The Hainan provincial government announced the establishment of a Haikou Jiangdong New District on June 3. This will be the central showcase of the China (Hainan) Free Trade Zone. The new district covers an area of about 298 square kilometers and consists of an eco-function zone in the eastern half and a mixed zone for industry and urban facilities in its western half. It boasts a prime location in the city of Haikou, with an excellent eco-environment and the obvious advantages of being the latest of its kind. Its strategic positioning is determined by the central government as “three districts and one center”, namely, building an innovation district in the test area for all-round reform and opening-up. It is a model district showcasing the national ecological civilization test area. It is showing what it takes to be an international tourist consumption experience center as well as a key national strategic service and maintenance zone. It is also tasked with building a world-class carbon emission-free city. This is a brilliant calling card for Chinese culture with Hainan characteristics, a model urban-rural community showcasing what to expect in the future and a leading central business district for the rest of the world to follow. Its goal is to “have an image in two years’ time, which will begin functioning in three years and take shape in seven years’ time”.
The Haikou Jiangdong New District was established less than two months after an important announcement by President Xi Jinping, who is also general-secretary of the Central Committee of the Communist Party of China. At a ceremony marking the 30th anniversary of the Hainan Island becoming a province and special economic zone, Xi stressed the central government’s decision to make the whole of Hainan Island a free-trade zone and later a free-trade port. The province obviously wasted no time in executing the central government plan for Hainan in an efficient and decisive way.
This is the definition of what the central government authorities led by General Secretary Xi have demanded since the 18th National Congress of the CPC as “top-down design”. This also applies to the Guangdong-Hong Kong-Macao Greater Bay Area city cluster development plan.
Many people in Hong Kong may find it hard to understand, because they are used to the “invisible hand” of the free market. Chief Executive Carrie Lam Cheng Yuet-ngor explained recently that it is necessary for the central government to provide a “top-down design” for the GBA city cluster development. This is because it concerns Guangdong province and two special administrative regions as well as many central government departments. Hong Kong society as a whole needs to understand this reasoning.
Once the central government has unveiled the “top-down design” for the GBA city cluster, it is up to the SAR to decide how it will take part in the development scheme
In fact, the three great bay areas that already exist — New York, San Francisco and Tokyo — are examples of two different ways of creating them: The New York and San Francisco bay areas were driven mainly by the free market; while the Tokyo Bay Area was mostly a government-led development scheme. Even in contemporary economic theory, preference for the free market over the government is not exactly dominant. In practice which one is preferable depends on the real conditions.
Since the GBA development is a part of the country’s deepening reform and opening-up drive, it is only a matter of course to be included in the national development strategy. We know there was no mention of “top-down design” in the central government’s vocabulary before the 18th National Congress of the CPC, but there were always principle directives. For example, after Deng Xiaoping made an inspection tour of Shenzhen in 1992, the 14th National Congress of the CPC adopted “socialist market economy” as the goal of economic reform. It then launched multiple major development programs in the following years — such as establishing the Pudong New Area in Shanghai.
The introduction of “top-down design” at the 18th National Congress of the CPC was inspired by experiences from almost 35 years of reform and opening-up and systematic understanding of socialism with Chinese characteristics. Hong Kong society must understand the rationale behind this strategy, or doubts will remain and hinder the execution of the “top-down design” by central government authorities.
Once the central government has unveiled the “top-down design” for the GBA city cluster, it is up to the SAR to decide how it will take part in the development scheme. That means it will have to choose between free market operation and “top-down design” by the SAR government.
The Hainan provincial government noted, upon announcing the establishment of the Haikou Jiangdong New District, that it is planning to aim high. Its projects will be of a high standard; its development will “follow a global vision, adopt international standards, maintain Hainan’s own characteristics and stay in a high position”.
These ideas should give Hong Kong many things to think about, such as whether it, too, needs to “aim high, adopt international standards and maintain its own characteristics.” Why cannot the SAR “see the big picture, think big, make big moves and go big or go bust” in its efforts to become an international inno-tech hub? If the answer is “yes”, there is no way Hong Kong can succeed by leaving it to the whims of free market.
The author is a senior research fellow of China Everbright Holdings.