In China's Future, Where's Hong Kong Fit In? pt 1

6/4/2010 - Alex Fong is the CEO of the Hong Kong General Chamber of Commerce, a driving force in the structure and focus on Hong Kong's economy for the past 150 years. As Hong Kong integrates more deeply into an ever-more global China, we wanted to ask Alex, who was previously in charge of security during Hong Kong's handover to the PRC, how the economic, financial, and cultural aspects of the integration are proceeding.




THE CHINA BUSINESS NETWORK: I’m Janet Carmosky and I’m interviewing Alex Fong, the CEO of the Hong Kong General Chamber of Commerce. Thanks for being with us, Alex. 

ALEX FONG: Hi Janet, how are you?

TCBN: Good morning in Hong Kong – it’s nighttime here in New York. Now, here’s my first question: Hong Kong and Shenzhen each have huge spheres of economic influence, and they also have a high degree of integration with each other. What could you tell us that you find particularly revealing, that could describe to our listeners how that relationship between Hong Kong and Shenzhen works in 2010? And also a little bit about where it’s going.

AF: Well, if you look at the history it’s really astounding, because thirty years ago the population of Shenzhen was just 20,000 people. Now their statistics will show that they are over ten million. Some people say it’s even twelve million. That’s a span of thirty years’ growth. Hong Kong’s population has about seven million. So, in terms of size, Shenzhen is already bigger than Hong Kong. But we should not see the two cities as two isolated cities in the western sense, because we operate under a very special arrangement called the One Country, Two Systems arrangement, whereby our systems and processes, which [Hong Kong] inherited from the British days, are still left very much intact. For example, things like rule of law, things like freedom of ideas – we’re still more ahead, in the international sense, than other parts of China, including Shenzhen. 

So, this used to be our competitive edge, we used to be defined by these sorts of differences, if you like – the degree of difference. But with the growth in population and all the economic activities, and also ten years after re-unification, there is now increasing integration. For example – the companies owned in Shenzhen now operate in Hong Kong and the companies owned by Hong Kong people are operating in Shenzhen. So there is cross-ownership of companies, and also people working in Shenzhen come to Hong Kong, and that’s called “people flow”. Now it’s becoming a big economic entity. 

The significant thing to look at is that in the five-year plan, which was announced earlier in the year, a thing called the Framework Agreement on Hong Kong/Guangdong Cooperation was formally confirmed by the central government. What this means is that the polities in the Guangdong province, including Shenzhen, Guangzhou, and the Special Administrative Regions of Hong Kong and Macau, will be doing planning as a big economic region, so that there will be more integration in terms of infrastructure, industrial cooperation, innovative cooperation, and green living. There will be a much easier flow of people, goods, and information, and as a result, there will be differentiation in the roles of Hong Kong and Shenzhen – the two will actually reinforce each other’s roles.

TCBN: On the website for the General Chamber of Commerce in Hong Kong, there is a phrase that you use called “Building a Circular Economy” in Hong Kong and the Pearl River Delta. You were just talking a little bit about what the circular economy is looking like, but I want to ask how, specifically in the relationship between Hong Kong and the larger PRD, what’s really most relevant – if you can predict it yet – to the future of Hong Kong? 

AF: The circular economy is one application of this new relationship. But I think this is going to take a lot of time to come to real effective phenomena that you see on the ground. The more immediate thing that we can see is, for example, the new express railway. They are now building express trains, sort of like bullet trains in Japan, all over China. The one which is going to link up Hong Kong and Shenzhen and Guangzhou, we call the Guangzhou-Shenzhen-Hong Kong Express Rail Link. It’s going to be completed in 2015, so in five years’ time. 

TCBN: How fast will it be?

AF: It will be something like 300 km.

TCBN: Which means it will take how long?

AF: Traveling time from Hong Kong to Shenzhen will become 15 minutes, and then Hong Kong to Guangzhou will be 15 minutes. It’s almost like traveling within Hong Kong now. From Hong Kong to the other side – Kowloon – it takes 10 minutes. From Hong Kong to Yuen Long, which is the furthest part, is about 15 minutes. So, in the future, the geographical region will shrink to such an extent that going from Hong Kong to Guangzhou is like going from Hong Kong to Yuen Long now. So that is a very significant change, and with that rail improvement, I can foresee that there will be lots of travelling across borders for work, study and living. So, from Hong Kong’s perspective, we may be seeing Shenzhen and Guangzhou as our extension, and from Guangzhou and Shenzhen’s perspective, they will be seeing us as their extension. 

TCBN: I’m also sort of curious about how that works as the cost of manufacturing in the PRD rises, because it used to be the synergy between Hong Kong’s capital and China manufacturing, backed by this massive investment and logistics, which clearly continues, that was driving growth, but now that manufacturing costs are going up, how is that changing?

AF: Well, you are right in saying that. If you go over the history of Hong Kong’s development, we first grew as a port, and then as a manufacturing center, and then the manufacturing center shipped across the border, and then we became a logistics center, and thereafter we became a financial center. So our growth is based on the growth of the internet as an integral part. It’s not just by central design. So that was the age when we didn’t have this close interaction with Shenzhen and Guangzhou, and now, because of the increasing way in which the planning of the two cities needs to be integrated, some of the activities are driven by government policies on the other side of the border.

Part 2 of this interview can be found here.




Alex Fong took up the post of CEO of the Hong Kong General Chamber of Commerce on September 1, 2006. Prior to this position, he was the Principal Hong Kong Economic and Trade Representative (Tokyo). Mr Fong had worked in the Hong Kong Government for over 20 years prior to joining the Chamber, holding various postings.  See more