Connectivity with the Mainland & GBA

The 14th National People's Congress and National Committee of the Chinese People's Political Consultative Conference (the Two Sessions) were held in Beijing in March 2023, which emphasised the importance of economic stability and growth in post epidemic era During the Two Sessions, China’s central government addressed the important strategic position of the Guangdong-Hong Kong-Macau Greater Bay Area (the GBA) in the country’s future roadmap.

The 2023 National Government Work Report discussed the development of the Hong Kong SAR and Macau SAR in the past five years in relation to the future development of the GBA, including but not limited to deepening the construction of the GBA, supporting the economic development, improving people's livelihoods, preventing the epidemics, and maintaining stability Chinese President Xi Jinping’s speech during the Two Sessions further pointed out the importance of supporting economic development in the Hong Kong and Macau and further integrate both regions into the overall development of the country.

Backed by the central government, local governments within the GBA also emphasised the importance of connectivity and coordinated development of the GBA. The Guangdong Government Work Report called for the construction of the GBA and Shenzhen Pioneering Demonstration Area, as well as for further development of the Hengqin, Qianhai, and Nansha economic zones To achieve these goals, local government introduced a variety of supportive policies (Table 1).

As outlined by these policies, every major city in the GBA will receive support to develop specific key industries. For example, the focus for Guangzhou is on developing advanced manufacturing, financing and strategic emerging industries. Zhuhai plans to focus on new energy storage, electronic engineering, and marine industries. Meanwhile, Zhongshan focuses on new energy, biotech and next-generation technologies. Different development priorities for the respective cities across the GBA can enhance the agglomeration effect among them, increase the connectivity between these cities, and promote the coordination among the GBA Building an interconnected ecosystem is one of the key prerequisites to achieve the collaborative development of the GBA super city cluster and take advantages of the synergistic effects.

Government connectivity

Following the reopening of the Hong Kong-Chinese Mainland border and the relaxation of pandemic restrictions, governments of the GBA cities conducted multi-level meetings and visits At the same time, enterprises and institutions in the nine major cities of GBA have been approaching Hong Kong to explore opportunities for cooperation and attract more investments from Hong Kong and the overseas. For example, the Department of Commerce of Guangdong Province led a delegation to Hong Kong to hold seminars on their investment and trade policies. At the same time, Hong Kong SAR government representatives also actively visited Chinese Mainland cities in the GBA. In February 2023, Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference Liang Zhenying led a Hong Kong delegation to Nansha for a two-day study session covering many aspects, such as entrepreneurship, work, life, healthcare and logistics The Chief Executive of Hong Kong SAR, John Lee, also led a delegation to visit Guangzhou and Shenzhen focusing on high-quality development of the GBA and strengthening cooperation in key areas such as the talent flow and mobility, financial assistance to technology and innovative industries, and the development of the green economy. This strengthened intergovernmental cooperation will boost the connectivity among the GBA cities such as the free flow of capitals and talents.

Improving cross-border capital flows

Finance plays an important part in the GBA initiative. Hong Kong is one of the world’s leading financial centres and one of the most developed asset management and insurance markets globally It serves as a central hub for financing investment and trading activities within the GBA, to support both multinational corporations to further expand in the region, as well as help Chinese corporates establish their presence overseas.

In addition, as Chinese companies continue to expand their global footprint, Hong Kong remains a key offshore hub for facilitating the internationalisation of the Renminbi (RMB). The city has already held large capital flows with mainland China. The Stock Connect schemes, Bond Connect and Mutual Fund Recognition have laid strong foundations to achieve further loosening of regulations, resulting in more RMB-denominated equity products and investment portfolios Besides, with the progress of a number of measures such as setting up the GBA insurance centre in Qianhan and the GBA international commercial bank in Nansha, the financial service sectors within the region are increasingly connected. This year, China’s top regulators have unveiled more than two dozen measures (for example, the Hengqin and Qianhai Finance 30 Measures) to boost crossborder investment as they further opened up the Hengqin and Qianhai economic zones in the GBA The Hengqin and Qianhai Finance 30 Measures aim to improve financial risk monitoring, prevention and resolution systems to enable high-level interconnection with Hong Kong's financial markets by 2025 Leading by the success in the financial industry, Qianhai will continue to drive the development and collaboration within the GBA in the fields of capital interoperability, economy, enterprises, and industries, which eventually also help the manufacturing industry to achieve upgrading and transformation.

Connecting the talents

Talent is the "first resource" and the mainstay of production and construction As stated in the original "Outline Development Plan for the GBA", the purpose of the GBA is to construct a pioneering cooperation zone for talent from Guangdong, Hong Kong, and Macau, demonstrate a sound mechanism for crossborder talent flows, and to facilitate talent mobility across different regions, industries, and systems. Currently, many Hong Kong universities have established or are planning to establish higher education institutions jointly with Chinese Mainland local universities in different cities in the GBA, taking advantage of the internationalisation of Hong Kong’s higher education and providing more opportunities for the talents in Hong Kong to start their career in the GBA.

Only by attracting and retaining talents and providing them with liveable and business-friendly environments can the GBA construction really unleash the great potentials of the talents to draw substantial competitiveness One such example is a new talent visa policy issued by the Chinese Mainland stating that Mainland citizens who visit Hong Kong and Macau for business, academic exchanges and other activities can apply for a 3-month or 1-year multiple-entry visa, enabling quality talent to access these job markets. Another example is the Hong Kong-Shenzhen innovation and technology park at Lok Ma Chau Loop (the LMC Loop) which aims to develop high valueadded higher education, high-tech research and development and culture and creative industries The Hong Kong SAR government is considering relevant entry and exit facilitation measures for IT talents working in the LMC Loop.

Additionally, local governments have also implemented a variety of policies, including tax incentives and subsidies, to attract talents and promote start-up enterprises. For example, Dongguan provides subsidies for Hong Kong and Macau talent to innovate and start businesses in the Binhaiwan New Area. The Hong Kong SAR government also issued the "Greater Bay Area Youth Employment Scheme" to encourage university graduates in Hong Kong to work in the GBA In addition, Hong Kong will continue to provide support and incubation services for Hong Kong talents working in the GBA through the "Youth Development Fund", helping them to meet their capital needs during the initial stages of their entrepreneurship.

Promoting talent mobility and connection in the GBA is a continuous process From the initial pilot programs focusing on legalising and certifying crossborder professional qualifications, to the recent visa policies for talent exchange between Hong Kong, Macau, and the Chinese Mainland, various measures have been carried out to deepen the integration of talents among Guangdong, Hong Kong, and Macau.

A gateway between China and the world

Since the launch of China’s opening-up and reform programme 40 years ago, the GBA has grown to become one of the world’s leading exportmanufacturing regions Factories here contribute to 37 percent of China’s exports – enough to make the GBA region the world’s fourth largest exporter, with a well-established network of global transport and shipping infrastructure. Leveraging on the connectivity among GBA cities and the accessibility of capital, goods, talents and information within the region, the GBA is undergoing industrial upgrades and is starting to play a leading role in China’s innovation and technology development For example, in recent years, many well-known enterprises in high-tech industries have set up their global or regional headquarters or affiliates in the GBA. In 2021, China Electronics Corporation relocated its headquarters to Shenzhen. In 2023, ExxonMobil Corporation started the construction of a R&D centre in Huizhou.

To realise the full potential of the GBA, the cities in the region must leverage their diverse range of competitive advantages to create significant business opportunities and drive economic growth Enterprises should draw on the strong base of advanced manufacturing, technology and innovation in the Chinese Mainland and take advantage of Hong Kong’s role as the “super connector” to explore more business opportunities in the GBA and globally.

About KPMG China

KPMG China has offices located in 31 cities with over 15,000 partners and staff, in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Nantong, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Taiyuan, Tianjin, Wuhan, Wuxi, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services “KPMG” is used to refer to individual member firms within the KPMG organisation or to one or more member firms collectively

KPMG firms operate in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world Each KPMG firm is a legally distinct and separate entity and describes itself as such Each KPMG member firm is responsible for its own obligations and liabilities.

KPMG International Limited is a private English company limited by guarantee KPMG International Limited and its related entities do not provide services to clients.

In 1992, KPMG became the first international accounting network to be granted a joint venture license in the Chinese Mainland KPMG was also the first among the Big Four in the Chinese Mainland to convert from a joint venture to a special general partnership, as of 1 August 2012 Additionally, the Hong Kong firm can trace its origins to 1945 This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multidisciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.

Maggie Lee, Audit Partner, KPMG China

Wilson Pang, Advisory Partner, KPMG China