Recently, the Communist Party of China Central Committee and the State Council issued plans for building Guangdong-Macao in-depth cooperation zone in Hengqin and further developing Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. These cooperation zones can breed innovation, lead development in industries, and bring new job opportunities to young people.
To understand the significance of the Guangdong-Macao in-depth cooperation zone in Hengqin and the Qianhai Shenzhen-Hong Kong modern service industry cooperation zone, we interviewed Li Chen, an associate professor at the Centre for China Studies, The Chinese University of Hong Kong, to share his views. He has published many research results on China's economy, and is also a research fellow at Lau Chor Tak Institute of Global Economics and Finance.
Qianhai and Hengqin to try out reforms and make breakthroughs
GDToday: The plan for Qianhai proposes to innovate a governance model, further open up legal affairs and promote high-level participation in international cooperation. What do you think these mean for deepening reform?
Li Chen: I think the Chinese mainland, and Hong Kong and Macao should learn from each other about social governance. For example, when fighting against COVID-19, the Chinese mainland has shown its grassroots units’ mobilization and response capabilities. At the same time, Hong Kong and Macao have rich experience in providing efficient metropolitan social services, with a mature ecology of social organizations operating under a high standard of transparency and professionalism.
The Qianhai and Hengqin can serve as a bridge to facilitate such two-way learning in social governance. By promoting this two-way learning, the cooperation zones can be a new model to enrich the practice of "one country, two systems".
GDToday: How do you think Qianhai and Hengqin will help the GBA play a greater role in the "dual circulation" development pattern?
Li Chen: The GBA has unique advantages and strategic importance in bridging the domestic and international circulations. For Hong Kong and Macao, the GBA development initiative is an ideal opportunity for them to better integrate into the domestic circulation; for the nine cities in Guangdong, the GBA development initiative can further enhance their capabilities to participate in international circulation.
However, there are potential risks in the financial sector that need to be managed effectively in the process. So, we need Qianhai and Hengqin to try out reforms and make breakthroughs. They can perform the functions of exploratory policy experimentation, manage risks while promoting innovation, and serve as a model to encourage other regions in the GBA to learn.
Forge competitive and integrated regional supply chains across GBA
GDToday: According to the plan, Qianhai will advance the development of the modern service industry. What kind of development do you think Hong Kong and the mainland will achieve in this kind of cooperation?
Li Chen: I think that cooperation in the modern service industry should really be the focus of the next stage in developing the GBA. We should evaluate where the strengths and weaknesses of each place are, and explore how to cooperate more effectively. The strengths of GBA cities in Guangdong can complement Hong Kong's weaknesses in economic structure, technological innovation capability, and the government's coordination capacity. On the other hand, the shortcomings in Shenzhen, such as the low degree of capital market openness, and the shortage of high-end educational and medical expertise, can be complemented by Hong Kong.
Since each GBA city has its supply chain, we should forge more competitive and integrated regional supply chains of modern services industry across GBA in the future, with higher degrees of specialization and more sophisticated division of labor among cities.
GDToday: The plan for Qianhai proposes to expand the opening-up of the financial sector, and the plan for Hengqin also proposes the development of a modern financial industry. What do you think these policies mean for Hong Kong's financial industry?
Li Chen: Hong Kong is a leading international financial services center. It is the world's largest and most crucial offshore RMB business hub. Given the tensions in the US- China relations, Chinese companies’ offshore listing, and financing demands will be increasingly met in Hong Kong instead of other markets, further strengthening Hong Kong's competitive position.
Given the growing demand for offshore investment and financing services by Chinese companies, it's worth exploring the possibilities to let some other cities in the GBA, such as Shenzhen and Zhuhai, or cooperation zones such as Qianhai, expand into offshore financial services under some forms of "regulatory sandbox" in collaboration with Hong Kong. In the future, it is possible to develop a broader regional supply chains of off-shore financial services with the participation of more cities under prudent regulatory oversight.
HK youth advised to explore chances in new industries in GBA
GDToday: There is a saying that Hong Kong's financial industry does not provide enough job opportunities for local young people. Do you think this problem really exists? If so, how to alleviate this problem? Is the cooperation zone a better place for young people to develop?
Li Chen: There are many exciting career opportunities in the financial industry or other high-end service industries. The issue is whether young people in Hong Kong are well prepared for these opportunities. To be successful in Hong Kong's financial services industry, young professionals need to deeply understand Chinese business environment and be able to communicate their understanding with global markets effectively. Some young people in Hong Kong may lack the vision and commitment to gain such understanding and capabilities.
Therefore, it's vital to strengthen education on national development in Hong Kong, and strengthen collaboration among educational institutions in the GBA. We need to nurture young talent to be well prepared for opportunities in the GBA, with adequate educational and training mechanisms that promote Hong Kong youth to study and practice in the region and foster a productive flow of talent. Again, we can start from pilot-demonstration projects and gradually build up a dense network of collaboration and exchange.
GDToday: If young people start their own businesses in Qianhai and Hengqin, which industry do you recommend?
Li Chen: For ambitious young people in Hong Kong to succeed in business, I would advise them to think big and look at the opportunities in the GBA as a whole, these opportunities provide a massive platform for young entrepreneurs to innovate and grow.
I would recommend industries related to the following four themes: new consumption, new technology, new opening-up, and new creativity.
"New consumption" is about consumers goods, services and business models that meet the evolving consumption demand of China’s rapidly-growing middle class and their pursuit of unique lifestyles.
"New technology" here refers to opportunities of generating commercially viable technological innovation on the basis of the strong research capabilities of Hong Kong's top universities and the supply chain advantages of other cities in the GBA.
"New opening-up" is business opportunities brought about by Chinese companies increasingly "going global."
"New creativity" here refers to opportunities in the field of cultural and creative industries. The GBA is well positioned to form an internationally competitive cultural and creative industry hub.
GDToday: Is there anything you would like to tell young people?
Li Chen: "The only constant is change". It's important for young people to understand the need to embrace and adapt to change and keep learning. China's remarkable rise is the most significant ongoing change in the world, and it will provide wonderful opportunities for young people in China.
