Hong Kong eyes 'Hefei model' for Northern Metropolis push

The arrival of Yuan Gujie, the new deputy director of Beijing's liaison office in Hong Kong, signals a potential push for deeper integration between the city and the Greater Bay Area. Her background in law and experience in Guangdong province suggest an agenda focused on this integration.

Accelerating the development of Hong Kong's Northern Metropolis may necessitate a departure from its existing legal framework and development model. A fundamental overhaul is being considered, with the establishment of a special economic zone emerging as a potential solution. This approach has been instrumental in China's economic growth, notably driving Shenzhen's rapid expansion.

However, Hong Kong's path may differ from Shenzhen's. While Shenzhen thrived on market liberalization, Hong Kong's special economic zone might involve a more assertive government role in shaping industrial strategy and guiding long-term development. This aligns with China's evolving approach to industrial policy.

The "Hefei model" is presented as a prime example of this new strategy. It represents a significant shift from growth driven by land and infrastructure to state-capital-led industrial cultivation. This long-term investment approach prioritizes strategic hard-tech sectors, accepts initial financial setbacks, and fosters entire ecosystems around anchor companies. Hefei's transformation, particularly through the success of ChangXin Memory Technologies (CXMT), China's sole domestic DRAM producer to achieve mass production, highlights the effectiveness of this state-backed industrial strategy.