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09/06/2019 06:04 PM

Pearl River Delta

China Experiments with a New Kind of Megalopolis

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Beijing is building a megacity in the Pearl River Delta that it hopes will one day rival New York and Tokyo. This colossal urbanization project is a bold attempt at metropolitan integration -- and perhaps also a plan by the Chinese leadership to keep Hong Kong under its thumb.

At night, when the sky clears, it's not difficult to guess where the bridge leads. The clouds on the other side of the bay glow orange, illuminated by the city of Hong Kong, with its population of 7 million, just beyond the horizon. Another glow can be seen farther north: the high-tech boomtown of Shenzhen, with 13 million inhabitants. There is a third and fourth patch of light in the sky even beyond that: Dongguan, with 8 million people, and Guangzhou, population 15 million.

In the haze of daylight, the Hong Kong-Zhuhai-Macao Bridge, modern-day China's most recent gargantuan building project, seems to end somewhere out in the open sea. But it actually spans the mouth of the Pearl River Delta, an area that has grown to become the world's largest metropolitan region. The bridge crosses 55 kilometers (34 miles) of open water and has been designed to last 120 years and withstand the ravages of storms and typhoons. It is a monument to a rapidly rising world power.

Here, in the country's south, is where China's economic miracle began 40 years ago. Small towns became cities and cities became megacities. Some 16 million people lived in the region in 1980. Today, it's home to more than 70 million who, in an area smaller than Lithuania, generate an economic output roughly equivalent to Russia. If the Pearl River Delta were an independent country, it would qualify for membership in the G-20 forum of the world's largest economies.

But Beijing has even greater ambitions. In February, the Communist Party announced plans to expand the delta into a city of cities that will rival the economic might and modernity of the world's major metropolises, like Tokyo, Chicago and the San Francisco Bay Area. Indeed, that is where China drew inspiration for the name of the project: The Greater Bay Area.

Chen Yalei hails from the northern part of the delta, from the provincial capital of Guangzhou, once known as Canton. He was 15 years old when he left China for the first time in 1993 and traveled to Hong Kong with a group of gifted students for a mathematics competition. "It seemed unreal," he says. "Everything was so civilized, so clean. Even the weather seemed better than on the mainland. It was another world."

Today, the 41-year-old Chen lives in Hong Kong as a financial broker and travels regularly between the cities on the Pearl River and across China: "Hong Kong seems small, old-fashioned and expensive today. Shenzhen, on the other hand, feels like Shanghai."

Chen says that Hong Kong, which for decades was seen as superior to other Chinese cities, won't be able to resist much longer being pulled into the maelstrom of economic and technological advances on the mainland. "Other cities in the delta will also lose their importance when everything here is consolidated," he says. "The Greater Bay Area is a huge opportunity for China."

China's leadership likes to forge vast plans, not all of which pan out. Long-pursued reform proposals to redistribute responsibilities from the overcrowded capital Beijing to neighboring cities have been delayed. The Shanghai Free-Trade Zone, announced in 2013, has not attracted as many investors as anticipated. In the port city of Tianjin -- where one municipal district was promoted as "China's Manhattan" -- the new skyscrapers have not filled up as expected.

Meanwhile, other plans that might have initially seemed grotesquely oversized, like the multi-trillion-dollar project to build the New Silk Road, are progressing at a pace that has unnerved many in the West. Can China succeed in building a new kind of metropolis on the Pearl River, one that shapes the 21st century, just as New York marked the 20th century and Paris the 19th?

Already, the nine mainland Chinese cities and the two special administrative regions of Hong Kong and Macao form a unique urban ensemble. Shenzhen has become a center for research and development that ranks alongside Silicon Valley. The area around the industrial city of Dongguan produces one-third of the world's jeans, while Foshan accounts for more than half of all refrigerators and air-conditioning units manufactured worldwide. Hong Kong is Asia's leading financial center and Macao is the largest gambling city in the world, with six times the gaming volume of Las Vegas.

But China is rapidly evolving, and its economic and political rivalry with the U.S. is forcing the country to change its business model. China can no longer merely remain the "the world's workbench." Its companies have to become more productive, efficient and competitive, and to achieve this they need better access to technical expertise and global financial markets.

This poses significant challenges for planners in Beijing. The differences between the mainland and the two former colonies of Hong Kong and Macao, which were returned to China in 1997 and 1999 respectively, go far beyond whether traffic drives on the left or the right. They also have diverging judicial, taxation and administrative traditions. There is free movement of capital and freedom of the press in Hong Kong and Macao, while China has capital control and censorship.

And the social differences are even greater. Hong Kong has an abundance of self-confident young people pushing for democratic reforms, as impressively demonstrated by the protest marches of recent months. On the mainland, there is an equally self-confident, well educated and digitally savvy younger generation that has thus far proved to be more interested in social advancement than in political participation or data privacy protection.

"It's bitter for young people in Hong Kong," says Chen, "but there are now at least as many qualified candidates from the mainland for many of the jobs in their city."

Can these different systems and societies be linked? How should competition between these 11 cities be organized without individual regions losing out and, more importantly, without two liberal special administrative zones being forced to merge with the structure of mainland China?

Urban development is largely complete in European and North American cities, and many metropolitan areas there have stagnating populations. At the same time, countries like India, Pakistan, Nigeria and the Philippines are experiencing rapid urbanization. What can they learn from China? Does it make sense to create metropolitan areas with populations of over 70 million people? Or, given the daunting dimensions involved, is it an overwhelming challenge, even for planning-obsessed China?

Shenzhen: 'It Was So Bad, But It Felt So Good'

It's 9:30 a.m. in Shenzhen. The temperature is 23.4 degrees Celsius (74 degrees Fahrenheit) and the air quality is 34 micrograms of fine particles per cubic meter, just above the recommended limit. Traffic is moving at an average speed of 29.3 kilometers per hour, not bad for this time of day, and 4.296 million people are currently in the Longgang district, with the highest density of traffic now at four nodes, flashing yellow and red on a real-time map. The rest of the area is displayed in green and black.

All of these -- and hundreds of other parameters -- can be viewed on a giant monitor in the Longgang district administration's Smart Center, with new information arriving by the minute. At 8:23 a.m., the system located an unauthorized street vendor. At 8:59 a.m., it detected illegally dumped construction debris. And at 9:01 a.m., it reported a suspicious pile of waste.

Longgang is one of China's most modern urban districts, with streetlights and park lighting that adjust their brightness to match the number of cars and pedestrians. There are even sensor-fitted trash cans that are only serviced by garbage collectors when they are actually full.

Longgang is also subjected to continuous surveillance. In the spring of 2017, a couple reported that their three-year-old son Xuanxuan had been abducted. A security camera captured the scene, and it took the police precisely two seconds to identify the kidnapper using facial recognition software. They located the perpetrator and the child on a train shortly thereafter.

The Smart Center collects images, traffic information and movement data from hundreds of thousands of video cameras and mobile devices. During the first six months of 2017, the number of thefts in Longgang declined by more than half. Now, says one staff member, data from the Smart Center is used to clear up 85 percent of all criminal complaints, ranging from traffic offenses to pickpocketing. Just about every corner of public space is under the watchful gaze of a surveillance camera.

Shenzhen is home to the internet company Tencent, network supplier Huawei and battery giant BYD, along with thousands of start-ups. Some of these companies dominate entire districts, with modern skyscrapers and glass facades separated by wide, urban expressways.

Shenzhen's rise began in the 1980s, with reformer Deng Xiaoping's Open Door Policy, which welcomed outside investment, including from the West. A small statue of him testifies to this. Now, the city's economic performance surpasses that of Hong Kong. Shenzhen is a model for many urban areas in China because it can push through reforms even faster than Beijing and Shanghai. A few years ago, the municipal government decided to make all 22,000 taxis electric -- and the conversion was completed by early 2019. Not surprisingly, Shenzhen has become quieter and cleaner.

For neighboring cities in the Pearl River Delta, Shenzhen is both role model and rival. The city is building subways and industrial parks, and recruiting top talent from around the world, all of which is making it both attractive and expensive.

"We've reached a tipping point," says Eric Pan, 36. The entrepreneur from Sichuan Province operates what they call a "makerspace," an incubator for hardware and software engineers with branches in Silicon Valley, Tokyo and, most recently, Berlin. "So far, Shenzhen has thrived thanks to the strength of its synergies," he says. "If you had an idea, you'd find a factory right on the other side of the street that could launch series production."

When he came to Shenzhen 15 years ago, he found a haphazard, creative chaos. "It was so bad, but it felt so good," he remarks. The more organized, efficient and wealthy the city becomes, Pan says, the higher the rents soar.

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.

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."

THIS ARTICLE WAS FIRST PUBLISHED IN THE GERMAN PRINT EDITION OF DER SPIEGEL 30/2019 ON JULY 20, 2019 AND HAS BEEN UPDATED.

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