After China resumed the exercise of sovereignty over Hong Kong, the special administrative region government decided to brand Hong Kong “Asia’s World City”. The official webpage of the government explains that this position of Hong Kong aims to highlight its strengths in financial services, trade, tourism, aviation and logistics as well as a regional center of international business and a major city in China. It also promises that Hong Kong, as a standard bearer of socio-economic development, will continue to advance.
Fast-forward to late last year; the Shanghai municipal government officially unveiled the city’s Urban Development Master Plan (2017-35) — “Shanghai 2035” in short. This ambitious development plan for the next 18 years prompted me to wonder: What must Hong Kong do to become more than “Asia’s World City”?
“Shanghai 2035” positions Shanghai as a cosmopolitan city and center of international economy, finance, trade, shipping, technology innovation and culture at the heart of a world-class city cluster in the Yangtze River Delta region, as well as a city of historical renown poised to become a global city. According to “Shanghai 2035”, the city aims to build up the basic framework by 2020 for a center of technology and innovation with global influence and basically complete the transformation of Shanghai into a socialist cosmopolitan city and center of international economy, finance, trade and shipping; it also aims to become an outstanding innovative, people-oriented and eco-friendly global city, a socialist modern cosmopolitan city of worldwide influence and appeal.
Since Shanghai has made its action plan for intermediate to long-term development, Hong Kong needs to respond in at least three aspects in order to maintain its competitiveness.
First, Hong Kong should strive to be the heart of the Guangdong-Hong Kong-Macao Bay Area world-class city cluster.
Shanghai’s plan to be the heart of the Yangtze River Delta world-class city cluster faces no systematic obstacle or administrative difficulties. It should be noted that the Shanghai municipal government, while drawing up the “Shanghai 2035”, received guidance from central government ministries and commissions concerned throughout the process, with other local governments in the region also involved. The fact is none of the provinces and cities in the delta has expressed objection to Shanghai being the heart of the region.
Hong Kong has the economic strength to be the heart of the Bay Area city cluster but is separated from other cities in the Pearl River Delta region by ideological differences as well as an administrative boundary. It also faces attempts by the opposition camp and certain members of the law community to derail the co-location arrangement at the Guangzhou-Shenzhen-Hong Kong Express Rail Link terminus in West Kowloon. The high-speed rail line is designed to facilitate Hong Kong’s efforts to integrate its own development into the overall development strategy of the country and the co-location arrangement is crucial to its success.
Second, Hong Kong must strengthen and elevate its status as a center of international finance.
Shanghai aims to become a center of international finance with the renminbi as the main currency for pricing and settlement by about 2020. Considering the renminbi is now in the basket of major currencies known as special drawing rights and Shanghai is backed by the whole Chinese economy, it is expected to become another global financial center like New York City.
Hong Kong can become the next global center of international finance instead of Shanghai if it fully integrates its own economy with the national economy before Shanghai achieves that same goal. And Hong Kong must also adopt renminbi as an official currency. If it insists on limited economic integration with the mainland and the Hong Kong dollar as the only official currency, it can only remain a regional center of international finance at best.
Third, Hong Kong must become a center of technology and innovation with global influence and appeal.
Technology and innovation is the ultimate driving force of economic growth in the 21st century, with artificial intelligence and quantum computing holding more promises than the rest. Hong Kong may have started earlier in AI than the Chinese mainland but Shenzhen is advancing really fast. What is holding Hong Kong back in tech-innovation development is not talent or funding but market size — 7.3 million people living in an area of about 1,100 square kilometers. Even if Hong Kong focuses on research and development with the Pearl River Delta region as its main market, it still has Shenzhen to contend with. At the end of the day, Hong Kong doesn’t stand a chance unless it fully integrates itself with the region.
“Shanghai 2035” is for Shanghai only and does not have Hong Kong in the equation but the world already sees them as competitors whether they admit it or not. The SAR government positions Hong Kong as “Asia’s World City” and recognizes it as “a major Chinese city”, therefore it cannot afford not to care what “the other major Chinese city” — Shanghai — is doing. When Shanghai is determined to become an “outstanding global city” the SAR government and Hong Kong society must make Hong Kong more than “Asia’s World City”.
(The author is a senior research fellow of China Everbright Holdings)
(Published on Page 12, China Daily Hong Kong Edition, January 17, 2018)