“ Is the Megapolis the answer to the Pearl River Delta’s transformation in the 21 st century? Presented by Patrick Cheung Councillor Hong Kong Foresight Centre Sponsored by

China’s Economic Drivers 1979 - 2009 Export Processing Foreign Direct Investment Hong Kong has played a pivotal role in both areas Pearl River Delta Region is China’s export processing leader

Hong Kong has played a pivotal role in both areas

Pearl River Delta Region is China’s export processing leader

Forces at Work What is PRD’s future positioning? Low value, export processing industries Intense competition from other developing countries China’s rising labour cost China’s new economy model Up the manufacturing curve Domestic and service economy Greater outward investments Is Hong Kong still relevant? World Economy Still waiting for recovery Economic centre of gravity shifting eastward China: $2 Tr foreign exchange reserve Hong Kong as a Financial Centre Competition from Shanghai and others

Low value, export processing industries

Intense competition from other developing countries

China’s rising labour cost

China’s new

economy model

Up the manufacturing curve

Domestic and service economy

Greater outward investments

World Economy

Still waiting for recovery

Economic centre of gravity shifting eastward

China: $2 Tr foreign exchange reserve

Hong Kong as a Financial Centre

Competition from Shanghai and others

Vision for PRD/HK from Beijing PRD key transport, higher value manufacturing and professional services hub Pilot region for further reforms: economic, political cultural, cultural, social and innovation Ever closer integration between Hong Kong and Shenzhen, “Virtual Merger” Gateway to the world Leading the way for China’s next transformation

PRD key transport, higher value manufacturing and professional services hub

Pilot region for further reforms: economic, political cultural, cultural, social and innovation

Ever closer integration between Hong Kong and Shenzhen, “Virtual Merger”

Gateway to the world

Hong Kong / Shenzhen The New Megapolis? One country, two systems Border people movement Legal Financial systems Currency, etc. Government approach Directed, top down vs. democratic limited government HK / SZ Combined population = 18 to 20 mn Richest megapolis in China Access to nationwide talent and technology base Differences Wages Property prices Retail prices Languages Business practices Etc. Challenges

One country, two systems

Border people movement

Legal

Financial systems

Currency, etc.

Government approach

Directed, top down vs. democratic limited government

HK / SZ

Combined population = 18 to 20 mn

Richest megapolis in China

Access to nationwide talent and technology base

Differences

Wages

Property prices

Retail prices

Languages

Business practices

Etc.

Opportunity for Private Sector Innovation To the innovator goes the spoils! New opportunity sets Business processes Organization approaches Communication approaches

New opportunity sets

Business processes

Organization approaches

Communication approaches

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