China's Bay Area Is Gearing Up to Take On Silicon Valley

Is Silicon Vally at risk of being displaced as the Bay Area? China’s Greater Bay Area (GBA)—a collection of 11 cities in and around the mouth of the Pearl River in southern Guangdong province—might give it a run for its money.

“Our Greater Bay Area is very promising and has a bright future because it has a larger size, a bigger population and very diversified industry resources,” says Li Chuyuan, Chairman of Guangzhou Pharmaceutical Holdings, speaking at the Fortune Global Tech Forum in Guangzhou. “There are a lot of policy advantages too,” Li adds.

The GBA is one of President Xi Jinping’s flagship policies: it is a roadmap to integrate nine mainland Chinese cities and the two Special Administrative Regions of Hong Kong and Macau into a single economic area with a population of 70 million and an economy roughly the size of South Korea’s.

Under direction from Beijing, each city in the GBA is expected to specialize in a different sector of the economy. Hong Kong will be the financial hub, Shenzhen the innovation hub and Guangzhou—the capital of Guangdong province, where nine of the 11 GBA cities are located—will be the policy hub.

Guangzhou Pharmaceutical is already altering its corporate structure to align with GBA objectives by moving its international headquarters to the former Portuguese colony of Macau, Li says.

Currently most famous for its casinos, which generate three times more revenue than the Las Vegas strip, Macau is destined to become a center for research into traditional Chinese medicine, in accordance with the GBA policy, making it an ideal place for a Chinese pharmaceutical giant like Guangzhou Pharma.

However, there are numerous roadblocks to actually making the GBA function as a single economic zone. Three separate currencies—the Hong Kong dollar, the Macanese pataca, and the renminbi—are in circulation across the eleven cities; there are three unique judicial systems in operation, too; even the mobile networks are different.

“If you want to make this GBA into a more coherent [system], we need to go back to the basics, which is infrastructure, says Lee Der-Horng, vice president and dean of Guangzhou-based PCITECH, which specializes in smart city infrastructure.

The GBA’s infrastructure is expanding: Guangzhou’s subway system is already connects to Foshan, a neighboring city and another one of the 11 nodes in the GBA, while Hong Kong, Zhuhai and Macau were recently connected by the world’s longest sea bridge.

However, those rail and bridge links aren’t what we might define as technologically smart. Perhaps Silicon Valley can retain its grip on the Bay Area title for a little longer yet.