‘One country, two systems’ to be extended into mainland China, but not by Hong Kong

By Lilian Cheng
The Hong Kong-Zhuhai-Macau Bridge. Photo: Winson Wong

Beijing’s two new master plans to forge closer mainland Chinese links with Hong Kong and Macau take very different approaches to furthering the “one country, two systems” model of governance, analysts and pro-China veterans have said.

Macau would serve as a showcase for the experiment of extending the one country, two systems principle, as the plan would allow the city to apply its governance in neighbouring Hengqin on the mainland over economic affairs.

But the proposal for Hong Kong was focused more on providing growth opportunities from the nearby Qianhai economic zone in Shenzhen without any room to extend governance rules, analysts noted.

There also appeared to be greater latitude in allowing Hong Kong to decide on the kinds of opportunities it would grab, and this in turn would depend on the willingness of the city’s government and businesses to open up, they added.

“Macau’s plan focuses more on institutional breakthroughs, while Qianhai’s development plan, which benefits Hong Kong businesses, stresses economic and technical growth, and takes a more conservative approach on breakthroughs in systems and rules,” Tian Feilong, director of the Chinese Association of Hong Kong and Macau Studies, said.

Hengqin Island in Zhuhai city, Guangdong province. Photo: Shutterstock

The analysts were responding to announcements by the central government over the past two days of landmark plans to link Macau with neighbouring Hengqin Island and for Hong Kong to boost technological and business ties with Qianhai in Shenzhen.

Hong Kong became a special administrative region in 1997 after it was handed back from British rule to China, while Macau, formerly governed by the Portuguese, returned to the mainland’s control as a special administrative region in 1999. Both are governed under the one country, two systems model of autonomy in local administration while falling under Chinese sovereignty.

Under the plan in Hengqin, the 106 sq km (26,190 acres) cooperation zone – three times the area of Macau – will be run under a dual-leadership model via a committee co-led by Macau’s chief executive and the governor of Guangdong province. The committee will decide on major plans, policies and important personnel appointments within the zone.

But in an unprecedented move, the daily governing and management of projects will be overseen by Macau, which can decide on the details of land development, project construction and management of people’s livelihoods, as well as the promotion of investment and international cooperation within the zone. This will mark the first time a special administrative region has taken charge of an area on the mainland.

The cooperation between the mainland and Hong Kong so far is much shallower than Macau’s link with GuangdongTian Feilong, Chinese Association of Hong Kong and Macau Studies

Under the plan approved by the State Council, Macau residents can effectively work and cross the border freely in the Hengqin area. The enterprise income tax rate will be 15 per cent for companies in the Hengqin zone, lower than the 20 to 25 per cent rate on the mainland, while personal income tax for Macau residents working in the Hengqin zone will be kept at the same rate they pay in Macau, also capped at 15 per cent.

The Macau experience of administering a mainland area would also pave the way for the future direction of the one county, two systems principle if the cooperation zone proved a success, mainland scholar Tian said.

He warned, however, that Hong Kong, in contrast, risked lagging behind and losing its competitive edge if it failed to grasp the opportunities dangled by the plan. The risk for Hong Kong was of not seizing its chances, while that of Macau centred more on execution.

“The cooperation between the mainland and Hong Kong so far is much shallower than Macau’s link with Guangdong,” he said. “In Beijing’s mind, the nine cities under the Greater Bay Area should grow together or can even compete against each other positively. Beijing is not favouring one of these cities only.”

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Professor Richard Hu Weixing, director of the Centre for the Guangdong-Hong Kong-Macau Greater Bay Area Studies at the University of Macau, also said the new model in Hengqin could be a way to test the one country, two systems principle.

“It is like providing an opportunity for a special administrative area to lead a major development,” he said. For example, the whole of Hengqin Island would practise Macau law when it came to economic activities, while products made within the area would be marked as Macau-manufactured, he added.

Hu, a former professor at the University of Hong Kong, believed Hong Kong needed to catch up on the development front after the time spent dealing with the political conflicts that had rocked the city in recent years.

“Instead of simply asking for more land, Hong Kong should think of ways of engaging itself in the overall development plans of the country,” he said. “Can we think of more linkages between the two systems in the future such as in public services and social security systems?”

China announced its plan for the Greater Bay Area back in 2017, aiming to transform it into a hub to rival San Francisco’s Silicon Valley. A development plan was released in February 2019, covering Hong Kong, Macau, Shenzhen, Guangzhou and seven other cities in Guangdong province.

There are at least four designated areas – namely the Lok Ma Chau Loop on the Hong Kong-Shenzhen border, Qianhai in Shenzhen, Nansha-Huangpu in Guangzhou and Hengqin. But only Hengqin would be run under this special model.

For the latest Qianhai plan, Beijing has decided to expand the economic zone from 14.9 sq km to 120.6 sq km, aimed at creating greater mutual access to financial markets and a higher degree of openness in legal matters, as well as to solve business restrictions for Hong Kong enterprises.

Witman Hung Wai-man, principal liaison officer for Hong Kong at the Shenzhen Qianhai Authority, said Beijing’s intentions were different regarding the two development plans.

“Qianhai is more about deepening what has been developed, and to address concerns of Hong Kong businesses in China,” he said.

“For Macau, it may really need more land and can allow structural changes … while for Hong Kong, it is simply not feasible for city officials to be sent to Shenzhen to run a major development zone,” Hung added.

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Tam Yiu-chung, the city’s sole delegate to China’s top legislative body, said the central government still valued Hong Kong and was implementing “different plans that best served the needs of the two special administrative regions”.

Wang Fuqiang of the China Centre for International Economic Exchanges, a think tank in Beijing, along with Hu of Macau University, agreed that the Macau-Hengqin cooperation plan could help the casino hub diversify its economic development.

“The current economic structure of Macau is [highly concentrated] or even deformed,” Wang said in an interview. “The gaming industry is the single largest industry, with related industries contributing 60 per cent of annual tax revenue and 70 per cent of Macau’s GDP. This kind of structure is extremely vulnerable to external challenges.”

A Macau street with the Grand Lisboa Hotel in the background. Photo: Getty Images

Hu also agreed that cooperation in some areas between Macau and nearby Zhuhai over the past two decades had not been smooth, and that was why the central government had to assist Macau in further developing new strengths, including creating more job opportunities outside the casino business for its younger generation.

The Macau-Hengqin zone will focus on hi-tech development and manufacturing industries such as integrated circuits, new energy, big data and artificial intelligence, according to the latest guidelines. Macau’s light-rail system will also be connected to Guangdong’s network.

The plan defines the strategic position of the zone as a new platform to boost Macau’s economic diversification, aiming for a “big increase” in the population living and working in the area by 2024.

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