Hong Kong and Shenzhen are seen as highly complementary in using their respective strengths to drive development in Bay Area. He Shusi and Chai Hua report.

Shenzhen’s spectacular rise in the past four decades and the central government’s granting the southern metropolis greater autonomy and a string of favorable policies is by no means a zero-sum game vis-a-vis Hong Kong.

These policies, ranging from capital market reform, innovation and technology, to city management and professional services, and coinciding with Shenzhen’s 40th anniversary as the nation’s first special economic zone, augur well for Hong Kong and the development of the Guangdong-Hong Kong-Macao Greater Bay Area, political and business bigwigs say.

The Communist Party of China Central Committee and the State Council jointly issued a plan in mid-October, initiating pilot reforms in Shenzhen to turn the city into a demonstration area of socialism with Chinese characteristics in the next five years.

The wide-ranging blueprint underlines institutional reform, market-based allocation of means of production, relaxed regulation on various business sectors, as well as favorable policies for foreign investment and professionals, especially in innovation and technology development.

David Wong Yau-kar, a Hong Kong deputy to the National People’s Congress, the country’s top legislature, said these policies are to encourage Shenzhen to make bold new attempts as a special economic zone as it has done in the past 40 years.

Although these policies are made for Shenzhen, they don’t make Hong Kong less important, he said. “They’re, of course, beneficial to the development of the entire Bay Area.”

Hong Kong and Shenzhen can complement their advantages rather than merely compete against each other. Under “one country, two systems”, both cities have different roles in regional development, especially in financial services, he said.

The SAR has a common law system that international investors prefer. With Hong Kong’s close ties with the international market and the professional services and talent serving the financial world, the city still has an edge in financial development, said Wong, who also chairs Hong Kong’s Mandatory Provident Fund Schemes Authority.

Hong Kong is the best platform for Shenzhen enterprises that want to attract international talent under these new policies, and innovative companies that wish to go public, he said.

The two metropolises also share a close relationship in turning the Bay Area into a global innovation and technology hub. As a non-executive director of some listed and unlisted companies, Wong stressed the importance of the synergy between financial services and inno-tech development.

The United States’ success in inno-tech is based on that country’s mature financial market, which can cater to the financing needs of tech startups in every stage of their development, Wong said. Hence, Shenzhen, the inno-tech hub, and Hong Kong can collaborate well in this area, he said.  

Among other new policies, the central government allows foreign-listed innovative companies to issue Chinese Depository Receipts on the Shenzhen Stock Exchange on a pilot basis.

Wong sees the practice as a big leap for foreign-listed Chinese inno-tech companies to raise money in the home market, where investors are more familiar with their operations.

In terms of the proposed registration-based IPO system reform in Shenzhen’s startup board, ChiNext, Wong thinks the Hong Kong stock market’s sound regulatory regime can be referenced.

After decades of development, Hong Kong’s regulatory regime is robust and in line with international standards, he said.

Hao Hong, managing director of Bocom International, said the highlight of the central government’s financial policies for Shenzhen is the registration-based IPO system for the ChiNext board.

It’s a fundamental reform of Shenzhen’s IPO system, which can boost the number of listed companies on the Chinese mainland, and generate more investment opportunities in the market, he said.

As for CDRs, Hong said the move can facilitate the internationalization of China’s capital market and diversify investors’ portfolios. 

All-embracing approach

The new policies also stress the acquisition of overseas professionals and the introduction of quality education resources from around the world.

Wong Yuk-shan, president of the Open University of Hong Kong, said that the central government’s policies allow Shenzhen greater flexibility in leveraging “one country, two systems” to facilitate a win-win situation through collaboration within the Bay Area.

But he said the central government only issues permits, guidelines and directions for Shenzhen, rather than detailed orders on how to implement them.

Hong Kong has to strive to utilize such favorable policies and make concrete breakthroughs in relevant areas, said Wong Yuk-shan, who is also a Hong Kong deputy to the National People’s Congress.

The SAR needs the spirit of entrepreneurship, which means being willing to reform, taking risks and gaining experience through practice. “They’re the most important elements that make Shenzhen the city it is today after becoming a special economic zone 40 years ago,” he said.

To turn policies into actual economic growth embraces all these elements. “Otherwise, they’re just words on paper,” he said.

Wong Yuk-shan said that in the past, cooperation between Hong Kong and Shenzhen was mostly participated by businesspeople and investors. But after 40 years, the focus is now on the exchange of professionals and collaboration in professional services, such as financial, legal, tax, education, and healthcare services, he said.

Hong Kong’s high quality of higher education can make a major contribution, he said. As most public universities have opened or are planning to open new campuses in Guangdong province, Wong Yuk-shan thinks there’s plenty of room for cooperation in education and scientific research.

In the future, the Guangdong campuses of Hong Kong universities can introduce more exchange or short-term study programs for Hong Kong students to help them explore more possibilities in the Bay Area, he said.

In a word, Hong Kong has to abandon the old mindset that Shenzhen is just a follower, and also reject the idea that the sun has set for the “Pearl of the Orient” amid fierce competition with its neighbor, Wong Yuk-shan said.

Shenzhen has seen tremendous changes since becoming a special economic zone 40 years ago. From 1979 to 2019, its GDP grew at an annual rate of 21.6 percent to 2.69 trillion yuan (US$408.4 billion).

“We must see Shenzhen’s edge in innovation and technology, and the huge improvement it makes in municipal administration and public services,” Wong Yuk-shan said. “But Hong Kong still has advantages in many areas — from professional services to city management.”

Edward Au, southern region managing partner with Deloitte China, said that Hong Kong should leverage its talent in professional services, innovation and technology, and international governance standards, and collaborate with Shenzhen.

“I foresee further cooperation between the two cities, especially in infrastructure, talent and healthcare development, the benefits of which will spill to the other nine cities in the Bay Area to increase synergy,” he said.

Such opportunities will uplift Hong Kong’s capability and help it integrate into the Bay Area as a technology and finance powerhouse, he said.

Contact the writers at heshusi@chinadailyhk.com