Tue, Sep 04, 2018 - Page 9 News List

China’s Silicon Valley threatens to swallow up Hong Kong

Beijing’s push to create a US$1 trillion economy is facing resistance

By John Follain  /  Bloomberg

Illustration: Yusha

The completion of one of the world’s longest bridges stands as the biggest monument to China’s success in reuniting its colonial-era concessions. Overcoming the political divide might prove much more difficult.

The 55km span — eerily deserted as crews prepared for a ribbon-cutting ceremony expected later this year — connects the former European outposts of Hong Kong and Macau for the first time and ties them both to southern China. It is tipped to carry some 29,000 cars and trucks daily over blue tropical waters formerly patrolled by three navies, and across borders the People’s Liberation Army once guarded mostly to keep defectors from leaving.

The US$15 billion bridge is only one piece of Chinese President Xi Jinping’s (習近平) sweeping plan to knit the region into a high-tech megalopolis to rival Silicon Valley in California. This so-called Greater Bay Area — with 67 million residents — would boast a US$1 trillion economy and eclipse Japan as the world’s fourth-largest exporter, according to HSBC Holdings.

While the project envisions a better marriage between China’s industrial might, Hong Kong’s capital markets and Macau’s casinos, it also risks aggravating rising tensions over Beijing’s influence on the reclaimed colonies.

Hong Kong in particular is confronting difficult questions about whether it can profit from China’s rise while still maintaining the “high degree of autonomy” promised before its return from Britain.

“Hong Kong needs to diversify — it could be a San Francisco and much more to the Bay Area’s Silicon Valley,” said Albert Wong (黃克強), chief executive officer of Hong Kong Science and Technology Parks, a public corporation set up by the Hong Kong Government that runs start-up incubators. “Hong Kong can’t afford to miss this boat.”

The Greater Bay Area could serve as a new growth engine for Hong Kong, Macau and Shenzhen, the economic powerhouse one of Xi’s predecessors, Deng Xiaoping (鄧小平), built on their doorstep almost four decades ago.

To make it work, China must figure out a way to move people and capital more efficiently between its one-party state and the liberal, capitalist bastions of Hong Kong and Macau — with their own passports, currencies, trade policies, courts and civil rights.

Success could help quiet a persistent source of angst toward the Chinese Communist Party (CCP) and provide a launching point for China’s Belt and Road Initiative to integrate trade and infrastructure networks across Africa, Asia and Europe. Failure risks undermining an economic system credited with making Hong Kong a top financial center and former Portuguese possession Macau the world’s biggest gaming hub.

The challenge facing Xi was clear during the three-year debate over China’s US$11 billion project to connect Hong Kong to its prized high-speed rail network via Shenzhen, where Internet giant Tencent Holdings and smartphone maker Huawei Technologies are based. To make the commute more appealing, authorities sought to station the Chinese border crossing at a futuristic new rail terminus overlooking Hong Kong’s Victoria Harbor.

The plan faced resistance from democracy advocates, who argued it would undermine a constitutional ban on Chinese law enforcement officers operating in the territory. Hong Kong finally passed the necessary legislation in June, but only after China’s National People’s Congress stepped in to ratify the plan and six opposition lawmakers were purged from the local council for a variety of violations.

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