Finding Greatness in China’s Greater Bay Area (GBA), part I: Diving into the Bay
Possessing about a decade-long lineage, China’s Greater Bay Area (GBA) formally began in 2017 with the signing of a Framework Agreement between the People’s Republic of China (PRC) and the Hong Kong Special Administrative Region. The objective is to create a mega economic cluster, involving 11 cities (e.g., Guangzhou, Dongguan, Hong Kong, Macao, and Shenzhen) that will be a leading international financial hub, a major global innovation center, a critical node between China and Southeast Asia, a world-class research center in fields such as biotechnology, and, more recently, a major link to China’s ambitious Belt and Road Initiative (BRI).
To build the cluster, the PRC central government and relevant provincial and city governments are constructing infrastructure such as airports, rail, and roads, enhancing financial market connections (e.g., the Shanghai-Hong Kong Stock Connect), improving opportunities for flows of financial, legal, and science and engineering talent, bolstering the quality of government services, and breaking down obstacles to flows of capital, goods, and services within the GBA and between the GBA and the outside world. Many are salivating about the GBA’s potential for both domestic and foreign direct and portfolio investors. Based on the aggregate numbers, the GBA’s future seems quite bright. After all, the GBA will have a population, GDP, amalgam of supply chains, financing capacity, and land mass that rivals or exceeds many other famous global clusters such as the Greater Tokyo Bay Area, London, and Silicon Valley in the United States. In addition, Beijing strongly supports the project as evidenced by its inclusion in China’s 14th Five-Year Plan. Moreover, Chinese President Xi Jinping reportedly is personally involved in overseeing the GBA, among other major PRC clusters. My next blog on the GBA will dive specifically into the potential implications of the GBA for inward and outward foreign direct investment (FDI)