A Trojan or a Gift Horse?

Barry Pearton's picture

MANAGED sensitively and sensibly, China's Bay of Plenty might - just might - help unlock some of the antagonism currently impacting its relationships across the world . . .

WHEN, on the 20th anniversary of Britain's 1997 'Handover' of Hong Kong to China, the Chinese Foreign Ministry declared Hong Kong's Basic Law "an historical document that no longer has any realistic meaning", a ripple of unease ran through the former Crown colony.
Many had already noted the increasing influence on Hong Kong affairs of Beijing's Liaison Office in Hong Kong.
And rulings by China's Supreme People's Court relating to student protests and the standing of local political parties were being seen as a trampling of Hong Kong's much-touted independent judicial system.
The vast majority of Hong Kong people acknowledge that any aspirations of independence from China are unrealistic - but they do want to maintain the 'one country, two systems' of Government, under which Hong Kong affairs are run by Hong Kong people.
So when, in September, China connected Hong Kong to its fast-train network, and in October linked Hong Kong by bridge to Macao and Zhuhai, references to a 'Trojan Horse'  quickly made the headlines.
An earlier announcement -- that the Separate Administrative Regions of both Hong Kong and Macao would be included in a conglomerate of 11 Chinese cities, nine of them in Guangdong Province, to form China's new Greater Bay Area (GBA) -- had already heightened fears that China was accelerating a merger of the two SARs into Greater China's political and economic system.
The high-speed train brings Hong Kong within 47 minutes of Guangzhou, capital city of Guangdong Province. Protestors were quick to scorn the siting of Chinese customs and immigration desks at the new West Kowloon rail terminus, well inside HKSAR territory.

THE protests have faded as Hong Kong's business sector embraces the Greater Bay concept -- and the potential business opportunities therein.

Han Zheng, Vice Premier of China's State Council, has been appointed to oversee development of the GBA, and the Chief Executives of both the Hong Kong and Macao SARs have been named to a GBA Leading Group, chaired by Zheng.
Business sees GBA as something new that Hong Kong needs to help drive its economy forward - and to further strengthen its standing as a global financial and services sector.
The fast train and the Hong Kong-Macau-Zhuhai Bridge together bring the majority of 70 million people living in GBA's 11 cities within an hour of Hong Kong -  now referred to as 'Hong Kong's Living Circle' or, more colloquially, the 'Hong Kong Hour'.
Hong Kong business expects new service industries to establish regional or even world headquarters in Hong Kong to cater for such a massive consumer market concentrated in a geographic area just five times the size of Greater Sydney.
New infrastructure opportunities will be part of the mix, along with next-generation technology and manufacturing hubs that feed into world markets.
Hong Kong authorities are preparing for an expected influx of new service industries, high-tech start-ups, and leading-edge manufacturing pods. Hong Kong also expects to provide services such as healthcare for the cities of GBA.
These expectations have spawned fast-track construction of a new CBD in Kowloon
(due to be completed in 2020) with a third
CBD now planned on land to be reclaimed at Lantau Island, adjacent to Hong Kong International Airport.    

NO DOUBT Hong Kong will also have key input into a number of policy issues around GBA now being actively addressed by the GBA Leading Group.
The first of these relates to visas. Business is pressing for a special GBA-wide visa to cater for both Hong Kong and multinational companies operating across multiple GBA cities in China.
As one observer puts it: "People flow is something that has to be worked through very carefully. You cannot just open your border.
"If a lot of people from China suddenly wanted to go to Hong Kong or Macau, it would cause a lot of pressure."
Current visas issued for foreigners travelling to China vary widely from city to city, and the rules, especially in the 11 GBA cities, will need to be synchronised.
The same applies to Customs and tariffs.
Then there is people flow, which is said to be near the top of the policy agenda for the GBA Working Group.
Hong Kong and Shenzhen have been actively competing over the past two years to attract high-level talent into start-ups and emerging industries. In fact, Hong Kong has now published a formal Talent List identifying those sectors in which new talent is especially welcome.
Competition between Hong Kong and Shenzhen over competing science parks, start-ups and even financial services is symptomatic of tensions that may emerge between the 11 GBA cities as local authorities and interest groups seek to protect their positions.    

FOR CHINA itself, there is a lot riding on successful implementation of GBA, which some refer to as a micro version of China's much grander Belt and Road Initiative (BRI).
If GBA can succeed, so the thinking goes, business - especially foreign business - will be more comfortable with the concept of Belt and Road, where the potential risk of committing long-term to major infrastructure in largely undeveloped lands can be daunting.
Almost without exception, BRI projects so far given the green light have been funded by China, and are being constructed by Chinese contractors. Often, as in Malaysia where Prime Minister Mahathir has cancelled two projects, no open tenders are called.
In Sri Lanka, the Government has handed a 99-year lease on Hambandota Port to China because it cannot afford China's US$1 billion price tag for the port's development.

The port complex, mired in allegations of corruption from the beginning, and again with a Chinese contractor, was tagged as a BRI project, part of China's String of Pearls strategy to establish a network of 'friendly' ports across Asia. India, especially, has been vocal in its opposition to Sri Lanka handing over control of what it considers a strategic port to China (memo Canberra: Please note the Port of Darwin).
As China also brazenly continues to build reef structures for military purposes in the South China Sea, more military analysts, corporate leaders and Governments are sensing that perhaps Xi's BRI dream -- with its ports, railways, expressways and energy arteries -- is really a design to provide China with massive influence over a large part of the world.
A ratcheting sharply downwards of China's current aggressive public stance in both regional and global affairs, together with successful development of a project like GBA -- which sits within China's own borders -- could do much to allow a pause for all players to consider the realities of co-existence in today's world.
Development of closer relationships in the GBA cities between Chinese companies creating new generation technology in areas like AI, robotics, blockchain, biogenetics, renewables and cyber security could also help mend some of the increasing distrust which has developed between China and the West in terms of allowing access for Chinese providers to critical national infrastructure.
This distrust emerges from three sources --frequent reports that China is both stealing and compulsorarily acquiring new technology to compete directly against the West; allegations of cyber spying; and what is seen as China's reluctance to share outside China any major new technology that Chinese firms might develop.
Such technology is as a rule scripted in Chinese language and configured to Chinese methods and systems. The concept of sharing genuine world-changing breakthroughs, as the West has done with, for example, the i-phone and the internet, seems alien to current Chinese thinking.
China wants the GBA to become a leading world hub for development, manufacture and export of tomorrow's technologies.
Increasing co-operation with foreign players, including a sharing of knowledge and expertise in these areas, could help reverse a climate of clearly deteriorating relations between China and many nations, including some in Africa and Asia-Pacific who now shrink from China's new-found hubris.
For our cover report on GBA for ASIA2019 we coined the term China's Bay of Plenty.
Managed sensitively and sensibly, that Bay of Plenty might -- just might -- help unlock some of the antagonism currently impacting in no small measure on China's business, Government and people-to-people relationships across the world.
* Barry Pearton is Publisher of ATI Magazine