China’s Greater Bay Area: Spearheading Innovation


Guangdong province and neighbouring Hong Kong have long been fundamental to China’s metamorphosis into an economic superpower. Notable as one of the country’s most open and dynamic regions, the Pearl River Delta (PRD), as that area previously used to be known, historically formed the soft underbelly via which the outside world would transact with the mammoth, but tightly administered Chinese marketplace. As such, the PRD has become phenomenally successful in its own right: by 2016, its 11 cities were already producing a combined GDP USD of 1.38 trillion, rendering it richer than the fifth largest economy in Asia!
A Patchwork of Entrepreneurial Activity

“As the region faces increasing competition from countries such as India and Vietnam for low-cost manufacturing, the freshly rebranded GBA must become even more open and innovative by taking a leading role in China’s next stage of economic development”
Mark Preen, Dezan Shira & Associates

“When you think back to the high-octane, freewheeling 1990s and early 2000s when China was pursuing double-digit growth at all costs, different provinces and main cities were all competing against each other and adopting wildly differing economic ecosystems. These ranged from the outward looking, wild-east capitalist model of the PRD and the technocratic, industrialist-state stance of Shanghai all the way along the spectrum to the top-down, command economies of Beijing and Chongqing… At the end of the day, you have to say that, by virtually all economic metrics, Guangdong emerged as the outright winner,” observes Li Peng Gua of the Chinese Academy of Social Sciences (CASS).

Moreover, the Delta became a thriving melting pot and patchwork of entrepreneurial activity with each city or sub-administration differentiating themselves from one another by assuming their own distinctive set of capabilities and poles of expertise. Hong Kong, for instance, asserted itself as a global trade, legal and financial center, strategically acting as a business and investment gateway to and from mainland. Macau adopted the mantel of a ‘Vegas of Asia’ by cultivating a distinctive gambling and entertainment industry.

Shenzhen molded itself into China’s very own ‘Silicon Valley’ boasting technological prowess and a startup culture that saw it quickly become home to China’s foremost internet giants and telecommunication equipment developers. Guangzhou city meanwhile became positioned as a strong logistics hub and service industry provider, while the greater Guangdong hinterland – comprising cities such as Foshan, Huizhou and Dongguan – posed as a sprawling manufacturing and industrial platform worthy of the epithet ‘factory of the world.’

A New, Connected Era
All good things come to an end, however, which is why the Xi Jinping administration has decided to craft a new economic framework for the country’s star region and to rebrand the PRD as a ‘Greater Bay Area (GBA)’. “China today is a radically different place from the 1990s. Back then it was all about lifting people out of poverty through fast paced growth.

Nowadays we have a burgeoning middle class that demands a better quality of living which means more value-added, knowledge-based jobs, environmental protection and a harmoniously integrated society with less inequality… the PRD is no longer fit for purpose for that vision, but it is appropriate that Guangdong together with the Specially Administered Regions of Hong Kong and Macau should be made responsible for spearheading the transformation to materialize these new ambitions,” analyses Li.

Mark Preen from Dezan Shira & Associates, a boutique consultancy specializing in the provision of FDI services, very much concurs with this assessment. “Despite unquestionable past successes, the Chinese government will not allow the PRD to rest on its laurels. As the region faces increasing competition from countries such as India and Vietnam for low-cost manufacturing, the freshly rebranded GBA must become even more open and innovative by taking a leading role in China’s next stage of economic development.

If the initiative develops according to plan, the region will be reconfigured from the World’s factory to a dynamic hub of innovation operating at the pinnacle of the value chain and boasting a GDP of USD 4.62 trillion by 2030 which means overtaking rival bay areas in Tokyo, New York, and San Francisco,” he predicts.

“I think what we are seeing is there is a pressing need for the Chinese and global innovation economies, companies and ecosystems to connect and synergise. In the past, places like Shenzhen and Hong Kong were all about enabling foreign capital, products and services to penetrate the massive Chinese market, but now as we’ve become more confident and influential on the world stage it’s just as much about projecting outwards and joining forces to scale the technological value chain. Kicking this process off with the Greater Bay Area is a no brainer as this is precisely the place where these sorts of interactions can most effectively happen. The GBA can literally become a super-connector to the world economy,” observes Walter Ji, president of Western Europe for Huawei.

According to Tommy Xie, head of Greater China Research at the OCBC Bank, the GBA concept sits very neatly within President Xi Jinping’s flagship strategy of One Belt and One Road precisely because of this function as a super-connector and integrator. “The guidelines proposed by the Belt & Road initiative (BRI), including policy coordination, facilities connectivity, unimpeded trade and financial integration will play a strong role in the Bay Area…

The BRI not only burnishes China’s image as the champion for globalisation, but also helps encourage further cooperation and technological advancement within the country. By promoting economic integration among Hong Kong, Macau and the Guangdong province while simultaneously serving as a gateway for Chinese companies to lead the innovation curve and expand their business overseas, the Bay Area will inject new vitality into the BRI,” he explains.

At the Vanguard of Innovation
Already the region can lay claim to being at the vanguard of technological innovation. A large slice of Chinese innovation derives directly from that part of the country and China’s patent office now stands proud as the world’s busiest. A high water mark was reached as early as 2015 when 1.1 million patent applications were filed represent 38 percent of all patent applications submitted across the globe that year. The GBA concept aims at nourishing even higher intensity innovation, however, as a synergized and seamlessly integrated Guangdong-Hong Kong-Macau agglomeration promises to deliver much more than the sum of its parts.

“The Greater Bay Area will present a rare opportunity for international investors and will act as a magnet in attracting in more innovation resources and promoting joint research, so as to serve as an international science and innovation epicentre. Moreover it will be intentionally fashioned to support industries such as new generation IT, biotech, and high-spec equipment manufacturing, as the intention is to craft a modern industrial system with global competitiveness,” confides Xie Feng, commissioner of the Ministry of Foreign Affairs of the People’s Republic of China in the Hong Kong Special Administrative Region.

In doing so it should reinvigorate the different component parts. “The Greater Bay Area initiative delivers an additional boost to the already purring Hong Kong economy by providing it with a an opportunity to reinforce its status as a regional knowledge hub by playing a greater role a wide array of cross-border issues including R&D, industrial technological investments, and scientific collaboration.

This is extremely important for Hong Kong’s technology sector, especially when Shenzhen is already fast on the heels of the SAR in many aspects of technology businesses except for robotics, smart-city applications and elderly healthcare. To avoid being marginalized by innovative mainland cities, Hong Kong very much needs to be proactively deepen regional technological collaboration and suddenly they are being handed the unique chance to do so,” muses Thomas Yeung, convener of policy at City Think Tank.

A Boost for Life Sciences
The plan, while carrying broader goals, will simultaneously energize the growth of China’s global life sciences innovation sector. “This affords us a golden opportunity to leverage on each other’s strengths with a view to furthering translational research in biotechnology…. I believe such collaboration is both timely and relevant and I am staunchly confident that this international partnership will drive a new wave of world-class discoveries in drug development,” extols Nicholas Yang, secretary for innovation and technology in the Hong Kong SAR government.

“The future looks very bright because there can be little doubt that these efforts are going to foster more applied research in biotechnology, and bring innovations in the areas of cancer, genomics, translational medicine, and other related areas in biotechnology,” concludes Professor Ping-kong Alexander Wai, vice president (research development) of PolyU.
Writer: Louis Haynes

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