Can the Guangdong-Hong Kong-Macao Greater Bay Area Become the No. 1 Regional Economy in the World?

Can the Guangdong-Hong Kong-Macao Greater Bay Area Become the No. 1 Regional Economy in the world?
CHAPTER ONE: INTRODUCTION
1.1 Introduction
The world has become more competitive with countries around the world are putting measures in place to enhance their competitiveness on the global stage. For instance, Aiginger, Bärenthaler-Sieber, and Vogel (2013) reported that the European Union has been working on new policies that enhance competitiveness by promoting new industrial and service industries. Given the global world and economy we live in today, gone are the days when countries can protect their economies using previous tools and policies. As a result, opening economies has become an important factor in enhancing competitiveness today (Wignaraja, 2003). The opening up of the economy has been accelerated by the need for countries to take advantage of markets in other countries. At the same time, regional integration has gained popularity (Kokko & Gustavsson, 2004). Regional integration has become important as countries and regions collaborate to promote economic growth and address global challenges. Regional integration has been applauded for increasing the interconnection of the global economy. According to the Asian Development Bank Institute and Asian Development Bank (2015), when countries and regions work together, they become more effective in tapping into global markets, sharing resources, and minimizing costs. In China, regional integration has become necessary as the nation’s economy becomes more complex (Azis and Menon, 2013). China has experienced economic growth, which has allowed it to tap into global markets (Barnett et al., 2004). For China to sustain economic growth, it must ensure its regions are more integrated. When regions work together, they enhance cooperation in policymaking and facilitate the development of common policies (Azis and Menon, 2013). Mussa (2000) suggested that the primary motivating driving force in establishing economic integration is overcoming economic bottlenecks by introducing new policies and regulations to stabilize the economy.
The Greater Bay Area (GBA) of Guandong, Hong Kong is comprised of nine cities, two administrative regions, and over 66 million people and is considered a great attraction for investors to strengthen their productivity (Shao et al., 2020). The GBA has recently issued an ‘Outline Development Plan for the Guandong,’ emphasizing regional economic development and fostering ongoing processes to deepen China's reforms (Li and Kwok, 2019). China's previous policies on cross-border collaboration are based on harmonization and integration to strengthen the economy. Leveraging the advantages of location and a strong plan is expected to stimulate the dynamic mechanism for the entire region (Li & Kwok, 2019). This paper analyzes data from secondary sources to determine whether it is possible, and if so, what it would take, for the GBA to become the world's Number 1 regional economy in the world.
1.2 Purpose and benefits of study
The overall purpose of this study is to determine whether it is possible, and if so, what it would take, for the GBA to become the world's Number 1 regional economy in the world. Understanding how the region can be developed and managed sustainably is essential in outlining what the GBA needs to achieve economic development. Analyzing the GBA's economic, social, and political aspects is vital in outlining its development and identifying ways of addressing any negative implications. An understanding of the dynamics of the region is instrumental in drafting the factors driving the region’s growth.
This study is beneficial in many ways. One of the benefits of this research is that it will investigate the importance of economic integration in influencing the economic prosperity of the GBAGBA and, by extension, other emerging economic areas. Economic integration is critical in enabling regions to promote economic growth and development in today's world (Azis and Menon, 2013). According to Shah (2021), economic integration is crucial in attaining prosperity and stability, which are required to increase regional trading activities.
When regions minimize trade barriers, businesses typically have more market access, thus consumers have greater access to various goods and services at lower prices (UNCTAD, 2013). The study will also help identify the economic gaps, including the effects of the Covid-19 pandemic that have impeded the area's growth of the world’s leading regional economy. The results of the Covid-19 pandemic continue to be felt in numerous regions worldwide. The pandemic has slowed trade and reduced some regions' competitive advantages (Arriola et al., 2022). Examining the gaps in the GBA will be critical in formulating appropriate solutions to the challenges.
Moreover, the new knowledge anticipated as an outcome of the study includes the potential of the GBA as the leading global economic region and the political, regulatory, and economic constraints impeding the same. This study will utilize research from several credible sources, which will be instrumental in providing an in-depth understanding of the economic and financial characteristics of the region. This will be critical in uncovering current constraints and possible solutions for the Covid-19 pandemic solutions as policy adjustments.
1.3 Research questions
The Greater Bay Area is an important strategic unification region that comprises Hong Kong, Macao, and the nine cities of Chinese Guangdong province, including Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing (Biswas, 2022). The development of this urban agglomeration and regional economic integration was officially launched in 2009 and fully implemented in 2015. The region covers an area of around 56,000 square kilometers with a population of more than 86 million people. In 2020, the GDP for the region was $2 trillion, or 11% of the combined GDP of mainland China, Hong Kong Special Administrative Region (SAR), and Macao SAR (Biswas, 2022). This study aims to determine whether it is possible and if so, what it would take for the GBA to become the world's Number 1 regional economy in the world. The study is significant as it will explore the benefits of economic integration for the three regions in the Greater Bay Area.
Key research questions include:
1) How has the COVID-19 pandemic recovery impacted the GBA’s economic progress?
2) What political, regulatory, and economic constraints influence Greater Bay Area?
1 How does the GBA’s economic prosperity contribute to China’s strategic move to become an economic powerhouse?
2 What recommendations are necessary for Greater Bay Area to become the world's Number 1 regional economy in the world?
1.4 Significance of the study
The study provides insights into the GBA's potential to become the world's leading regional economy. In particular, the research provides information on how large-scale regional development plans can be implemented. It is easier to make proposals regarding regional integration but implementing them can be challenging due to the complex nature of the process. The study will demonstrate the various advantages that the GBA has, including a large population, strategic location, and a solid economic base to implement the integration.
The research will also demonstrate the essence of the GBA as a prime example of China’s economic influence in the region. China’s strategic move to become an economic powerhouse is worth examining because of its ability to contribute to shaping the global economy. The study will critically investigate China's challenges in developing the bay. For instance, the GBA addresses infrastructural challenges and coordinates policies and regulations across various jurisdictions. The study of the GBA will hence be instrumental for regions and nations seeking to develop regional economies. The GBA’s experience will offer valuable insights into how areas can overcome challenges faced in the integration process. The GBA model will also serve as an example to other countries and regions that wish to enhance their economic ability through integration.
1.5 Implications of research
The research will be crucial in informing policy and decision-making needed to propel the GBA to become the world’s Number 1 economic region. Examining the implications of COVID-19 on the area will be instrumental in outlining the resilience of the GBA to external forces. The study will indicate the measures the GBA must undertake to navigate its way to an economic hub. Moreover, the study will provide other regions with important information. The conclusions drawn will be useful for future researchers examining the GBA's progress toward integration. Finally, the recommendations will assist policymakers in making the appropriate adjustments to ensure that the region achieves its objective of being the leading regional economy in the world.
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
This chapter examines the extant literature which starts by providing an overview of the GBA area by providing critical data like population and income. Next, the impact of globalization on China is explored. Moreover, a comparison is made between the GBA and other major world bays. The impact of the COVID-19 pandemic is examined to establish how it has affected the economic progress of the GBA. The competitive advantages of the GBA are then discussed in order to establish the factors that enable the region to succeed. Additionally, the challenges facing the GBA are outlined, Lastly, two theoretical frameworks guiding the research are discussed.
2.1 Overview of the Greater Bay Area
As previously mentioned, the GBA refers to a region located in southern China which comprises Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Jiangmen, Huizhou, and Zhaoqing, and two special administrative regions, namely Hong Kong and Macao (Macau). The Chinese government formulated the GBA concept to integrate Macao and Hong Kong into the Chinese mainland (Liu, 2019). The move was designed to boost the economy of the cities in the Pearl River Delta. Li (2008) argues that while the Pearl River Delta was a prime economic area in the 1980s and 1990s, since that time, it has become secondary to the Yangtze River Delta region in East China. The GBA's development plan, initiated in 2017, seeks to reclaim the lost ground and ensure the region regains its position as the world’s largest and most economically advanced Bay Area (Chong and Pan, 2020)
The GBA covers an area of 56,000 square kilometers. Demographically, the GBA had a population of 86.7 million in 2021 (Yu, 2021). The GBA has a larger population than the rest of the major Bay regions in the world. For example, the Tokyo Bay Area, the New York Metropolitan Area, and the San Francisco Bay Area had a population of 44.37, 19.26, and 7.76 million people, respectively (Statista, 2022). Much migration has been to Guangzhou, Shenzhen, Foshan, and Dongguan. The growth in population in these cities is primarily due to the availability of job opportunities. In particular, Guangzhou and Shenzhen have remained the core cities of the GBA. The availability of job opportunities in these cities has attracted many young people (The Education University of Hong Kong, 2022). The tableTable 1 below demonstrates the movement of the population of the nine cities. In Guangzhou, Shenzhen, Foshan, and Dongguan, in-migration dominates, while Zhaoqing and Jiangmen have more out-migration than in-migration. For example (see my comment below)
Table 1 – In-, Out-, and Net-Migration in the GBA
City

In-Migration

Out-Migration

Net Migration


From the
province

From outside
the
province

To the
Province

To
outside
the
province

Within
the
province

Outside
the
province

Shenzhen

74,087

145,998

3,943

14,685

70,144

131,313

Guangzhou

56,285

62,368

21,172

24,988

35,113

37,380

Foshan

46,454

37,456

4,857

5,482

41,597

31,974

Dongguan

16,126

27,612

3,062

3,568

13,064

24,044

Huizhou

38,752

24,674

33,481

8,985

5,271

15,689

Zhongshan

7,744

10,156

2,349

3,724

5,395

6,432

Zhuhai

6,955

11,214

3,608

5,958

3,347

5,256

Zhaoqing

19,993

4,951

28,243

5,679

-8,250

-728

Jiangmen

11,548

8,607

15,021

9,169

-3,473

-562

Source: Bureau of Statistics of Guangdong Province. (2019)
In 2020, the GBA's gross domestic product (GDP) reached $1.67 trillion (Statista, 2022). However, this was half that of the Tokyo Bay Area and about one-fifth of that of the San Francisco Bay Area. The GBA’s per capita GDP increased from $19,367 in 2020 to $22,585 in 2021 (Statista, 2022). The per capita GDP in Hong Kong reached $49,375 in 2021, making the city the highest ranking in the GBA (Statista, 2022). This demonstrates that, while the GDP of the GBA is still lower compared to major bay areas like Tokyo Bay Area, the increase in GDP between 2020 and 2021 demonstrates upward growth.
The overview of the GBA is critical because it provides data necessary to evaluate the area. In particular, the synopsis gives information necessary to understand the GBA and hence helps determine how it compares with other significant bay area throughout the world. Furthermore, developing an understanding of the GBAis essential to examine how globalization has affected China since the GBA is part of the country, which will be discussed next.
2.2 The impact of globalization on China
Market globalization has been instrumental in changing the manner by which countries and businesses operate. Nations can not longer afford to think locally in the era of globalization (Ristovska and Ristovska, 2014). Something happening in one part of the globe can significantly impact another part of the globe. In particular, the world has become more interconnected, especially with the advent of information communications technologies (ICTs). Globalization continues to present many business opportunities and advantages to countries (Kyove et al., 2021). Today, many countries no longer produce simply for their local market but also factor in the global market. Globalization has allowed countries to have a larger market that did not exist before. However, although their have been numerous benefits resulting from globalization, it has also resulted in several unique challenges, especially stiff competition among regions and countries (IMF, 2008). The opening up of markets has exposed regions and nations to intense competition from other areas. It has therefore become necessary for regions and countries to evaluate their competitiveness on the global front.
China has been at the forefront of taking advantage of globalization. For instance, in 2001, China proposed plans to develop small towns and small and medium cities and enhance the operation of regional central cities (Gu, Li, and Han, 2015). China realized that urban development was critical in enhancing its competitiveness on a global scale. Hence, the government adopted the idea of urban agglomeration as the primary form of urbanization in the nation (Zhang, 2022). By 2011, China had transformed many urban areas, by forming groups of cities and coordinating their development. In 2017, China unveiled the GBA as an ambitious scheme seeking to integrate the Pearl River Delta and make it a significant trading hub (Li et al., 2022). Through China’s 13th Five-Year Plan, the government demonstrated the need to set the GBA apart from its predecessors. The venture is meant to steer China’s sustainability of economic growth and ensure that China becomes a moderately prosperous nation by 2049 (Li et al., 2022).
China’s 1978 reforms combined with Globalization will enable China to create more job opportunities for workers. Because of the reforms, China has worked hard to become a world-wide leading manufacturing hub. The availability of cheap labor in China has attracted overseas manufacturers to set up their plants in China (Yang & Gallagher, 2017). As a result, the GBA was projected to be an economic powerhouse. As the region attracts more industries, it will create more employment opportunities for the massive population in the area. At the same time, the GBA will experience increased business activities, which are designed to result in increased demand for more workers. Since China has a vast population, the GBA is expected to play a major role in providing job opportunities for the Chinese people (Yu, 2021).
This section discussed China’s ability to take advantage of globalization. As a central manufacturing hub in the world, globalization has allowed China to sell its products to other parts of the world. Because China accepts globalization, it is felt that the GBA is better located to enable them to access foreign markets. In the next section, a comparison between the GBA and other significant bays in the world will be described.
2.3. How the GBA compares to other major Bays
The development of the GBA seeks to make it a unique Bay area. Before its inception, the economic development of the other three major bay areas played a critical role in determining the direction the GBA should take. For example, the New York Bay area is considered a financial center in the US (Zhang, 2022). The GBA has top financial services corporations, making the area a financial hub. The San Francisco Bay Area stands out as a technology hub. The area is home to some of the most high-profile universities and leading information technology companies like Apple and Intel. The area has cut a niche as a technological hub, attracting businesses that want to use technology to provide solutions. Tokyo Bay is famous in Asia for its diverse industries and dense population (Okata and Murayama, 2011).
According to Guo (2021), the New York, San Francisco, and Tokyo Bay areas have a common feature characterized by their open economy. Each of the bay areas allow free entrance and exit of goods and services. Moreover, capital and individuals can move in and out of the bays. The three major bays have reduced trade barriers and ensured minimum tariffs and capital controls. The openness of the three major bays is demonstrated by their close link to the international market. Zhang (2022) agrees that these bays have formed an important node in the world’s value and supply chain. Compared to the other economic zones in China, the GBA is the most open region in the country (Zhang, 2022). For instance, Hong Kong remains the most open free trade port in the world. The port permits the free movement of commodities. It also allows people from 170 countries to enter the port without a visa (China Discovery, 2022). In the same way, Macao’s economy is relatively open. The city exempts visa requirements from citizens in about 130 countries, making it convenient to access. Like the three major bays, the GBA has been at the forefront of opening China to the outside world.
Given the success of the other three major bay areas, the GBA wants to form a diverse economic body including industries ranging from finance, technology, to other critical industries. The GBA is the largest among the four bay areas, with a size of 56,000 square kilometers (Liu, 2019). Because of its huge size, the GBA has better development potential. The presence of core cities within the GBA is instrumental in propelling the area to prosperity. Cities like Guangzhou, Hong Kong, Shenzhen, Dongguan, and Zhuhai are critical in ensuring that the GBA works to become an economic hub globally. For instance, Hong Kong is an international financial center and a technological provider (Schenk, 2002). Innovation and technology industries are major driving forces of economic development for any area that seeks to advance. The formation of the GBA has brought about businesses that wish to take advantage of the numerous economic growth and technological advancements.
In summary, in the same way, the New York, San Francisco, and Tokyo Bay areas have attracted diverse businesses, the GBA has allowed the region to attract major industries from China and abroad. Because of the impact of the COVID-19 pandemic on world’s economies, it is essential to examine how the pandemic has impacted the GBA, which I will do in the next section.
2.4 The impact of the COVID-19 pandemic on the GBA
The COVID-19 pandemic adversely affected most of the world’s economies, China included. In response to the pandemic, various measures to control the transmission of the virus were introduced. These measures were largely non-pharmaceutical and had restricting mobility and social distancing. People were required to stay home except when purchasing essential items or seeking medical treatment (Zhong et al., 2022). These measures led to a significant reduction in human mobility. Businesses were forced to send their workers away in the wake of social distancing measures. China's labor-intensive businesses were forced to reduce their labor force (Kemp and Spearritt, 2021). It took much work for businesses to operate normally, significantly reducing goods and services production. China was majorly hit as it continued to put measures to control the transmission of the virus. The strict criteria adversely affected supply chains in the country.
The GBA is a significant economic hub with a large concentration of high-tech businesses, financial services, and cultural industries. The implementation of COVID-19 restrictions had an adverse effect on businessthe GBA’s business. Firstly, restricting mobility reduced the area's demand for goods and services. People were forced to stay at home unless purchasing essential items or sought medical services (Burki, 2022). The GBA businesses experienced reduced demand for their products and services. Secondly, businesses were forced to close down as the government continued implementing strict measures to control the spread of the virus (Zhong et al., 2022). For instance, the government required social distancing among workers, forcing businesses to send many workers home. Some of the firms in the GBA were forced to close specialties where they could not meet the safety measures the Chinese government had put in place. For instance, the mandatory requirements of the COVID-19 virus were challenging to implement, especially for small and medium enterprises (Ma, Liu, and Gao, 2021). Overall, the COVID-19 pandemic adversely affected the economic performance of the GBA.
Recent progress in controlling the spread of COVID have allowed normalcy to return in most parts of the world, including China. Governments have put up measures to curb the spread of the virus, including mandatory vaccines. At the same time, the Chinese government has eased some of the restrictions on human mobility. For instance, the relaxation of global COVID-19-related social distancing measures raises hope for the GBA (Nande et al., 2021). The area really needs to access the Chinese mainland markets. Vaccination lifted most of the social distancing restrictions. Now, people can mingle more in the GBA compared to earlier days when the government limited interactions. Businesses are recovering from the effects of the pandemic. With human mobility, businesses can continue with their operations. Despite the pandemic, the GBA remains strong and is on its path to prosperity (Xu, 2022). Despite the pandemic putting to halt some of the initiatives, the government and business support the GBA gets will allow it to move on despite the delays.
In this section, the literature suggested that the strict measures to combat the COVID-19 pandemic had negative implications on economic activities. As a result, business in the GBA has been adversely affected. However, the GBA is on its path toward recovery. In the following section, the competitive advantages of the GBA well be examined.
2.5 The GBA’s competitive advantages
According to Yu (2019), the GBA has several competitive advantages. Firstly, the region has achieved economic development because of its open natural geographic location. The GBA is strategically located at East Asia's heart, providing access to major markets like mainland China and South Korea. Secondly, the urbanization rate of the GBA is increasing (Yang et al., 2020). For instance, Hong Kong and Macao have become entirely urbanized. The high rate of urbanization is strengthening the interregional links. At the same time, urbanization has broken reduced administrative barriers. The different cities are now coordinating and cooperating in their activities, which lays the foundation for the competitiveness of the GBA. Thirdly, the GBA is accessible to the outside world. Developed port cities like Guangzhou, Shenzhen, Hong Kong, and Macao are instrumental in connecting the bay with the domestic and international markets (Chan, 2018). The export-oriented infrastructure contributes to the openness of the area.
In summary, the GBA has an advantage because of its strategic location in East Asia. The high rate of urbanization has driven economic growth in the GBA. Moreover, the GBA is accessible through the port cities like Guangzhou, Shenzhen, Hong Kong, and Macao, which connects it to the outside world. With the competitive advantages in mind, the next section will examine the implications of the GBA on China’s economy.
2.6 Implications of the GBA "
The economy of the GBA will be a significant driving force that will propel China to become one of the leading economies. Abeysinghe & Ding (2003) demonstrate that China’s rise as an economic powerhouse has been a major concern among its neighbors. China’s rapid economic growth has instilled the fear that the nation is becoming a ‘“regional factory’” that will, in the future, ‘“hollow out’” the industries of the neighboring economies. In this regard, a regional factory implies a major manufacturing center and hollowing out implies making industries in the neighboring economies disappear. These fears are not without basis. According to Morrison (2019), China has been the fastest-growing large economy and has become a major exporter over the past two decades. China’s products are consumed worldwide, indicating the country’s export emphasis. Fan (1998) asserts that China has successfully attracted foreign direct investment (FDI). China is the second country in the world to receive more FDI after the US. Sui (2019) believes that the advantage of capital flow through FDI and trade balance surpluses has drastically increased China’s foreign reserves. China’s competitiveness is on the rise, considering the critical indicators. China is, making it the primary producer of grain, and a leader in producing coal, steel, and cement (Bai at al., 2018). Before the economic reforms of 1978, home electronics manufacturing ...