The long-awaited Guangdong-Hong Kong-Macau Greater Bay Area (GBA) masterplan was released on February 18, 2019. As had been expected, the 59-page English translation reads like a broadly ambitious guide to how the region is expected to develop over the coming years, leaving more specific implementation details to be fleshed out by local authorities, albeit under the guidance of the central government.
Although short of detailed prescriptions, the document provides a glimpse into how quickly the region is likely to change in the coming years: by 2035, nine Guangdong cities plus the Hong Kong Kong and Macau SARs (“9+2”) should be the world’s leading “bay area”. This would involve roughly doubling the region’s GDP over the next 15 years, thereby surpassing Greater Tokyo, Greater New York and Greater San Francisco.
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Chinese media were awash with glowing reports yesterday trumpeting a milestone in the Fortune 500 global rankings. For the first time, there are more Chinese companies on the list than American: 129 to 121. What we find most interesting on the list is the presence of 20 companies from the Greater Bay Area.
Below is a snapshot of how Chinese companies grew on the Fortune 500 over the past 20 years.
The prestigious Fortune China 500 list has been released for 2019, with GBA companies standing out in measures of both revenues and profits. Shenzhen-based Ping An, which began as an insurer but is now more of a fintech firm, is the GBA’s leading light, ranking No. 4 in revenues and No. 6 in profits nationwide.
A total of 86 from the GBA made the top 500. Moreover, 12 of the top 40 most profitable were from the GBA.
Guangdong’s governor, Ma Xingrui, gave a press conference today at which he said the province’s GDP is expected to grow to more than RMB10 trillion this year. It is the way this will be achieved, rather than the number, that jumped out at us, however. He said the province will continue to “open up its market to the outside to strengthen its competitiveness”, and his No. 1 priority for the coming year is to build the Greater Bay Area by “finding solutions for cross-border issues, meeting international trade rules and facilitating the easy flow of capital, talents, goods and information within the GBA”.
Priority #2 to #5 were more interesting for a domestic audience: propelling innovation, investing more in the countryside, promoting Lingnan culture, and protecting the environment.
Priority #6 was more intriguing: To optimize the rule of law and internationalization, build a good business environment, and create the most secure, stable, fair, and legal environment in the country.
The Greater Bay Area’s economic development model should not be other so-called “Bay Area” economies such as Tokyo, New York and San Francisco. It would be better to look at South Korea in the short term and Germany in the longer term. This is the view of Michael Enright, the Hong Kong University professor who is widely acknowledged as the leading international expert on the region’s development.
Speaking at an event organized by Amcham South China in Guangzhou today, Enright painted a bullish picture of the GBA’s future. When one looks at the resources available here, the connectivity that has been built between the region’s cities, and policy changes under way, he sees a unique opportunity for international investors. “The GBA will be a bellwether for the future of the world economy,” Enright said. “It will be at the center of the global economy. Not being here at this time. would be worse than having not been in Germany [in the post-war period].”
South Korea is the more rational choice for a role model in the near term, however, Enright said. Like that country, the GBA has an integrated economy where multinationals can locate: world-class finance and HQ operations, next to world-class R&D facilities; next to advanced manufacturing facilities; next to world-class logistics facilities; next to a consumer market of nearly 80m people. And now it is getting a turbo-boost from infrastructure development that is bringing travel times for goods and people into a range that will facilitate strong growth going forward.
Will the GBA double its GDP by 2030, or by 2035? The question is moot, Enright says. It will happen, just as it has happened everywhere else in the world that has faced a similar development path.
We will have a follow-up interview with the professor in the near future. In the meantime, check out his consulting company page .