Press Conference of 2014 China Urban Competitiveness Report (Hong Kong)

For Immediate Release

PressConference of

2014 China Urban Competitiveness Report (Hong Kong)

Organizer

The Better Hong KongFoundation

Co-organizers

Center for City and Competitiveness, The Chinese Academy of Social Sciences

Hong Kong Institute of Asia-PacificStudies, The Chinese University of Hong Kong

(29 May2014, Hong Kong) The Press Conference of 2014China Urban Competitiveness Report (Hong Kong) is held in Hong Kong on 29 May 2014. It is organized by The Better Hong KongFoundation and co-organized by Center for City and Competitiveness, The ChineseAcademy of Social Sciences and Hong Kong Instituteof Asia-Pacific Studies, The Chinese Universityof Hong Kong. “The 2014 China Urban Competitiveness Report”project is led by Prof. Pengfei Niin 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 theresearch andinnovation and making ita newdriving force forthe developmentofHong Kong, Hong Kongcan alleviatethe risksandchallengesand releasethepotential ofinnovationtofurtherenhance Hong Kong'scompetitiveness.

The level of China’s urbanization reached 53.7% in 2013; urbanization has beendesignated as a long term strategy and an engine of economic growth by the newterm of Chinese government; the National Plan for New-form of Urbanization(2014-2020) has just been promulgated recently. All these facts indicate that China hasentered a new stage of urban development. Choosing correct direction and keysof development will have important and positive impact on the vision ofurbanization and economic development. Comparing with other countries, China’surbanization process still has many inadequacies. International experiences show that50% is a critical point of urbanization. From this point onwards, the processof 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 ofurbanization centering on “spatial resources allocation” as the mainstimulating factor, different from the early urbanization driven by industrialdevelopment.

World PopulationProspects: The 2010 Revision by the United Nations’Department of Economic and Social Affairs indicates that the urbanization levelof Chinawill increase stably to 68.7% by 2030. In order to develop smoothly and toavoid middle-income trap throughout the phase with the level of urbanizationincreasing from 50% to 70%, Chinese cities must, temporally, ensure theirsustainability; and spatially, continue to consolidate their positions atglobal and national levels and in the urban system. While the former issue ismainly a matter of sustainable development, the latter one is mainly a matterof urban competitiveness.

The ComprehensiveEconomic Competitiveness and Sustainable Competitiveness indices constructed inthe 2013 China Urban Competitiveness Reportoffer a key reference for urban planning and choosing the direction ofdevelopment of Chinese cities. The Project Team applies the same theoreticalframework 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 289prefecture-level cities (including Hong Kong and Macao) are ranked by the livable city,business friendly city andSustainableCompetitiveness 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 locationaladvantage to comprehensive economic competitiveness is obvious. In terms ofadministrative status of cities, Special Administrative Regions,municipalities, vice-provincial cities, cities with independent planning andprovincial 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 theadvantage. Livable city and business friendly city are two out ofeight major sub-indices of the Sustainable Competitiveness Index. The top tencities of the former in 2013 are Zhuhai, Hong Kong, Haikou,Sanya, Xiamen, Shenzhen, Zhoushan, Wuxi, Hangzhou and Shanghai. The top tencities of the latter in 2013 are Hong Kong, Shanghai,Beijing, Shenzhen, Guangzhou,Wuhan, Chengdu, Tianjin, Nanjing and Chongqing. Raising thepopulation quality and the improvement of municipal facilities and livingenvironment, which are parts of the effort of livable city building, can raisethe competitiveness of business friendly city. This is becoming more importantfor a society with rising income level.

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

To build livablecity, business friendly city, knowledge-based city, harmonious city, eco-city,cultural city, urban-rural integrated city and info-city, a sustainablecity in short, the Project Team recommends that Chinese cities must handle thefollowing issues properly. They include solving the outstanding problems of fogand haze and high housing prices, the construction oflong-term effective mechanisms for building an idealbusiness environment, the change fromfactor-driventoinnovation-drivengrowth, the initiation of reforms, the getting out of the EKC[1]predicament, the avoidance of the loss of historical heritageand character, thesolution of urban-rural dichotomy, and promoting IT development respectively.

Hong Kong keeps the top position incomprehensive economic competitiveness but the speed of growth is slowing down. The sub-index of overall efficiencycompetitiveness is 0.7329, ranked third after Taipeiand Macao. Hong Kong has a significant advantage in GDP per unit ofland, thanks to its dense population and commercial activities, a high degreeof agglomeration, streamlined business regulations, a clean government, goodsupporting facilities and efficient services. However, the sub-index of overallincremental competitiveness is only 0.363, ranked eighteenth, fell by tenplaces from last year. Hong Kong is sufferingfrom the gradual weakening of the advantages in talent, software and hardwarefacilities. There is nosignificantenhancement of theatmosphere ofinnovationand entrepreneurship. Land shortage-induced high rents hinder the development of small andmedium-sized enterprises. Hong Kong is alsoover-dependent on financial and real estate sectors and lacks stable sectorsfor growth.

Hong Kong also has a top position in sustainablecompetitiveness but the sub-index of knowledge-based city and thesub-index of info-city are weakening. Hong Kong isranked first with the index of 1.000. Hong Kongis also ranked second and first in the sub-indices of livable city and business friendlycity respectively. Among six other sub-indices, Hong Konghas top positions in cultural city, urban-rural integrated city, harmoniouscity and eco-city, while it is ranked fourth in info-city. Its index inknowledge-based city is 0.749 and is ranked fourth after Beijing,Shanghai andShenzhen. Hong Kong’s R&D expenditure, in terms of the percentage of GDP,is much lower than the one in Japan,South Korea, Singapore andthe Mainland. Hong Kong also lacks effectiveincentive system for technological innovation, along with the weak atmosphereof innovation and ability of knowledge transfer. All these are the majorproblems in Hong Kong.

In addition to the insignificant transformation ofthe industrial structure towards innovation and technology, high dependence onthe financial sector and real estate economically, rapid aging population andcompetition from global and the Mainland cities are the problems challenging Hong Kong’s sustainable development. The Project Teammakes recommendations on the future development of Hong Kong in three aspects. First, the HKSAR Government shouldadjust its policy approach by developing long-term development planning onland policy, development of pillar and new industries, population policy andgoals of sustainable development. Second, it has to re-position Hong Kong according to the latest situation of theChinese economy and to play its unique role and influence. Specifically,Hong Kong can promote regional economic integration and the establishment ofGuangdong-Hong Kong-Macao Free Trade Zone by deepening the implementation ofCEPA and the Framework Agreement on Hong Kong/Guangdong Cooperation at the governmentallevel; can enhance thecooperation of its enterprises with their mainland counterparts to developinternational markets; can further optimize the RMB clearing platform, promotethe use of RMB and attract more enterprises to use RMB for settlement; canparticipate in the development of the Greater Pearl River Delta economic circleetc. These will let the people of Hong Kong better understand the importance ofregional cooperation to regional prosperity and stability, strengthen civil andofficial exchanges and cooperation between two areas, and allow Hong Kong to play a unique role and impact. Third, topromote research andinnovation, and to lead the development of the knowledge-based economy by consolidating the existing pillarindustries, promoting the potential industries, implementing the “going-out”and “bringing-in” policies through the participation in the development of the “Shenzhen-HongKong Innovation Circle” and the construction of the Asian intellectual propertyrights trading and service center.

Concluding the press conference, Ms. Karen Tang, Executive Directorof the Better Hong Kong Foundation commented that “Hong Kong ranks the 1st in both Comprehensive Economic Competitivenessand Sustainable Competitiveness. Hong Kongperforms well in many aspects. To maintain our advantage in competitiveness andcreate a win-win situation, Hong Kong needs long-term plans for policies suchas population and land use, should focus on nurturing research and innovation,and must play the role of ‘super connector’ well with its positioning in Chinain 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 oremail: jimmie_chow@betterhongkong.org.

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