Because the world’s second-largest economic system has proven indicators of a V-shaped restoration from the coronavirus outbreak, China’s ambition to arrange a mega financial zone involving its territory Hong Kong has created a ripple amongst Beijing watchers.
Some analysts warn that if China realizes the “Guangdong-Hong Kong-Macau Higher Bay Space” undertaking, the arrival of such a gorgeous funding vacation spot might present a window of alternative for Beijing to bolster its financial affect on this planet.
Because the world’s most populous nation is predicted to keep up progress momentum, many world companies would proceed investing in China no matter its communist ideology, which in flip may additional undermine Hong Kong’s standing as a world monetary hub.
The management of Chinese language President Xi Jinping has been apparently “aiming to realize progress whereas strengthening the ability of the Communist Celebration, with financial tensions with america escalating,” a diplomatic supply mentioned.
Beijing will try and “combine Hong Kong into the mainland in each financial and political phrases by launching the Higher Bay Space. Hong Kong will turn out to be part of China in an actual sense,” the supply added.
China’s economic system expanded 4.9 p.c from a yr earlier within the July-September interval, after plunging 6.8 p.c within the first quarter within the aftermath of the virus unfold and choosing up 3.2 p.c within the three months from April, official information confirmed Monday.
“The economic system has rebounded and the virus has been below management in China. Xi is raring to push ahead the Higher Bay Space undertaking, as different main economies are going through a extreme downturn in opposition to the backdrop of the pandemic,” the supply mentioned.
The virus, first detected within the central Chinese language metropolis of Wuhan late final yr, has hit round 85,000 folks within the mainland and killed over 4,600, in accordance with Chinese language well being authorities. However the improve in new infections peaked in late February.
Hong Kong, the previous British colony that returned to Chinese language rule in 1997, and neighboring Macau, the previous Portuguese colony that did in 1999, have every been ruled below the “one nation, two programs” association.
The Higher Bay Space plan, together with Hong Kong, Macau and 9 mainland cities of Guangdong Province, is designed to develop a metropolis cluster framework by coordinating infrastructure and expertise innovation of the 11 cities.
The bay space covers 56,000 sq. kilometers, with a inhabitants of almost 70 million and a mixed gross home product that tops $1.5 trillion.
Hong Kong was promised it may retain its lifestyle, rights and freedoms for 50 years following its return, however Beijing has not too long ago stepped up measures to quell pro-democracy activists within the semiautonomous area after a sequence of huge protests final yr.
The territory’s financial progress contribution to the mainland has additionally diminished. Though its economic system accounted for one-fourth of China’s GDP round twenty years in the past, it’s now solely about 3 p.c.
In the meantime, Shenzhen — one of many cities in Guangdong Province that turned China’s first particular financial zone in 1980 — has performed a big position within the nation’s fast financial improvement as a state-of-the-art expertise heart.
The economic system of the previous fishing village surged greater than 1,500-fold over the previous 40 years. The GDP of Shenzhen, the place Chinese language tech large Huawei Applied sciences Co. and IT firm Tencent Holdings Ltd. are headquartered, has already exceeded that of Hong Kong.
In his speech earlier this month in Shenzhen close to Hong Kong, Xi celebrated the fortieth anniversary of the particular financial zone’s institution and pledged to advertise the Higher Bay Space blueprint, calling the southern metropolis a “key engine” for the undertaking.
Hong Kong has lengthy labored as a fundraising conduit for Chinese language enterprises, however Beijing is believed to be changing the territory with Shenzhen as its largest supply of overseas foreign money.
Stephen Nagy, a senior affiliate professor of politics at Worldwide Christian College in Tokyo and a visiting fellow with the Japan Institute for Worldwide Affairs, mentioned the Higher Bay Space may very well be a “true rival to Tokyo and New York.”
“If this might occur, China could also be much less depending on financial ties with america and Japan and start to supply a comparative benefit to companies” wishing to do enterprise in China, he mentioned.
“On Shenzhen changing Hong Kong, in the end that’s the objective of Beijing,” he mentioned, including if Shenzhen can tackle a few of Hong Kong’s features, the territory “would regularly lose its significance to Beijing and turn out to be simply an strange Chinese language metropolis.”
Nagy additionally mentioned, “The Chinese language market stays alluring due to its measurement and progress, particularly within the wake of the COVID-19 induced world recession,” referring to the illness attributable to the novel coronavirus.
“We’re prone to see companies will shift their world operations away from Hong Kong and preserve their China-oriented companies Hong Kong based mostly to please Beijing and guarantee market entry,” he added.
Victor Teo, a analysis fellow on the College of Cambridge and the Singapore-based ISEAS-Yusof Ishak Institute, solid doubt on such views, saying, “I don’t assume Xi has disregarded Hong Kong as a monetary hub and funding vacation spot.”
“For years, the Shenzhen authorities has been very eager to develop their monetary sector, however many plans have been shelved or deferred as a result of the central authorities has been apprehensive that this would possibly have an effect on Hong Kong,” he mentioned.
The regional professional, nevertheless, added, “After the unrest in Hong Kong over the yr, the deference and sensitivity of the central authorities to Hong Kong’s aspirations won’t rank extremely anymore.”
“From a coverage standpoint, Hong Kong would now need to compete like another mainland cities for their very own developmental success,” he mentioned.
In Hong Kong, large-scale demonstrations sparked by a now-withdrawn extradition invoice with mainland China morphed into an anti-government motion in 2019, with protesters in search of a probe into police use of pressure.
Afterward, Beijing in late June enacted a controversial nationwide safety legislation for Hong Kong to crack down on what it views as secession, subversion, terrorism and collusion with overseas forces.