Date: Dec 28, 2023
Author: Dr. Yu Zongliang, Director, Research Center for Free Trade and Innovation, CDI
The Guangdong–Hong Kong–Macao Greater Bay Area (GBA) is among China’s most open, economically agile, and business-friendly regions. As of 2022, the GBA's GDP was approximately CNY 13.04 trillion, with a per capita GDP of approximately CNY 150,900. Despite occupying less than 1% of China's land area and being the home of only 5% of its population, the region contributes 11% of the nation's total economic output. In December 2023, the National Development and Reform Commission (NDRC) of China unveiled an action plan to further enhance the GBA's business environment.
Various domestic and international business environment rankings indicate that a better business environment correlates with greater economic prosperity. Therefore, a conducive business environment is crucial for promoting prosperity at the national, regional, and city levels, and serves as a key aspect of economic competitiveness. Enhancing the business environment in the GBA will support the creation of a first-class bay area and world-class city cluster that is dynamic and internationally competitive.
At the micro-level, the action plan revolves around effectively serving and enhancing the sense of growth and satisfaction among businesses by considering their complete lifecycles. This includes encompassing every stage of their development, reducing institutional costs, and ultimately benefitting the public.
From a reform perspective, the action plan highlights the transformation of government functions. The reform and innovation of internal systems and mechanisms fall under the umbrella of constructing a supportive environment within the superstructure.
By integrating advanced concepts and experiences globally, the GBA aims to establish a business environment system that aligns with international standards and achieves a world-class level of marketization, rule of law, and internationalization. Market connectivity levels will significantly improve, enabling the region to attract and allocate more global resources.
To achieve these goals, it is crucial to properly manage the following six relationships.
First is the relationship between the government, the market, and society. The construction of a favorable business environment entails collaborative efforts among diverse entities, such as the government, the market, and society, rather than unilateral actions by the government. Subsequently, the action plan includes aspects concerning social organizations, diversified dispute resolution mechanisms, and credit-building.
Second is the relationship between innovation and replication. Specifically, the various reform measures targeting the business environment are aimed at producing institutional innovations that can be replicated, rather than providing long-term exclusive policies for the few cities.
Third is the relationship between micro-reform and systematically integrated innovation. The action plan emphasizes locating and addressing the most pressing concerns of local people, even if small, then enabling an incremental and rapid progression of systematic initiatives to develop a better business environment.
Fourth is the relationship between local innovation and central facilitation. Coordination of top-level design with grassroots exploration is essential to fostering regional initiatives. The local grassroots level is closer to the market and is better informed and more up-to-date regarding the specific needs of local business entities. Therefore, the local level should be granted greater autonomy to boost reform and innovation.
Fifth is the relationship between policy and legal support. A clear and credible legal environment, in which the security of property and transactions is guaranteed, will enhance investors’ confidence and willingness to invest in and promote the market. Thus, it is necessary to promptly and effectively promote the establishment, modification, and interpretation of relevant laws, regulations, and rules to ensure the legality of reforms. This will also enhance the predictability and certainty of business environment reforms.
Last is the relationship between Hong Kong, Macao, and the nine mainland cities within the GBA. The GBA is unique, with its "one country, two systems", three customs territories, three legal systems, and three currencies, and requires Hong Kong, Macao, the mainland cities, and the central government to collaboratively promote market integration within it. This consists of compliance with international economic and trade rules and breaking the reliance on past practices of opening borders between Hong Kong, Macao and the Mainland.
