1 Jianfa Shen Department of Geography and Resource Management The Chinese University of Hong Kong Cross-boundary Urban Development in Hong Kong and Shenzhen

2Outline  Introduction  Conceptualizing intercity relations between Hong Kong and Shenzhen  Growing together: economic integration  Living together: social interaction  Linking together: cross-boundary infrastructure and services  Asymmetric urban governance and challenges  Conclusion

3 Location of Hong Kong and Shenzhen

4Introduction  Cities compete against each other for certain opportunities, markets and supply.  Cities may also cooperate to enhance the competitive advantage of both cities by è seeking agglomeration effects è facilitating innovation process è managing externalities è avoiding duplicative capacities è improving efficacy è minimizing risks (Heeg et al, 2003)  The dynamics of Hong Kong and Shenzhen relations constitute an interesting case for the study of inter-city competition and cooperation.

5 Conceptualizing intercity relations between Hong Kong and Shenzhen

6 Private business  Cross-boundary cooperation prevails in Hong Kong and Shenzhen è Due to the complementarities of capital, labour, technology and market knowledge  Hong Kong investors have made massive investment in Shenzhen è contributing to economic growth and export in both cities.

7 State-owned enterprises and business  Hong Kong SAR government only owns a few public organizations/businesses such as è Hong Kong Convention and Exhibition Centre under Trade Development Council è Hong Kong Airport Authority è Kowloon-Canton Railway Corporation  Making profit is not the main objective of these businesses  But the government does have a keen interest to maintain a strong convention and exhibition business and airport in Hong Kong for the general interest of Hong Kong economy  These are areas that may compete directly with other cities such as Shenzhen International Airport and convention and exhibition business in Guangzhou, Macau and Shenzhen

8 Growing together: economic integration

9  Hong Kong is the largest FDI investors in mainland China  Hong Kong is the major source of foreign capital in Shenzhen è accounting for 78.9% in 1986, 70.7% in 1997 and 53.0% in 2005  Hong Kong FDI reaches many places è Shenzhen accounted for 19.2% FDI received by China in 1986, 3.7% in 1997 and 4.9% in 2005 è Shenzhen received 27.1% of Hong Kong FDI to mainland China in 1986, 8.1% in 1997 and 16.5% in 2005  HK-mainland FDI link > HK-Shenzhen link  HK dependence on Shenzhen < Shenzhen dependence on HK

10 Shenzhen and Hong Kong are important trading partners  Shenzhen’s export contributed over 13% of the total export of China  Outward processing related export accounted for the bulk of export from Shenzhen  A high proportion of Shenzhen’s export went to Hong Kong.  Shenzhen to Hong Kong export’s share in the total export from mainland to Hong Kong è 19.0% in 1991, 48.4% in 1997 and 36.2% in 2005.

11 Living together: social interaction Share in the total employment of Hong Kong: 4.2% in % in 2005

12 Living together: social interaction

13 Location of working in 2005

14 Hong Kong residents living in mainland China for over 3 months in the 6 months before enumeration

15 Residential properties owned by Hong Kong residents

16 Residential properties owned by Hong Kong residents

17 Residential properties owned by Hong Kong residents

18 Residential properties owned by Hong Kong residents

19 Reasons for living in mainland China

20 Linking together: cross-boundary infrastructure and services  The 24-hour operation was introduced at the Lok Ma Chau checkpoint on 27 January 2003  Hong Kong-Shenzhen Western Corridor opened on 1 July 2007  Lok Ma Chau spur line and the Lok Ma Chau/Huanggang railway passenger crossing started operation in 15 August 2007

21 Asymmetric urban governance and challenges  A market economy has emerged in Shenzhen and SOEs play a limited role, though much greater than the case of Hong Kong  Domestic firms employed only 22.5% people but contributed 36.2% pre-tax profit and 50.8% tax  Shenzhen economy depends heavily on the Hong Kong and foreign investment  Shenzhen is more active in attracting FDI than Hong Kong  Shenzhen government has bee highly selective in supporting large business, SOEs and private business è provide convenient and direct services to 193 large firms in Shenzhen since 2003

22 Asymmetric urban governance and challenges  As a policy of the central government, the core task of the Shenzhen government focuses on economic development and investment promotion  The core task of the Hong Kong government focuses on the social needs of the city while leave economy largely to the invisible hands of the market  Hong Kong government has also been less sensitive and responsive to economic opportunities under the philosophy of “positive non-intervention”  The legislative council and the growing civil society also make it harder for the government to get approval or support for major projects after 1997  All these factors result in a pattern of being slow to make decision and slow to take action

23Conclusion  Close economic relation/cooperation exists between HK and Shenzhen  Shenzhen relies heavily on HK investment  HK and Shenzhen are major trading partners  Increasing number of HK residents living and working in Shenzhen  Competition emerges in state-owned sector  Major challenges in cooperation due to asymmetric urban governance  Serious talk on cooperation between two city governments may partly help to move forward

24 Thank you!