Can China’s Greater Bay Area emerge stronger after the coronavirus pandemic?
Rodney Moulder
Managing Director, South China
Asia
The world has been shaken by the impacts of the coronavirus pandemic and experienced major disruption across all sectors of the economy. While the wider ramifications will be felt for some time to come, the construction industry must look to respond safely and responsibly in the short-term. Now more than ever is a time for greater industry collaboration across China’s Greater Bay Area for the benefit of the tens of millions of people who make their livelihood there.
The Greater Bay Area was set up by the Chinese Government as a national initiative to build a mega-region that is globally competitive by 2035 and comprises nine cities in the Guangdong province and two Special Administrative Regions (SAR’s) of the People's Republic of China (PRC) of Hong Kong and Macau.
The initiative is a way to combine and leverage the individual strengths of Hong Kong as a finance hub, Shenzhen as the tech-centric home to Huawei, Macau as a hospitality and leisure heavyweight, and the respective strengths of the nine other major cities in mainland China. This strive for ‘mega-region’ status has had a series of serious set-backs in 2019 and 2020.
On paper, it’s a viable strategy to capitalise on an area that is already home to around 70 million people, which produces 37 percent of the entire country’s exports and amalgamates so many different strengths. There, however, remain substantial obstacles for the Greater Bay Area to reach its full potential.
Cluster challenges
After the overall strain of the US-China trade wars and Hong Kong’s 2019 protests and recession, then came coronavirus.
COVID-19 contributed to a 17.2 percent fall in Chinese export shipments throughout January and February 2020, especially of steel (for which China is the world’s largest producer).
In February 2020 alone, 50,000 construction workers were laid off in Hong Kong and in mainland China, projects were shut down for up to eight weeks.
Though the pandemic’s long-term effect on the Greater Bay Area is unknown, it is clear that in the short-term it will exacerbate an existing cluster conflict as the region starts its ‘bounce back’.
As the situation stabilises and projects rapidly remobilise, the cluster cities are competing for labour and materials in the short-term, to get their projects moving as quickly as possible.
Cluster conflicts
This collection of challenges has shone a light on a pre-existing inhibitor for the Greater Bay Area.
Economic rivalries, especially between Hong Kong and mainland China, are still prevalent, causing a disparity in regulation, best practice, legislation and ideology. Crucially, there continues to be restrictions on the freedom of movement of workers, inevitably detracting from the notion of ‘one mega-region’.
This tension not only slows down key commercial projects but also hinders the region’s overall ability to offset the damage caused by crises and geopolitical instability.
Cluster call to action
The Greater Bay Area is key to the Chinese government’s long term growth strategy. It may have been disrupted in the short-term by the COVID-19 pandemic, but has a strong role to play in the future prosperity of China and the world. Construction will help deliver this potential.
Amid a pending industry softening, the coronavirus, and both domestic and international conflict, there is now a call for a heightened focus on protectionism and inward-facing investment.
Through Chinese government stimulus to social housing, transport, healthcare, education – these projects should be able to leverage materials that may not be shipped elsewhere in the world if the economic fallout of the virus causes a contraction in demand.
To not align standards, regulations and legislation to some degree so that each of the cities can mobilise and meet this demand quickly would be a huge missed opportunity and lead to many longer-term ramifications.
Collaboration and defragmentation between all eleven cities in the cluster are now urgent and vital to steady a faltering ecosystem and potentially seize competitive advantage.
The cluster conflict may not be the sole reason for its recent slowdown, but overcoming it will be key to the region’s resurgence and future prosperity.
All stakeholders across government and industry must join together and see the cluster as greater than the sum of its parts.
Further resources
Please visit our COVID-19 response page for all of our resources relating to the impact of COVID-19 on the construction sector.