Opinion – New Greater Bay Area Trends: Hong Kong Losses, Macau Gains and Taiwan Prospects

The ongoing chaos in Hong Kong is arguably leading to Macau’s gains in the new development of the Greater Bay Area (GBA), while Taiwan will increasingly face the pressure from the mainland to join the GBA together with an expanded Fujian-Taiwan economic region in the coming years.

The GBA is an idea that could be traced back to yitihua (one systemization) as early as 1997 when some academics in Shenzhen floated this idea of economic integration between Hong Kong and Shenzhen. However, this idea was premature because most Hong Kong people were just preparing to accept the transfer of British sovereignty in Hong Kong to the People’s Republic of China (PRC) on July 1, 1997.

In 2006, the eleventh Five-Year Plan that was published by the PRC government stressed “multi-tiered” cooperative mechanisms between the mainland, Hong Kong, Macau and Taiwan. Clearly, the central government in 2006 had a rough idea of fostering the economic integration between the PRC, Hong Kong, Macau and Taiwan.

Two years later, the Outline of the Plan for Reform and Development of the Pearl River Delta (PRD) was published, emphasizing the rapid development and cooperative needs of the PRC, which encompasses the cities of Guangdong, Hong Kong and Macau. The idea was to stimulate the PRD development as a precursor to the further integration of the mainland, Hong Kong, Macau and later Taiwan.

The 2008 Outline could be regarded as a warm-up plan to accelerate the development of infrastructure projects from the early 2010s onwards. In 2011, the twelfth Five-Year Plan was published, emphasizing the need to deepen economic cooperation and develop the transport system in the PRC, Hong Kong and Macau Special Administrative Regions. The Outline was a top-down central plan initiated by Beijing to realize the economic integration in Southern China.

In March 2015, the PRC State Development and Planning Commission, the Ministry of Foreign Affairs and the Department of Commerce issued an important document, namely “Promoting and Co-establishing the Silk Road Economic Belt and 21st Century Maritime Silk Road: Vision and Action.”

The document stressed that China must “promote internal and regional comparative advantage, adopt a more active open policy to strengthen east-central-west cooperation, and increase comprehensively the standard of an open-style economy.”

A liberal approach to dealing with economic integration was adopted, emphasizing for the first time the establishment of the GBA, including Qianhai, Nansha, Zhuhai, Hong Kong, Macau and Taiwan. 

It was important to note that Taiwan was originally included into the new idea of the GBA, and that Taiwan was mentioned twice in the 2015 document. The silk road plan also mentioned the need to “promote overseas Chinese and utilize the special advantages and functions of Hong Kong and Macau to actively participate and assist in the construction of One Belt One Road scheme.

We also make proper arrangements for Taiwan region to participate in the Belt and Road initiative.” Therefore, Taiwan was embraced in the original Belt and Road initiative.

In 2016, the thirteenth Five-Year plan was published, encouraging Hong Kong and Macau to “cooperate with the Greater Pearl River Delta” and to “advance the development of Guangdong-Hong Kong-Macau GBA and major trans-provincial cooperation platforms.”

Obviously, Beijing is keen to break down regional barriers in Southern China through the construction of infrastructure projects, notably the Hong Kong-Zhuhai-Macau bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail that would link up Hong Kong with other mainland cities.

Hong Kong was and is expected to cooperate closely with Macau, Guangdong, Shenzhen, Pan-PRD, Shanghai, Beijing, Fujian, Sichuan and other mainland provinces.

The top-down central planning from Beijing eventually led to the signing ceremony between Guangdong, Hong Kong and Macau over the Framework Agreement on the GBA on July 1, 2017, under the witness of President Xi Jinping and the PRC National Development and Planning Commission. 

In August 2018, Han Zheng, the PRC Vice Premier who chairs the Coordination Committee on the GBA, which has the participation of the Chief Executives from Hong Kong and Macau, remarked that Beijing will support Hong Kong to develop into an international innovation and technology center.

He also said that Macau will develop into a center of traditional Chinese medical science and technology. Overall, the GBA will become an innovation center. 

Beijing’s motivations in the development of the GBA were and are obvious. First, it is keen to accelerate the economic integration of Southern China, increasing the competitiveness of both Hong Kong and Macau. Hong Kong’s knowledge-based economy will have to develop further by utilizing mainland talents and by establishing a new scientific research fund.

Macau’s economic diversification away from the dependence on casino industry will benefit tremendously from its closer integration with the GBA, like the creation of a securities exchange center that will help the internationalization of Renminbi. In other words, Macau will become another offshore center for Renminbi internationalization, facilitating the PRC’s economic transactions and interactions with the Portuguese-speaking countries in the world.

Both Hong Kong and Macau will be expected to help the GBA develop into a special powerhouse that will compete with the Tokyo Bay, San Francisco Bay and Silicon Valley.

Second, Beijing intends to minimize provincialism, regionalism and localism through its central leadership and coordination in the development of the GBA. Premier Li Keqiang’s report to the National People’s Congress in March 2018 said that Beijing would coordinate the development of Beijing-Tianjin-Hebei region, the new Xiongan region, the Yangtze Economic Belt, and the GBA.

He added the need to “develop” western regions, “revitalize” the northeast, “promote” the central region, and “support” the eastern region. The GBA, in the minds of Li, will “spearhead the development of the eastern region,” including the prospect of integrating Taiwan into the Fujian and Guangdong developmental provinces.

Third, Beijing wishes to concretize, realize and implement the Belt and Road initiative by using Hong Kong, Macau and the GBA. PRC officials from mid-2017 to June 2019 emphasized the role of Hong Kong as a “window” of China’s modernization, as evidenced by the speeches of Hong Kong Liaison Office director Wang Zhimin in July 2017 and September 2018. Beijing did and does cherish Hong Kong’s monetary, financial, international and offshore Renminbi centers.

However, Beijing’s view of Hong Kong has appeared to be shaken by the 2019 disturbances from June 2019 to the present.

Witnessing Hong Kong as a place where some citizens are not “patriotic” enough, Beijing has already speeded up Macau as a securities exchange center. The National People’s Congress is also considering a proposal from Macau to make the port of Hengqin and its surrounding areas as falling into the jurisdiction of Macau. In other words, Macau is going to have more physical and economic space for development in view of Hong Kong’s ongoing protests and political turbulence.

The message is very clear: Hong Kong’s losses are pointing to Macau’s gains. Hong Kong’s economy is expected to decline gradually. Mainland tourists have decreased significantly, leading to tremendous loss of businesses in Hong Kong. It can be argued that Hong Kong’s economic decline is inevitable and natural. Radical localism in Hong Kong has politically become anti-mainland.

The central government in Beijing does not publicly talk about its retrenchment policy toward Hong Kong. Yet, the extensive mainland media coverage of Hong Kong’s chaos has already deterred many mainlanders from visiting Hong Kong. Mainlanders who wish to visit Hong Kong also find it more difficult to apply for visiting visas than ever before.

The corollary is Macau’s gains. More mainland tourists have been visiting Macau, although their spending power was reportedly not very high on average. Still, so long as the joint Hong Kong-Macau tours from the mainland have declined and/or terminated, Hong Kong’s economic losses are apparent.

What is more, the gradual increase in the supply of land and housing units in Hong Kong from now to early 2030s means that Hong Kong’s economic heydays will gradually be a thing of the past. After all, Beijing as the central government favors a more balanced regional developmental approach to dealing with both Hong Kong and Macau.

Huang Liuquan, the deputy director of the Hong Kong Macau Affairs Office, said on October 2019 that Hong Kong should learn from the developmental experiences of Macau.

In the meantime, the Hong Kong chaos has appeared to slow down the development of the GBA. Still, some mainland cities have been targeting at the Hong Kong people, especially the relatives of Hong Kong police. The city of Zhaoxing has provided housing units and dormitories for police officers and their relatives after retirement – clearly a united front attempt to woo the support of the Hong Kong police force.

Regardless of how long the protests in Hong Kong will last, the GBA aims to have demonstration effects on Taiwan. The GBA will likely be a platform and model for Beijing to integrate Taiwan through a renewed plan of Fujian-Taiwan economic integration. Taiwan was a parallel agenda in the GBA plan in which 31 policy initiatives were already implemented for the Taiwan people to invest, study, work and reside in the mainland. Resident permits for Hong Kong, Macau and Taiwan were issued in the summer of 2018, encouraging the Taiwan people to integrate with the mainland.

Although the ruling Democratic Progressive Party (DPP) opposes integration, still many Taiwan people are pragmatic and realize the tremendous economic opportunities offered in the mainland. Hence, the GBA serves as a magnet integrating not only Hong Kong and Macau but also Taiwan closer into the mainland Chinese economic orbit.

In recent weeks, mainland engineers have discussed the possibility of building three bridges and tunnels linking the Fujian province with Taiwan, enhancing the so-called four links (electricity, water, gas, and bridges). The provision of water supply from Fujian to Kinmen on August 2018 was an attempt by Fujian authorities to show to Taiwan the benefits of integration

Overall, Beijing is adopting a patient attitude toward Taipei. Even though the DPP is likely to win the presidential election in January 2020, the pragmatic economic linkages between Fujian and Kinmen will continue. The temporary termination of the visits of mainland tourists to Taiwan is a deliberate attempt by the mainland to show the harmful effects of Beijing’s economic boycott on Taipei. The idea is to strengthen the image of tremendous economic benefits to the people of Taiwan through closer economic integration between Taiwan and Fujian-GBA regions.

In short, Hong Kong’s ongoing political turbulence has already harmed the city’s economic development. At the same time, Beijing continues with its policy of facilitating Macau’s economic integration into the GBA, regardless of the relatively slow process of Hong Kong’s integration with the GBA. Taiwan is obviously the next target of Beijing’s economic integration.

In December 2018, President Xi Jinping emphasized the need to enhance interactions with Taiwan and he has recently stressed the use of the “one country, two systems” principle. Although the DPP in Taiwan rejects the formula of “one country, two systems,” the PRC is likely exploring a unique model of “one country, two systems” tailored for Taiwan, as seen in the ongoing Fujian-Kinmen infrastructure integration projects and plans. Hong Kong losses point to Macau’s gains, economically, and Taiwan will become the next economic target sooner or later.