5 minute read
The Greater Bay Area
All for one
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 km, population 86m and the combined GDP last year stood at $1.68trn, bigger than many G20 economies.
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 this term as chief executive this October 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 it wants to support cooperation between the Hong
Kong Stock Exchange and the Guangzhou Futures Exchange to develop products on carbon emission trading.
“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 skill levels.
“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 services 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. Almost immediately, only 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.”
The port view
Hong Kong’s terminal operators already have a firm foothold within the GBA, while mainland operators such as Cosco and China Merchants are well entrenched in the former British colony.
Including Hong Kong, the annual box throughput of all the cities within the GBA tops 65m teu, more than the entire continents of either South America or Africa.
As to how these ports ought to develop within the GBA framework, Horace Lo (pictured), managing director of Modern Terminals, Hong Kong’s oldest terminal operator, tells Splash: “In the Greater Bay Area development, Port of Hong Kong should seek to strengthen its role as a transhipment and import hub, with the Shenzhen port serving as an export hub, and the Guangzhou port a domestic hub in the Greater Bay Area.”
