Topics in this section: - Infrastructure to lead China Greater Bay's drive for integration - Integrated transport system to ease exchange - Railway connectivity may spur travel demand - New highways to ease bottlenecks, stimulate traffic - Improved access, manufacturing upgrade to fuel aviation demand - Free trade zones, import demand may underpin ports' throughput
These analyses are by Bloomberg Intelligence senior analyst Francis Chan and contributing analyst Denise Wong.
Infrastructure development should play a crucial role in China's Greater Bay Area initiative, since it will ease the movement of people and goods across the borders of Hong Kong, Macau and the mainland. This could fuel travel and freight traffic on GBA's rails, roads, airports and ports as well as fostering regional integration and development.
Integrated transport system to ease exchange
Traveling between Hong Kong, Shenzhen, Guangzhou, Foshan, Macau and Zhuhai could take no more than an hour in 2022 under the GBA's plan as infrastructure connections strengthen. Other cities within the area and toward the north and western part of Guangdong province may also be within two hours reach. China also seeks to promote development of cities in neighboring provinces by shortening travel times to less than three hours. The area will also be within 12 hours connection with Southeast Asia, the U.S., and Europe via major aviation hubs in GBA.
Strengthened connections should enable a more efficient exchange of talent, resources, capital, and services, which could facilitate specialization and spur development across major cities and towns in and around GBA.
Railway connectivity may spur travel demand
Hong Kong MTR's passenger growth could accelerate as access to rail improve under China's GBA development plans. China is looking to build another 11 high speed rail lines and 13 intercity rail routes with a total length of 1,500 kilometers, which will shorten transport time and fuel demand for travel between cities. Higher passenger flow could also spur development along rail corridors and allow MTR and Guangshen Railway to reap higher returns from properties adjacent to stations.
Guangdong had more than 4,000 kilometers of railway in 2018. Rail transport could offer significant time savings vs. other modes of transportation in densely populated areas, given its efficiency, reliability, and avoidance of traffic congestion. Rail operators may also adopt an integrated ticketing system to speed up payment and transfer.
New highways to ease bottlenecks, stimulate traffic
Volume growth may rise at toll road operator Shenzhen Expressway and logistics firm S.F. Express as new infrastructure ease capacity bottlenecks at major traffic arteries. The Nansha Bridge that opened in April should relieve congestion at Humen bridge and improve link from Shenzhen and Dongguan to Zhongshan and Foshan. Shenzhen-Zhongshan bridge will open in 2024 and provide additional direct links between the GBA's east and west. The Hong Kong-Zhuhai-Macau bridge that opened in 2018 also provided ground connections for three cities that were previously linked mainly by sea transport.
The GBA has one of the highest road densities in China with 218,000 kilometers of paved roadway, including 9,000 kilometers of expressways. Yet major arteries are congested, which may have hindered passenger vehicle and logistic traffic growth.
Improved access, manufacturing upgrade to fuel aviation demand
Air traffic in GBA is poised to rise on travel penetration growth, improved access to airports, and freight and logistics demand from the e-commerce and advanced manufacturing industries. GBA's passenger traffic is projected to rise 1.9x to 387 million by 2030, according to IATA Consulting. Freight traffic may expand at an even faster pace of 2.4x to 20 million tons.
Hong Kong Airport and Cathay Pacific could capture high-value international passengers and cargos from across the GBA once access improves. Shenzhen Airport could also grow its business and logistics traffic as the city evolves. Guangzhou Airport may face challenges to lure high-yield traffic, yet demand for the airfield should continue to climb on China Southern Airlines' expansion and travel penetration growth in north GBA and neighboring provinces.
Free trade zones, import demand may underpin ports' throughput
Throughput growth at GBA ports operated by China Merchants Port and Cosco Shipping Ports could pick up if China relax restrictions for imports and capital flows at pilot GBA free trade zones in Qianhai, Nansha, and Hengqin. More offshore businesses could also drive commercial and land development for companies operating in -- and near -- the port itself.
Guangdong and Shenzhen's share of cargo volume in China dropped to 26% in 2018 from 30% in 2010 as factories move inland and overseas to reduce costs. The decline could accelerate if GBA transforms into an advanced manufacturing center with a focus on low-volume, high-value products. Still, contributions from imports, transshipment and domestic north-to-south bound traffic may increase as rising prosperity in the area fuel demand for goods and resources.
