Competition to innovate is set to peak with the development of China’s Greater Bay Area.
The region is estimated to represent about 12% of the country’s current economy and attract some of the biggest players in innovation. The competition lies not only in technological advancements but the ability for companies to commercialize their innovation at a faster pace than their Western counterparts.
The Greater Bay Area refers to the initiative proposed by the central government to combine 11 cities – Hong Kong, Macau and nine cities in the Guangdong province – to form a world-class integrated economic, business and technological hub, allowing the free exchange of labour, trade and capital between the cities.
There is zero doubt that China’s government is looking towards Hong Kong to lead this initiative; the city has already established itself as the heart of the Greater Bay Area because of its prime location, serving as a financial centre for the region due to its proximity to central China while remaining closely linked to Southeast Asia. Hong Kong also boasts lower income taxes, intellectual property protection and has one of the highest contributing GDPs in the Greater Bay Area, which itself is ranked just behind Tokyo’s Bay Area at no.2 in the world.
Economic viability
Shenzhen presently houses majority of China’s tech giants, creating the cluster of start-ups that form the backbone of the Bay Area technological ecosystem. While Hong Kong offers an unmatched pace of progression with infrastructure and regional co-operation, the rate of funding has yet to catch up leaving the development a ripe area for investments.
Tony Verb
“The Greater Bay Area is a region that is second to none, considering its potentials and its sectoral diversity. Hong Kong alone is ranked second in the world in terms of FDI inflow, whilst the region is collectively very close to the entire USA, which is ranked first in the world.
This region has been growing approximately 10% annually GDP-terms for the past 20 years and is expected to grow at a similar rate for the coming 20 years. With a combined economic power now matching all Nordic countries or that of Australia. In two decades, the combined GDP of the 11 cities will surpass California’s by a good mile and will be the home to 88 million people,”
said Tony Verb, Founder, GreaterBay Ventures & Advisors.
“I expect the concentration of tech and innovative businesses to accelerate as the unique combination of world class software and hardware ecosystems are just becoming mature. That will be helped by the fact that 4% of Shenzhen’s GDP is consistently spent on R&D, more than any other cities in China, whilst Guangzhou expects a 2.5% share this year and Hong Kong about to double its own ration to 1.5% over the coming years.
The outlook is optimistic and compare favourably as a combined figure with that of the European Union’s OECD’s (approximately 2%) and Japan’s (3%) with more growth expected in the region. Only a war or an epidemic can stop this region from growing and gaining momentum in the global innovation supply chains. I encourage all optimistic and adventurous innovators to come and join the process,”
Verb added.
Fostering inter-city interaction
The complementary roles of the other cities are of enormous importance in this initiative. For instance, manufacturing hubs in Guangdong province and ICT and high-tech industry clusters form a more competitive industry space, which has a brighter prospect for development than that in a traditionally isolated system of cities. But what are some of the challenges that the Area faces?
Siqi Zheng
“One of MIT China Future City Lab’s ongoing research provides insights into another possible way to foster intercity interaction in the Area. In a top-down model of entrepreneurship in mainland China, local government provides a variety of favorable policies, such as innovation spaces, subsidy, tax cuts, administrative services, affordable housing, and etc., to attract talent and innovation-driven startups.
In this regard, the goal of creating vital entrepreneurial activities could be achieved by connecting the dedicated pro-entrepreneurial resources in Guangdong Province to high-skilled human capital in Hong Kong as well as fast-growing startups that lead in Fintech (Hong Kong) and tourism (Macao),”
said Siqi Zheng, Faculty Director, MIT China Future City Lab (MIT-CFC).
There are many other channels through which infrastructure in the Area shapes the country’s economic development. The enhanced transport links between cities in the Greater Bay Area may have effects on the property markets, possibly through helping ease the land supply constraint in cities such as Hong Kong, Guangzhou, and Shenzhen. Transport links may also make the cities more liveable by increasing the uses of inter-city high-speed rail and subways instead of using automobiles due to reduced travel costs and higher travel speed.
“There are also several areas where we need to rethink the foundational infrastructure of a city. First, given access to comprehensive real-time urban data, the data and cloud computing infrastructure in the Greater Bay Area allows us to apply data-driven smart city technologies to optimize the urban management and public resources.
Second, the social institution is also an important foundational infrastructure. The Greater Bay Area initiative can facilitate the institutional innovation under the unique form of governance — “One country, two systems”.
Third, intellectual property right, another critical infrastructure in one opinion, enables limitless entrepreneurship and innovation. The Greater Bay Area tops the country in this respect and we hope it can act as a bottom-up force to create a better business environment in other regions,”
added Zheng.
More than a high-tech hub
According to Professor Roland Chin, President and Vice-Chancellor of Hong Kong Baptist University, the Greater Bay Area is not only well poised to become a high-tech hub but also a destination that is rich in artistic and cultural diversity.
Roland Chin
“What makes the Area so exciting is the unique strengths each of the 11-member cities bring to make our collective dreams into reality. This is the place where the best of the East and the West enriches each other. The diversity and the sheer amount of talent and capacity is unparalleled in the world.
The Greater Bay Area will be far more than an economic powerhouse. It will be a global high-tech innovation hub enhanced by cultural richness, enabling great ideas to become ground-breaking projects that benefit humankind. Against this broad vista, HKBU as a research-intensive liberal arts university will nurture new discoveries, budding talent, and young entrepreneurs,”
he said.
The Greater Bay Area initiative is a great, ambitious plan that brings great opportunities for development of this country. However, there is more that can be done to facilitate greater collaboration as well as funding to speed up the pace of innovation.
To ensure its success, there should be a call for effective policies to enhance intercity coordination efforts within the urban agglomeration and improving infrastructure construction and management to provide a seamless connection between cities in terms of public goods and services, production factors, data and computing capabilities, and strong spillovers.
Featured image via Freepik
