kong and Macao with Guangdong. The 55-km bridge took at-least 15 years in makings and was completed at the cost of $18.3 billion.
Being the world’s No. 1 cargo center with a global share of 40%, the role Hong Kong will be crucial in the success of China’s economic plans – as it is the most open and international territory in the region.
Once the 99-year lease of the New Territories expired – Britain handed over Hong Kong to China in July 1997 after 150 years of colonial rule, making Hong Kong a Special Administrative Region (SAR) of People’s Republic of China (PRC).
Hong Kong is governed under the principle ‘Once Country, Two Systems’, under which China provides Hong Kong a greater degree of autonomy in all matters except for defense and foreign issues for 50 years from the date of the handover.
The economy of Hong Kong is externally oriented and is highly dependent on the rest of the world. Hong Kong is largely a service-oriented economy, with services sector accounting for more than 90% of the GDP.
With a tiny population of around 7.5 million people – its GDP was $341.2 billion in 2017, more than Pakistan that houses more than 200 million people. Hong Kong’s exports in the first eleven months of 2018 totaled $489.6 billion.
Ranked #1 for the 24th consecutive year by The Heritage Foundation’s 2018 Index of Economic Freedom, Hong Kong is the world’s freest economy. The little tolerance for corruption and transparency has boosted the government integrity in the country.
Due to its strategic location, well-developed infrastructure, and effective international communication network – Hong Kong plays a key role in the trade between Mainland China and the rest of the world.
According to the China Customs, it was also the second-largest exports destination for China in 2018 – accounting for more than 12% or about $302.1 billion of total Chinese exports, behind the haughty Sino economic rival, the United States ($478.4bn).
Most of the Chinese goods exported to Hong Kong are re-exported to other countries. In 2017, the value of goods exported through Hong Kong from and to China was valued at $435.9 billion – nearly 89% of its total re-exports.
Hong Kong does not subsidize its exports. There is no tariff on the goods entering the partially-autonomous country. In 2017, only 1.2% of all the imports (four groups of commodities) were subject to excise duties.
Since the reforms and opening-up of the Mainland (China) – its share of Hong Kong’s global trade has soared significantly from 9.3% in 1978 to 50.2% ($530.7bn) in 2017. China has been Hong Kong’s largest trading partner since 1985.
UNCTAD’s World Investment Report 2018 said that FDI inflows in Hong Kong totaled $104 billion in 2017, second-largest in Asia and third-largest in the world. The United States ($457bn) and China ($136bn) charmed FDI the most.
Hong Kong is the largest source of China’s realized foreign direct investment, with 53.1% of the national total or $1.1 trillion as of 2017. Hong Kong’s major investments are directed towards Guangdong, with estimated cumulative value of $255.9 billion.
As of June 2017, a total 154 Chinese companies had their regional headquarters in Hong Kong in addition to another 196 companies which also had set-up their regional headquarters in Hong Kong to oversee business activities in the region.
As of December 2017, Hong Kong’s stock market was ranked third (3rd) in Asia and sixth (6th) globally in terms of market capitalization – estimated at $4.35 trillion with 2,118 companies listed on Hong Kong Stock Exchange (HKEx).
Hong Kong also jumped two placed to become world # 3 global banking and financial center – five points behind the top New York and just three points behind London, according to GFCI 24 ranking and ratings released in September 2018. Some 22 out of 155 licensed banks in Hong Kong are from Mainland China.
The country’s Hong Kong International Airport is the world’s busiest airport for international cargoes since 2011. As of 2017, it also had the world’s fifth-busiest container port, in terms of container throughput.
Hong Kong, however, is being caught in the fraught Beijing-Washington relations as the 90-day truce from December 1 is yet to result in any kind of settlement between the two countries. And the situation is likely to worsen in the backdrop that the United States sees it as China’s plan to catch-up America.