World Watch: Asia -- Poised for Growth

In the coming decades the Pearl River Delta region -- the huge swath of land that includes Hong Kong, Macau, and the southern part of communist China's most prosperous province -- should be one of the mightiest industrial regions in the world. The Pearl River Delta as a manufacturing powerhouse is not an entirely new phenomenon: Manufacturers in Hong Kong have been shifting their operations over the border to China since the country opened up to the world in the early 1980s. But recent events, including the reversion of Hong Kong and Macau to China, albeit with autonomous rule and free-market systems, have brought the regions even closer. All now are part and parcel of mainland China, and that synergy is being exploited. The opening of Hong Kong's new airport, road, and rail system in 1998, which cost a total of US$20 billion, meant the potential for cargo growth was virtually limitless. The system was designed to be able to cope with 9 million tons of cargo and 87 million passengers annually. Now that the Asian economic crisis is over, and the first shoots of economic growth are sprouting vigorously, Chek Lap Kok airport can begin to realize its enormous potential. "It is growing at a blistering pace," says Victor Fung, chairman of the Hong Kong Airport Authority. "There was a 21% increase in traffic in 1999 over 1998, and the last quarter of 1999 saw a rise of over 30%. I expect our air cargo to continue growing at a double-digit rate." Hong Kong, with a population of 6.8 million and now a Special Administrative Region of China, is located at the mouth of the Pearl River estuary. To go upstream to Macau takes an hour by fast ferry; to the Guangdong provincial capital of Guangzhou, another two hours. It was this proximity to southern China that led the British colonials to originally target Hong Kong as a port, initially as a stopping-off point for their China-bound opium ships. Over the years Hong Kong's importance as a deep-water port grew. When China opened to the world, the shipping business boomed. Two more deep-water terminals are being built in Hong Kong, which will take the tally to nine. On land, too, links have improved enormously between the key Pearl River Delta cities. A fast train whisks visitors from Hong Kong to the border and the Special Economic Zone city of Shenzhen, where they can simply walk across into China itself and take a cab to the downtown zone or to factories farther afield. Express trains link Hong Kong with the city of Guangzhou, a journey that goes through the heart of the southern China industrial heartland. Ten years ago water buffalo pulled plows across paddy fields; now there are rows of factories producing computer chips, radios, toys, and clothes. Big-name investors with production bases there include Procter & Gamble, Nestl, Coca-Cola, and Mitsubishi. Economic growth in the area has been remarkable. The city of Guangzhou, with a population of 6.7 million, has a GDP of 184 billion yuan (US$21.6 billion), while the Special Economic Zone city of Shenzhen, with nearly 4 million people, is close behind with 129 billion yuan (US$15.2 billion). The long-term plan of the authorities is to keep these Pearl River Delta areas as centers for higher-tech ventures, with the outlying, less-developed areas targeted for production of petrochemicals, iron and steel, and automobiles. Heading farther inland, Guangdong province has a huge supply of labor. Some 72 million people live in the province, a population that, when combined with the 6.8 million in Hong Kong, makes it an enormous and still-growing bloc. A formidable range of projects to improve the infrastructure are either in progress or on the drawing board. Guangdong already has seven airports, including the Baiyun International Airport, with a replacement facility capable of handling a million tons of cargo annually expected to be completed in 2010. A network of 25 roads linking major cities with Hong Kong and Macau also is being built. It is a construction program that will leave the Pearl River Delta with an enviable arsenal of trade weapons: cheap labor, a willing workforce, good roads and communications, plentiful airports, and a world-class city, Hong Kong, which boasts a superb deep-water port and international-service-center credentials.