Hong Kong continues to show strong interest in participating in the development and integration of the Greater Bay Area (GBA), but it’s doubtful whether newly announced governement measures to promote this can effectively be deployed due to new outbreaks of Covid-19 infections in the city.
Earlier this week, Hong Kong’s chief executive Carrie Lam delivered her annual policy address during which she mentioned the GBA multiple times and outlined her government’s approach to it. "We can focus on the business opportunities in the mainland market, better integrate into the overall development of our country, take the GBA development as an entry point, and proactively become a participant in domestic circulation and a facilitator in international circulation.”
In her address, Lam announced nine measures, covering different aspects of insurance, healthcare, transportation, education and employment, that will be rolled out in Hong Kong to enhance cross-border infrastructure and foster better integration among GBA cities.
The GBA, an initiative to merge 11 Chinese cities – including the Guangdong provincial capital of Guangzhou, the financial hub of Hong Kong, and the tech hub of Shenzhen – into a single business area along the lines of the San Francisco or Tokyo Bay Areas, is one of the key focuses of Hong Kong’s policymakers going forward as, as Lam points out, “playing the dual role [of domestic participant and international facilitator] well will bring continuous impetus to Hong Kong's economy."
Indeed, the GBA promises great opportunities. According to the GBA Wealth Index report, issued by the Bank of China, the number of financial institutions in the GBA has increased by 1.03% year on year (yoy) as of end-Q1 2020.
In particular, financial institutions have been eyeing the wealth management space, given the strong momentum of wealth creation in the area and the wealth connect in the pipeline. As of end-Q1 2020, the savings per capita in the GBA has increased by 9.17% yoy. And the number for GBA cities like Shenzhen, Dongguan and Zhuhai has surpassed 10%.
But given that Hong Kong is still struggling to control the pandemic – with continuous reports of new infections and strict quarantine measures still in effect – it seems difficult to realize a more convenient cross-border travelling model any time soon. This is hurting the cross-border business and Hong Kong’s collaboration and integration with other GBA cities. Against this backdrop, technology should play a bigger role.
Research at China Merchants Bank (CMB) recently discussed the possibility of setting up “GBA one-pass” bank accounts. Two types of accounts are proposed – northbound accounts to provide residents in Hong Kong and Macau with better convenience and wider access to the mainland market, and southbound accounts to enable more qualified mainland residents to open offshore accounts.
Residents in Hong Kong and Macau currently can open mainland Chinese accounts under the pilot programmes of some banks’ witness account opening services. The pilot programmes should be enhanced and allow more banks to participate, according to Sun Huaiyu, general manager of the CMB Institute. For the northbound accounts Sun suggests that their identity information verification mechanism could be diversified to better leverage existing financial technology or fintech.
For the southbound accounts, Sun suggests expanding the pool of qualified mainland residents allowed to open offshore bank accounts. The regulators now only allow mainland residents with long-term visas issued overseas to open offshore accounts. To boost cross-border capital flows within the GBA, he suggests, Guangdong residents with one-year multiple entry visas issued by Hong Kong or Macau should be allowed to open offshore accounts as well.