In a recent survey by the European Union Chamber of Commerce in China, cited by South China Morning Post (SCMP), European businesses have reported a significant decline in optimism regarding China’s Greater Bay Area. This highly valued southern city cluster, including Hong Kong and Shenzhen, has been facing challenges in attracting and retaining foreign investors. Out of the 75 companies surveyed, only 44 per cent have expressed optimism for the region’s grand development plan, marking a significant drop from 68 per cent the previous year.
The survey results, released on Wednesday, shed light on increasing investor concerns over China’s cooling economic activities, market barriers, and geopolitical tensions. Klaus Zenkel, head of the chamber’s South China chapter, told SCMP that many South China members have not benefited from the Greater Bay Area. According to the poll, 52 per cent of the firms remained neutral towards the plan, up from 31 per cent a year earlier. Moreover, 4 per cent of the companies surveyed held a highly pessimistic outlook for the scheme to integrate Hong Kong, Macau, and nine mainland cities into an economic and business hub.
The primary obstacles identified by the survey respondents stem from competition between cities within the Greater Bay Area. The development blueprint for the Greater Bay Area was introduced in 2018, with an aim to create a world-class growth engine to rival other prominent Bay areas like Tokyo, San Francisco, and New York. Over two-thirds of the European firms surveyed stated that Chinese authorities should clarify business opportunities available to both Chinese and foreign companies.
Industry analysts cited by SCMP have emphasized the need for enhanced policy coordination within the city cluster, as mainland cities in the region exhibit a relatively high degree of overlap in areas such as manufacturing, finance, and technological innovation. This overlap has resulted in a certain level of similarity in their industrial structures. SCMP cited Yuan Chenjie, principal representative at private equity firm SAIF Partners, who noted that the two leading cities, Guangzhou and Shenzhen, engage in homogeneous competition, which distinguishes them from cities in the Yangtze River Delta, such as Shanghai, Suzhou, and Wuxi. The latter cities have their own unique positioning, allowing for complementary and virtuous development.
Reports have also pointed out the lack of integration between cities in the Greater Bay Area. Market rules in the region are not uniform, with differences in industry regulation and intellectual property protection between Guangdong province, Macau, and Hong Kong.
Peng Peng, executive chairman of the Guangdong Society of Reform, highlighted the importance of drawing on the practices of Hong Kong, Macau, or even Singapore to address the concerns of foreign investors. Peng emphasised that Hong Kong and Singapore possess the best business environments in the world, providing valuable insights for the nine mainland cities in the Greater Bay Area.
The Greater Bay Area’s combined economy reached 13 trillion yuan (US$1.8 trillion) last year, with significant contributions from Shenzhen, Guangzhou, and Hong Kong, according to the Hong Kong Trade Development Council.
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