Regional Integration of Hong Kong and Guangdong:
Hopes and Fears

8 April 2002

Christine Loh, Civic Exchange

By Timothy Hildebrandt

Five years after the international community scrutinized the July 1997 handover of Hong Kong to the People's Republic of China the city now is comparatively ignored by the worldwide news media. Economically, while not the force of years past, the region is in good health; Hong Kong and south China weathered the Asian financial crisis without devaluing their currencies. Politically, the former colony has maintained stability; pessimistic predications of a Beijing stranglehold on the region have, as yet, not come to fruition. This relative stability in Hong Kong, with no presence of global terrorist activity and limited interests in the Enron debacle means Hong Kong is not the hot topic it was a few years ago. But, according to Christine Loh of Civic Exchange, this is no reason to ignore the region. The integration of Hong Kong and Guangdong offers an intriguing story involving interlinked political, economic, and environmental factors. This Woodrow Wilson Center meeting introduced the issue of regional integration of Hong Kong and Guangdong, highlighting environmental issues in the region and the importance of collaboration in solving problems.

Self-Determination and Economic Windfall
Politically, Hong Kong residents have accepted reality. The city-state that grew from a small fishing village to a world economic powerhouse while a member of the British Commonwealth is back under the control of its historical "birth mother," China. Economists urged China's leaders not interfere with Hong Kong's economic success and instead preserve the open door policy that has been integral to south China's economic boom. When China began to open in the late 1970s, Beijing declared south China the proving ground for a free-market economic policy in China, inviting Taiwan, Macao, and Hong Kong to invest freely in Guangdong Province. Possessing the freedom to make economic decisions themselves, Guangdong authorities have transformed their province, particularly the Pearl River Delta, into the most economically dynamic and successful area of China.

While perhaps not as romantic as Shanghai, the "Paris of the East," the Pearl River Delta is unquestionably the economic emperor of China. Interregional cooperation has been essential for Hong Kong and Guangdong's common success:

• Since the early 1980s, virtually all of Hong Kong's light manufacturing moved into southern China;
• Southern China manufacturing operations have resulted in dramatic growth for Hong Kong-based companies, along with increased value and quantity of production;
• The shift in production plants into southern China has meant Hong Kong exports fewer products than in the past. However, Hong Kong businesses now control the more lucrative end of manufacturing: production management, product design, and marketing;
• While Guangdong presently constitutes 40 percent of China's exports, Hong Kong businesses control 60 percent of Guangdong's export capability; and,
• Guangdong's per capita GDP is double that of the rest of China, while Hong Kong's GDP is over six times the size of all of China's provinces combined.

The Danger of Competition
Traditionally, Asia's economic centers (Hong Kong, Seoul, Singapore, Taipei, and Tokyo) have competed with each other. These cities often attempt to outbid each other for Olympic Games, corporate headquarters and, most recently, the new Hong Kong Disneyland theme park (Editor's Note: See following commentary on this topic). Guangdong and Hong Kong, like the rest of Asia, also compete with each other. While this competition has spurred economic growth in the Pearl River Delta, it also has led to extreme cases of waste (in terms of duplicative infrastructure) and detrimental environmental impacts in the region. Clearly, as Hong Kong and Guangdong move toward economic integration, local governments on both sides of the border need to contend with similar "side effects" of development and pollution problems—as Loh noted, environmental issues "respect no political borders."

Uncontrolled Development
Looking at transportation networks, Ms. Loh reported that the Pearl River Delta is home to five fairly major airports—two of which are "hardly doing anything at all." For regional integration that is economically and ecologically sound, Hong Kong and Guangdong must avoid such waste and environmental destruction. Loh suggested a regional "spatial database" be created in order to identify areas that are suitable for development—and those that simply should not be touched. The key, according to Loh, is cooperation among policymakers on regional development planning. While scholars and scientists in the region understand responsible development, it will be a challenge to raise such awareness among city, county, and provincial government leaders.

As the region continues its rapid growth, observers hope the Pearl River Delta will not commit the developmental sins of Hong Kong. Christine Loh, however, fears the Pearl River Delta is on track to repeat Hong Kong's failure to adopt a conservation policy. She envisions the push for economic growth through massive infrastructure projects will lead to less conservation and more irresponsible development in Guangdong. Ms. Loh provided one telling example: Guangdong government officials have issued plans to construct the "Guangdong-Hong Kong-Macau (GHM) Major Bridge," to connect the eastern side of the Pearl River Delta to the west. A capstone of the project would be the Macao Immigration Check Point. This development would necessitate a vast reclamation project to create enough land for the checkpoint and a massive housing project—the latter would be developed to provide financing for the bridge. Massive infrastructure initiatives like the Delta Bridge and Hong Kong Disneyland have incurred a high financial cost and, according to Loh, a high ecological one as well. Loh lamented the public indifference in Hong Kong to the "deletion" of an entire bay for the theme park construction, a stark contrast to a similar situation in the United States. "I know that people in Virginia are very proud of themselves because they rejected Disney. This does not happen in our part of the world. People see these [large infrastructure projects] as ways to generate economic returns."

Insufficient Infrastructure, Inadequate Information
Responsible development is, according to Loh, dependent upon reliable information making its way to the policymakers who are in a position to affect change. These individuals in Hong Kong and Guangdong, however, have yet to receive a comprehensive picture to create environmentally friendly development policy for the whole region. Clear data on the long-term costs of inefficient development and environmental degradation will be needed to convince policymakers on both sides of the border to commit politically and financially to regional development research and planning. One current obstacle is that data is difficult to access in Guangdong, as many local governments are only willing to sell such information.

There is a great need for adequate water and solid waste processing investment and planning in the region. Despite being a developed city on par with Toyko and Sinagpore, Hong Kong still suffers from inadequate infrastructure for wastewater and solid waste disposal. Loh declared that Victoria Harbor is "still half a cesspit [after] many years [as] a public toilet." In some areas of Guangdong, wastewater lacks advanced treatment while solid and hazardous waste disposal facilities are often nonexistent.

Public Awareness Factor
The general population in Hong Kong grossly neglects environmental problems. Environmental issues that do capture public attention are approached from a shortsighted perspective. For instance, with the growing energy shortages in Hong Kong residents care only about avoiding brownouts, not the larger, more sophisticated problems such as carbon loading, energy efficient buildings, and renewable energy. Loh insists a change in the environmental mindset of the region must be made to improve the ecological situation of the Pearl River Delta. Loh's think tank Civic Exchange has partnered with a Shenzhen academic institution to conduct a study examining people's attitudes in the Pearl River Delta toward the environment and what efforts they as individuals make to promote environmental protection in their area.

Public awareness is also low, Loh contends, due to the lack in Hong Kong and Guangdong of enough environmental "champions" to affect large-scale change. The well-known personalities that champion other causes in the region have yet to attach themselves to ecological issues (except, perhaps, Loh herself). The most influential, well-known people in the region—many in business—are fixed in the mindset of competition within the Pearl River Delta rather than collaboration on sustainable development.

Perhaps the biggest roadblock to solving environmental problems in Hong Kong and Guangdong is a lack of funding. Options for the region are constrained by preferences for continued economic autonomy and its great wealth—accepting money from the Chinese government would implicitly obligate Hong Kong and Guangdong to follow Beijing's directions, while multinational lending organizations like the World Bank and Asian Development Bank would not chose to operate in such a rich area. This leaves the Pearl River Delta with only two viable options for funding—private money and regional government support. Private funding of public projects is not uncommon in the region. Hong Kong-based investors already own a big chunk of infrastructure on both sides of the border—the Zhejiang expressway in eastern China is listed on the Hong Kong stock exchange. Few private groups, however, are willing to fund the ugly "underbelly" of city infrastructure like wastewater treatment. Government funding can be equally difficult to secure for these less appealing projects. The necessary infrastructure projects, integral for the ecological health of the region, thus lose out to the grander, more profitable, often environmentally detrimental schemes.

Environmental Movements and Regional Cooperation
According to Loh, environmental movements in the Pearl River Delta region are "few and far between." One significant problem for nongovernmental organizations (NGOs)—especially within Mainland China—is a lack of expertise. Too often green groups do not possess the necessary scientific knowledge to accompany their advocacy work, making themselves vulnerable to criticism. The burden of proof lies on the green NGOs, which means that scientific expertise and intellectual capacity are crucial for the survival of south China's environmental movements. Regional environmental work among NGOs also is complicated by the difficulty of self-organization on the mainland. Ms. Loh noted, however, that since environment protection is relatively non-political compared to contentious issues like constitutional reform and human rights, the Chinese government has allowed for the development of green groups.

While the number of green NGOs is still small in mainland and Hong Kong, environmental research is strong within universities and research centers on both sides of the border. Consequently, some intra-regional ecological work is underway. Air quality research and monitoring provide particularly promising areas for collaboration. While the Hong Kong and Guangdong governments jointly embarked on a groundbreaking study on air pollution, university-supported environmental research is even more prolific. For example, in Hong Kong the University of Science and Technology and Polytechnic University have collaborated with Beijing University and the Guangdong government on an air quality study. Georgia Tech has done significant work on ground level ozone in Guangdong as well. More recently, Civic Exchange has initiated research on regional environmental issues by bringing together a research team to propose innovative management and financing options for water and wastewater infrastructure in the Pearl River Delta. The team will produce a report in summer 2002. This collaboration of academics and practitioners is integral, according to Loh, for the successful application of environmental research in the policy sector.

The Promise of Cooperation
The growing economic, social, and political integration between Hong Kong and Guangdong offers a unique opportunity to address shared infrastructure and environmental problems throughout the Pearl River Delta. To more effectively solve the area's troubles, Christine Loh suggests that residents must change their mindset from one that is city-centered, stressing intra-regional competition (Hong Kong versus Guangdong) to one that is region-centered, focusing on unified efforts within the Pearl River Delta.

Hong Kong and Guangdong have the luxury of an "executive-led" government. Once the governments have resolved to embark on a project, the process is completed post haste. While this can easily result in irresponsible infrastructure projects, it could just as easily benefit ecologically sound development activities and conservation projects. Ms. Loh recounted one fast acting Hong Kong government move to concrete the slopes around the island to prevent destructive landslides during rainstorms. Though happy with the protection provided by the project, residents complained of the unsightly concrete slopes—just as quickly as the original concreting was complete, the government had beautified the slopes with new vegetation.

Christine Loh reminded the audience of the admiration held for the Pearl River Delta's beauty, " I was with a Chinese official in Shanghai…and he said to me, ‘You know, you're so lucky in Hong Kong. We have the water, but you have the mountain and the water.' I came home and I thought I better go up to the peak and have a look. And my god, Hong Kong is beautiful." "But," Loh continued, "we do stupid things. We go…fill in the harbor and ruin the skyline…we do silly things." A history of unchecked development and a ceaselessly competitive attitude makes ecologically responsible regional integration in Hong Kong and Guangdong a daunting task. While "silly" decisions have degraded the environmental health of the region, residents like Christine Loh have resolved to make a change for the better.

This Wilson Center meeting was cosponsored by ECSP's China Environment Forum and The Asia Program.