Pearl River Delta, pearl of economic accord
written by: Janus Lam and Carrie Chan, 03-Jul-04
 | | Chinese workers sew at a factory in the southern Chinese city of Shenzhen in 2004. |
HONG KONG - The Pan-Pearl River Delta Regional Co-operation and Development Forum has unfurled grand plans to facilitate economic cooperation among nine mainland provinces, Hong Kong and Macao, in the new Pan-Pear River Delta (PPRD) project. It's supposed to promote interaction and synergy within China, attract new Chinese and foreign business and generate vast revenues. It holds promise and is moving rapidly, but it has yet to take off.
The odd arrangement reflects the competition between Hong Kong territory and Guangdong province for the title of "Big Brother" of the Pearl River Delta (PRD). The competition has been underway since the two joined efforts in economic integration of the delta, comprised of developed cities like Guangzhou, Dongguan and Shenzhen.
PRD is one of China's two major economic locomotives besides the Yangtze River Delta led by the country's largest city Shanghai. In 2002, the former recorded a gross domestic product of US$113 billion, with an export value of $112.5 billion - 9.2% and 34.6% of the national totals respectively.
According to some analysts, the competition between Hong Kong and Guangdong is a major reason for the slow progress in the PRD integration. Beijing managed to shelve the rivalry when forging the cooperative structure for the larger PPRD. Though the new PPRD includes many more actors than its smaller predecessor, the PRD, it is moving rapidly; the concept was introduced a year ago.
The PPRD cooperation, namely the "9 plus 2" scheme, comprises nine provinces: Guangdong, Guangxi, Fujian, Jiangxi, Hunan, Guizhou, Yunnan, Hainan and Sichuan; and two special administrative regions: Hong Kong and Macao. But initially, Hong Kong and Macao were excluded, until the central government intervened on their behalf.
The concept of nine-province cooperation was first raised last July, when Zhang Dejiang, secretary of the Guangdong Provincial Chinese Communist Party (CCP) Committee and member of the party's central Politburo, proposed strategic cooperation and co-development within what he called the "PPRD".
In April, Zhang led a business delegation through Guangxi and Hunan in an effort to enhance inter-province liaison and collaboration. During the tour, the delegation signed a series of contracts worth in total 84.4 billion yuan (US$10.2 billion) with the two provinces.
The two special administrative regions were finally recruited to the scheme, after chief executives Tung Chee-hwa of Hong Kong and Edmund Ho Hau Wah of Macao pressed for membership in the PPRD in a meeting with President Hu Jintao and Premier Wen Jiabao during the March sessions of National People's Congress and Chinese People's Political Consultative Conference.
In economic cooperation, Guangdong will become a bellwether among all the nine provinces. The forum that took place a month ago also divided the work between Guangdong and Hong Kong to prevent the two from fighting for the pole position. Actually the Guangdong/Hong Kong Cooperation Joint Conference held on August 5, 2003, agreed that Guangdong would develop into a manufacturing base while Hong Kong would be a center for logistics, finance and service industries - in principle, complementary.
Hong Kong - with different features in economic systems, governmental functions, business operation, social and cultural background - can hardly take the lead in the "9 plus 2" cooperation, the Economic Review, a monthly of Bank of China (Hong Kong), pointed out in April. But it added that Hong Kong should, besides sharpening its competitive edge in financial service, spare no effort to propel Guangdong in its regional economic integration.
In the past, Guangdong refused the cooperation mode initiated by Hong Kong - shop at the front (Hong Kong), factory at the back (Guangdong), and consequently the bilateral cooperation bore no fruit. Zhang Dejiang, transferred to Guangdong in 2002, has been considering how to reposition Guangdong in cooperation with Hong Kong, and accelerate the economic integration in the Pan-Pearl River Delta (PPRD) project. As the former secretary of the CCP Zhejiang Committee, he witnessed the take-off of the Shanghai-centered Yangtze River Delta project.
Zhang says that with the booming mainland economy, the Pearl River Delta co-operation will spotlight Hong Kong's advantages in financial and logistics services and tourism.According to him, the PPRD cooperation is an all-around project covering economy, transportation, communications, education, culture, science & technology, tourism, and other fields.
The PPRD is supposed to usher in a new era of regional cooperation. However, many observers and participants in the inaugural ceremony in June doubted whether the ideal scheme on paper will work in practice. The blueprint, however promising, remains in the initial stage and details of cooperation are skimpy, they warned. The theme of the project is "prosperity through partnership" and leaders from all regions, signatories to an accord, are now undertaking the integration process.
Zhang Dejiang emphasizes that the pan delta region is endowed with vast land, abundant labor and rich natural resources. In addition, it enjoys one of the best production facilities in Guangdong, now often called the World's Factory - and ample talents in the other eight provinces. Besides, the region has an extensive international network with Macao and Hong Kong, the latter being Asia's most sophisticated center of logistics, finance and information.
Zhang suggested that Hong Kong should position itself as the financial and logistics hub while Macao specializes in entertainment and Guangdong, of course, in manufacturing.
Some observers called the "9 plus 2" concept conducive to a win-win situation, while noting it was too early to predict actual results.
Albert So, President of the Hong Kong Institute of Real Estate Administration, said, "The pan delta concept remains much on paper only. It takes time to see its actual effects. If it does work, it will be a positive development for surveyors because a booming realty market guarantees business opportunities for the surveying industry."
However, So pointed out that the 11 parties would definitely face obstacles before a seamless cooperation could be achieved. The most conspicuous problem is that the mainland governments in general imposes too many restraints and demands on various enterprises. He cited a CEPA (Closer Economic Partnership Arrangement) clause related to the surveying industry as an example: Hong Kong surveyors and the mainland authorities concerned have to achieve mutual qualification recognition and agree on one threshold for registered capital. CEPA is generally considered a policy that Beijing has designed to stimulate the Hong Kong economy, mainly by granting zero tariff to some products made in the territory.
For decades, protectionism prevalent throughout the mainland has led to counterproductive economic policies among different regions. That's why the notion of PPRD focuses on lifting the trade barriers among the 11 parties, realizing regional economic integration and mutual complementarity.
Further, the concept of delta cooperation demands a more extensive and sophisticated network. Although the planners invited officials of the ministries of railways and communications, how to develop the transport network has not been decided yet. Since investors traditionally value the transportation cost, the existing network will fail to attract massive investments and must be upgraded and extended.
Economic analysts say tourism is another major area urgently in need of development in the Pearl River Delta region. The China National Tourism Administration (CNTA) has urged formation of a "9 plus 2" tourism cartel to make the industry an example of regional tourism cooperation. In general, the nine provinces abound in tourism resources and have developed considerably. In 2002, they generated $7.68 billion in foreign exchange from tourism, or 37.7% per cent of the national total.
Experts have urged the nine provinces, Hong Kong and Macao to develop distinct regional tours, services and itineraries and jointly undertake an advertising campaign to create a Pearl River Delta image. In recent years the region has become a magnet for holiday makers, many of them driving their own cars and creating traffic congestion - a sign of increasing prosperity and mobility, but also an annoyance.
According to the Guangdong branch of China Travel Service, self-driving tours bound for provinces like Hainan, Guangxi, Jiangxi, Fujian, and elsewhere accounted for a large part of its business during the May holiday.
After individual Hong Kong and Macao tours have been gradually opened to the mainland, the two are also among the favorite destinations of mainland travelers, from the neighboring Guangdong province in particular. It is estimated that some 400,000 mainland residents visited Hong Kong during the May vacation, and Guangdong tourists spent substantial sums.
Since individual tourism - not the previously mandated group tours - is now available to the entire Guangdong province, an increasing number of local residents prefer to travel on their own instead of joining package tours. As the expressway-railway-airway traffic network is being enhanced constantly, the appeal of Pearl River Delta travel is growing and the "9 plus 2" travel cartel could create a prodigious tourism culture covering almost half of the country.
Published in: Asia Times
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