Shenzhen 2.0 – Hengqin to be Transformed into a Special Economic Zone
Hengqin Island was a sleepy rural community that was well known for one product, oysters. But today many of the islands oyster shacks and fish farms are giving way to development and have been demolished in favor of highways and skyscrapers.
Hengqin Island is also located just across a narrow river from the casino town of Macau. That is why Hengqin is such an ideal place for the Chinese government to transform and experiment on how Hong Kong and Macau can bring in more money to neighboring Guangdong province. Hengqin will be transformed into a special economic zone that will be offering business that is not found anywhere else in the country.
While Guangdong is China’s most populous province with 104m people, it also houses some of China’s most valuable high tech companies such as Huawei, ZTE and Tencent that are based in Shenzhen. Still these companies are relying on low margin contract manufacturers who in turn find it difficult to offer wages to workers in line with the cost of living that covers China. Last year alone Guangdong’s GDP per capita was at US$ 7,819 and Chinese economists believe that that will double by 2020, meaning that local enterprises need to step up the value chain or relocate.
Business-wise, the island is also planning to increase its tourism, technology research, financial services, Chinese medical research and creative media. The construction of skyscrapers for the Shizimen central business district is already on its way. According to experts, the plans being made for Hengqin represent an upgraded version of Deng Xiaoping’s plans for special economic zones.
Shenzhen and Zhuhai were among the original Special Economic Zones that pioneered his economic reforms in the 1980’s where foreign investment and foreign trade were allowed on Chinese soil for the first time since the communist revolution. Hengqin also needs to overcome current challenges of doing business in China, such as lowering taxes than standard mainland rates, imports will be duty free, and food safety, labor and quality control regulations should be based on Hong Kong and Macau standards.
Business establishments in Hengqin that are caught in civil litigation will be protected under Macau or Hong Kong’s legal system, and three types of currency namely the renminbi, Hong Kong dollar and Macao pataca can be used interchangeably on the island.