Beijing is forging closer ties between Hong Kong, Macao and Guangdong province. Local shipping lines are thrilled.
Talk to anyone in the maritime or logistics field in Hong Kong about the future potential and invariably the Greater Bay Area (GBA) comes back into the conversation.
First conceived in 2017, the concept lives up to the Belt Road Initiative in terms of general economic mega plans defined during Xi Jinping’s tenure as head of China. In a way, it is reminiscent of the previous Communist era, what Deng Xiaoping called, “Crossing the river, feeling the stones” – a way of bridging the gaps for greater mutual strength in the long run.
The Guangdong-Hong Kong-Macao Greater Bay Area includes 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 square meters, the population 86 million, and the combined GDP last year was $ 1.68 billion, more than many G20 economies.
Shenzhen is China’s Silicon Valley
The objectives are to deepen cooperation between Guangdong, Hong Kong and Macao, to take full advantage of the composite advantages of the three locations, to facilitate deep integration within the region and to promote coordinated regional economic development.
Many members of the Hong Kong maritime community have adopted this new political guideline by setting up offices across the border in Guangdong.
Hing Chao, president of shipowner Wah Kwong, has a growing ship management division based in Shenzhen. He tells Splash he sees Hong Kong acting as a “super-connector” between China and the world with the SAR service and knowledge base leading maritime development across the GBA.
Likewise bullish is Angad Banga, the COO of the Caravel group. “With the GBA’s focus on logistics and shipping, Hong Kong will be exposed to a whole new world of opportunities that will enable the development of specialist services such as marine insurance and ship financing,” said Banga told Splash.
Carrie Lam’s last speech as CEO in October clearly underscored the government’s desire to strengthen Hong Kong’s status as an international transportation hub with plans underway to build a ‘smart port’ and promote enforcement. broader use of digital technology in maritime and port operations.
“At this point, shipping and technology really go hand in hand,” Banga said, “so the fact that there are plans to develop an IT mega hub next to Shenzhen – already a global innovation hub – should bring immense benefits of cross-border collaboration and R&D which will hopefully fuel the ongoing digitization and transformation of the maritime sector. “
With decarbonization arguably high on shipping priorities right now, the Guangzhou Futures Exchange has officially launched the process of developing emissions derivatives, putting in place a pricing mechanism to help China meet its goal of achieve carbon neutrality by 2060. The government has previously stated that it wants to support cooperation between the Hong Kong stock exchanges and the Guangzhou Futures Exchange to develop products on carbon emissions trading.
Cities in the region are able to coordinate the diversification of their economies
“This could be a very practical way for shipowners to fight decarbonization,” suggests Banga.
Wellington Koo, executive director of Valles Steamship, believes the GBA has the potential to address some structural issues, in particular the scarcity of land and human resources, which over the years has limited maritime development in Hong Kong.
In agreement, Kenneth Lam, CEO of Credit Agricole Asia Shipfinance, points out that the GBA has a population 10 times that of Hong Kong to begin with, which will provide a lot more human resources at different skill levels.
“Shenzhen is China’s Silicon Valley and there must be a lot of synergies within the GBA to come up with financially viable technologies to solve the decarbonization and ESG issues,” Lam said, adding that the northern capital flow / south specifically for shipping is another area to explore.
In June last year, the Chinese Ministry of Transport issued advice on improving the development of maritime services in the GBA and achieving the goal of making the GBA a pioneer area for services and transport. maritime services, a pilot zone for maritime reform, a driving force for openness – up innovation and development, and a demonstration zone for quality maritime services. Almost immediately, only two months later, an agreement was signed with the maritime authorities of Hong Kong and Macao to promote maritime cooperation within the GBA, to establish a collaborative mechanism for the governance of maritime transport security. in the GBA, to promote the development of green shipping and the optimization of the business environment for stakeholders in the maritime industry.
“Ultimately, these initiatives have enabled the regions of the GBA to form a mutually beneficial system to promote and improve their logistics and shipping sectors,” said Damien Laracy, director of the Hong Kong office of the firm. attorneys Hill Dickinson. “Thanks to the sharing of resources, the cities of the region are able to coordinate the diversification of their economies in order to optimize competitiveness. “
In conclusion, Laracy said, “Hong Kong will always be able to take advantage of its own unique advantages and strength as an extraordinary international financial center and shipping hub supported by a robust common law system, and will be in 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, released to coincide with the city’s Maritime Week, which began on Sunday. Splash readers can access the full magazine for free by click here.