Opinion | Hong Kong must turn Greater Bay Area integration challenges into opportunities

Between March 28 and April 8, which includes the extended Easter weekend and Ching Ming Festival, a staggering 3.6 million Hong Kong residents went north via land control points, compared to about 860,000 mainland residents who visited Hong Kong.

Other cities in the Greater Bay Area have become Hongkongers’ go-to playground in the same way that mainland residents poured into Hong Kong after the Individual Visit Scheme was launched 21 years ago.

The economic impact of this reversed travel pattern being felt across the Greater Bay Area. Last year, Shenzhen authorities announced that “social consumption and retail spending” rose by 7.8 per cent while its gross domestic product (GDP) grew by 6 per cent, exceeding Hong Kong’s and other first-tier cities on the mainland.

Hong Kong residents take a tour of Shenzhen on March 30 during a trip to Guangdong province for the Easter holiday. Photo: Yik Yeung-man
In comparison, tourist arrivals from the mainland that have failed to reach pre-pandemic levels, plus weaker spending, as well as the “leakage” of our consumption dollars to the mainland, means our economic recovery crawled to an anaemic 3.2 per cent last year, from a low base in 2022.
Restaurant and shop closures forced the government to organise the “Night Vibes Hong Kong” campaign to stimulate local consumption. Yet, the downtrend is likely to continue until and unless Hong Kong’s restaurant and retail services are able to catch up to Greater Bay Area standards of value and service quality.
In case all the blame is laid at the door of our service providers, it’s worth saying that macroeconomic forces have played a big part in the downtrend. The strong Hong Kong dollar, being linked to the US dollar, makes the city incredibly expensive for Japanese, Korean and mainland visitors.

Given our strong currency, Hong Kong ought to devalue. But sticky wages, caused more by labour shortages than an uptick in prices, make it hard for Hong Kong to deflate. Even though commercial rentals have come down, the city’s high wages and property values make it almost impossible for it to compete on price.

The northbound trend is set to increase as more convenient transport links with the mainland develop as part of the Northern Metropolis project, an ambitious plan to develop Hong Kong’s northern districts into a technology hub that will accommodate 2.5 million people. As that happens, more Hongkongers may well choose to live on the mainland, and commute daily to work in Hong Kong, or simply work in other mainland cities.

A fundamental problem with Greater Bay Area development is that it is far from being a single market, even though integration is one of the objectives of the 2017 framework agreement.

Under the “one country, two systems” arrangement, there is no free movement of people, goods, services and data between the mainland and Hong Kong. As separate custom and immigration areas, both sides have instituted controls that make market integration a slow and difficult process.
In the short term, Hong Kong needs to overcome the asymmetry of movement and spending by urging the central authorities to allow residents of more remote mainland cities to visit, as well as approve multiple-visit permits and increase the duty-free allowance for mainland residents returning from Hong Kong.
Healthcare professionals from the Greater Bay Area Healthcare Talents Visiting Programmes arrive at West Kowloon Station in Hong Kong on April 17, 2023. Photo: Jelly Tse

In the long term, the government must develop a strategy for mainland cities and Hong Kong to complement each other. Officials must work out how to make use of the abundant resources mainland cities have to offer to remedy our shortages.

As more Hongkongers choose to live in nearby mainland cities, why can’t we build our residential care homes in those cities? Cross-border transport is now far more convenient. After all, our residential care homes depend heavily on the import of workers from Guangdong and Guangxi.

Instead of spending billions to reclaim a small area of land, why don’t we buy good-quality housing that’s readily available in nearby mainland cities, to provide more options for those who live in the northern districts? Now is a good time to buy on the cheap.

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How Hong Kong’s housing market became among the world’s most unaffordable

How Hong Kong’s housing market became among the world’s most unaffordable

We should also take more vigorous measures to phase out hindrances for mainland professionals to work in Hong Kong, bring in more talent and import more mainland labour.

Only by leveraging the mainland’s resources, and combining our strengths with theirs, can we turn the process of Greater Bay Area integration into a win-win formula. The government ought to remould Hong Kong into a metropolis like London or New York, with some of its population dispersing into nearby suburbs.

The Hong Kong diaspora on the mainland will make Hong Kong more influential while relieving the pressure of the cost of living in this city. The government needs to think outside the box and move fast.

Regina Ip Lau Suk-yee is convenor of the Executive Council, a lawmaker and chairwoman of the New People’s Party

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