On 28 November, Shen Minghao, Director of Institute of Studies for the Greater Bay Area, Guangdong University of Foreign Studies, delivered a keynote speech at the Guangdong-Hong Kong-Macao Greater Bay Area Cooperation and Development Forum of the Asia Youth Leaders Forum 2021.

The full speech is as below.

We are an educational and scientific research institute. I'm not very young, but the students I train in the university are very young. 5,000 to 6,000 students graduate every year, and over 80% of them work in the Greater Bay Area. Moreover, theiremployment is good. According to differentnational lists, the competitiveness and salary levels of our students are ranked in the top ten or twenty in the country, and one of the best in Guangdong Province. So, we have trained many young studentsby using our specialties.

The Institute of Studies for the Greater Bay Area is committed to the research on industries and trade in the Greater Bay Area. We also did it early, and inthe year of 2016, we were already working on thesubject of the Greater Bay Area. Back then, we did something for Shenzhen. Our institute was one of the earliest Greater-Bay-Area-focused research institutions and entered the top list of Chinese Think Tank Index (CTTI).
We have done a few things. We have established a talent database, an information database, and three platforms, including a policy consulting platform for governments at all levels, an international exchange platform, and a training and policy promotion platform. Over these years, we've organized more than 100 policy interpretation meetings for the leadership in four or five districts of Shenzhen and two or three districts of Guangzhou, more than 100 media interviews, and more than 100 forums. So generally speaking, whatwe've done is policy promotion and raising awareness of the Greater Bay Area.

In the Guangdong-Hong Kong-Macao Greater Bay Area, Nansha was a geometric center and is transforming into a transportation and functional center. The Greater Bay Area actually adopts a Chinese model of an international bay area. The Greater Bay Area has many unique features whichcould bring many opportunities to Nansha. For example, there are diverse systems in the Greater Bay Area with Hong Kong and Macaocharacteristics, so there must be a good opportunity in system innovation. Moreover, the Greater Bay Area is actually the bay area with the highest density of metropolises in the world. Within 100 km, there are Guangzhou, Shenzhen, and Hong Kong, the three metropolises whose GDP surpass RMB 2 trillion. What does that mean? It means there is a city cluster whose GDP is larger than New Zealand's. Around the world, such city clusters are generally 500 km apart, so the density of such clusters is very high.

Moreover, there is a high level of industrial diversification. We all know China is the world's only country with all the 41 industrial divisions, 207 groups, and 666 classes as specified by the United Nations. The Greater Bay Area deals with 40 industrial divisions except for the coal industry. In fact, Guangzhou has 35 industrial divisions, which ranks first among all first-tier cities. So, the city exports many varieties of products. Guangdong Province, mainly the Pearl River Delta, exports 5,898 kinds of products, covering 70% of China's total number of varieties, which is 8,557, so the volume of trade is large. In 2019, the volume of trade in the Pearl River Delta was around USD 1.1 trillion. The volume of trade in Hong Kong was USD 1.2 trillion, and USD 700 billion of products from the mainland were exported through entrepot trade in Hong Kong. So, no matter how we calculate, the volume of trade in the Greater Bay Area can account for one third of and even above China’s total, which is the largest in the world.

The number of patents has been increasing recently. The number of patents in the Greater Bay Area has reached 330,000, the largest among all bay areas. According to the World Intellectual Property Organization’s ranking, among the most important innovation clusters in the world, the cluster made up of Guangzhou, Hong Kong, and Shenzhen has been ranked second for several consecutive years, following the Tokyo-Yokohama metropolitan area. The San Francisco Bay Area is a small area with a population of only seven million, so its scale index has reduced, and it lags behind. So, we can see that the Guangdong-Hong Kong-Macao Bay Area has actually brought us many opportunities. We have a cross-border market. The integration of this cross-border market will generate many opportunities.

The Guangzhou-Shenzhen-Hong Kong Express Rail Link has opened to traffic, although it is affected by the pandemic. The railway is actually significant. It takes half an hour from Qingsheng Station to Hong Kong West Kowloon Station and 15 minutes from the downtown of Futian District to Hong Kong West Kowloon Station. This is urban integration. Urban integration of these three cities whose GDP have surpassed RMB 2 trillion each means that there is a total volume of over RMB 6 trillion, or even nearly RMB 7 trillion, which is a rare opportunity in the world.

I've trained over 1,000 Hong Kong young people. They all said that there was a small market space for entrepreneurs, as Hong Kong had a population of only 7.5 million and covered an area of 1,110 square kilometers. But if there is a cross-border market, there would be a huge market share. So, we can see that many bay areas in the world developed with efforts from young people. For example, 250 years ago, a group of young people represented by Watt, who was around 40, promoted the Industrial Revolution. 140 years ago, a group of people with Edison who was in his 30s as a representative promoted the electrical revolution. 45 years ago, Jobs and Bill Gates who were in their 20s promoted the information revolution.

Actually, we can see that many young people have played an important role in the development of the Greater Bay Area. In the Guangdong-Hong Kong-Macao Greater Bay Area, the proportion of young people is very high. The Guangdong-Hong Kong-Macao Greater Bay Area is the only metropolitan area with minor problems of aging among major city clusters in China. So, this is a big opportunity for us. There will be a lot of opportunities. 

Back to the topic of my speech: youth's responsibility and action. In my opinion, youth's responsibility means to solve some existing problems. As a research institution, to solve problems, we need to identify the problems and give policy suggestions to the government. In recent years, we have made hundreds of policy suggestions on the Belt and Road Initiative in the Greater Bay Area, which have been approved by governors and ministers. And ten suggestions were approved by the top leader of the Party and the State. This is our responsibility. I think it is youth's responsibility to solve some problems in the industry or field theyare in. I think, we need to first identify problems and then do something. Simply speaking, I think there are two problems. 

One problem is the severance of the industrial and supply chains, including technological bottlenecks, which is actually a matter of patented technologies. Over these years' development, people have paidmore and more attention to this problem, especially the risk of patented technologies. We know that the past industrial revolutions emerged in the West, so they have more patented technologies.

We all know that China is the largest trade-surplus country. In fact, it is about the trade in goods. In terms of the trade in services, China is the largest deficit country. Where is the deficit of the trade in services from? There are three major aspects. The first is overseas consumption. This is a good thing. It is about outbound travel and shopping. The second is international shipping. Why is it international shipping? China has large production capacity but doesn’t have enough transport capacity. China produces 48% of the world’s pig iron, 49% of crude steel, 70% of electrolytic aluminum, 70% of computers, and 77% of cellphones, which is great production capacity, but China doesn't have many ships for international shipping. Therefore, it is a deficit country in this aspect. The other important aspect is the deficit from patent licensing fees. Qualcomm alone gets USD 26 billion of patent licensing fees from China per year, accounting for only 3.25% of that in cellphone business. Qualcomm doesn't charge much. If Chinese enterprises engage in this area, things may be different. Of course, it is a form of the boiling frog. Qualcomm doesn't charge much, and we don't engage in the upstream business. This is a big problem.

The other problem is insufficient integration of the industrial chain and the innovation chain. We know that there are problems with the industrial chain and the innovation chain. We have a lot of institutions of higher education and scientific research institutes, but the integration is actually insufficient. In China, there are 130 million market entities, 380 million enterprises, and 380,000 enterprises above designated size. In the Greater Bay Area, there are over five million enterprises, but less than 50,000 national high-tech enterprises, which is less than 1%. Many enterprises actually don't realize technological innovation is their competitiveness. That is a problem. 

How can the Guangdong-Hong Kong-Macao Greater Bay Area give play to its strengths to solve those problems? I think the combined advantages of Hong Kong, Macao, and Pearl River Delta can play a great role. 
Firstly, we can make use of both sides' strengths. For example, Hong Kong and Macao has innovative and creative technological resources, and the Pearl River Delta has large production capacity, talent supply, and particularly a super large market. The total volume of retail sales in the Greater Bay Area has reached RMB 3.6 trillion, which is the combined volume of that in Beijing, Shanghai, Tianjin, and Chongqing, so the Greater Bay Area can become one of the important consumption centers in the Asia-Pacific. Besides, as we have a complete industrial chain system, if Hong Kong and Macao market can be integrated with the mainland market, I believe the advantage can be brought into full play.

Secondly, I think we should promote the integration among the upstream, midstream, and downstream of the industrial chain. In the past, we were mainly engaged in the downstream of the industrial chain. The Pearl River Delta is a place where the downstream of the global industrial chain is most concentrated. We are mainly connected with others in the downstream, and the final products go out from here. But we are seldom engaged in the upstream. Huawei actually engages in the upstream, so the US is very nervous. 

Actually, we need more enterprises to engage in the upstream, and there are more and more upstream enterprises. There are many enterprises of original ideas, R&D, and production here, because only this place may have such strengths in the world. DJI Technology is such an example. Wang Tao, whose postgraduate supervisor is Prof. Li Zexiang of the Hong Kong University of Science and Technology, launched a project based on laboratory technology in Shenzhen, and with further R&D, produced and exported products to European and the US, accounting for 80% of the market share. Leung Chun-ying once asked Wang Tao, "If you go back to Hong Kong, all your requirements will be satisfied, will you?" Wang Tao said, "That is impossible. Because I'm engaged in ideas. If I give out a contract for a project, a product may need several hundred parts. Only suppliers in Shenzhen and places around the Greater Bay Area can quickly supply me, and no other place can." It is evident that we have a sophisticated industrial chain.

There are too few upstream enterprises, so there willbe great opportunities in the future. Many enterprises, whether in terms of new energy, new material, or even new energy vehicles, are given an opportunity to overtake others. We know that in thefield of traditional automobiles, Europe, the US, and Japan have great advantages. China indeed lags behind in that aspect. But all countries are on the same starting line in terms of the development of new energy vehicles. All are actually in the same stage, so this is a good opportunity to overtakethem. Now more and more enterprises are starting from the upstream, and that is a very good opportunity.

Thirdly, China's internet doesn't lag behind, or we can say China's consumer internet is leading, but the industrial internet is relatively backward. The coverage of the industrial internet in China is only around 30%, but the rate in developed countries in Europe and the US is around 60%. So, there is a huge market space for us. In the future, the first-generation internet (PC internet) and the second-generation internet (mobile internet) will be obsolete. There will be internet led by 5G technology such as 5G cloud computing, VR, and AR. The third-generation internet might be the internet connecting all things. We can call it industrial internet or holographic internet. We can give it such names. Then digital economy will be a great opportunity. Actually, this opportunity renderstraditional print-media internet only 1% chance of winning. In the past, there were few tracks forcompetition. But now, there are many. A lot of such 1% chances will arise. I think there will be a great opportunity. There actually have been many such enterprises here. I think, if we take full advantage ofthose elements, the Greater Bay Area will be a great opportunity for the youth in both Hong Kong, Macao, and the mainland.