On February 18, 2019, the PRC central government formally issued the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (the New GBA Plan), which is an important guide to the current and future cooperation and development of the Guangdong-Hong Kong-Macao Greater Bay Area (the Greater Bay Area).
What is the Greater Bay Area?
The Greater Bay Area consists of the Hong Kong Special Administrative Region (Hong Kong), the Macao Special Administrative Region (Macao) as well as the municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province, covering a total area of 56,000 square kilometres with a combined population of approximately 70 million at the end of 2018. As one of the most open and economically vibrant regions in China, the Greater Bay Area plays a significant strategic role in the overall development of the country.
Overall development scheme of the Greater Bay Area
The New GBA Plan outlines the strategic position, development objectives and spatial layout of the Greater Bay Area
- According to the New GBA Plan, there are five strategic positions of the Greater Bay Area as follows: (1) a vibrant world-class city cluster; (2) a globally influential international innovation and technology hub; (3) an important support pillar for the Belt and Road Initiative; (4) a showcase for in-depth cooperation between the Mainland China, Hong Kong and Macao; and (5) a quality living circle for living, working and travelling.
- The development objectives of the Greater Bay Area under the New GBA Plan are: (1) by 2022, the framework of the Greater Bay Area as an international first-class bay area and world-class city cluster shall essentially be formed; and (2) by 2035, the Greater Bay Area shall become an economic system and mode of development supported mainly by innovation, and the Greater Bay Area shall be established as an international first-class bay area for living, working and travelling.
Key points of the new GBA plan
The New GBA Plan covers a wide range of cooperation and arrangements within the Greater Bay Area. There are some key developing sectors to note.
Science and technology innovation
- According to the New GBA Plan, the Greater Bay Area aims to be developed as an international innovation and technology hub.
- Pursuing the development of the “Guangzhou-Shenzhen-Hong Kong-Macao” innovation and technology corridor, exploring policy measures to facilitate the cross-boundary and regional flow of talent, capital, information and technologies, and jointly developing a Greater Bay Area big data centre as well as platforms for international innovation.
- Encouraging the enterprises and scientific research institutes within the Greater Bay Area to participate in international innovation and technology cooperation, jointly organising events on innovation and technology, supporting the enterprises in setting up R&D institutes and bases for innovation incubation overseas, and encouraging domestic and foreign investors to set up R&D institutes and innovation platforms in the Greater Bay Area.
- Supporting the development of the five Hong Kong R&D Centres respectively for Logistics and Supply Chain MultiTech, Textiles and Apparel, Information and Communications Technologies, Automotive Parts and Accessory Systems, and Nano and Advanced Materials, as well as the development of the Hong Kong Science Park and Hong Kong Cyberport.
- Studying and formulating specific policies and regulations to enhance the management of the cross-boundary use of medical data and bio-samples such as blood necessary for R&D cooperation projects in designated higher education institutions, R&D institutes and laboratories in the Greater Bay Area, and fostering the research and development of clinical medicine.
- Enabling Hong Kong and Macao R&D institutes in Guangdong province to enjoy the same treatment as other mainland R&D institutes, including various national and provincial (Guangdong) policies in support of innovation, and encouraging as well as supporting them to participate in technology programmes in Guangdong province.
- Stepping up the protection and exploitation of IP. Better leveraging the roles of institutions such as the Guangzhou Intellectual Property Court, and strengthening law enforcement actions in key fields and sectors such as e-commerce as well as import and export. Strengthening international cooperation in areas such as IP creation, exploitation, protection and trading, and establishing a comprehensive cooperation mechanism for cross-boundary IP cases. Promoting alternative dispute resolution (including arbitration, mediation and consultation) as a means to resolve IP disputes.
- Capitalising on existing trading venues, promoting IP transactions, and fostering a reasonable and effective flow of IP. Initiating pilot projects for the securitisation of IP.
Information infrastructure
- Expanding the bandwidth capacity of broadband internet among Guangdong province, Hong Kong and Macao, and making comprehensive planning for the next generation network based on Internet Protocol version 6 (IPv6). Promoting the development of wireless broadband systems in the Pearl River Delta city cluster, and achieving full coverage of free high-speed wireless local area network in hotspots and along main transport routes within the Greater Bay Area.
- Building smart city clusters, developing information infrastructure facilities including a smart city spatiotemporal cloud platform, a spatial information service platform, and devoting great efforts to develop smart transport, smart energy, smart municipal management and smart communities.
- Enhancing the level of cyber security protection, including strengthening the protection of communication networks, major information systems and data resources, enhancing the reliability of information infrastructure, and raising the level of information security protection.
Insurance and finance
- Supporting insurance institutions in Guangdong, Hong Kong and Macao to (i) cooperate and develop innovative cross-boundary motor vehicle and medical insurance products, and (ii) provide facilitation services such as underwriting, inspection, and claims for cross-boundary policy holders.
- Progressively promoting cross-boundary transactions of insurance products within the Greater Bay Area, and establishing a mechanism for mutual access to capital and products.
- Supporting eligible Hong Kong and Macao insurance institutions in setting up operational institutions in Qianhai of Shenzhen, Nansha of Guangzhou, and Hengqin of Zhuhai.
- Supporting Mainland China, Hong Kong and Macao insurance institutions in developing cross-boundary RMB reinsurance business.
- Exploring the possibility of setting up transaction platforms for with innovative insurance elements for international shipping insurance etc. in Nansha of Guangzhou.
- Supporting Shenzhen to establish an innovative insurance development zone.
- Supporting banking institutions in the Greater Bay Area to conduct the following business: (i) cross border RMB lending and borrowing, (ii) RMB spot or forward foreign exchange, (iii) RMB related derivatives; and (iv) wealth management cross-border agency sales.
- Exploring the establishment of Greater Bay Area international commercial banks in the Guangdong free trade zone to support the development of the Greater Bay Area.
- Permitting the enterprises in the Greater Bay Area to issue cross-border RMB bonds.
- Building Hong Kong as the green financial centre of the Greater Bay Area, and supporting Hong Kong to establish internationally recognized green bond certification institutions.
- Promoting the mutual access and connection among different financial markets and gradually expanding the scale and scope of cross border RMB use in the Greater Bay Area.
- Building Macao as the RMB clearing centre for Portuguese speaking countries and strengthening Hong Kong’s status as the global offshore RMB business centre.
Securities and funds
- Enhancing the leading role of Hong Kong in the financial sector, strengthening and promoting the international financial centre status of Hong Kong, building the investment and financing platform in Hong Kong to serve and support the Belt and Road projects.
- Expanding the cross border investment space for residents/institutions of Hong Kong and Mainland China, and expanding the channel for the residents of Hong Kong or Mainland China to invest into the financial products of each other’s market.
- Progressively promoting cross-boundary transactions involving fund products within the Greater Bay Area, and establishing a mechanism for mutual access to capital and products.
- Supporting Hong Kong institutional investors to raise RMB funds in the Greater Bay Area which are to be further invested into the Hong Kong capital markets, and to participate in investing into PE / VC funds of Mainland China.
- Supporting Hong Kong to develop more offshore RMB, bulk commodity and other risk management tools.
- Furthering Shanghai-Hong Kong Connect, Shenzhen-Hong Kong Connect and the Bond Connect.
- Supporting Guangzhou to perfect its modern financial service system, to establish a regional PE transaction market, and to build a regional transaction centre for equities/properties and bulk commodities.
- Supporting Guangzhou to build a green finance revolution and innovative experimental zone, and to explore the possibility to establish an innovative future exchange with the carbon emission as the first product.
- Supporting Shenzhen to develop the capital markets on the basis of the Shenzhen Stock Exchange, and to further promote its financial innovation.
- Exploring the function of the overseas account (OSA), by referring to the free trade account operated in the Shanghai free trade zone, and actively exploring the convertible path of capital account transactions.
- Supporting the Qianhai Mercantile Exchange under Hong Kong Stock Exchange to build a transactional platform of spot bulk commodities in order to serve the onshore and offshore clients.
Supporting the belt and road initiative
- Refining the pre-establishment national treatment and negative list management approach for foreign investments, and deepening the reform in the business system.
- Supporting Hong Kong to function as a leading international legal services and dispute resolution centre and promoting Macao to act as a bridge to Portuguese-speaking countries.
- Strengthening connections with major economies in the world, attracting investment in advanced manufacturing industries, modern service industries and strategic emerging industries from developed countries, and attracting multinational companies and international organisations to establish their headquarters in the Greater Bay Area.
- Attracting international advanced technology, managerial experience and high-quality talents, support multinational companies in setting up global research and development centres, laboratories and open innovation platforms in the Greater Bay Area.
Our observation
The issuance of the New GBA Plan demonstrates a major step in China’s economic development. The New GBA Plan reflects China’s ambitions for further advancing innovation and technology and is aligned with its Made-In-China 2025 initiative. If the Greater Bay area develops according to the New GBA Plan, it will become a world class city cluster, enjoying same or even stronger competitiveness with other world class rival bay areas in New York, San Francisco and Tokyo.
Since the New GBA Plan is an outline guidance document, we expect that specific implementation measures will be issued by the relevant government authorities in due course. We will keep close watch in this regard and provide updates from time to time.
