(Yicai Global) Nov. 15 – On 6 November 2021, Jack Chan, EY China Chairman and Regional Managing Partner, Greater China, attended the 4th Hongqiao International Economic Forum in Shanghai. In the panel session of Hongqiao International Open Hub and Coordinated Regional Development Forum, Chan shared his insights on the advantages and prospects of “Greater Hongqiao” in the new development landscape.

In February this year, the State Council approved the General Plan for the Construction of Hongqiao International Open Hub (the “General Plan”). The General Plan infuses the Greater Hongqiao with added values to attract more resources and strengthen its position as a regional hub. It signifies the construction of the Greater Hongqiao as an important part of the national strategy for the integrated development of the Yangtze River Delta, while also turning a new page for Shanghai, Jiangsu, Zhejiang and Anhui toward a joint implementation of the General Plan.

As a pivot and trailblazer for the implementation of the national strategy on the integrated development of the Yangtze River Delta, Hongqiao holds a number of features that help drive the Yangtze River Delta toward deepening reforms and opening up collaboratively.

1. High traffic density

Strategically located, Hongqiao is home to two major traffic hubs: Hongqiao International Airport and Hongqiao Railway Station. Within the Hongqiao area, the traffic network is highly developed, powered by a complete multi-layered urban public transport system. The easy, quick and effective traffic network has considerably extended the reach of Hongqiao. Thanks to its full-grown and highly developed traffic corridors, Hongqiao has laid a solid groundwork as a regional hub to serve the Yangtze River Delta, reaching out to Greater China and connect China with the world. This has allowed Hongqiao to attract top-tier business service agencies and well-known enterprises to set up business headquarters as well as gather high-caliber talent and business people here to generate intellectual output.

2. High performance platform

As the point of convergence for the integrated development of the Yangtze River Delta, the Yangtze River Economic Belt strategy, and the Belt and Road Initiative, Hongqiao leverages the advantages and resources of the National Convention & Exhibition Center, the China International Import Expo (CIIE) and the Hongqiao International Economic Forum to focus on strengthening its role as an ideal location for convention and exhibition and for business to explore its great potential as an international business district and trade center. Devoted to building a number of high-end trade platforms and entities including Hongqiao Overseas Trade Center and a specialized trade platform oriented toward the Belt and Road countries, Hongqiao is expected to facilitate the in-depth integration of finance and trade by offering a series of new international trade and cross-border trade services.

3. High-end industries

Hongqiao adjoins Jiading, Taicang and Kunshan to the north and Jinshan, Pinghu, Nanhu, Haiyan and Haining to the south. Together, they cover an extended area of 7,000 square kilometers. In 2020, the region generated approximately RMB2.3 trillion in GDP^[1], serving a world-class industrial cluster and a huge consumer market. During the process of building a top-notch international business district, Hongqiao will bring in more leading professional service organizations in accounting, consulting and other fields, providing intellectual support and best practice for industry planning, incubation and development, and spearhead regional efforts toward accelerating the transition to intelligent and digital development and the setting up of a comprehensive system that covers conventional and leading-edge industries.

4. High-level policy support

The General Plan proposes up to 29 innovative policies, including notably a slew of high-value supportive policies that shall fortify the position and expand the influence of the CIIE, promote the opening-up of the service industry and the high-quality development of the trade sector, accelerate the headquarters economy toward integration and upgrading, and strengthen the role of Hongqiao as a transportation hub. To date, as many as 23, or up to 80%, of the 29 policies under the General Plan have been put in place[2]. Looking ahead, these policies are expected to expand their scope of application, offer more benefits, generate greater catalysts, and become stronger role models.

Currently, the world economy is still in the post-pandemic period of recovery, in which global supply and industry chains are undergoing a new round of transformation. China is also stepping up efforts to implement its dual circulation strategy – a two-pronged development strategy that seeks to spur China’s domestic demand as well as cater to export markets. As a key player of internal circulation and a pivotal link between the domestic and international circulations, Hongqiao is well-placed to play five important roles as a linkage in serving the new development paradigm.

1. Way of thinking

Hongqiao should fully build upon the momentum from the CIIE and the Hongqiao International Economic Forum, remain committed to the innovation and reform to adapt to international economic and trade rules, and continue to open up to the outside world. At present, the new trends of international economic and trade cooperation led by numerous high-profile regional free trade pacts such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the North American Free Trade Agreement (NAFTA) and the Economic Partnership Agreement (EPA) of the EU and Japan are significantly more open than the Regional Comprehensive Economic Partnership (RCEP)^[3]. Hongqiao should gather economic and trade organizations and professionals, both in China and abroad, to discuss ways of adapting to international standards and rules, explore new approaches with Chinese characteristics toward reforming and innovating rules and mechanisms for international, law-based and market-oriented business practices, take an active part in global trade governance reforms, in particular exerting influence in setting rules and standards in nascent areas such as e-commerce, digital trade and digital currency.

2. Supply chain

Currently, global supply chains are increasingly regionalized and diversified, and the influx of high-end foreign investors coincides with the going-abroad of top-tier Chinese companies. Meanwhile as digital technology gains in popularity, the advent of new patterns, new business, new products and new services is accelerating the transformation of corporate supply chains. Underpinned by the advanced manufacturing industry in the Yangtze River Delta, Hongqiao brings into its fold powerful trade service platforms, international supply chain management entities and various financial service institutions, placing Hongqiao in a strong position to grow collaboratively with the pilot free trade zones, thereby working together toward common goals to jointly set up a pivotal hub for global supply and industry chains.

3. Digital development

The COVID-19 pandemic has revealed the strengths of cross-border e-commerce. The General Plan intends to support the Hongqiao Airport Economic Demonstration Zone in exploring the possibility of creating a national digital services export base and building a private channel for international internet data in Hongqiao business district. Hongqiao is currently home to a host of Chinese and overseas e-commerce companies. It should ride on this strong base to explore the feasibility of formulating digital trade mechanisms and rules, including data classification rules, cross-border transaction rules and cross-border digital trade sandbox mechanism, and continue to improve the digital security assurance system designed to promote the healthy development of cross-border digital trade. In addition, through the negative list approach, Hongqiao can explore new areas for opening up digital and services trade so as to provide a broader platform for Chinese cross-border e-commerce and digital services companies to go global.

4. Application of innovative solutions

Hongqiao has enormous value in connecting international rules with standards, industry chain with supply chain, digital economy with real economy, laying a solid foundation for Hongqiao to turn innovative solutions into reality. As an important hub that opens up extensively to the outside world, Hongqiao will help bring more high-quality products and services into China, thanks to its role as a high-end convention and exhibition center. Through a range of pilot policy arrangements and industrial support policies, Hongqiao can accelerate time to market for many more new products and services, and expedite the mass application of new technologies and new business models.

5. Carbon peaking and carbon neutrality

Countries around the world are stepping up efforts to reduce carbon emissions toward sustainable development within the framework of the Paris Agreement. As part of the global initiative, China launched the world’s largest carbon emissions trading market in July this year. The carbon emissions trading system is expected to reshape the landscape of international commodity and energy trading in the foreseeable future. Based on the strong Yangtze River Delta industrial and trade system, Hongqiao is well-positioned to adapt to and participate in the design of the international carbon pricing system and mechanism in exploring and innovating more in carbon emissions ratification and carbon trading, reshaping the green business philosophy, and straightening out the leading role of green finance and trade services in manufacturing, distribution, circulation and consumption, with the ultimate aim to amplify its global influence.

Over time, Hongqiao is set to continuously leverage its strengths in regional location, platform, industry and policy, reinforcing its position as a “rainbow bridge” between Chinese and global features, ideologies and methodologies, as well as real and digital economies.