Opinion: Bay Area's success rests on it tackling major obstacles

Lu Jianbao discusses some challenges involved in Bay Area development and three key obstacles it needs to overcome to be a leading city cluster:

The Guangdong-Hong Kong-Macao Greater Bay Area is inherently bestowed with competitive advantages in terms of its location, population and economic strength. Nevertheless, that infrastructure facilities have been given priority over other support measures has created an unbalanced relationship between hardware and software development on the mainland side of the Bay Area. Specifically, there are three obstacles that the mainland side needs to overcome to build the Bay Area into a first-class city cluster: insufficient talent admission and development, inadequate knowledge of the significance of the Bay Area, and the tardy development of its public service system.

Obstacles to talent gathering

In terms of talent attraction and admission, currently talent mobility between Hong Kong, Macao and the nine mainland cities in Bay Area is still restricted. Talents from the two SARs are subject to certain regulatory restrictions in the areas of employment, right of abode, healthcare and education if they choose to stay in those nine mainland cities in the Pearl River Delta. The medical and social security systems among the nine mainland cities are also incompatible with each other. Salary and corporate taxes on the mainland are much higher than the two SARs. Restrictions abound in the area when applying for national funding on technology research across the boundary.

The region's efforts to nurture local talents have been constrained by its relatively weaker educational resources - with only six top national universities in Guangzhou while none is located in Shenzhen. The education level in Bay Area cities, in terms of the ratio of people who have received higher education to total permanent residents, is relatively low according to statistics: 26.18 percent for Hong Kong, 25.19 percent for Shenzhen and 15.74 percent for Dongguan. A huge gap exists between education levels in the Pearl River Delta and the San Francisco Bay Area - where world-class institutes like Stanford University and University of California, Berkeley are located. Nurturing top talents demands first-class education. The Bay Area will have difficulty in retaining talents in the absence of top-notch institutes. Furthermore, the incentive policies provided by various cities on the mainland have led to a dispersion of talents across the country. Not only is the Bay Area less attractive to international talents than Beijing and Shanghai, incentives provided by other emerging first-tier cities will also draw talents away from the Bay Area.

Deficient grip of significance

People-to-people connectivity, cooperation, openness, inclusiveness, innovation, sharing, and collaboration are important factors for the success of a bay area. People-to-people connectivity is especially crucial to creating a quality living area within the Bay Area. At present, many residents in Hong Kong and Macao are still not fully aware of the strategic importance and social value of the creation of a world-class city cluster. Some of them have doubts about deepening collaboration between the two SARs and the mainland out of concern that their own cities will lose their uniqueness in the integration process.

At the official level, the construction of Bay Area involves numerous new issues, new regulatory requirements and breakthroughs in policies. This would pose challenges to the traditional government organizational and functional setup; they are also a test of the overall competencies of civil servants. The risk and unpredictability of reform, together with the imperfection of the liability exemption rules in the government sector, have rendered local governments cautious about pursuing the many institutional reforms that are both urgent and imperative. Furthermore, the professional competency of civil servants in the Bay Area has not kept up with the development of the Bay Area. According to recent surveys conducted with some knowledge-based institutions in the mainland cities of the Bay Area, civil servants working in government departments would find it difficult to resolve new issues arising in the international finance and trade sectors.

Insufficient public services

Firstly, a world-class bay area requires a world-class environment. While the Bay Area has inherited relatively more favorable environmental conditions than the Beijing-Tianjin-Hebei urban agglomeration, its natural environment, scenic attractions and environmental protection efforts are still considerably behind those of San Francisco Bay Area. Besides pollution from the manufacturing industry, there is also a lack of scenic attractions along the Pearl River Estuary and an absence of a platform for cross-district leisure tourism. Secondly, there is room for improvement in terms of housing, education and health care. An unbalanced residential development is evident in the Bay Area, where supply exceeds demand in second- and third-tier cities while demand exceeds supply in major cities. In some newly developed zones, the rise in property prices has preempted the aggregation of talents and industries, who subsequently find those zones less attractive compared with other areas. On the other hand, education and medical institutes are heavily centralized, with most of the top schools and hospitals being located in old districts of major cities. This creates a mismatch in the suburbanization trend of most cities in the Bay Area. The lack of education and medical facilities in the new zones then further deters people from settling there. Finally, it is difficult to unify the dissimilar welfare systems across different cities. Medical insurance, social security, pension, eligibility of home ownership and etc. are among the institutional obstacles that separate the nine mainland cities in the Bay Area. That the household registration (hukou) system in mainland cities is still not open to non-local residents has discouraged overseas talents from settling in the mainland side of the Bay Area. Compared with the factors that attract technology talents to San Francisco Bay Area, the habitability of the Pearl River Delta Bay Area will be a critical element that restricts its ability to become a global talent pool.

The author is a researcher at the Institute of Guangdong, Hong Kong and Macao Development Studies, Sun Yat-sen University. He is also an associate researcher at the Institute of Free Trade Zones at Sun Yat-sen University.