Beijing is forging closer links between Hong Kong, Macao and Guangdong Province. Local shipping firms are delighted.
Speak to anyone in maritime or logistics in Hong Kong about future potential and invariably the Greater Bay Area (GBA) comes up in conversation.
First conceived in 2017, the concept is up there with the Belt Road Initiative in terms of mega, overarching economic plans laid out during the tenure of Xi Jinping as leader of China. In a way it harks back to previous Communist times, what Deng Xiaoping called: “Crossing the river by feeling the stones” – a way of bridging divides for greater, mutual strength long term.
The Guangdong-Hong Kong-Macao Greater Bay Area comprises the two Special Administrative Regions (SARs) of Hong Kong and Macao, and the nine municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province. The total area is around 56,000 sq m, population 86m and the combined GDP last year stood at $1.68trn, bigger than many G20 economies.
Shenzhen is the Silicon Valley of China
The objectives are to further deepen cooperation amongst Guangdong, Hong Kong and Macao, fully leverage the composite advantages of the three places, facilitate in-depth integration within the region, and promote coordinated regional economic development.
Many in Hong Kong’s shipping community have embraced this new political directive, setting up offices across the border in Guangdong.
Hing Chao, chairman of shipowner Wah Kwong, has a fast growing shipmanagement division based in Shenzhen. He tells Splash he sees Hong Kong acting as a “super-connector” between China and the world with the SAR’s service and knowledge base leading maritime development across the GBA.
Similarly bullish is Angad Banga, the chief operating officer of the Caravel Group. “With the GBA’s focus on logistics and shipping, Hong Kong will gain exposure to a whole new world of opportunities that will enable further development of specialised services such as marine insurance and ship finance,” Banga tells Splash.
Carrie Lam’s final address as chief executive for this term clearly outlined the government’s desire to boost Hong Kong’s status as an international transportation centre with plans underway to build a “smart port” and promote wider application of digital technology in maritime and port operations.
“At this point, shipping and technology really go hand-in-hand,” Banga says, “so the fact that there are plans to develop a mega IT hub neighbouring Shenzhen – already a global innovation hub – should bring immense benefits of cross-border collaboration and R&D which will hopefully feed into the ongoing digitalisation and transformation of the maritime sector.”
With decarbonisation arguably at the top of the agenda for shipping right now, the Guangzhou Futures Exchange has formally kicked off the process of developing emissions derivative products, putting a pricing mechanism into place to help steer China towards its goal of attaining carbon neutrality by 2060. The government has already said they want to support cooperation between Hong Kong Stock Exchanges and the Guangzhou Futures Exchange to develop products on carbon emission trading.
Cities within the region are able to coordinate diversification of their economies
“This could lend itself as a very practical way for shipowners to tackle decarbonisation,” Banga suggests.
Wellington Koo, executive director at Valles Steamship, believes the GBA holds the potential to resolve certain structural issues, in particular the shortage of land and manpower resources, which over the years has limited maritime development in Hong Kong.
Concurring, Kenneth Lam, CEO of Credit Agricole Asia Shipfinance, points out that the GBA has a population 10 times of Hong Kong to begin with that will provide substantially more human resources at different skills level.
“Shenzhen is the Silicon Valley of China and there must be a lot of synergies within the GBA to come up with financially viable technologies to address decarbonisation and ESG issues,” Lam says, adding that the north/south flow of capital specifically for shipping is another area worth exploring.
In June last year, China’s Ministry of Transport issued opinions on enhancing the development of maritime services in the GBA and achieving the goal of building the GBA into a pioneer zone for maritime service and transportation, a pilot zone for maritime reform , a driver for opening-up innovation and development, and a demonstration zone for high-quality maritime services. Just two months later, an agreement was signed with maritime authorities from Hong Kong and Macao promoting maritime cooperation within the GBA, to establish a collaborative mechanism for the governance of marine transportation safety in the GBA, to promote green shipping developments and the optimisation of the business environment for maritime industry players.
“Ultimately, these initiatives have enabled the regions within the GBA to form a mutually beneficial system to promote and improve their logistics and shipping industries,” says Damien Laracy, head of law firm Hill Dickinson’s Hong Kong office. “Through resource sharing, cities within the region are able to coordinate diversification of their economies so as to optimise competitiveness.”
Concluding, Laracy says: “Hong Kong will still be able to leverage its own unique advantages and strength as an extraordinary international financial trade, and shipping centre supported by a robust common law system, and be able to act as the backbone of the GBA by providing a reassuring and reliable bridge to international markets.”
This article is part of Splash’s Hong Kong Market Report 2021, publishing to coincide with the city’s maritime week, which started on Sunday. Splash readers can access the full magazine for free by clicking here.