BOFIT Viikkokatsaus / BOFIT Weekly Review 2018/34

Last week, a high-level working group held its initial meeting in Beijing to discuss development plans of the Pearl River Delta Greater Bay Area initiative. The initiative seeks to blur borders through creation an economically integrated region that grows the roles of mainland China cities of the Guangdong province (particularly Shenzhen and Guangzhou) through enhanced cooperation with the Hong Kong and Macao special administrative regions. While Guangdong's nine major cities cover less than 1 % of China's land area, they contain about 4 % of China's population and generate nearly 10 % of China's GDP.

The initiative seeks to build on the strengths of each area, while increasing the mobility of people, goods and capital within the region. Hong Kong will focus on financial markets, Macao on entertainment services and tourism, and cities in mainland China on services and high-technology sectors. Guangdong's provincial government announced in August plans to invest 450 billion yuan (65 billion dollars) over the next three years in high technology, while encouraging local officials to attract more electronics firms and car manufacturers to the region.

An infrastructure goal is to improve travel within the Pearl River Delta. This year will see the opening of the world's longest highway bridge (55 kilometres). It will link Hong Kong, Zhuhai and Macao. A bullet train connection linking Hong Kong, Shenzhen and Guangzhou also opens this year. Improvements are planned for numerous tunnels, ferry terminals and highway networks. Starting in September, residents of Hong Kong, Macao and Taiwan can apply for a Chinese personal ID that will give them access to a range of public services in mainland China, including education and housing services.

A goal of regional development is to ease Hong Kong's lack of land for building by enabling those who work in Hong Kong to live also outside the city. Naturally, the project has also caused apartment prices in the mainland China side to soar. Apartment prices in some cities of the Pearl River Delta region have risen by over 70 % since 2015. The regional population is expected to reach 120–140 million by 2040.

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