Impacts of Hong Kong-Zhuhai-Macao Bridge on Macao
Introduction:
Macao, which officially called the Macao Special Administrative Region of the People’s Republic of China. It is a small island, which only have 28.2 square kilometers territory and 648,550 population, and located in South China sea where close to Hong Kong. However, the GDP per capita of Macao in 2017 is 110,000 dollars, which is the fourth city/region in the world. Also, its real growth rate of GDP is 9.1% in 2017, which is the sixth country.[i] Furthermore, one of the biggest project in the entire world, the longest sea-crossing bridge, Hong Kong-Zhuhai-Macao Bridge (HZMB), has been completely built, and it was opened on October 23rd, 2018. The total length of the bridge is 55 kilometers (34 miles) that connects Hong Kong, Macao and other nine Chinese cities.[ii] To connect those cities, it costs around 26 billion dollars, nine-years construction, and at least 18 workers died for it. Why is this little island so wealthy? Can or how it keeps the wealth? Why China built the bridge in such a high price? Is it worth it? What are the pros or cons about it?
History: talk about how economic institution change
Macao was the first European colony in the Far East. In 1553, because Ming Dynasty implemented trade ban in mainland China, Portuguese chose to settle, and try to trade with Canton (Guangdong), China in Macao.[iii] Portuguese merchants developed this small island rapidly. However, after the First Opium War, Qing dynasty lost its dominion over Hong Kong, and Britain established it as a more powerful port city than Macao. While Macao was losing its position, Firecracker, tea and tobacco processing became its main product.[iv] During this period, the economy of Macao was stagnant, and it lasted until World War Two. China was a huge battlefield in World War Two. Invasion from Japan, lingering Qing government, warlord dogfight made mainland China extremely chaotic. A lot of rich people and war refugees escaped to Macao. Then the increasing wealth and population simulated Macao to develop its economy. Its clothing and textiles manufacturing industry and gambling were expanded and became the mainstay industry in Macao.[v] After the World War Two, China and Portugal came to an agreement that transferred dominion of Macao in 1999, and China guaranteed Macao would use the same political and economic systems for 50 years after the transfer. In other words, Macao would remain capitalism as its economic system, and it could have its political system and laws. The Chinese government claimed the “one country, two systems” policy, which applied to both Hong Kong and Macao so that people would not be scared about socialism. According to this policy, Macao was allowed to insist on a free-port and a free trade policy.[vi] More importantly, China allowed Macao to legalize gambling, and it became the only city permitted to gamble in China.
Composition of Macao’s economy: how different economic institution make trades of Macao different from China’s
Because Macao only has a few plow-land and limited natural resources, it has to rely on mainland China for food, water, electricity, and many daily supplies.[vii] Besides, raw materials and semi-finished goods for manufacturing purposes are significant imports for Macao. For the exportation, precious metal watches and jewelry are primary goods. Nowadays, Hong Kong and mainland China become the major origins and destination for Macao’s production. In 2017, Macao exported 1.33 billion dollars and imported 9.7 billion dollars in total. Hong Kong occupied 68% exportation and 56% importation, and China occupied 7.6% exportation and 29% importation of Macao. Other countries such as Japan, Philippines, Germany, the United States, and Singapore are big traders of Macao too.[viii] Hence, Macao as a port city, Hong Kong and mainland China are extremely important partners for Macao’s trades and economy.
Gambling-related tourism is the leading industry in Macao. While Deng Xiaoping implemented the Chinese economic reform in1979, China reopened to the global economy and developed rapidly.[ix] In 2003, individuals from selected Chinese cities were permitted to visit Macao without the need to join a tour, and it attracted a large amount of Chinese to play gamble, so the gambling industry raised swiftly. The police influenced Macao significantly since China’s rapid growth of the economy and wealthier Chinese accelerated the development of Macao. Besides, gambling is the main sources of government revenues. In 2014, around 87% of government revenues were from the gambling industry.[x] Gambling-related tourism brings uncountable wealth to Macao, so it is the pillar industry now, and its position would maintain for a long period.
Goals and orientations of the Hong Kong-Zhuhai-Macao Bridge:
Hong Kong, Zhuhai, and Macao are located in Pearl River Delta (PRD) Economic Zone. In 2008, China decided to connect the nine key PRD cities of Guangdong, which including Guangzhou, Shenzhen, Dongguan, Zhaoqing, Foshan, Huizhou, Jiangmen, Zhongshan and Zhuhai into a single megacity. China United roads, railway, air and ocean of transportation, infrastructure projects and telecoms networks among those cities. Also, Shenzhen and Zhuhai are adjacent to Hong Kong and Macao, and Shenzhen is the third busiest container seaport in the world, just behind Shanghai and Singapore. The eleven PRD cities become the most productive cities and the most massive manufacturing center in the whole world.[xi] PRD cities have 65 million population, $1.2 trillion GDP, 55000 square kilometers territory, and they are far from fully growth, so there is a huge space to keep going forward. Hong Kong-Zhuhai-Macao Bridge is a super project that aims at uniting RPD cities more tightly, and it tries to achieve “one-hour intercity living” among PRD cities. As the map blow shows.[xii] It states that someone in any PRD city can arrive in any other PRD cities in one hour.[xiii] For example, it took 4 hours driving from Zhuhai to Hong Kong since it needed to detour many cities in the past, but HZMB connects them directly and cuts the time to 30 minutes.[xiv] HZMB makes travels and road freight more convenient, so it is expectable that economic activities would become more and more frequent in the fu
ture. Is it the high-frequent connects good or bad for Macao?
Positive influences of Hong Kong-Zhuhai-Macao Bridge in Macao:
Macao’s macroeconomic:
When a city is developing, agglomeration is the best way to save costs and attract more suppliers and customers. Macao has wonderful hotels and casinos to support its gambling related tourism industry, so it attracts companies to invest and customers to have gamble. However, according to Harry Richardson, diseconomies of agglomeration is a big problem when a city’s economic activities and population are too concentrated. That would cause high property prices, heavy pollution.[xv] In 2017, Macao’s housing prices raised to the fourth highest city in the world, and it tended to increase in the future.[xvi] If Macao wants to keep developing, it should transfer some industries, like jewelry and metal watches processing to less-developing cities around it and focus on the third industry, like high-end tourism. HZMB connects Macao and Zhuhai directly, and it can connect to Zhongshan, Jiangmen and other cities in western PRD Economic Zone through Zhuhai tightly. Hence, the closer connections between them are easier for Macao to transfer manufacturing industry and optimize Macao’s structure of the industry. Besides, the rate of housing prices can slow down due to HZMB. It is more convenient for Macao’s employees to live in Zhuhai, where has lower living costs since HZMB cut the transportation time. In the long run, Macao not only can develop itself but also it would drive the economy of the whole western PRD Economic Zone forward.
Macao’s tourism industry: how different visa (both foreigners and mainland China tourists) affect tourism of Macao
Macao is located in the South China Sea, and it has a delightful scene, comfortable weather all over the year. Also, its history of the colony remains Portugal architectures and customs, and it forms the mixture of the West and the East that is attractive for tourists from Hong Kong, mainland China, and other foreign countries. After 2003, tourists from mainland China increased rapidly. In 2015, around 87% of tourists came from mainland China and Hong Kong.[xvii] Furthermore, in 2017, 61.3% of GDP is contributed to travel and tourism.[xviii] So tourism is the major channel that increasing GDP and drive developments of other industries. HZMB connects Hong Kong, which is one of the biggest financial center with prosperous tourism that about 56 million tourists were to it in 2016 to Macao.[xix] Both of them can bring their superiority into full play. Then, it is convenient and attractive for tourists from Hong Kong to travel to Macao in 30 minutes driving and enjoy the scenery along the route. So, other Asian countries and the Western countries should be the new targets of Macao’s tourism industry. HZMB promotes the convenience of transportation and internationalization and diversity of tourism. They are the necessary conditions for Macao to become a global tourism center.
Macao’s logistics:
HZMB changes the pattern of road transportation in PRD Economic Zone, and improve Macao’s status. It is the bond between Hong Kong, Macao, Zhuhai, and Guangzhou, and Macao becomes the traffic center of HZMB. The total handling capacity of Guangzhou, Hong Kong, Shenzhen’s seaports reaches 1.11 billion tons, and the top five airports, which are located in Guangzhou, Zhuhai, Macao, Shenzhen, and Hong Kong has 8 million tons handing capacity in 2017.[xx] Hong Kong and Shenzhen are the busiest ports in the world, and HZMB can release their pressures by distributed a part of logistics to Macao and Zhuhai. For example, Hong Kong can export its high-value electronics products through Macao to mainland China. Manufactories can be settled in Zhuhai and Zhongshan, which have lower production costs than Shenzhen, and the complete goods can be exported to Hong Kong through Macao. HZMB can balance the unequal level of development between eastern (Hong Kong and Shenzhen) and western (Macao and Zhuhai) PRD Economic Zone. The busy passenger flows and logistics can be distributed in Macao, and it brings lots of opportunities to develop economy because HZMB can enhance the efficiency of logistics.
Negative influences of Hong Kong-Zhuhai-Macao Bridge in Macao:
Macao’s capacity: what institution is taking charge
A constant influx of tourist is a key factor that economy of Macao can keep growing. However, the development of tourism needs to expend resources and energy sources. It is easy to produce a large amount of garbage, noise, and pollution that affect Macao’s residents. On account of the limited area of Macao, its capacity reaches the level of saturation almost. The average number of daily visitors in Macao are almost 90 thousand per day in 2017.[xxi] That requires the high standards of public transportation and public infrastructures, which challenges Macao’s biggest capacity. Although HZMB is helpful to rise the number of tourists, it may vary over the capacity of Macao. It is unavoidable that services and quality of tourism decline, and damage Macao’s image in tourists’ minds. Hence, how to expand its capacity and improve the quality of tourism would be a serious problem for Macao’s government.
In the other hand, traffic is a huge issue for Macao after HZMB is opened. The densities of roads, building and population, are already high in Macao. If Macao allows cars from Hong Kong and mainland China go into it, traffic is going to be heavier. But, if Macao limits flow of car, it loses some opportunities that can gain its economy. How to manage cars that drive into Macao? What are suitable policies that can adjust traffic? How to implement those policies? They are issues needed to be worked out.
Competition between Macao and Hong Kong:
HZMB cut the distance of Macao from Hong Kong to 36 kilometers and cut the time to 30 minutes driving. Even though it can be benefited by passenger flow, road freight and fund flows from Hong Kong; Hong Kong is taking some away. It is possible that some local industries, such as an airport, seaport, and human resources. Freights and passengers used to be unloaded or get off in Macao can be changed to unload or get off in Hong Kong instead since Hong Kong has a larger airport and seaports and HZMB lower the transportation costs. As well as human resources, Hong Kong is more attractive for well-educated than Macao. Before the construction of HZMB, many local people would not be willing to leave and work in Hong Kong, but now it is convenient for local people to find jobs with brighter prospects. How should Macao maintain its amount freights and passengers at the first stop? How to stay its well-educated people behind?
Current economic system
The Hong Kong-Zhuhai-Macao Bridge is the largest bridge in the world, and its construction is expected to increase tourism attraction and the number of visitors. It is estimated that the region will receive more than 45000 tourists by 2020. The bridge also plays an essential role in developing the economy by making transportation easy in the regionxxiii. The region expects at least 2.1 million visitors in area per year. It can be noted that the increase in the number of visitors in the region boasts the retailing industry. According to Denis Head of Research at JLL indicated that based on 2017 visitors spending on products and food, the turnover is expected to be more. In this sense, he indicated that the turnover would be 7.1 billion per year derived from tourism.
The current economy of the region is performing well, but this cannot be compared with after the introduction of the Hong Kong-Zhuhai-Macao Bridge. Hong Kong has become an incursion of guests from different parts of the world; this has attributed the government and other stakeholders to set up to 12,400 extra hotels to cater to visitor’s needs. Wanchai and other neighboring towns are expected to construct more houses; the number is projected to be 4,200 rooms xxiv.
This is anticipated to offer a robust retailing demand for shops for tourists. The bridge has played an essential role in enhancing the connection between western regions and Hong Kong. There is now efficiency in the transportation of cargo and warehouse across the city. The airport has also been improved due to the free movement of goods; manufacturers now take less time to transport their goods from one point to another without a struggle. This has also helped in reducing the rate of unemployment in the region and developing the economy.
Economic Institutions
The construction of the bridge has led to economic freedom whereby people can transport or move freely without any obstacle. The bridge has been very strategic and has opened up the city for economic development. The city’s GDP has significantly improved as the number of business in the region has improved xxv. The time and cost of transportation have also been reduced, and this is the reason for regional development.
The flow or distribution of money in the region has been enhanced. This has helped the government to come up with measure or rules to regulate trade in the region. The measure aims at motivating or encouraging people to carry out business effectively without any obstacle. The cost of starting the business has also reduced as one way of encouraging local investors to invest more money in the area.
Moreover, the number of external investors has dramatically increased in Hong Kong. Friendly tariffs and eco-friendly environment attract the speculators. Based on the local reports the economy of Hong Kong is anticipated to grow. Towns around have benefitted from the economic vicinity with both human and land resources offering the best opportunity for the city entrepreneurs to increase their activities to the mainland.
The region’s recent reform is based on economic development as well as improving people’s lives. The development of the bridge has made it easy to carry business operations anytime. In this case, there are high chances that in future the area will be more developed economically. Also the government has also formulated different reforms that have significantly affected the way people do business in this area.
Stability and Political Change
Most economists believe that national economic performance is based on the rules and national political changes. Since business rules are set in the political system, in Hong Kong there is a strong correlation between economic development and politics. The region has experienced a political dilemma, which almost affected the business negatively. The political reform aimed at ensuring that each person in the area enjoys his or her freedom. The reforms helped in ensuring that there is economic stability as well as the enforcement of contracts. The central dilemma is that the government or the authority has the power to develop or destroys citizen’s wealth.
Conclusion
In a nutshell, the construction of the Hong Kong-Zhuhai-Macao Bridge has played an imperative role in the economic development of the region. Macau has been able to achieve its economic dreams because of the bridge. The number of tourist in the region is expected to increase; this also leads to an increase in some houses and hotels to meet the demand. The government has formulated strategies that promote local entrepreneurs to carry out their business without any obstacle. This was one way of enhancing the regional GDP. Also, the bridge has lowered the cost of transportation and operating a business to about 25%.
Macao was the first European colony in the Far West, and this status helped it to develop further and earlier than mainland China. But it was limited by its area and population; it could not be a city as large as Hong Kong. Fortunately, it became the only jurisdiction that legalized gambling in China, which is the main factor and reason for its development of the economy, and tourism-related gambling is the pillar industry of Macao. In 2003, China permitted citizens in selected cities to have independent tours in Macao, the surging number of tourists from mainland China promote the economy rapidly. In 2009, the Chinese government decided to construct Hong Kong-Zhuhai-Macao Bridge, and the bridge brought about opportunities for development, and tough Challenges as well.
HZMB bonds all PRD cities tightly. It helps Macao to go through diseconomies of agglomeration, catches more global tourists’ eyes, and creates efficient logistic because HZMB shorts the transportation time between Hong Kong and Macao from three hours to half an hour. Also, Macao needs to face over the capacity of city and severe competition with Hong Kong. However, HZMB raises more opportunities to develop Macao’s economy, or it is possible that Macao’s economy would stagnate since the difficulty of attracting new tourists. In the comprehensive views, PRD cities in mainland China are manufacturing centers with high productivity, Hong Kong is one of the most famous financial centers, and Macao is a city of leisure tourism. The combination can form a prosperous megacity that full of energy. Macao as a center city would be benefited.
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