Pearl River Delta China Experiments with a New Kind of Megalopolis

Justin Chin/ Bloomberg via Getty Images


Part 2: What Does the Future Hold for Hong Kong?

In October, Pan decided to open another branch office in the neighboring city of Dongguan, which until a few years ago was still known for its notorious sweatshop textile and shoe factories. These companies -- which were located in Hong Kong decades ago, then moved to Shenzhen and finally to Dongguan -- are now transferring to low-wage sites in Myanmar and Bangladesh. In Dongguan, some rents are only one fifth what they would be in Shenzhen, so that's where small savvy businesses are headed.

Of course he appreciates the quality of life in Shenzhen, Pan says, with its futuristic airport offering direct connections to the U.S. West Coast and its proximity to Hong Kong. But he insists that the true city of the future in the Pearl River Delta is Dongguan: a city without a center, a former low-end industrial site undergoing a structural revival, and a place where surprising things still happen. He's not an urban planner, Pan admits, but if he had one suggestion to make to the strategists of the Greater Bay Area, it would be: "Don't overdo it with this plan."

Guangzhou: Brexit in Reverse

The provincial capital of Guangzhou is located about 140 kilometers up the river from Shenzhen. It takes roughly two hours to drive this stretch by car, but with the high-speed rail connection, the trip is neatly reduced to a subway-like commute of exactly 36 minutes. People like financial broker Chen Yalei, who are perpetually short on time, aren't big fans of the commute, though. The express train station is too far on the outskirts of town for their taste, and the trip to the downtown area takes longer than the ride through the delta.

Almost all the stations in China's high-speed network, which was launched in 2008 and has since expanded to almost 30,000 kilometers, are located on the periphery of the country's cities. This was done on purpose, the idea being that new districts would sprout up near the train stations, creating new jobs in the process. This may be good for future generations, but it makes life difficult for today's commuters.

"Of course, it would be more convenient for the new station to be right in the heart of the city," says Ma Xiangming, 57, chief city planner in Guangdong Province. He recently visited Frankfurt: "That's a city where the distances are right."

But his country isn't at that stage yet, he says, not even in the Pearl River Delta. Ma sketches a map of China and divides the country into three zones: "west, middle, east -- poor, richer, rich." At the southeastern tip is the Greater Bay Area, the richest of all regions. The plan is for it to become even richer and for that wealth to flow into the hinterlands.

IT entrepreneur Eric Pan came to Shenzhen 15 years ago. He says he found a haphazard, creative chaos. "It was awful, but it felt great."
Gilles Sabrié / DER SPIEGEL

IT entrepreneur Eric Pan came to Shenzhen 15 years ago. He says he found a haphazard, creative chaos. "It was awful, but it felt great."

Ideally, he admits, the individual cities would know best what was good for them and their citizens, and where a new residential area or an industrial park should be built. But, he adds, that's not how things work in China: "Here, the central government also has a say and it has ambitious plans." Sometimes, he says, it can take "many years" before Beijing's wisdom is revealed. There's respect and also a touch of resignation in Ma's words: Beijing isn't planning for the present and the individual, but for the future and the masses.

And now, Beijing is also planning for the world. Chen Guanghan, 64, flew in from Tokyo in the morning and will continue on to Singapore in the evening. He has also visited New York, San Francisco and a number of European cities as part of his Greater Bay mission. He has never traveled so much in his 40 years as an economist, he says.

Chen is advising the government on how the mainland, Hong Kong and Macao can grow together economically. The vision he has developed following his travels is a kind of Brexit in reverse: the merging of three complex tax, legal and customs systems, the integration of a global financial center and a gambling city into a single economy.

"Only the European Union is familiar with problems like this," Chen says, adding: "People, goods, information -- everything flows freely in Hong Kong and Macao, while everything is regulated here." In Macao, income tax is 12 percent and in Hong Kong it's 15 percent -- "but here, it's as high as 45 percent." Simply registering a car that is allowed to drive in one of the special administrative areas as well as on the mainland costs a small fortune today, he says.

This will demand a great deal of work, presumably create many new jobs in the three administrations, and, as Chen predicts, generate 7 to 8 percent growth over the next 10 years. That level of growth would be more than current levels in China and Macao and more than twice as much as in today's Hong Kong. People there would especially benefit from the Greater Bay Area, he asserts: "The Hongkongers, because their economy is stagnating, and the people of Macao, because they are short of space and suffering from high rents."

Macao: The New Prohibition

After Low Hon Man persuaded his wife, they simply swam over. He was 20 years old, lived in a small village on the mainland and wanted to get away from China as soon as possible. That's how he came to Macao exactly 40 years ago.

The contrast was mind-boggling, and echoes of that disparity can still be felt today. On the other side of the border, in China, there was the abject poverty resulting from Mao Zedong's policies. But here was the gambler's paradise of Macao, at the time a "territory under Portuguese administration" and today a Chinese special administrative zone that is bursting at the seams. A total of 670,000 people live on around 30 square kilometers. High-rise apartment buildings with small windows protrude into the sky like silos, while crowds throng the narrow, dark, canyon-like streets.

Low Hon Man, though, has never regretted his decision. His children grew up in the burgeoning prosperity of Macao and now work in local casinos. Meanwhile, he's driving his way toward retirement in a taxi that, like most cabs in Macao, is painted black and looks like an American patrol car. "That's where my son works!" he proudly exclaims as he passes Wynn Palace, one of the baroque gambling halls that American investors have built in Macao.

The casinos are currently generating so much money that Macao has one of the highest per capita incomes in the world. Once a year, the government pays a bonus to all residents. Low Hon Man's last payment was roughly the equivalent of one month's salary.

"The money comes from the gamblers, and 70 to 80 percent of the gamblers come from China," says Nuno Santos, 37. Santos, one of the few members of his generation who still speak Portuguese, was a policeman on the anti-corruption squad. Now, he works for a casino operator in the "risk & investigations" department, as it says on his business card.

There are strict controls on the flow of capital in China, and officially each citizen is only allowed to export $50,000 dollars a year. Gambling is banned on the mainland, and many Chinese are adept at moving money abroad using unofficial channels. "They try everything," says Santos, adding that "when people were still paying with cards, they smuggled in credit card terminals that were registered in China. Since they now pay almost exclusively with mobile apps, we're investigating online fraud." China's rise to economic power has brought about a new kind of prohibition -- except that money is being smuggled, not alcohol.

The casino city of Macao is not only politically, but also economically dependent on Beijing. When China's President Xi Jinping launched a campaign against corrupt party cadres five years ago, revenues plummeted in Macao, though they have since recovered. Beijing still tolerates the gambling, but it's putting pressure on Macao to shift more toward luxury and family tourism in the future: shopping malls instead of casinos, zoos and amusement parks instead of roulette tables.

But China itself has changed at least as much as Macao since Low Hon Man took a swim in the Pearl River 40 years ago. Low now often drives to the mainland to visit relatives. On his first visit, he admits, he was "shocked" by the prosperity that had taken hold of his village. "Ordinary people are now building three and four-story houses there! They're just as rich as I am!"

He says the economic boom on the mainland is so massive that Macao ultimately won't be able to resist it. "Most of us here have come to terms with it. It's a different story in Hong Kong, though."

Hong Kong: 'One Country and One and a Half Systems'

In Victoria Harbor, the port of Hong Kong, a dead man was seen floating in the water this spring. The object, a colossal inflatable sculpture by American pop artist KAWS, was a whimsical hybrid of Mickey Mouse and the Michelin man, lying on its back with its eyes closed and its arms and legs stretched out.

You didn't have to be a political activist to interpret this artwork as a symbol of Hong Kong itself, the proud city on the Pearl River Delta, which has always been held up by the Chinese as a model of business acumen, productivity and quality of life - but one which has been losing its leading edge for years now. A sense of resignation, even of paralysis, had taken hold in Hong Kong.

In the past four months, though, this apathy has morphed into activism. A new energy can be felt in Hong Kong, sparked by the city government's plan to pass a law that would allow the authorities to extradite local residents to the mainland. Hundreds of thousands have taken to the streets in protest. They refuse to allow their city to end up like a dead man in the Pearl River.

Student leader Joshua Wong, 22, one of the city's most prominent political activists, was in jail when the protest movement erupted. He took part in the protests again after his release, but has since been arrested again and is now out on bail. When Britain returned Hong Kong to China in 1997, Beijing pledged that there would be only "one China" in the future, but that the administrative, legal and economic system of the former crown colony would remain untouched for at least 50 years. "One country, two systems" was the policy.

"In reality, today we have one country and only one-and-a-half systems," Wong said earlier this summer. The number of immigrants from the mainland is rising, he said, and an increasing amount of "red capital" from the mainland is flowing into the city. Likewise, Mandarin Chinese is supplanting the Cantonese spoken in Hong Kong. "Some in the pro-Beijing camp here no longer refer to us as Hongkongers. For them, we're all just residents of the Greater Bay Area."

Wong is a staunch opponent of the Greater Bay Area initiative. In his view, it's aimed at the heart of what constitutes Hong Kong: the city's economic independence and the independent judiciary that is still based on British law.

The protest movement achieved a major victory in its bid to defend this justice system this Wednesday, when Hong Kong Chief Executive Carrie Lam declared that she was finally withdrawing the extradition bill, which had been suspended since mid-June. Many young people remain unhappy, and have pledged further protests.

But challenging China's leadership poses a risk: Beijing's leaders will certainly think twice before they decide to renege on their promises and fully integrate Hong Kong into China before the expiration of the 50-year period of semi-autonomy. But this move cannot be entirely ruled out.

Wong has no illusions about the influence that China exerts along the Pearl River. As he said in an earlier interview, he sees the speed with which cities like Shenzhen have surpassed Hong Kong, "but the city's future and its international reputation will undoubtedly be decided in the field of economics."

And he noted that Hong Kong's prospects in this area might be better than they seem. Wong points to China's trade dispute with the U.S., its competition with the EU and the financing of the New Silk Road, and said that Beijing needs Hong Kong as an independent, international financial center that gives it the ability to operate globally and influence markets beyond its own planned economy.

Could China's ambition and the rules of global financial capitalism end up rescuing Hong Kong? It's an odd thought, but Hong Kong's unique role as a separate economic entity, governed by the rule of law, is perhaps its best chance to avoid becoming another Chinese city among many others.

Chen Yalei, the financial broker, says Beijing is making a kind of offer to the cities in the Greater Bay Area that they simply can't refuse. "Of course, there will be major shifts and, of course, some of these cities will lose importance while others gain ground." But, he adds, at least for the time being, Hong Kong will remain indispensable, as the financial center of the Pearl River Delta and as China's gateway to the world.

And afterwards? "The reformer Deng Xiaoping created a monument to himself in Shenzhen, and for his successor, Jiang Zemin, it was in Shanghai " says Chen Yalei. "The Greater Bay Area is the project that President Xi Jinping intends to be remembered by in the history books."



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