Within a country, wealth and power are almost always concentrated in just a few small regions.
In the U.S., 37 of the 75 highest-earning counties lie in the Northeastern corridor between Washington D.C. and Boston.
And 54% of startups are first financed in just five metropolitan areas. Trace the coasts and there you will find the rich and powerful.
China is no exception. The historic, political-capital of D.C. is Beijing, The bustling, financial-center of New York is Shanghai, And the fast-paced, innovative Silicon Valley is the southern city of Shenzhen.
Together, it, Hong Kong, Macau, Guangzhou, and several other cities form the Pearl River Delta, one of the wealthiest and most vibrant parts of China, and one of the most important to the world economy.
It’s home to the third, fifth, and seventh busiest container ship ports. It’s where your iPhone came from, And where it will eventually end up.
But while these are among China’s most internationally open, connected, and capitalist cities, they’re also the most disconnected domestically.
Despite being part of China, Hong Kong and Macau have separate governments, laws, and freedoms. Residents of the two Special Administrative Regions require a permit to cross the border
into the mainland, and vice versa. Legally, they’re islands, and doing business across them involves a sea of bureaucracy.
At least, until now. China plans to integrate all these cities into one Greater Bay Area – a megacity 58%
bigger than the entire Tokyo Metropolitan Area. San Fransisco’s Bay Area is home to about 7 million people.
China’s, almost 70. It hopes to rival both Silicon Valley and Wall Street – at the same time, with an economy
already the size of South Korea or Russia. But many argue there’s another, hidden motivation behind China’s plan.
The train from West Kowloon, in downtown Hong Kong, to Futian Station in Shenzhen, mainland
China takes just 14 minutes. But in those 26 kilometers, almost everything changes.
British electrical outlets are replaced with the Type I used in Australia and New Zealand.
Sites like YouTube, Twitter, and Facebook stop working, thanks to the Great Firewall,
The Hong Kong Dollar becomes the Chinese Yuan, and the average income drops from 46 to 30,000 U.S. Dollars.
All of this is due to Hong Kong’s unique and complicated history. On June 30th, 1997, the United Kingdom officially withdrew from the territory after 156 years
And on July 1st, Hong Kong was returned to China. But not without compromise. The Sino-British Joint Declaration stated that, although Hong Kong would exist under
the sovereignty of China, it was guaranteed its own constitution, capitalist and legal systems for 50 years. “Hong Kong will be directly under the authority of the Central People’s Government of the People’s Republic of China and will enjoy a high degree of autonomy, except in foreign and defense affairs.” One country; Two systems.
Likewise, the Portuguese and Chinese governments signed the Joint Declaration on the Question of Macau.
But with separate, detached governments come separate, detached economies. For a region so dependent on trade and tourism, traveling between cities is remarkably complicated.
While the train from Hong Kong to Shenzhen only takes 14 minutes, it first requires a lengthy immigration and customs process.
First, by going through security, then, the Hong Kong Departure procedure, and finally, receiving mainland arrival clearance, which requires a separate visa.
On the other side of Hong Kong, the longest sea-crossing in the world connects to Macau and the mainland city of Zhuhai.
But this $19 Billion dollar bridge which took eight years to build, is surprisingly quiet. In 2018, 36 million people visited Macau, 88% of whom came from the mainland or Hong
Kong, but only about one million total entered through the bridge. The crossing is an amazing feat of engineering, but also a bureaucratic nightmare.
Because all three territories have separate laws and regulations, crossing the bridge requires three separate insurance policies.
In Hong Kong, car insurance is required to cover $12.74 million US Dollars in damages, on the mainland, a tiny $18,172 dollars, and, in Macau, a minimum of $185,524.
Such a huge difference makes creating a single, unified policy extremely difficult. And because of their British and Portuguese influence, Hong Kong and Macau drive on the
left side of the road. But the main bridge section is located in mainland waters, so Hong Kong drivers have to switch to the right-hand side as they enter the link bridge, even though that’s still
in Hong Kong territory, travel briefly in an undersea tunnel, allowing ships to pass overhead, and then change back to the left side if they enter Macau.
Making things even more complicated, there’s a quota on private cars, of course, immigration and customs, and a toll, which, if you pay in cash, has to be Chinese Yuan.
Imagine how much harder it would be work in San Fransisco if crossing the Golden Gate required a visa, permit, changing sides of the road twice, and a few insurance policies.
Oh – and don’t forget to pay with Mexican Pesos. These inefficiencies are especially pronounced in an area so rich with startups and large consumer markets.
Doctors, lawyers, and investors, for example, are often blocked from doing business across borders despite the huge economic potential, if not legally, then out of confusion or frustration.
Hong Kong and San Francisco have some of the world’s most expensive rent. The former, however, is surrounded by other terribly expensive cities – Palo Alto, San
Jose, Berkeley, and so on. Hong Kong, on the other hand, has lots of cheap labor for China’s increasingly service-based economy, right across the border, waiting to be tapped into.
The Chinese government sees this as a major opportunity. The Greater Bay Area Plan, first announced in 2016, and just released in February, is
not one, but a series of steps to connect these cities and make use of their vast differences. Macau will continue to be the Las Vegas of the East, thanks to its geographically central
location and relaxed gambling laws. Hong Kong, a global intermediary, allowing foreign firms to invest in China, and, increasingly, for Chinese companies to access the wider world.
Its airport, one of the busiest in the world, and now in the process of building a third runway, will act as a gateway to the rest of the region.
Already, 14 of its 75 million passengers a year end up traveling to nearby cities and Cathay Pacific is considering selling two-in-one plane tickets which include train or ferry
travel to and from the airport. Shenzhen, meanwhile, will serve as China’s Silicon Valley, home to some of the country’s biggest companies, including DJI, Tencent, and BYD.
Finally, Guangzhou, as the capital of the entire Guangdong province, is the administrative and political center. And connecting them all are the first parts of the plan: The train from Hong Kong to the mainland, The Hong Kong-Macau-Zhuhai Bridge, whose details will hopefully be worked out, And another, currently in construction, will connect Shenzhen to the other side of the
mainland. Now, as these cities become more linked together, wealth will spread outward. The Hong Kong University of Science and Technology has announced a second campus on the mainland,
and many companies are investing in property across the border in anticipation of the plan. Already, Shenzhen is nowhere near the cheap source of labor it once was, and some cities
will likely benefit more than others. But with 70 million people, there will long be plenty of workers in surrounding areas. The economic case for the plan, is, therefore, hard to refute.
But so is the concerning trend that has followed: Remember that before you can get on the train from Hong Kong to Shenzhen, you first have to pass mainland immigration.
That means a portion of the terminal, in the middle of downtown Hong Kong, is controlled by mainland authorities and governed by mainland laws.
Now, as an isolated event, this would be easy to dismiss as a mere convenience for faster travel. After all, it’s quite similar to how the Chinese government leases part of its Shenzhen
port to Hong Kong. But this is occurring against a much larger backdrop. In 2014, the Chinese government changed Hong Kong’s election rules, limiting the democratic
power of its people to elect their Chief Executive, to which Hong Kongers took to the streets with their iconic yellow umbrellas.
Later, during a football match, Hong Kong fans booed at China’s national anthem. It ended in a tense 0-to-0 with Chinese police wearing riot gear warning the crowd not to
insult the song. The People’s Republic then passed a law which made doing so illegal. And although Hong Kong is entitled to its own laws, there’s an exception: a special section of its constitution which China has the power to add to or remove from. More recently, the Hong Kong government is proposing changing its extradition laws to allow some suspected criminals to be sent to the mainland for prosecution.
Both the UK and U.S. governments have warned that “Hong Kong’s autonomy is at risk”, but it’s also clear the world is woefully unprepared for a China which builds not walls,
It’s unlikely that either country would risk raising tensions any further.
Meanwhile, political unity and economic growth are China’s absolute highest priorities.
It will argue that the redundancies of Hong Kong and Macau’s separation loses everyone time and money.
Many locals, in turn, will argue that those separations are exactly what makes their home so great.
China will argue that no part of the Greater Bay Area Plan fundamentally changes its relationship with the regions – that protestors are overreacting.
And skeptics will argue gradual, symbolic changes are exactly how freedom is usually lost.
Hong Kong is unlike any other place on earth – a culture within a culture, set to expire in 2047 when its promised autonomy ends.
But the new era has, in many ways, already begun. There are about 179,000 Hong Kongers worth a million US dollars, which, divided by its
427 square miles, means you’d only need to walk an average of 4 meters to cross paths with a millionaire.
But as the world moves towards an automation-based economy, the Greater Bay Area will need to invest in high skill workers to maintain its advantage.