A decade on from its launch, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) initiative has made some significant wins but remains some way from fulfilling the vision of a fully integrated internationally competitive bay area to rival that of its US west coast namesake.


Staggering Fundamentals

Home to 87 million people, an area of 56,000 km2, and a combined GDP of close to USD two trillion in 2022 – comparable to that of Italy – the GBA is the Chinese government’s landmark initiative in Southern China. It aims to foster greater integration between 11 cities – Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Huizhou, Zhongshan, Jiangmen, and Zhaoqing in mainland China’s Pearl River Delta and the two Special Administrative Regions of Hong Kong and Macao. These cities are situated in close proximity to one another and are connected by a vast network of transportation infrastructure, including high-speed rail, bridges, and tunnels.

“This is the youngest region in China. It’s the most educated, most talent rich region in China,” says McKinsey advisor Gordon Orr. “It’s enormously capital rich. It’s got fantastic infrastructure, and it’s got this unique thing with Hong Kong connected to it that creates a global capability and global connectivity to capital and professional services that’s unique.”

The GBA initiative aims to draw on the traditional strengths of its cities. For Hong Kong that means its status as a major legal, services, and financial hub and source of foreign investment into the mainland. Over 70 percent of the world’s RMB payments settled through the city. Shenzhen, for its part hosts some of the world’s most prominent technology companies, including Tencent and PingAn, as well as a legion of tech startups, and is often referred to as China’s Silicon Valley. Guangzhou, the provincial capital, is the fourth largest city in China and Southern China’s political, economic, education and cultural hub.


Integration Challenges

In the State Council of the People’s Republic of China Outline Development Plan (the Outline), released in February 2019, four areas are laid out as key priorities for upcoming government policies supporting the GBA. These are: further market opening-up, technology and innovation, infrastructure upgrade, and talent and capital mobility enhancement. The objective of these policies is to transform the GBA into a more efficient market by opening up and building internal connectivity within the region.

However, the devil is inevitably in the details: the three different areas – Guangdong province, Hong Kong SAR, and Macao SAR – exist as separate jurisdictions with their own, distinct sets of administrative, legal, financial, and regulatory processes and systems. The three regions have separate political systems and custom zones with hard borders, different institutional, legal and governance systems, and different currencies, all of which present major barriers to further integration.

To address the challenges that a lack of coordination in the region’s infrastructure is causing, the Outline calls for closer integration between physical infrastructure like bridges and highways and institutional infrastructure (systems and information). Upgrades to the physical infrastructure are already underway, with the 2018 opening of the Hong Kong-Zhuhai-Macao Bridge helping to connect Hong Kong with other cities in the GBA, enabling the flow of cargo and talent. Additionally, Guangzhou and Foshan are building new airports, while Hong Kong, Shenzhen, Zhuhai, Huizhou, and Macau are expanding their existing ones.

Physical challenges are compounded by political ones. As Yu Hong, a senior research fellow at the East Asian Institute, notes, the fierce competition for dominance among GBA cities could jeopardise efforts to forge closer economic integration in the region and lead to widening regional division. “The relations between Hong Kong and the Guangdong cities have, since the 1980s, been characterised as “front shop and back factory”; nevertheless, the cities in Guangdong are no longer content to be regarded just as the “back factory” of Hong Kong,” he notes, with Shenzhen and Guangzhou now competing with Hong Kong to be the dominant player and driving force of the GBA.

Indeed, Hong Kong’s own push to develop its innovation and technology sector is partly driven by the successes of cities like Shenzhen – compared to the corresponding figure of roughly one percent in Hong Kong, Shenzhen’s R&D spending accounted for over four percent of its GDP in 2019.


Biotechs Looking to GBA

In the healthcare and life sciences space, start-up companies are increasingly looking to capitalise on the advantages of the GBA’s different regions, often through listing on the Hong Kong Stock Exchange but situating manufacturing operations in the mainland. For Michael Yang, senior vice-president (innovation and enterprise) at the City University of Hong Kong (CityU) and co-founder of two biotech companies – Prenetics and Cellomics – based on technologies developed in his laboratory at CityU, this is a logical move. “Start-up companies can develop their products or services in Hong Kong, and Hong Kong is a good environment for that, but they must leverage the supply chain and manufacturing capability in the GBA,” he says.

One such example is Zhaoke Ophthalmology. Established in 2017 as a spin-off from Lee’s Pharmaceutical, Zhaoke is aiming to be a global player in the ophthalmology field, building on its strong footprint in China and Asia to eventually establish operations in the US and Europe. “Since starting operations, we have been able to take advantage of the incentives put in place by the Chinese government to grow operations in the region,” explains CSO & President Lau Lit Fui. “This is through areas such as research funding support in clinical trials and talent support by allowing Hong Kong nationals to work in the area and still take on the lower tax rates they are used to.”

“Moreover, we are very close to Hong Kong, less than 1 hour by high-speed rail, and the Hong Kong Trade Development Council is facilitating our growth by setting up meetings to meet the correct people in Southeast Asia. Furthermore, the GBA is much cheaper for land than Hong Kong, so we have constructed a production facility here. This site ensures we are even more independent and allows us to reach the market with our products at a more competitive price.”


The GBA offers a good market for us as it has 87 million people, while Hong Kong and Macao together are only around 8 million

Desmond Hau, Bio-Gene


Bio-Gene, part of the Pangenia Group, is one of Hong Kong’s most notable life science success stories, with operations in the laboratory supply of instruments, reagents, and consumables. Desmond Hau, who founded the company back in 1993, notes that the GBA’s large population renders it attractive, but that it is a highly competitive market in which to operate.

“The GBA offers a good market for us as it has 87 million people, while Hong Kong and Macao together are only around 8 million,” he notes. “Nevertheless, expanding there is not easy and mainland Chinese companies are a lot more aggressive in areas such as pricing, so grabbing a market share there will be difficult. To expand and get a piece of the GBA pie we would need clear pathways to benefit us. These could include strong collaboration with our overseas vendors to accelerate the launch of their innovative products or resources to cultivate our sales and marketing team. These are necessary as we would be dealing with a huge population.”

“Hong Kong is a small market, so it would be an advantage for Hong Kong companies to work in mainland China,” agrees Xia Jiasheng, CEO of Guangdong Medical Valley, an investment incubation platform in southern China focusing on the biomedical and medical device industries. “Also, there is no registration agency like the Chinese NMPA in Hong Kong, so research completed in Hong Kong must then go to mainland China, Europe or the US for it to be approved, which creates a longer pathway from R&D to market,” he adds. “Another important point is that there are many VC funds in this region, and they are a lot more willing to invest in biotechnology than in the past.”


Work to be Done

The GBA’s fundamentals are progress are undeniable. it stands today as one of China’s two main economic powerhouses alongside the Yangtze River Delta Region (YRD); a fact which lends it particular significance given the country’s economic slowdown in recent years. However, it is clear that the initiative is not a panacea for spurring economic growth, and that continuous policy tweaks are vital to ensuring its continuing viability. China must continue to leverage the traditional strengths of its 11 cities, allow them to flourish in new areas, and continue to work through the myriad integration challenges that such a complex system throws up for the Greater Bay Area to truly flourish.