Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone

• Located at the southwestern part of Shenzhen Municipality, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (前海深港現代服務業合作區, "Qianhai Cooperation Zone") has been developed since 2010 as a major demonstration zone for strengthening cooperation between Hong Kong and Shenzhen. Ever since its establishment, Qianhai Cooperation Zone has introduced various preferential policy measures for Hong Kong people and businesses. As at 2020, the number of Hong Kong permanent residents who had conducted commercial activities or taken up employment there had exceeded 100 000, while more than 10 000 Hong Kong-invested enterprises of various sizes had been registered in Qianhai.
• On 6 September 2021, the Central Committee of the Communist Party of China and the State Council promulgated the Plan for Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (全面深化前海深港現代服務業合作區改革開放方案, "Qianhai Plan"), which has expanded the area of the Qianhai Cooperation Zone by seven times. The Qianhai Plan also emphasizes the further promotion of institutional innovation (制度創新), opening up, and development of modern service industries over the next decade or so.
• The Chief Executive proposed in the 2021 Policy Address to develop the northern part of New Territories into the "Northern Metropolis". By leveraging the strengths of Shenzhen and other Greater Bay Area cities and seizing the opportunities to cooperate with them, it is hoped to enhance the growth impetus in northern New Territories and address its long-standing development impasse arising from "home-job imbalance". According to the Northern Metropolis Development Strategy released by the Government, one of its development highlights is to connect the western part of the Northern Metropolis (covering Yuen Long, Tin Shui Wai, and Hung Shui Kiu/Ha Tsuen) with the Qianhai Cooperation Zone by rail, so as to help deepen cooperation between the two places and create more jobs for the Northern Metropolis.^{1The Northern Metropolis Development Strategy proposes that the western part of the Northern Metropolis, Qianhai, Shekou and Houhai form the "Shenzhen Bay Quality Development Circle".}
• As such, many stakeholders are concerned about the prospects of the Qianhai Cooperation Zone, its potential synergy with Hong Kong, and the opportunities and challenges it poses to Hong Kong-invested enterprises, Hong Kong people and even the long-term development of Hong Kong. This issue of Essentials provides an overview of the development of Qianhai, including (a) its background and present situation; (b) major liberalization policies; (c) new policies and prospects under the Qianhai Plan; and (d) views and concerns from the community over promoting the synergistic development of Hong Kong and Qianhai.

• The development of the Qianhai Cooperation Zone started in 2010. The Framework Agreement on Hong Kong/Guangdong Cooperation (粵港合作框架協議)^{2In 2010, the Hong Kong and Guangdong Governments jointly formulated the Framework Agreement on Hong Kong/Guangdong Cooperation, which is the first agenda on Hong Kong/Guangdong cooperation endorsed by the State Council. The Framework Agreement lays down the major work plans of the two places, and provides a platform and mechanism for Hong Kong/Guangdong cooperation, so that the two sides can pursue more measures for "early and pilot implementation".} designated Qianhai as a key zone for Hong Kong/Guangdong cooperation for the first time. The General Development Planning for Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (前海深港現代服務業合作區總體發展規劃, "Qianhai Development Planning") released afterward specifies the following key development directions: (a) establishing the strategic position of Qianhai as an important base for the nation’s modern service industries; (b) promoting close cooperation and integration with Hong Kong; and (c) serving as a testing ground for the opening up of the financial industry and capital market. The document has set a planning horizon up to 2020, with a target of developing Qianhai, which covered 14.92 sq km, into a "demonstration zone for Hong Kong/Guangdong modern service industry innovation and cooperation". Key industries identified for development include finance, modern logistics, information services, technology services and other professional services. The Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen Municipality (深圳市前海深港現代服務業合作區管理局, "Qianhai Authority") is put in charge of Qianhai’s development and construction, operation and management, investment promotion, institutional innovation, and overall coordination. Qianhai Authority is the nation’s first public body to play a leading role in regional governance in the form of a statutory body.
• Following the rollout of regulations and policy initiatives related to the Qianhai Cooperation Zone^{3For instance, various policies were introduced in 2011, such as the Regulations of the Shenzhen Special Economic Zone on Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (深圳經濟特區前海深港現代服務業合作區條例) and the Interim Measures on the Administration of Qianhai Bay Bonded Port Area (前海灣保稅港區管理暫行辦法), thus putting in place a framework for the future development of Qianhai. See 政協深圳市委員會(2019).}, enterprises were officially permitted to register there from 2013. Subsequently, a number of important policy documents at the national and regional levels repeatedly emphasize the unique role played by Qianhai (see Table 1 for a list of important policies), and position it as a "special zone within a special zone", which means that Qianhai is to act as an early and pilot demonstrator by carrying out innovative experiments on top of what have taken place in Shenzhen, which is itself at the forefront of economic reform.^{4See 前海管理局(2017a).} Apart from being a modern service industry cooperation zone, Qianhai is also designated as part of the China (Guangdong) Pilot Free Trade Zone^{5In the China (Guangdong) Pilot Free Trade Zone, pre-establishment national treatment and negative list administration mechanism are adopted for foreign investments. For details, see 中國(廣東)自由貿易試驗區工作辦公室(2015).}, and this, coupled with the Qianhai Comprehensive Bonded Zone^{6The Qianhai Comprehensive Bonded Zone is entitled to special regulatory policies on taxation and foreign exchange as well as trade facilitation arrangements. For details, see 前海管理局(undated).}, enables Qianhai to benefit from liberalization measures under the three policies at the same time.
• More specifically, the development of the Qianhai Cooperation Zone features promoting close cooperation with Hong Kong, and drawing on Hong Kong’s experience as an international financial centre and commercial hub (including its successful experience in the rule of law and market-based modus operandi), with a view to introducing institutional innovation that might be conducive to the development of modern service industries. In this regard, Qianhai has been actively strengthening cross-border regulatory interface and connectivity, and striving to achieve a higher level of opening up, so as to create a conducive business environment for the development of modern service industries and attracting foreign capital and private enterprises. As of September 2021, a total of 685 institutional innovations have been made under the pilot platform of Qianhai.^{7See 泛珠三角合作信息網(2021).} Key policy areas which have undertaken institutional innovation are summarized as follows:
  • (a)
    Judicial system: Concerning judicial system innovation, an important achievement is "allowing wholly-owned Hong Kong enterprises to adopt Hong Kong law", that is, when entering into civil and commercial contracts, Hong Kong-, Macao-, Taiwan- and foreign-invested enterprises registered in the Qianhai Cooperation Zone may agree on the choice of applicable law with the counterparty, with Hong Kong law being one of the options.^{8The Regulations of the Shenzhen Special Economic Zone on Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, as amended and approved in August 2020, further relax the conditions under which Hong Kong-, Macao-, Taiwan- and foreign-invested enterprises registered in the Qianhai Cooperation Zone may, with mutual agreement with the counterparty, choose an applicable law (including laws of other jurisdictions) when they enter into civil and commercial contracts, regardless of whether "foreign-related elements" are involved in the contracts (e.g. one of the parties being a foreign citizen). Prior to this, unless there was the presence of a foreign-related element, the applicable law of a contract shall be Mainland law and arbitration of the dispute shall only be conducted on the Mainland.} Meanwhile, the Qianhai Cooperation Zone People’s Court has also been actively implementing judicial reforms, including appointing Hong Kong jurors and mediators since 2016 to help Qianhai create an internationalized business environment based on the principle of the rule of law.^{9As of July 2020, a total of 74 mediators from Hong Kong, Macao, Taiwan and foreign countries were appointed by the Qianhai Cooperation Zone People’s Court, representing nearly 40% of all specially invited mediators. Among them, 56 were from Hong Kong. See 南方日報(2020) and 新華網(2020).} In addition, the commercial arbitration cooperation platform in Qianhai established by the Shenzhen Court of International Arbitration not only adopts international commercial rules, but also allows Hong Kong, Macao, Taiwan and foreign legal professionals to provide arbitration services, rendering it the most internationalized among international courts of arbitration on the Mainland in terms of arbitrator composition.^{10The SCIA Panel of Arbitrators (深圳國際仲裁院仲裁員名冊) has a total of 933 arbitrators from 77 countries and regions, among whom 385 are arbitrators from outside the Mainland, representing over 41% of the total. See Shenzhen Court of International Arbitration (2021).} Institutional innovation also encompasses the area of intellectual property. For example, the Shenzhen Intellectual Property Tribunal, which was established in 2018 in Qianhai, is dedicated to hearing intellectual property cases. In 2020, the Tribunal heard more than 10 000 cases.^{11See 人民網(2021).}
  • (b)
    Trade and investment facilitation: On cross-border trade facilitation, the Qianhai Cooperation Zone has introduced new methods for electronic filing of tax return and tax payment, and implemented measures such as "Shenzhen/Hong Kong land-air intermodal arrangement"^{12The Shenzhen/Hong Kong land-air intermodal arrangement, which has been implemented since 2017, simplifies inspection procedures for goods in the Qianhai Comprehensive Bonded Zone intended to be exported through the Hong Kong Airport. All business processes such as booking, palletization and security screening of exports can be completed by enterprises in the Qianhai Comprehensive Bonded Zone, and the goods are ready for direct transfer upon arrival at the Hong Kong Airport. See 前海管理局(2017b, 2018).} and paperless customs clearance. In order to promote investment, Qianhai has substantively streamlined the procedure for business registration. For instance, the automatic approval service launched in 2019 enables business registration to be completed within a few tens of seconds, while one-stop service is provided through the Integrated Registration Service platform to handle matters such as business registration, bank account opening appointment and invoicing on a single platform.
  • (c)
    Financial reform: The authorities have identified two important roles for the Qianhai Cooperation Zone in financial services, namely a "pilot zone for cross-border Renminbi business innovation" and a "testing ground to showcase the opening up of the nation’s financial industry". In this regard, Qianhai has implemented various pilot schemes to open up financial services, including allowing locally registered enterprises to engage in cross-border transactions (such as cross-border Renminbi lending, two-way cross-border cash pooling and two-way cross-border bond issuance) and streamlining procedures for foreign-invested enterprises in relation to receipts and payments under the capital account.^{13Under the Detailed Implementation Rules for the Pilot Program of Facilitating the Examination of Receipts and Payments under the Capital Account in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (前海深港現代服務業合作區資本項目收入支付審核便利化試點實施細則) as approved in March 2018, payments made using foreign exchange receipts under the capital account are subject to random post-payment verification in place of pre-payment examination. In other words, transaction certificates such as contracts and invoices are no longer required to be presented to the bank on a transaction-by-transaction basis in advance.} Furthermore, Qianhai has also carried out reforms in regulatory regimes for financial services. For example, in 2019 a regulatory regime for private equity funds was put in place, which uses data screening technology to identify illegal acts disguised as private equity operations.
• To foster close cooperation with Hong Kong, the Qianhai Cooperation Zone has adopted various facilitation measures to attract Hong Kong-invested enterprises and Hong Kong people, many of which are substantive support in the form of tax concessions and subsidies:
  • (a)
    Attracting Hong Kong-invested enterprises: The Qianhai Cooperation Zone has adopted various concessionary measures for Hong Kong-invested enterprises, including (i) providing financial incentives for enterprises to establish their headquarters in Qianhai, and (ii) providing financial support to enterprises in specific industries (including financial industry, legal service industry, high-end maritime service industry, etc.). Moreover, eligible enterprises registered in Qianhai (including Hong Kong-invested enterprises) can enjoy, among others, a preferential corporate income tax rate of 15% (corporate income tax rate on the Mainland being 25% in general) and office rental subsidies.^{14For details, see Constitutional and Mainland Affairs Bureau (undated) and 前海管理局(2019, 2020b, 2021b).} As of June 2021, the number of Hong Kong-invested enterprises registered in Qianhai had reached 11 500 in total, and more than 20% of them had a registered capital of over US$10 million (HK$77.5 million). In 2020, Hong Kong’s investment into Qianhai amounted to US$3.8 billion (HK$29.5 billion), accounting for 88.3% of foreign direct investment actually utilized in Qianhai.^{15See 前海管理局(2021a).}
  • (b)
    Attracting Hong Kong professionals: To facilitate Hong Kong professionals in such sectors as finance, accounting and law to practise in the Qianhai Cooperation Zone, both Hong Kong and Qianhai have been working together on mechanisms for qualification recognition, setting up partnerships/associates and so forth. Besides, the Shenzhen Municipal Government provides financial subsidies to high-end and sought-after talents who possess abilities required for Qianhai’s development. The subsidy is equal to the amount of individual income tax payable in Qianhai in excess of 15% of their taxable income. As of September 2021, enterprises in Qianhai had attracted a total of 3 652 Hong Kong talents.^{16See 國家發展和改革委員會(2021).}
  • (c)
    Encouraging and supporting the new generation of talents to start businesses: In 2014, the Qianhai Authority, the Hong Kong Federation of Youth Groups and the Shenzhen Youth Federation jointly set up the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub ("E Hub") to provide young people from the Mainland, Hong Kong and Macao who start their businesses in Qianhai with a range of support, including start-up grants, various subsidies and entrepreneurial services in financing, accounting, law, human resources, etc. As of mid-2021, E Hub had incubated a total of 524 start-ups, among which 245 were from Hong Kong.

• While the Qianhai Development Planning released in 2010 was set to expire in 2020, the Guangdong Provincial Government and the Shenzhen Municipal Government already commenced planning for the next phase of the Qianhai Cooperation Zone as early as 2018, including proposing to expand the geographical coverage of Qianhai.^{17The Three-year Action Plan of Guangdong Province for Building the Guangdong-Hong Kong-Macao Greater Bay Area (2018-2020) (廣東省推進粵港澳大灣區建設三年行動計劃(2018-2020年)) released in July 2018 already reveals the possibility of the geographical expansion of Qianhai. The Overall Development Plan for Development Zones in Guangdong Province (2020-2035) (廣東省開發區總體發展規劃(2020-2035年)) released in June 2020 proposes to promote the geographical expansion of the Qianhai Cooperation Zone under the theme of in-depth Guangdong-Hong Kong-Macao cooperation. This includes implementing Qianhai-related support policies in the new areas put under the enlarged Qianhai, and, at the same time, implementing pilot free trade zone-related reform and innovation policies.} At the celebration of the 40th anniversary of the establishment of the Shenzhen Special Economic Zone held on 14 October 2020, President XI Jinping emphasized the need to deepen reform and opening-up measures concerning Qianhai when speaking of the development of the Guangdong-Hong Kong-Macao Greater Bay Area. The Qianhai Plan was subsequently released in September 2021 to provide directional guidance on the planning for Qianhai up to 2035.
• The Qianhai Plan has significantly increased the total area of the Qianhai Cooperation Zone from 14.92 sq km to 120.56 sq km, thereby expanding into areas including Shekou (蛇口) and the Dananshan and Xiaonanshan areas (大小南山片區), the airport and its surrounding areas, Convention & Exhibition New Town and Shenzhen New Marine City, and Bao’an Central Business District ("CBD") (寶安中心區) and Dachan Bay area (大鏟灣片區) (Figure 1). The new areas put under the enlarged Qianhai cover a number of economically well-developed areas with sophisticated ancillary facilities for living^{18For example, Shekou and areas surrounding Dananshan and Xiaonanshan are well-developed high-end residential and leisure areas with a population of 230 000. In the areas, there are ancillary facilities for living such as large shopping malls, and consequently the personal consumer service industry is already well developed.}, and the existing support policies for Qianhai (except for the preferential corporate income tax policy) will be applicable to the expanded portions.
• As can be seen below, the new areas incorporated into the Qianhai Cooperation Zone already have their own established industrial clusters and are well-equipped in infrastructure, and thus the expanded Qianhai has a significantly larger number of enterprises and more diversified industries. For this reason, service enterprises, including Hong Kong-invested enterprises, will have more opportunities to realize their potential in Qianhai, and Qianhai will have more room for institutional innovation and industrial restructuring and upgrading.
  • (a)
    Industry variety: Bao’an CBD has prosperous commercial activities and many industry giants have set up their regional headquarters there, such as the Rural Commercial Bank, Eternal Asia and Vivo. The area around Shekou, which was opened up as early as 1979, has well-developed sectors such as industry and trade. In recent years, it has strived for restructuring and upgrading by building on its strength in manufacturing, and has successfully developed emerging industries such as the Internet of Things, mobile Internet, and electronic commerce. Among them, the Shekou Net Valley Park has attracted nearly 450 enterprises, including internationally-renowned technology enterprises such as Apple and IBM, and "unicorns" such as 51world.^{19See 深圳新聞網(2021).} In addition, there is a fledgling convention and exhibition service industry in Convention & Exhibition New Town and Shenzhen New Marine City. For example, Phase I of Shenzhen World Exhibition and Convention Center already commenced operation in 2019, and over 70 expositions were held in 2021.
  • (b)
    Cross-border transport and logistics facilities: Bao’an International Airport, which has been incorporated into the expanded Qianhai Cooperation Zone, sustained rapid growth in passenger and cargo traffic, and ranked 5th on the Mainland in 2019 in terms of both passenger throughput as well as cargo and mail throughput (thus placing it within the global top 30 in terms of these two throughput volume).^{20See 深圳市交通運輸局(2021) and 21經濟網(2020).} There is a sea-land intermodal arrangement between Hong Kong International Airport and Bao’an Airport, allowing passengers to travel between the two airports by express ferries and coaches. Qianhai also has container terminals at Chiwan (赤灣), Mawan (媽灣) and Dachan Bay as well as Shekou Cruise Terminal, which can support the development of an international logistics industry in Qianhai.

• Building on the achievements in the previous 11 years, the Qianhai Plan continues to emphasize institutional innovation as the core to promote the innovative development of modern service industries. The Plan sets out short and medium-term goals for 2025 and 2035, including high-standard opening up, a world-class business environment, synergistic development with industries in Hong Kong and Macao, and an innovation-driven development model. The Plan mainly revolve around the following policy areas:
  • (a)
    Deepening institutional reforms: (i) continuing to improve judicial reforms, such as allowing wholly-owned Hong Kong enterprises to adopt Hong Kong law, exploring the interface with various legal systems and rules, and further setting the goal of establishing Qianhai Cooperation Zone as an international legal services centre and an international commercial dispute resolution centre; (ii) carrying out reforms conducive to enhancing business environment, including introducing investor protection ordinance, improving the competition policy framework and its implementation mechanism, and promoting the alignment of standards and rules with Hong Kong and Macao in areas such as transport and payments; and (iii) joining hands with Hong Kong and Macao to explore innovation in regulations and international economic and trade rules conducive to innovation and technology ("I&T") industries, and supporting intellectual property rights protection; and (iv) exploring innovation in the mode of governance, such as allowing statutory bodies to take up some of the government’s regional governance functions, and allowing eligible persons from Hong Kong and Macao and foreigners to serve in statutory bodies in Qianhai.
  • (b)
    The Qianhai Plan continues with strengthening institutional mechanisms for service industries, and puts forth several directions for the innovative development of service industries, including: (i) constructing integrated ports for international trade to facilitate land, sea and air intermodal transport arrangements and the interconnection of hubs, and promoting the development of supply chains; (ii) accelerating supply chain innovations and establishing supply chain standards that are in line with international standards; (iii) deepening market-oriented reforms and developing offshore trade on the basis of the Qianhai Comprehensive Bonded Zone; (iv) promoting innovation in financial institutions, financial markets, financial products and financial supervision to foster a business mode that serves the real economy; and (v) promoting the integrated development of modern service industries and the manufacturing industry, such as promoting the development of "Internet Plus", artificial intelligence, and other new technologies and models for service industries.
  • (c)
    In terms of scientific and technological development, the Plan strives to improve institutional mechanisms required for I&T industries, including: (i) developing research and development institutions for Guangdong-Hong Kong-Macao cooperation and introducing management systems for I&T cooperation; (ii) enhancing supporting measures such as international talent services, innovation funds, incubators and accelerators, thus facilitating the interconnection with scientific infrastructure in surrounding areas and the consolidation of innovative industrial chains; (iii) bringing in venture capital institutions, science and technology funds, and research and development institutions; and (iv) bringing in international marine innovation institutions and developing marine science and technology.
  • (d)
    The Qianhai Plan places emphasis on further opening up in the following areas: (i) deepening the liberalization of trade in services with Hong Kong and Macao, including the alignment of industry rules in the Qianhai Cooperation Zone with those of Hong Kong and Macao (in such areas as vocational qualifications, service standards, certification and accreditation, and inspection and testing); initiating partnerships with renowned universities from Hong Kong, Macao and overseas for joint school operation; supporting the entry of healthcare institutions from Hong Kong and Macao; and supporting the development, creation, publication and distribution of cultural products that are targeted towards overseas markets; (ii) further opening up financial services, including exploring new businesses such as all-in-one domestic and foreign currency bank accounts and cross-border securities investment, allowing the Qianhai Mercantile Exchange of Hong Kong Stock Exchange to carry out spot commodity trading, and launching corresponding reform of industry standards, such as establishing unified green finance standards for Guangdong, Hong Kong and Macao; and (iii) achieving a higher level of opening up in legal matters, such as allowing well-known non-local dispute resolution bodies, including arbitration agencies, to just file records (備案形式) for establishing business units in the Qianhai Cooperation Zone.
• The various institutional reforms under the Qianhai Plan aim to strengthen regulatory interface and connectivity with Hong Kong and Macao. This will bring significant opportunities to Hong Kong. Not only will a familiar business environment be created for Hong Kong-invested enterprises to realize their potential, but there will also be greater demand for Hong Kong talents who are familiar with rules of the international market. In addition, many modern service sectors proposed under the Qianhai Plan closely match the existing advantages of Hong Kong, such as finance, supply chain management and logistics. This, coupled with the more diversified industry structure brought by the geographical expansion of the Qianhai Cooperation Zone, will enable more Hong Kong-invested enterprises to seize this opportunity to develop in Qianhai and by extension other markets in the Greater Bay Area. Following the release of the Qianhai Plan, some specific implementation plans have also been introduced^{21Issued policy documents include the Interim Measures for the Management of Special Funds Supporting the Development of the Financial Industry in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen (深圳前海深港現代服務業合作區支持金融業發展專項資金管理暫行辦法) and the Measures of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen relating to Office Cash Subsidies for Promoting Industry Concentration (深圳前海深港現代服務業合作區促進產業集聚辦公用房資金補貼辦法). The former provides incentives for financial service companies to establish offices and for specific financial businesses (such as digital Renminbi, public listing and financing, and green finance). The latter provides cash subsidies for key emerging service industries (including headquarters, financial industry, modern marine industry, convention, exhibition, trade and logistics industry, technology service industry, new types of international trade, digital and fashion industry, and professional service industry). See 前海管理局(2021d, 2021e).}; and the Shenzhen Municipal Government has indicated earlier that at least one-third of new industrial land in Qianhai to be sold by 2025 would continue to be reserved for Hong Kong-invested enterprises.^{22See 廣東省人民政府港澳事務辦公室(2021).}

• The Northern Metropolis Development Strategy ("Strategy") put forward by the Chief Executive in the 2021 Policy Address proposes to develop the Hong Kong-Shenzhen boundary area into "Twin Cities, Three Circles", among which the "Shenzhen Bay Quality Development Circle" encompasses Tin Shui Wai, Yuen Long and the Hung Shui Kiu/Ha Tsuen New Development Area, and interfaces with Qianhai, Bao’an, Shekou and Nanshan of Shenzhen. The Strategy proposes to develop Hung Shui Kiu/Ha Tsuen into a new CBD, and, by taking advantage of the geographical expansion of the Qianhai Cooperation Zone, promote high-level economic cooperation and development with Qianhai in terms of financial and professional service industries, modern logistics service industry and technology services, so as to attract more high-end enterprises interested in tapping the Shenzhen and Greater Bay Area markets to establish businesses, and create more jobs that are closely related to the new economy.
• In Hong Kong, many sectors support the Northern Metropolis plan, and some commentators are particularly keen on the development of the Hung Shui Kiu/Ha Tsuen area near Qianhai.^{23An analysis of social media data shows that negative public sentiment towards the Northern Metropolis plan is significantly lower than that towards the two major infrastructural plans proposed by the Government earlier, namely "Lantau Tomorrow" and "Invigorating Island South". In addition, the analysis shows that among the key development areas in the Northern Metropolis, Hung Shui Kiu/Ha Tsuen area has received the most attention from Hong Kong social media due to initiative of the Hong Kong-Shenzhen Western Rail Link. See 思考香港(2021).} It is generally believed that the Northern Metropolis plan, if implemented smoothly, will attract the concentration of talents, technology and business activities, which will in turn generate a high level of prosperity in the Shenzhen-Hong Kong Boundary Control Points Economic Belt (深港口岸經濟帶). This is of great significance to the enhanced integration of Hong Kong and Shenzhen, as well as the deeper integration of Hong Kong into the Guangdong-Hong Kong-Macao Greater Bay Area and the overall development of the nation.^{24See 南方都市報(2021) and 文匯報(2021).}
• However, there are doubts in the community as to how/to what extent the Qianhai Cooperation Zone will affect the service industries of Hong Kong^{25See 陳文鴻(2021) and 香港01(2021).}, and there are also concerns from the Mainland that the Northern Metropolis may create uncertainty in resource allocation for Shenzhen’s I&T industry.^{26See 宋丁(2021).} In this regard, many analysts believe that the development of Qianhai can provide a platform to support those industries where Hong Kong enjoys clear advantages, expanding their room for development. In addition, many believe that the strengths of Hong Kong and Shenzhen in many areas can complement each other to form a more internationally competitive industry chain.^{27See 前海管理局(2021c) and 宋丁(2021).} Take I&T industry as an example, Hong Kong has outstanding capabilities in the upstream of the technology industry chain (basic scientific research results), while Shenzhen’s strengths are concentrated in the midstream (applied research) and downstream (market-oriented research and development) of the technology industry chain^{28A number of international indicators (including the number of patent applications and high-quality papers) show that despite the large amount of technological output in the Greater Bay Area, it at large still remains at the stage of imitation and replication, and it is still dependent on imported core technology. See 2022 Foundation (2022基金會) (2021), 大公報(2022) and PwC (普華永道)(2022).}, and the geographical expansion of Qianhai has brought many I&T enterprises into the Cooperation Zone. Moreover, placing the I&T industry in the northern part of the New Territories may help promote deeper interaction with other cities on the Mainland and provide Hong Kong with opportunities for a third industrial transformation.^{29See 中央人民政府駐香港特別行政區聯絡辦公室(2021) and BBC(2021).}
• Although the development of the Northern Metropolis and the Qianhai Cooperation Zone can provide impetus to each other, there are comments that the development of the Northern Metropolis should be supported by industrial policies, with the Government proactively nurturing and attracting enterprises and talents in selected industries. This may pose challenges to Hong Kong given that it has long pursued a more market-oriented economic policy.^{30See 蔡洪濱(2021) and 團結香港基金(2021).} There are also concerns from the community about the procedural hurdles that may be encountered in the use of land in the Northern Metropolis (such as the potential problems associated with the resumption of Tso/Tong lands in the New Territories and the need to change land use).^{31See 頭條日報(2021).} In addition, there are also concerns from stakeholders about whether the Government has the fiscal strength to develop the Northern Metropolis and whether there is a balance in resource allocation between the project and other major infrastructural projects (such as Lantau Tomorrow).^{32See Now新聞(2021), 劉勵超(2021) and 思考香港(2021).} In terms of the pace of development, although the Government has pledged to expedite the development of the Northern Metropolis through legislative amendments^{33According to the Government, development studies on the Northern Metropolis are being conducted, and it plans to streamline development control and expedite land supply by amending legislation pertaining to town planning and land resumption. Its target is to submit the concrete proposals to the Legislative Council in the first half of 2022 and put forward the amendment bill in the same year. See Development Bureau (2021).}, it is estimated that it will take 20 years to fully implement the development; in contrast, Qianhai has set development targets for 2025 and 2035. Therefore, some have urged that Hong Kong must proceed at an efficient pace in the development of the Northern Metropolis, otherwise it will be difficult to catch up with the development on the Mainland.^{34See 明報(2021).}
• Based on the above-mentioned concerns, it is indicative that coordination between Hong Kong and Shenzhen is vital for the development of the Northern Metropolis and the Qianhai Cooperation Zone, so that the two places can give full play to their respective strengths and create a complementary relation where they can draw upon each other’s strengths. The Chief Executive has earlier said that the Governments of Hong Kong and Shenzhen had agreed to set up a high-level working group, so as to expedite higher-level cooperation in Qianhai and identify more concrete measures for implementation.

• Since its establishment, the Qianhai Cooperation Zone has maintained a mutually beneficial relationship with Hong Kong, pursued development through promoting close cooperation with Hong Kong, leveraged Hong Kong’s established strengths in service industries to develop its modern service industries, and introduced institutional innovations based on Hong Kong’s experience. At the same time, Hong Kong enterprises and talents have benefited from various preferential policies in Qianhai, which allow them to enter Qianhai and other regional markets on the Mainland at a lower threshold and seize new opportunities brought about by related developments.
• The geographical expansion of the Qianhai Cooperation Zone, its opening up, and the deepening of institutional reforms imply that Hong Kong people and enterprises will have more room for development in Qianhai in the future. In addition, if the development of the Northern Metropolis is adequately supported by industrial policies, Hong Kong will be able to drive its third industrial transformation by leveraging Shenzhen’s foundation in I&T industry with Qianhai as a gateway. This will in turn allow Hong Kong to better contribute to the creation of a world-class city cluster in the Greater Bay Area.