Building a Hong Kong-Shenzhen Metropolis


Commerce, Finance and Business | 2007-08-09

To a very large extent, Hong Kong and Shenzhen have already or nearly attained the standard of an international metropolis in various aspects. In respect of economic size, the combined GDP of Hong Kong and Shenzhen was US$259 billion in 2006, ranking amongst the world’s top international metropolises, behind Tokyo, New York and London. With regard to the size of the city, the two cities occupy a combined area of over 3,000 square kilometres and have a combined population of over 20 million, surpassing both Tokyo and London. In terms of competitive edge, Hong Kong is a recognised regional and international financial centre and has a well-developed service sector, while Shenzhen is a world-class manufacturing centre for many products. Regarding transportation, the terminals in Hong Kong and the ports in Shenzhen rank among the top container ports in the world; Hong Kong has the busiest airport in the world in terms of cargo tonnage, while the number of passengers using the airports in Hong Kong and Shenzhen also rank among the top ten in the world. Based on the above, it is believed that Hong Kong and Shenzhen have all the right conditions to develop into a highly competitive international metropolis through further integration.

On the other hand, we must be well aware that the establishment of a Hong Kong-Shenzhen Metropolis is a very long and challenging process. 5 For the Hong Kong-Shenzhen Metropolis, one of the basic pre-requisites is achieving the relatively free flow of key resources for production and daily life. 6 Under market forces, the two cities have been going through further integration in respect of the flow of capital, people, goods and information. There have been increasingly frequent and in-depth exchanges and resources sharing in the areas of consumption, property investment, employment, education, medical services, communications and transportation. However, from the perspective of establishing a Hong Kong-Shenzhen Metropolis, there is a long way to go from the status quo and trends of integration to achieving the potential of the synergies between the two cities to realise the desired roadmap. The level of synergies and cooperation between Hong Kong and Shenzhen is far from satisfactory. There is a lack of coordination in the institutional arrangements between the two cities in urban planning, infrastructure construction, frontier area development, two-way free flow of key production resources, and steering of industry competition and cooperation. As a result, the complementary functions of the two economies cannot be exploited to the fullest or reasonable extent and enterprises and residents of Hong Kong and Shenzhen are unable to take full advantage of the potential business, residential and livelihood benefits of the two cities, either severally or jointly, as they could if they were integrated.

The overall objective of this study is to explore how the Hong Kong and Shenzhen governments can, in response to market demand, minimise institutional obstacles in order to speed up the two-way flow of goods, people, capital and information between the two cities (particularly as to how residents and enterprises in Shenzhen can more easily access the services available in Hong Kong) under the framework of “One Country, Two Systems” and the World Trade Organisation (“WTO”). This study will seek to put forward recommendations for the two governments to reduce obstacles at the institutional and policy levels concerning the economic and livelihood aspects of the two cities without compromising the independence and uniqueness of either one; and to enhance, by way of integration, the strengths and competitive edge of the two cities, both severally and jointly, in the national and international economies. In particular, this study has three specific objectives: 1) from a win-win perspective, conduct joint planning and construction of boundary-crossing infrastructure hardware; 2) under the fundamental framework of “One Country, Two Systems”, reduce institutional obstacles to realise two-way relatively free flow of key economic and social resources, i.e. relatively satisfactory for the flow of key resources between the two cities; and 3) conduct an assessment of the economic forecast of a Hong Kong-Shenzhen Metropolis, and a concise comparative study on the strengths and weaknesses of a Hong Kong-Shenzhen Metropolis relative to Mainland metropolises, including Guangzhou (and Foshan), Shanghai, Beijing-Tianjin, and overseas metropolises, including New York, London and Tokyo, as well as an analysis of the economic impact and the prospective role of a Hong Kong-Shenzhen Metropolis in the Pan-Pearl River Delta, in China and in the world. At the same time, this study will also give due consideration to the independence and uniqueness of the various social and economic strata of Hong Kong and Shenzhen under the “One Country, Two Systems” arrangement, because the process of integration concerns the cooperation relationship between two adjoining cities where there are two social systems and two tariff zones in one country, which means that such cooperation would need to take place subject to compliance with WTO rules.

This report will be presented in the following order: Background and Evolution of the Hong Kong-Shenzhen Metropolis Concept; Analysis of Past and Current Cooperation between Hong Kong and Shenzhen; the Effect and Influence of a Hong Kong-Shenzhen Metropolis on the Economic Development of China and the World (Comparisons Against Mainland and Overseas Metropolises); Assessment of the Economic Impact of a Hong Kong-Shenzhen Metropolis; Promoting the Relatively Free Flow of Key Resources between Hong Kong and Shenzhen (Status Quo and Differential Analysis of the Flow of Key Resources and Policy Design for Promoting the Relatively Free Flow of Key Resources); Breakthrough and Policy Recommendations for Building a Hong Kong-Shenzhen Metropolis.