For 40 years, the Pearl River Delta (PRD) of Southern China has been at the leading edge of China's economic miracle. It is where China's reform and opening up began, where China began to re-engage with the global economy and where countless international firms began to engage with China.
During the first decades of China's reform and opening up to the world, the Pearl River Delta was seen as the world's factory. Proximity to Hong Kong was a factor in the choice of Shenzhen for one of China's first Special Economic Zones which was financed largely with Hong Kong capital, and reliant on the city's traders and logistics firms to send its goods to the world.
New economic models developed in the PRD and soon moved up the coast, and spread inland.
Big changes in the World
Just about everything has changed in the world in the four decades since the PRD began to open up. The global operating environment for the GBA is completely different in terms of technology, politics, and trade.
Much of that change has occurred in the past 10 years alone.
Today, the delta region, augmented by Hong Kong and its fellow special administrative region Macau, runs not just one of the world’s most advanced manufacturing networks, but has added innovation and technology to its industrial repertoire.
Today’s factories must be flexible enough to handle constant line changes and small, fragmented orders.
The G.B.A. Initiative:
The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is a policy initiative seeking to promote closer cooperation and coordination between 11 cities of the Pearl River Delta (PRD) in Southern China so that they can better leverage their competitive advantages in the global economy.
The GBA will see the creation of a city cluster around the delta of the Pearl River (or the Zhujiang River) that is intended to rival other bay areas including the San Francisco Bay Area, the Tokyo Bay Area and the New York Bay Area.
The concept of creating a Greater Bay Area began in 2015 in a policy paper on China’s Belt and Road Initiative. During 2016, the central government included the concept in it’s 13th Five-Year Plan for the period ranging from 2016 to 2020.
On February 18th 2019, the Central Government promulgated the Outline Development Plan, based on President Xi Jinping’s national strategy, to guide the current and future cooperation and development of the Greater Bay Area.
The timetable to connect the various markets in the bay area would be 2035.
Aiming for an unrivaled GDP Ranking
Guangdong Province has always led other provinces in terms of total economic size in China, its present GDP equalling 14% of the national economic aggregate data.
The huge scale of China’s economic transformation and rapid urbanization over the past 40 years has seen these 11 cities grow and intersect so as to become a loosely connected mega city. In 2015, the World Bank reported that the Pearl River Delta had overtaken Tokyo becoming the largest urban area in the world in both size and population.
With a population of more than 70 million, a total GDP of USD 1.64 trillion and per capita GDP of USD 23,074, the size of the GBA economy is close to Russia’s, larger than Spain’s and Australia, and just behind that of Korea. Therefore, both in terms of total economic size and population, the GBA can be considered as rich as a country.
G.B.A. Within the Belt And Road
The Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, a significant development strategy launched by the Chinese government with the intention of promoting economic co-operation among countries along the proposed Belt and Road routes.
The Initiative has been designed to enhance the orderly free-flow of economic factors and the efficient allocation of resources.
An important “support area” for Belt and Road
It is also intended to promote further market integration and create a regional economic co-operation framework of benefit to all.
The GBA has the potential to extend its reach beyond the Pearl River Delta by acting as a catalyst for China’s Belt and Road Initiative:
To strengthen HKs role as a global offshore RMB business hub and a service center for resolving investment and commercial disputes relating to Belt and Road projects:
To support Macao to embark on collaboration with the Silk Road Fund. The Sino-Latin American Production Investment Fund. The China-Africa Production Capacity Fund and the Asian Infrastructure Investment Bank (AIIB):
Within a five-hour flight from half the world’s population
International logistics hub with world-class infrastructure and one of the world’s busiest and most efficient container ports
Regional transport and communications hub with an award-winning international airport and state-of-the-art information and telecommunication networks
The GBA has the potential to become the most diversified city cluster in the world, by leveraging its wide range of industries and strengths across its cities, such as financial and professional services, high-tech manufacturing, and technology and innovation.
This unique combination provides significant opportunities for companies that are looking to enter or build on their existing presence in China.
The increased connectivity and integration of the GBA will also facilitate the movement of goods and services, capital, people and information within the region. As the GBA continues to develop, it will play a larger role in boosting the domestic market, facilitating the implementation of the 13th Five-Year Plan, and serving as a key hub connecting countries along the 21st-Century Maritime Silk Road under the Belt and Road Initiative.
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