Long-reigning King Of Southern China, Hong Kong Looks North To A Possible Usurper - TheStreet

Long-reigning King Of Southern China, Hong Kong Looks North To A Possible Usurper

With Shenzhen designated the engine of Greater Bay Area, financial hub finds itself at risk of being sidelined in national development While some observers caution Hong Kong might lose its competitive edge, others say it has irreplaceable role to play in helping neighbour flourish
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Long-reigning King Of Southern China, Hong Kong Looks North To A Possible Usurper

President Xi Jinping has given Shenzhen the starring role in turning southern China into an economic powerhouse, but Hong Kong is largely absent in his prescription for regional greatness.

The situation was markedly different just a decade ago, when at the same anniversary event then-leader Hu Jintao feted Hong Kong tycoon Li Ka-shing with a private reception after the billionaire joined three other businessmen to speak about the mainland city's future.

Xi has sparked fears within the financial hub, which was rocked by months of anti-government protests last year, that it could be shunted to the sidelines of Beijing's grand plan for the region.

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Shenzhen is now home to some of the world's biggest companies, including Tencent Holdings, Huawei and Ping An Insurance, and the size of its economy surpassed Hong Kong's for the first time in 2018.

Chinese President Hu Jintao (right) meets Hong Kong tycoon Li Ka-shing at the 30th anniversary of the founding of Shenzhen as a special economic zone, in September 2010. Photo: Xinhua

Chinese President Hu Jintao (right) meets Hong Kong tycoon Li Ka-shing at the 30th anniversary of the founding of Shenzhen as a special economic zone, in September 2010. Photo: Xinhua

But the mainland hi-tech hub owes at least part of its success to the army of Hong Kong industrialists and professionals who moved their companies over the border during its early years as a special economic zone, a fact state media has downplayed or ignored recently.

During his 50-minute address in the Qianhai development zone, Xi hailed Shenzhen's role as an "important engine" of the Greater Bay Area project and assigned the city new responsibilities such as "enriching" new practices in the implementation of "one country, two systems", the governing principle under which Hong Kong is part of China but promised a high degree of autonomy.

We need to be very alert that we are losing our competitive edge and that we may run behind Shenzhen

Alice Mak, Federation of Trade Unions lawmaker

Under the regional integration plan, the central government aims to turn the city, Hong Kong, Macau, and eight other Guangdong cities into a technology and finance giant rivalling California's Silicon Valley by 2035.

"Shenzhen must proactively advance the Greater Bay Area plan, which is a key development strategy of the country, with Shenzhen as an important engine," Xi declared.

One lesson drawn from the reforms in the hi-tech city over its past four decades as a special economic zone was the necessity of "comprehensively and accurately implementing the one country, two systems", he said.

But the president did not specifically mention Hong Kong's contribution to Shenzhen's development or its role in his speech.

A live broadcast of Chinese President Xi Jinping's speech in Shenzhen is watched on a mobile phone in Causeway Bay, Hong Kong. Photo: Felix Wong

A live broadcast of Chinese President Xi Jinping's speech in Shenzhen is watched on a mobile phone in Causeway Bay, Hong Kong. Photo: Felix Wong

Although his predecessor Hu also did not mention Hong Kong's role in his 2010 speech on the 30th anniversary, the leader did say during a meeting with Li Ka-shing that Hong Kong had made a tremendous contribution and he hoped it would take part in future developments.

"This is a bit of friendly advice from the president," said Alice Mak Mei-kuen, a lawmaker from the pro-Beijing Federation of Trade Unions.

"We need to be very alert that we are losing our competitive edge and that we may run behind Shenzhen. We need to focus more on the economic development and other aspects of the city, unlike in the past year, where we have spent so much time on never-ending political arguments and disputes."

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Professor Lau Siu-kai, vice-chairman of the Chinese Association of Hong Kong and Macau Studies, a semi-official think tank based in Beijing, said the central government needed to rely more on Shenzhen, because Hong Kong's international status had been weakened by sanctions imposed by Western countries.

"Hong Kong used to be the bridge between the East and the West … but now with the suppression by the US and the West, China needs to adjust its strategy and turn its attention to its domestic market," Lau said.

But former transport and housing minister Anthony Cheung Bing-leung said the relationship between Hong Kong and Shenzhen should not be viewed as a zero-sum game.

"It's not a matter that Shenzhen's development must come at the expense of Hong Kong," he told the Post. "What Hong Kong needs to do better is … fully utilise the potential of its talents in areas like innovation and technology."

Cheung noted that Frank Wang Tao, founder of drone maker DJI, studied at the Hong Kong University of Science and Technology before setting up in Shenzhen.

Guo Wanda, executive vice-president of the China Development Institute, a think tank based in the hi-tech city, said it was natural the president did not highlight Hong Kong in a speech primarily about Shenzhen's development.

"If Hong Kong's contribution to Shenzhen's development was mentioned, would there then be a need to talk about the role played by Guangzhou and Shanghai?" he said.

The two hubs had ample room to cooperate further in innovation and technology, as well as 'internationalising' use of the yuan, he argued.

"Shenzhen is a financial centre serving the mainland, while Hong Kong is an international financial centre. Hong Kong's strengths can't be matched by Shenzhen," he said.

But for some Hong Kong-based tech start-ups who have run into obstacles in developing their businesses in the bay area, Xi's insistence on Shenzhen's role as the first driver of growth brought fresh hope.

President Xi urges young Hongkongers to work, study, live in mainland China

RaSpect, which applies artificial intelligence to property inspections, set up a branch in Shenzhen a few years ago, but its founder, Harris Sun Chi-chun, said expansion on the mainland had been slow due to a lack of opportunities to establish regular exchanges with other businesses and government departments.

"If the repositioning of Shenzhen can drive regional development, it would be a shot in the arm for our expansion plans across the whole country, which is attaching increasing importance to property management," he said.

Sun believed Hong Kong still had an irreplaceable and urgent role to play in helping Shenzhen internationalise its market and enhance the transparency of its legal system.

Law Ka-chung, a commentator and former chief economist at Bank of Communications, said he believed Shenzhen's technology and financial sectors were being primed for development after the United States moved to block Chinese tech firms from Western markets.

But the city's path would be rough, he said, as funding for most new foreign investment projects still came from Hong Kong, despite the social unrest.

"The China containment strategies of the United States and the international community might drag on the progress," Law said.

Chan Ka-keung, former secretary for financial services and the treasury, believed Xi's emphasis on bolstering financial innovation in Shenzhen would not undermine Hong Kong's status as an international financial hub.

"The Shenzhen market has been important for start-ups to raise capital," Chan said. "When they grow into sizeable businesses, Hong Kong's still plays a pivotal role for listing and trading."

But analysts said Hong Kong needed to raise its game to enhance its competitiveness among the regional integration. Lau, also former head of Hong Kong government think tank Central Policy Unit, said the government needed to train and support young people to seize more opportunities on the mainland.

Additional reporting by Cheryl Heng

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