Four challenges ‘Greater Bay Area’ planners must overcome to ensure success

The release of a “Greater Bay Area” development plan for linking Hong Kong and Macau with nine cities in Guangdong province is expected to be released early this year. The plan may be a sign of China’s ascent, but this area will be starkly different from, for example, the San Francisco, New York and Tokyo bay areas. While it is all within one nation, it also links two “systems”, three currencies and multiple cities. This makes the plan highly convoluted, and such complexity could pose far more challenges than those found in other bay areas.

Here are four potential issues. First, because the Greater Bay Area consists of cities in Guangdong province, plus Hong Kong and Macau, any kind of amalgamation will be one of multiplicities, rather than natural affinities, and this could mean additional obstacles to the flow of talent, finance, logistics, information and so on.

It has been suggested that the euro-zone experience could provide a good lesson where, to coordinate nations of vast differences as seamlessly as possible, it was necessary to jointly organise and empower a “coordination team” to overcome the difficulties. Indeed, having such a team, at least in principle, should lead to greater affinities. This is why a single currency, the euro, and a single political system known as the European Parliament were established.

One obvious difficulty that the euro zone faced is that the economically weaker nations within it, such as Greece and Portugal, raised their debt levels greatly while under the euro-zone protection umbrella. The actions of these nations resulted in a series of debt crises which led to doubts about the sustainability of the euro zone, roiling financial markets, including those outside Europe. The European debt crisis and Brexit, plus the drama of potential exits by Greece and the Netherlands, have been directly or indirectly due to such actions.

These nations have chosen to leave, or have considered leaving, the euro zone so they can individually decide on exchange rates in order to increase exports and promote economic development. How to overcome or prevent the same fate in the Greater Bay Area is something that needs to be addressed upfront.