China Is Creating A ?Greater Bay Area" To Rival Silicon Valley. What Will It Mean for Hong Kong?

They fear the Greater Bay Area (GBA) will erode the political freedoms granted to the Hong Kong Special Administrative Region (HKSAR) when it was returned to Chinese sovereignty in 1997.Currently Hong Kong operates its own judiciary, which is dictated by a mini-constitution called the Basic Law. The Basic Law grants Hong Kong the regulatory freedoms and political stability it needs to operate as a hub for international business and finance – a springboard for Chinese companies expanding overseas and an entry port for international firms targeting China.However, the Basic Law is only guaranteed to be in effect for 50 years from the date of the handover. With no guarantee, the Greater Bay Area policy offers the best insight into what Hong Kong’s future role in the world will be.The Greater Bay Area is comprised of nine cities in Guangdong – the southern province where Deng Xiaoping launched China’s policy of economic reform 40 years ago – plus the two Special Administrative Regions of Hong Kong and Macau. The AmCham Shanghai report cited capital controls and “arbitrary government intervention” as leading causes for Shanghai’s failure to become a leading international finance center.As Hong Kong integrates more with the Greater Bay Area, there’s concern closer regulatory alignment between the two jurisdictions will pose a threat to Hong Kong’s judicial integrity and undermine the appeal of Hong Kong’s financial market – much like how “arbitrary government intervention” has hindered Shanghai’s financial dreams.“A pessimist might say in the long-term Beijing would like to see Shanghai displace Hong Kong as the hub for international finance in China and so gradually eroding the distinction between the ‘two systems’ by integrating Hong Kong into the GBA and pushing for regulatory harmony will serve that goal,” says Stuart Hargreaves, a professor of law at Chinese University of Hong Kong. “However, an optimist would say that even with some regulatory alignment, Beijing has to protect Hong Kong’s independent legal system, because it is a precondition for the international finance sector.”At a speech given February 21 during a symposium in Hong Kong, where the GBA blueprint was unveiled, Chief Executive Carrie Lam emphasized that the integration policy had pledged to uphold the “one country, two systems” model that currently dictates Hong Kong’s relationship with mainland China – an understanding that Hong Kong is part of China (one country) but operates with a high degree of autonomy (two systems).However, in its latest Index of Economic Freedom, the Heritage Foundation noted Hong Kong’s “judicial effectiveness” had declined over the year before due to political interference from the mainland government.