The future commercial success of Hong Kong will very likely be determined by the direction and development of a visionary scheme that aims to transform the nine South China provinces geographically nearest to us into an "economic super zone," with both Hong Kong and Macau included as members. Known as "Pan-Pearl River Delta 9+2" or more simply "9+2" the scheme envisions an integrated economic community working together to achieve common large-scale goals. The basic concept is to share resources, skills and large-scale infrastructure developments to ensure maximum competitiveness in global markets and to provide the greatest opportunities and benefits for all concerned, similar to successful international economic groupings such as the European Common Market.

The "9+2" concept is highly ambitious but certainly would produce a formidable economic powerhouse. The nine provinces are Guangdong, Fujian, Jiangxi, Guizhou, Sichuan, Yunnan, Hunan, Hainan and Guangxi Zhuangzu Zizhiqu. Taking into account the "2" - Hong Kong and Macau - this grouping holds more than a third of China's population or 460 million-plus people, in 2004 had a combined GDP of US$730 billion (40 percent of China's total economic output), and a total trade value of US$970 billion (higher than the corresponding figures of France or the United Kingdom) Economic output is forecast to exceed US$1,000 billion by 2010, and reach US$2,000 billion by 2020. The closer the co-operation between the "9+2" governments, the more likely they will be able to achieve these goals and maximize their benefits.

The "9+2" idea was first put forward in 2003 by Guangdong Party Secretary Zhang Dejiang, who saw it as a way to equalize growth throughout the area and make the best use of the disparate resources in each province. He also saw it as a counter to the rapid growth and success of the Yangtze River Delta, which was not only offering investors and entrepreneurs competitive rates, opportunities and infrastructure, but provided access to a burgeoning Chinese middle class in Shanghai, Beijing and other northern cities.

Importantly, the concept offered a compelling vision of integrated development which would enable poor provinces such as Guangxi Zhuangzu Zizhiqu, Guizhou and Hunan to grow as low-cost manufacturing centres. In their turn, Guangdong would move towards technical industries more appropriate to its stage of development, while Hong Kong would leverage the latest technology to further upgrade its highly developed service industries. "9+2" started out with the immediate appeal of a win-win situation.

The fundamental process for developing the scheme is to hold regular forums among all 11 players to co-ordinate policies and development projects, taking into account the input of Beijing's powerful State Development and Planning Commission. Besides removing barriers such as the administrative procedures that hinder the flow of resources, goods, capital and skilled labour within the region, the scheme includes massive infrastructure projects to better link the region physically as well as commercially. Improved transport links are a major priority, and it is planned to increase the rail networks from 19,000km to 29,000km by 2020, to create 22 new superhighways totalling 30,000km, and to expand waterway facilities by 30 percent, mainly along the Pearl River.

The first PPRD Forum was held in 2004, and while some of the imaginative plans and schemes tabled were quite extraordinary, all centred on the vast potential of "9+2" as an economic powerhouse. In these grand schemes, Hong Kong is envisaged as the centre for logistics, banking and finance, high-value services and as an international gateway, especially for tourists.

That acclaimed initial Forum has now grown into an annual event where still bolder and more exciting proposals are debated as "9+2" moves closer to getting off the ground.

At the 2005 Forum of the Hong Kong SAR Goverment, Secretary for Constitutional Affairs Stephen Lam, said Hong Kong could make a serious contribution in these areas:

1. Helping in the planning and construction of infrastructural networks since the development of a comprehensive transport network connecting various provinces and regions is one of the key driving forces underpinning Pan-PRD co-operation.
2. Using our financial system and advanced financial services to help raise the capital needed for "9+2" projects.
3. Making greater use of Hong Kong as a platform for Mainland enterprises to access global markets by encouraging Pan-PRD enterprises to set up offices here for trade, investment and fund-raising activities.
4. Speeding up the implementation of CEPA under the Pan-PRD cooperation framework. [Note: Stages II and III of CEPA have since come into operation.]

Chief Executive of the Hong Kong SAR Donald Tsang, speaking at the recent 2006 PPRD Forum, underlined the scheme's importance to Hong Kong's development, and highlighted Hong Kong's strengths in financial services, tourism, logistics, professional and economic services and our international experience and networks as the key areas in which Hong Kong will contribute.

While "9+2" is still in its early stages, the planning is there, the opportunities are there, and the commitments are starting to come, so it seems inevitable that Hong Kong's future will be to play a key role in the development of this economic "super zone."

Although in terms of size and population Hong Kong SAR is the second smallest of the "9+2" members, it seems that it is increasingly emerging as one of the pacesetters for the whole scheme. It has either spread its representation to all nine provinces, or will do so by end of this year.

Since April 2006 the Hong Kong Economic and Trade Office in Guangzhou, capital of Guangdong, has expanded its geographical coverage to include four more provinces besides Guangdong - Guangxi Zhuangzu Zizhiqu, Jiangxi, Fujian and Hainan. Later this year Hong Kong will also set up an Economic and Trade Office in Chengdu, Sichuan, which besides Sichuan will cover the three remaining provinces of Hunan, Yunnan and Guizhou, plus the Municipality of Chongqing in Sichuan and a province not in the "9+2" scheme, Shaanxi.

One of the main roles of these offices will be to encourage Hong Kong industrialists to look farther afield rather than setting up still more factories in neighbouring Guangdong. Instead they will be reminded that the benefits of CEPA are not confined to Guangdong, and urged to choose sites in other less developed "9+2" locations, thereby helping the spread of development and wealth. In addition, the Secretary for Financial Services of the Hong Kong SAR Government, Henry Tang, will lead a high-powered financial delegation to Hunan this September to explore financial co-operation opportunities with the regional provincial government and local businessmen.

Speaking recently in Kunming, capital of Yunnan province, at the Third PPRD Regional Co-operation and Development Forum, Donald Tsang, the Chief Executive of the Hong Kong SAR, said the SAR had made substantial progress over the past year in promoting co-operation with the PPRD region. He added that Hong Kong would continue to promote regional development in collaboration with other "9+2" provinces and regions. In doing so it would continue to draw on its strengths in financial services, tourism, logistics, economic and trade and professional services, as well as its international experience and network.

Mr Tsang said financial services were the focus of Hong Kong's co-operation with the PPRD region and pointed out that last March Hong Kong had hosted the Pan-Pearl River Delta Regional Co-operation Financial Services Forum, with the theme of regional co-operation in financial services. The Forum was yet another indication of Hong Kong's willingness to share its multi-faceted advantages with its less well-off "9+2" partners. It attracted an attendance of more than 600, many of them officials from PPRD provinces and some from Central Government agencies in Beijing.

Since May 2006, Hong Kong has extended the Individual Visit Scheme to cover the inhabitants of the six biggest provincial cities across the PPRD not already included. This has been done in response to wishes expressed by provincial delegates to last year's Second PPRD Regional Co-operation and Development Forum, and with the approval of the Central Government. The cities are Changsha in Hunan, Nanning in Guangxi, Nanchang in Jiangxi, Haikou in Hainan, Guiyang in Guizhou and Kunming in Yunnan, which have an aggregate population of 20 million-plus. Although only a small percentage of that number is expected to visit Hong Kong in the next few years, they will nevertheless make a considerable contribution to our hospitality, catering, retail and entertainment businesses.

Also in May, a delegation from Hong Kong's tourism and logistics industries went to Yunnan, where a common platform on tourism and logistics co-operation was agreed. Digital Trade and Transportation Network Company Limited is one of the delegation members and its Chairman Justin Yue stressed that Hong Kong, being the first in the world having built an electronic logistics platform, can well share experiences with its counterparts in Yunan to propel the development of electronic trade and logistics in both places for mutual economic benefits. Earlier this year, at the 11th National Five-Year Plan conference, Hong Kong's position as an international centre for finance, shipping, trade and other services was recognised.

Meanwhile, since its very beginnings the "9+2" scheme has had the enthusiastic support of Hong Kong's business world. Fred Lam, Executive Director of the Hong Kong Trade Development Council, said Hong Kong and Guangdong should join hands to take a leading role in setting up the new regional economic bloc, rather than vying with each other to take the leading role. Arguing against either Hong Kong or Guangdong becoming the sole "dragon head" of the bloc, Mr Lam said, "Hong Kong has many distinct advantages but it must join forces with Guangdong to lead the development of the PPRD."

Hopewell Holdings Chairman Gordon Wu believes Hong Kong must seize the opportunity to further integrate with the PPRD Group, adding: "I believe co-operation with the region is essential for the territory's long-term economic prosperity. With this new arrangement we can maximize our advantage as the Pan-Delta's window to the world."

Andrew Leung, Honorary President and Federation Appointee of the Federation of Hong Kong Industries, said Hong Kong must stop thinking of itself as a "single city" and adopt the concept of being a partner. He added: "We must eliminate local protectionism, which is a hindrance to economic integration. When transport and economic barriers are removed, Hong Kong's businesses will have better access to the region's raw materials, facilities and talents, furthering collaboration efforts."