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Press Release

2014 China Urban Competitiveness Report (Hong Kong)

2014.05.29

(29 May 2014, Hong Kong) The Press Conference of 2014 China Urban Competitiveness Report (Hong Kong) is held in Hong Kong on 29 May 2014. It is organized by The Better Hong Kong Foundation and co-organized by Center for City and Competitiveness, The Chinese Academy of Social Sciences and Hong Kong Institute of Asia-Pacific Studies, The Chinese University of Hong Kong. “The 2014 China Urban Competitiveness Report” project is led by Prof. Pengfei Ni in The Chinese Academy of Social Sciences. The theme of the 2014 Report is “YRD: the emerging global mega economic region”. For Hong Kong, the key suggestion is “promoting research and innovation, developing a knowledge-based economy”. Through strengthening the research and innovation and making it a new driving force for the development of Hong Kong, Hong Kong can alleviate the risks and challenges and release the potential of innovation to further enhance Hong Kong’s competitiveness.

 

The level of China’s urbanization reached 53.7% in 2013; urbanization has been designated as a long term strategy and an engine of economic growth by the new term of Chinese government; the National Plan for New-form of Urbanization (2014-2020) has just been promulgated recently. All these facts indicate that China has entered a new stage of urban development. Choosing correct direction and keys of development will have important and positive impact on the vision of urbanization and economic development. Comparing with other countries, China’s urbanization process still has many inadequacies. International experiences show that 50% is a critical point of urbanization. From this point onwards, the process of urbanization will be changed from quantitative expansion to qualitative change, and from the stage of extensive growth to intensive change. That means entering a latter stage of urbanization centering on “spatial resources allocation” as the main stimulating factor, different from the early urbanization driven by industrial development.

 

World Population Prospects: The 2010 Revision by the United Nations’ Department of Economic and Social Affairs indicates that the urbanization level of China will increase stably to 68.7% by 2030. In order to develop smoothly and to avoid middle-income trap throughout the phase with the level of urbanization increasing from 50% to 70%, Chinese cities must, temporally, ensure their sustainability; and spatially, continue to consolidate their positions at global and national levels and in the urban system. While the former issue is mainly a matter of sustainable development, the latter one is mainly a matter of urban competitiveness.

 

The Comprehensive Economic Competitiveness and Sustainable Competitiveness indices constructed in the 2013 China Urban Competitiveness Report offer a key reference for urban planning and choosing the direction of development of Chinese cities. The Project Team applies the same theoretical framework used in previous reports with improvement in the index system. 294 cities (including cities from Hong Kong, Macao and Taiwan) are ranked by the Comprehensive Economic Competitiveness Index, while 289 prefecture-level cities (including Hong Kong and Macao) are ranked by the livable city, business friendly city and Sustainable Competitiveness Indices.

The top ten cities in the Comprehensive Economic Competitiveness Index in 2013 are Hong Kong, Shenzhen, Shanghai, Taipei, Guangzhou, Beijing, Suzhou, Tianjin, Foshan and Macao. They are all cities located in Eastern region and the influence of locational advantage to comprehensive economic competitiveness is obvious. In terms of administrative status of cities, Special Administrative Regions, municipalities, vice-provincial cities, cities with independent planning and provincial capitals have stronger competitiveness.

 

The top ten cities in the Sustainable Competitiveness Index in 2013 are Hong Kong, Shanghai, Shenzhen, Beijing, Macao, Guangzhou, Hangzhou, Xiamen, Qingdao and Nanjing. Similarly, coastal cities have the advantage. Livable city and business friendly city are two out of eight major sub-indices of the Sustainable Competitiveness Index. The top ten cities of the former in 2013 are Zhuhai, Hong Kong, Haikou, Sanya, Xiamen, Shenzhen, Zhoushan, Wuxi, Hangzhou and Shanghai. The top ten cities of the latter in 2013 are Hong Kong, Shanghai, Beijing, Shenzhen, Guangzhou, Wuhan, Chengdu, Tianjin, Nanjing and Chongqing. Raising the population quality and the improvement of municipal facilities and living environment, which are parts of the effort of livable city building, can raise the competitiveness of business friendly city. This is becoming more important for a society with rising income level.

 

A typical inverted U-shaped relationship is identified between the sustainable competitiveness and economic competitiveness. This indicates that the key to enhance the competitiveness of Chinese cities is not the present comprehensive economic competitiveness, but rather how to raise the sustainable competitiveness to enhance the development potential of the Chinese cities, which can be regarded as the inherent requirement and inexhaustible power to transform Chinese mode of socio-economic development.

 

To build livable city, business friendly city, knowledge-based city, harmonious city, eco-city, cultural city, urban-rural integrated city and info-city, a sustainable city in short, the Project Team recommends that Chinese cities must handle the following issues properly. They include solving the outstanding problems of fog and haze and high housing prices, the construction of long-term effective mechanisms for building an ideal business environment, the change from factor-driven to innovation-driven growth, the initiation of reforms, the getting out of the EKC[1] predicament, the avoidance of the loss of historical heritage and character, the solution of urban-rural dichotomy, and promoting IT development respectively.

 

Hong Kong keeps the top position in comprehensive economic competitiveness but the speed of growth is slowing down. The sub-index of overall efficiency competitiveness is 0.7329, ranked third after Taipei and Macao. Hong Kong has a significant advantage in GDP per unit of land, thanks to its dense population and commercial activities, a high degree of agglomeration, streamlined business regulations, a clean government, good supporting facilities and efficient services. However, the sub-index of overall incremental competitiveness is only 0.363, ranked eighteenth, fell by ten places from last year. Hong Kong is suffering from the gradual weakening of the advantages in talent, software and hardware facilities. There is no significant enhancement of the atmosphere of innovation and entrepreneurship. Land shortage-induced high rents hinder the development of small and medium-sized enterprises. Hong Kong is also over-dependent on financial and real estate sectors and lacks stable sectors for growth.

 

Hong Kong also has a top position in sustainable competitiveness but the sub-index of knowledge-based city and the sub-index of info-city are weakening. Hong Kong is ranked first with the index of 1.000. Hong Kong is also ranked second and first in the sub-indices of livable city and business friendly city respectively. Among six other sub-indices, Hong Kong has top positions in cultural city, urban-rural integrated city, harmonious city and eco-city, while it is ranked fourth in info-city. Its index in knowledge-based city is 0.749 and is ranked fourth after Beijing, Shanghai and Shenzhen. Hong Kong’s R&D expenditure, in terms of the percentage of GDP, is much lower than the one in Japan, South Korea, Singapore and the Mainland. Hong Kong also lacks effective incentive system for technological innovation, along with the weak atmosphere of innovation and ability of knowledge transfer. All these are the major problems in Hong Kong.

 

In addition to the insignificant transformation of the industrial structure towards innovation and technology, high dependence on the financial sector and real estate economically, rapid aging population and competition from global and the Mainland cities are the problems challenging Hong Kong’s sustainable development. The Project Team makes recommendations on the future development of Hong Kong in three aspects. First, the HKSAR Government should adjust its policy approach by developing long-term development planning on land policy, development of pillar and new industries, population policy and goals of sustainable development. Second, it has to re-position Hong Kong according to the latest situation of the Chinese economy and to play its unique role and influence. Specifically, Hong Kong can promote regional economic integration and the establishment of Guangdong-Hong Kong-Macao Free Trade Zone by deepening the implementation of CEPA and the Framework Agreement on Hong Kong/Guangdong Cooperation at the governmental level; can enhance the cooperation of its enterprises with their mainland counterparts to develop international markets; can further optimize the RMB clearing platform, promote the use of RMB and attract more enterprises to use RMB for settlement; can participate in the development of the Greater Pearl River Delta economic circle etc. These will let the people of Hong Kong better understand the importance of regional cooperation to regional prosperity and stability, strengthen civil and official exchanges and cooperation between two areas, and allow Hong Kong to play a unique role and impact. Third, to promote research and innovation, and to lead the development of the knowledge-based economy by consolidating the existing pillar industries, promoting the potential industries, implementing the “going-out” and “bringing-in” policies through the participation in the development of the “Shenzhen-Hong Kong Innovation Circle” and the construction of the Asian intellectual property rights trading and service center.

 

Concluding the press conference, Ms. Karen Tang, Executive Director of the Better Hong Kong Foundation commented that “Hong Kong ranks the 1st in both Comprehensive Economic Competitiveness and Sustainable Competitiveness. Hong Kong performs well in many aspects. To maintain our advantage in competitiveness and create a win-win situation, Hong Kong needs long-term plans for policies such as population and land use, should focus on nurturing research and innovation, and must play the role of ‘super connector’ well with its positioning in China in the context of ‘going-out, bringing-in’ policy.”

 

For enquiries, please contact Ms Jimmie Chow, Communications Manager of the Foundation at Tel: (852) 2865 3529 / 6030 6025 or email: jimmie_chow@betterhongkong.org.

 

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2014 China Urban Competitiveness Report (Hong Kong)