The European Union Chamber of Commerce in China says that European businesses have reported a plunge in optimism for China’s Greater Bay Area, that includes both Hong Kong and Shenzhen, raising questions over how Beijing should improve its attractiveness to hold on to foreign investors. Only 44% of the 75 companies surveyed by the Chamber expressed optimism for the region’s grand development plan, compared to 68% a year earlier. Foreign investors have become worried about the cooling economy, market barriers and lingering geopolitical tensions. “Many South China members are reporting that they are not benefiting from the Greater Bay Area,” said Klaus Zenkel, head of the Chamber’s South China chapter. According to the poll jointly conducted with consultancy firm Roland Berger, 52% of firms stayed neutral to the plan, a rise from 31% a year earlier. Obstacles mainly stem from the competition between cities rather than uniform policy coordination, according to Zenkel. The Greater Bay Area development blueprint was released in 2018, with the aim to build a world-class growth engine to rival the bay areas of Tokyo, San Francisco and New York.
More than two thirds of the surveyed European firms said Chinese authorities should do more to clarify the business opportunities available for both Chinese and foreign companies. Analysts have called for more policy coordination within the city cluster, as cities in the region generally have a relatively high degree of overlap in areas such as manufacturing, finance and technological innovation, which has led to a certain level of similarity in their converging industrial structures.
“There is more homogeneous competition between cities in the Greater Bay Area, especially the two leading cities – Guangzhou and Shenzhen,” said Yuan Chenjie, the principal representative at private equity firm SAIF Partners. “They are different from the ones in the Yangtze River Delta, such as Shanghai, Suzhou and Wuxi, as the latter each have their own positioning and they can achieve complementary and virtuous development.”
A report earlier this month by Yuekai Securities also pointed to a lack of integration between cities in the Greater Bay Area and a homogeneous industrial landscape. The Yuekai Securities report said that market rules are not uniform, with Guangdong province and the special administrative regions of Macao and Hong Kong having differences in industry regulation and intellectual property protection, and a split in the policy pilot areas within the Pearl River Delta. “These can lead to businesses facing additional systemic costs,” the report added. Meanwhile, the lack of talent and “outstanding risk” of its industries facing technological sanctions from Washington are creating more uncertainties to the prospects of the Greater Bay Area, the South China Morning Post reports.
The combined economy of the Greater Bay Area stood at CNY13 trillion last year, with Shenzhen, Guangzhou and Hong Kong contributing the most, according to the Hong Kong Trade Development Council.
