Construction of the Hong Kong-Zhuhai-Macau bridge, seen as a priority project, is expected to get underway soon

Officials on both sides of the Hong Kong-Chinese mainland boundary are pinning their hopes on a host of large-scale infrastructure projects that they hope will spur spending, development and closer integration between Hong Kong and the Pearl River Delta (PRD) region.

The projects are intended to create a world-class "Pearl River Delta Metropolis," according to a 2008 study by the Hong Kong-based Bauhinia Foundation Research Centre. The study reports that the next 20 years "will be a golden age in the acceleration of economic integration between the two territories and in the creation of a world-class Pearl River Delta Metropolis. A highly competitive and influential Pearl River Delta Metropolis is both necessary and feasible."

The study called on Hong Kong and Guangdong to work together to build cross-boundary infrastructure projects. It added that both sides need to step up cooperation under World Trade Organisation (WTO) and the Hong Kong-mainland Closer Economic Partnership Arrangement (CEPA) rules.

Meeting Expectations 

	Professor Li Pang Kwong, Research Director at the Bauhinia Foundation Research Centre

The Hong Kong Government also sees the value of using infrastructure projects to bring the two sides closer. In his 2007-08 policy address, Chief Executive Donald Tsang called for Hong Kong to undertake major infrastructure projects to promote growth, saying "in promoting infrastructure development, our efforts over the past decade did not match expectations. Overall expenditure on infrastructure for this year may well be the lowest in recent years." Mr Tsang then announced that to address the problem, his administration would push ahead with 10 large-scale infrastructure projects within his term in office.

Several of those projects, he noted, will be used to integrate Hong Kong more closely with the mainland.

Among them is the Guangzhou-Shenzhen-Hong Kong Express Rail Link, which will run from West Kowloon to Shibi in Guangzhou. It will be part of a mainland project to build a high-speed national rail network of 12,000 kilometres linking major cities, with maximum train speeds of up to 300 kilometres per hour, substantially expanding the mainland's transport capacity. In Hong Kong, the Express Rail Link will use a dedicated line. Hong Kong is developing a common immigration and customs clearance system at the Kowloon Terminal. Construction is expected to start sometime this year.

Another project, the Hong Kong-Zhuhai-Macau Bridge is considered a priority project by authorities. As a major strategic cross-boundary project, it is unprecedented in its scope, scale and complexity. Hong Kong has already completed engineering feasibility studies for more than 20 project items, but financing remains to be finalised. Hong Kong officials said they plan to complete the financial arrangements soon. They are now working on site selection and collecting public input.

Other proposed projects include a rail link connecting the Hong Kong International Airport with the Shenzhen Bao'an International Airport, and a joint development between Hong Kong and Shenzhen of the Lok Ma Chau Loop. Government authorities on both sides agreed last week that the 87-hectare site will be set aside for higher-education development, and that the site will be jointly administered by Hong Kong and the mainland. Government officials said infrastructure linking the loop and Kwu Tung will be considered, as part of a comprehensive study to start in June and to be completed by 2011.

Where to Begin?

In addition to nuts and bolts for the infrastructure projects, officials on both sides are planning to make the delta a regional financial centre, a transportation and logistics hub, a trade fair capital and a hub for technology transfer.

But is infrastructure the right place to begin the integration of the region?

"I believe infrastructure is vital and the right place to start," said Professor Li Pang Kwong, Research Director at Hong Kong's Bauhinia Foundation Research Centre. "If we have a direct link, it will cut down transportation costs, and it is the most appropriate thing for major partners in the region to have a common infrastructure project.

"These are very viable projects," he added. "Because you have these different cities, it's necessary to build up some common mechanisms to improve public policy and the markets. The challenge is how to improve the common policies. By integrating the infrastructure and having a sort of common market, it will also improve the cultural issues. It may take a longer time to evoke a new set of values or a new set of attitudes, but I'm quite optimistic."

Clement Chen, Chairman of the Hong Kong Federation of Industries, which met last week to discuss PRD integration, said it is a key step for Hong Kong.

"We'll be talking about lowering the threshold for Hong Kong companies that want to enter the mainland, and perhaps see if we can get the same treatment as mainland Chinese entrepreneurs," Mr Chen said. "Right now, Hong Kong investors are treated as so-called foreign investors. Under CEPA, people in the professional services sector should be able to enter the mainland easily, but in reality there are a lot of hurdles that we need to overcome."

Mr Chen said the planned infrastructure improvements "will enhance the efficiency of cargo flow and personnel flow." He added that it was important that Hong Kong work to integrate its rail lines with those being built across the boundary in the delta.

Deregulated Markets

Sunny Ho, Executive Director of the Hong Kong Shippers' Council, said the role of logistics companies in an integrated PRD would be a large one. The Council represents shippers in Hong Kong. It has a deep reach into the mainland because many of the companies, whether shipping by land, sea or air, are Hong Kong companies with operations on the mainland.

Mr Ho said the Council was regularly keeping an eye on such integration matters as customs regulations, e-documentation and other issues.

"We do have a role to play in the integration," Mr Ho said. "Instead of taking a passive role and letting the Central Government decide, we would rather play an active role in the planning stage and the execution stage, and make sure Hong Kong companies can provide the operations they need to provide."

Mr Ho agreed that because Hong Kong was a British colony for 156 years, "we have different ways of doing things than the mainland, but I don't want to emphasise the differences.

"What we need," Mr Ho said, "are deregulated markets, in the sense that we need to have systems in place to minimise government interference. In China, there is too much government interference. If we can achieve the goal of deregulation, then the cultural problems will be more easily resolved."

Mr Ho also said that with three administrative systems in place in the PRD plan – the mainland's, Hong Kong's and Macau's – "somehow we have to sort it out. We cannot work independently and should not discard others' wishes," he said. "If we can start working on that together at an early stage and at a high level, we can coordinate things rather than compete with each other. Basically we believe in competition, but there are some areas that we need to set up for companies to operate cooperatively."

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Bauhinia Foundation Research Centre
Hong Kong Shippers' Council
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