A Greater Bay Area: China’s Initiative To Build A New Silicon Valley

Executive Summary

• The GBA, covering 56,000 square kilometers with 70 million people, aims to become a globally renowned economic and technological hub, comparable to bay areas like San Francisco, Tokyo, and New York. Its economic output surpasses 13 trillion RMB ($1.8 trillion) by 2022, exceeding developed countries like South Korea.
• The GBA leverages Hong Kong’s international aspects for China’s development, by attracting talent and resources through policies to liberalize the movement of money and people into the region.
• Special zones within the GBA incubate companies and research institutes focusing on hard sciences, technological innovation, AI, biomedical technology, and aerospace.
• The initiative, led by Xi Jinping, supports Beijing’s military-civilian fusion development strategy, emphasizing the development of the People’s Liberation Army through academic and other collaboration.

An Innovation Center was recently inaugurated with great fanfare in the Bay Area Core Valley (CTEE, December 7, 2023). Located within the Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, the launch of a semiconductor testing and packaging innovation center owned by STMicroelectronics (ST) represents a strategic maneuver as part of China’s ambitious Greater Bay Area (GBA) initiative. ST—a Swiss company and one of Europe’s largest semiconductor companies—publicly investing in Shenzhen seems to defy the current US technology-denial strategy against China (ST, accessed January 17). But it is indicative of China’s use of the GBA initiative to realize its national strategy to establish itself as a leader in global innovation and technology while navigating US technological containment.

The GBA initiative, which became national policy under President Xi Jinping, encompasses a significant portion of Southern China, including major cities such as Shenzhen, Hong Kong, and Macau. [1] It aims to transform the region into a globally renowned hub for economic activity and technological innovation, leveraging Hong Kong’s international status to attract talent and investment.

The Greater Bay Area Initiative And Hong Kong’s Importance

In 2019, Beijing unveiled its grand vision for the GBA. The “Outline of the Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (粤港澳大湾区发展规划纲要)” shows the government’s ambitions for the region spanning Hong Kong, Macau, and nine cities in Guangdong province (State Council, February 18, 2019). This initiative, spearheaded by President Xi Jinping, was intended to build on the economic strength of the Pearl River Delta megaregion through both further integration and expansion to include Hong Kong and Macau. With an area of about 56,000 square kilometers and a population of approximately 70 million, the GBA constitutes one of the most open and economically vibrant regions in China, playing a crucial role in the nation’s overall development strategy. Its name is an explicit indication of its ambitions to be seen alongside three other globally renowned bay areas: the San Francisco-Bay Area, Tokyo Bay Area, and the New York-Manhattan Bay Area (Xinhua, March 22, 2023).

Economic and urban policies conceived at the national level shape China’s urban system. [2] This can be seen in the rise of individual cities that receive the imprimatur of China’s top leader, such as Deng Xiaoping’s approving China’s first Special Economic Zone (SEZ) in Shenzhen in 1992, or Xi Jinping’s preoccupations with Xiong’an New Area (CPC, last accessed January, 17; HK01, January 17, 2022; China Brief, August 18, 2023). This centralized, top-down approach extends to megaregions—vast agglomerations of multiple economically vibrant city clusters. These are detailed under the “Coordinated Regional Development Strategy (区域协调发展战略),” a national-level strategy targeted to address regional disparities and promote balanced development across China’s uneven landscape (State Council, December 26, 2023). Beyond the GBA, other megaregions include the “Jing-Jin-Ji” region, which integrates Beijing, Tianjin, and parts of Hebei Province; the Yangtze River Delta, which is centered on Shanghai and the surrounding cities of Hangzhou, Nanjing, and Suzhou; and the Chengdu-Chongqing Economic Circle in western China.

Megaregions such as the GBA are powerful drivers of China’s economic growth. By 2022, the GBA’s economic output exceeded 13 trillion renminbi (RMB; $1.8 trillion), above that of developed countries like South Korea. (CE, October 27, 2023). The region serves as a testbed for integrating economic growth with technological development, exemplified by collaborative efforts between universities, research institutes, and industry in areas such as quantum science, the digital economy, and biomedical research. Uniquely positioned at the forefront of China’s coastal opening-up, its robust transportation infrastructure includes world-leading ports and international aviation hubs. In 2023, the nine mainland cities within the GBA accounted for 19 percent of China’s total import and export value, reaching 7.95 trillion RMB; ($1.11 trillion) (Sina, January 17).

The GBA initiative differs from other megaregions within the People’s Republic of China (PRC) in one key respect. It goes beyond the Pearl River Delta, which it subsumes, by integrating the autonomous regions of Hong Kong and Macau. In this way, it seeks to leverage the international aspects of these territories for the benefit of the PRC’s development. The PRC has benefited from Hong Kong’s unusual status for decades, which allowed it to function as a “hidden-in-plain-sight source of rule of law and market finance” for PRC-based entrepreneurs, as political scientist Yasheng Huang has argued. [3] The PRC’s unilateral destruction of Hong Kong’s special status in 2019 has allowed Beijing to advance its plan for deeper regional integration on the GBA. It seems likely that the deterioration of Hong Kong’s institutions will reduce its ability to play the role that Beijing wants it to, but folding it into the wider region has had other benefits from the CCP’s perspective. It has all but destroyed Hong Kong democracy in favor of Chinese-style modernization, with lessons for other territories. From this perspective, the PRC’s persistent designs on the Taiwanese islands of Kinmen and Matsu for deeper economic and infrastructural integration can be seen as a necessary step on the road to national reunification and rejuvenation (China Brief, January 5).

The GBA initiative is intended in part to advance Beijing’s military-civilian fusion (MCF) development strategy. The 2019 plan states that the GBA must bolster the development of the People’s Liberation Army, with Chapter Four, “Building an international science and technology innovation center (建设国际科技创新中心),” urging promotion of “the innovative development of civil-military integration in the nine cities in the PRD, and supporting the creation of civil-military integration innovation demonstration zones (推动珠三角九市军民融合创新发展，支持创建军民融合创新示范区)” (State Council, February 18, 2019). There is also a strong emphasis on academic collaboration. Utilizing the global resources and accessibility of Hong Kong universities, as seen in the numerous collaborations between Hong Kong academia and Shenzhen and Guangzhou government, the GBA initiative could facilitate significant transfers of knowledge and recruitment of talent.

Special Zones Promote Priority Sectors

The core focus of the GBI initiative is in bolstering the hard sciences and technological innovation. These are incubated in a number of special zones, including the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone and the Qingsheng District of Nansha, Guangzhou.

 Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone

The Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone (河套深港科技创新合作区; hereafter, the Zone), is a core part of the GBA initiative. A plan for the Zone’s development up to 2035 was laid out in 2017, detailing 11 separate specialized industrial parks. (GovHK, January 3, 2023). Huang Min (黄敏), Vice Mayor of Shenzhen City, recently emphasized the Zone’s role as the GBA’s sole major cooperation platform for scientific and technological innovation was (SouthCN, September 13, 2023).

An updated agenda was produced by the State Council in August 2023 (State Council, August 8, 2023). It outlines a comprehensive strategy to push the boundaries of next-generation information technology, focusing in particular on integrated circuit design, software development, testing and packaging, and 5G technologies. The aim is to foster technological breakthroughs and set standards for these technologies. In line with the “14th Five-Year Plan for National Informatization (‘十四五’国家信息化规划)” (CAC, December 28, 2021), the Zone’s design is that of a smart city, containing a pervasive digital infrastructure system, a collaborative and efficient digital government service system. This is intended to nurture leading-edge industries and encourage the growth of a digital economy, while enhancing the urban experience for citizens.

Advanced biomedical technology is another core focus of the Zone. The plan mentions a push to accelerate innovations in medical imaging, precision medicine, cell therapy, and new biomaterials. Collaborations in drug and vaccine development, genetic testing and diagnostics, high-end medical equipment, and artificial intelligence (AI) applications for biotechnology are also included. As such, it is poised to become a platform for global top-tier medical R&D and manufacturing outsourcing services by 2035.

The Zone has attracted numerous businesses related to AI and the digital economy. These work on constructing AI innovation platforms, developing intelligent sensors, designing graphics processors, and creating demonstration bases for intelligent manufacturing and autonomous driving. Setting AI standards and exploring the regulated application of big data, cloud computing, and blockchain in financial services is an additional priority. STMicroelectronics’ semiconductor center, established in the Zone, demonstrates at least some successes in enticing international players in the technology sector to the region, despite the adverse political climate.

Hong Kong is highlighted as central to internationalizing the science and technology innovation system in the Zone. The city’s concentration of talent and knowhow is being leveraged through relaxing visa processes to enable more liberal entry, stay, and residency policies in collaboration with the Hong Kong government. The plan also explores innovative cross-border financial management for scientific research by supporting joint venture capital funds between the mainland and Hong Kong and fostering cross-border scientific project funding. By enhancing cross-border linkages, professionals and innovators working in Hong Kong can more easily collaborate or transition to projects within the Shenzhen-Hong Kong innovation hub. In this way, access to the entire GBA region is an appealing prospect to prospective investors and experts. Five renowned Hong Kong universities have set up ten innovative R&D platforms in the Shenzhen Park within the Zone, alongside over 150 other advanced research initiatives (LOCPG, September 13, 2023). One such example is a joint laboratory focusing on quantum science, established by Guangzhou Laboratory and the Chinese University of Hong Kong. The lab is supported by an RMB 200m ($28m) annual investment from the Guangdong provincial government. Half of the first batch of projects have been led by Hong Kong universities (LOCPG, September 13, 2023).

Guangzhou Nansha and Qingsheng District

Guangzhou Nansha (广州南沙)—and specifically its Qingsheng District (庆盛)—is emerging as another area for innovation cooperation. The Greater Bay Area Development Plan designated Nansha as a “comprehensive cooperation demonstration area” with Hong Kong and Macau, focusing on innovation and development. It is newer and therefore less advanced than Hetao or other developed innovation hubs in the country, but it has a prominent role in assisting the Hetao plan. This role has recently been enhanced following a decision by the Guangzhou Municipal Government to solidify Nansha’s strategic platforms (GuangzhouGov, January 11). Nansha has thus become home to a number of high-end research institutions. The planned 99-square-kilometer Nansha Science City already hosts facilities such as the Chinese Academy of Sciences’ Pearl Science Park and the Southern Marine Science and Engineering Guangdong Laboratory, and Hong Kong University of Science and Technology (Guangzhou) is set to enroll students on a campus there (Xinhua, June 19, 2022; GuangzhouGov, April 20, 2023).

Nansha’s Qingsheng District is home to many firms in industries aligned with Xi Jinping’s strategic imperatives. Over 400 AI companies have chosen Qingsheng for its robust industry-academia-research ecosystem (State Council, June 19, 2022). Indeed, the district plans to build a 3000-acre AI industrial park in about five years, aiming to create an AI industry cluster and become a leading example of a smart city (Sohu, February 26, 2019). Similarly, Qingsheng has dedicated areas for road testing and R&D of autonomous vehicles (Baijiahao, March 29, 2018).

Transforming scientific research into technology products is a stated objective of the project (GuangzhouGov, April 20, 2023). This is exemplified by the relocation of aerospace firm CAS Space (aka Zhongke Aerospace Exploration Technology (中科宇航探索技术)) to Nansha. CAS Space, as its name suggests, realizes and commercializes research conducted by the Chinese Academy of Sciences (S&T Commission of the Shanghai Municipality, January 15). Beyond state subsidies, there is an additional geographic logic to producing rockets at Nansha. Its proximity to China’s Hainan launch site and its convenience for maritime launch missions demonstrates the wider benefits of location underpinning the success of the GBA megaregion (Xinhua, June 19, 2022).

Conclusion

Beijing seems to be making progress on its goals for the Greater Bay Area initiative. Strategic hubs like the Hetao-Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone and the Guangzhou Nansha Qingsheng District are concentrating talent and resources in the AI, aerospace, and biomedical technology sectors. The synergy between Hong Kong’s international status and the Pearl River Delta’s robust innovation infrastructure is creating a dynamic ecosystem to rival that of Silicon Valley.

Investigating subnational projects such as the GBA initiative are vital for understanding how the PRC’s plans are enacted on the ground. Given that technology transfer remains part of Beijing’s strategy, and that the GBA initiative functions in tandem with the strategy of military-civil fusion, the importance of the GBA for the PRC’s broader national strategy requires closer scrutiny. This can then inform policies that are more effectively aligned with the realities of China’s regional developments, enabling nations to effectively navigate the complex landscape of international relations and technological competition with China.

Notes

[1] The CCP has pushed for greater economic and social integration with Hong Kong and Macau since the late 1990s. Progress was made in particular during the Hu Jintao era, when the phrase “Greater Bay Area” started to appear. United Front work has long supported the effort to integrate the two autonomous regions with the mainland cities surrounding the Pearl River Delta in order to further assert the Party’s control. This extends to official media in Hong Kong promoting a “GBA cultural identity,” intended to supersede that of Hong Kong.

[2] See, for example, Wu Weiping & Piper Gaubatz, The Chinese City, (Routledge 2020), for a good introduction.

[3] Huang, Yasheng. The Rise and the Fall of the EAST: How Exams, Autocracy, Stability, and Technology Brought China Success, and Why They Might Lead to Its Decline. Yale University Press, August 2023.