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Guangdong, HK and Macao now 'Golden Delta'

By Liang Qiwen (China Daily)
Updated: 2008-12-17 07:55

Trade and investment between Hong Kong, Macao and Guangdong continues to spur growth as increasingly close cooperation agreements bear fruit.

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The trend began with the Closer Economic Partnership Arrangement (CEPA) between the government of the Hong Kong Special Administrative Region (SAR) and the central government that was signed on June 29, 2003.

A similar agreement, known as the Mainland and Macao Closer Economic Partnership Arrangement, was signed between the government of Macao SAR and the central government on October 18, 2003.

Both took effect on January 1, 2004.

Annual supplements to the agreements have also been signed between the central and Hong Kong governments.

The fifth supplement to CEPA in Hong Kong was signed on July 30 this year, aiming to further open the mainland market to Hong Kong-based businesses, especially the service industry.

As the closest province to Hong Kong and Macao, Guangdong is seeing significant benefits from the CEPA.

The most recent statistics from a Guangdong industrial and commercial department show the province now was home to more than 432,000 Hong Kong-invested enterprises last February that accounted for over 60 percent of its overseas-invested companies.

The total investment from Hong Kong was nearly $200 billion, more than a half of the province's foreign investment capital.

In 2007 alone, some 6,000 new companies from Hong Kong registered businesses in Guangdong, bringing with them investment capital of more than $15 billion.

At the same time increasing numbers of Guangdong enterprises are investing in Hong Kong.

By the end of 2006, 713 Guangdong companies expanded to Hong Kong, investing $2.8 billion to establish branches.

Hong Kong is the destination of 40 percent of Guangdong's overseas investment, according to its department of foreign trade.

Through the platform provided by Hong Kong, many Guangdong enterprises, including TCL and Huawei, have also become more competitive in the global market.

Economic cooperation in the region started 30 years ago as China began its reform and opening-up. "Guangdong and the Pearl River Delta caught the right opportunity to develop economic relationships with Hong Kong and Macao and gained great economic success," said Chen Guanghan, an expert on Hong Kong and Macao at Guangzhou's Sun Yat-sen University.

Offering low-priced land and labor, the delta region became a second home for many Hong Kong companies, especially those in labor-intensive manufacturing.

"The world market usually recognizes the PRD, Hong Kong and Macao as an integrated area known as the 'Golden Delta'," he said.

After Hong Kong's return to China and the implementation of CEPA, cooperation entered a new era, he said.

Today Hong Kong and Guangdong are interdependent and indispensable to each other, he added.

An important result of the cooperation is that Hong Kong has become a global trading and logistic center as Guangdong became a base of manufacturing.

With access to Guangdong open, Hong Kong transferred most of its manufacturing enterprises to the province, so that it could focus on the development of service industry.

Even though Guangdong is upgrading its industries and is making moves to develop its own service industry, manufacturing will still be its primary industry, Chen said.