There are exceptions: tech jobs and managerial positions. The GBA-Hong Kong wage gap for managerial staff is small compared to lower-level positions. Four such positions in Guangzhou offered an average salary that is 12.4 to 34.1 percent lower than Hong Kong’s level: administrative/general services manager, engineering manager, quality control manager, and logistics manager. Unless these positions involve interacting with actors in the foreign market, however, they would likely require familiarity with the region’s workplace culture and knowledge of the local industry ecosystem.
As mainland China’s tech hub, Shenzhen offers high-paying jobs in the IT industry that rival, and even surpass, similar positions in Hong Kong. In 2019, software engineers earned on average an annual base salary equivalent to around HK$407,000, compared to around HK$341,000 in Hong Kong. These IT giants offer competitive salary packages for programmers and software engineers. The same may also be true for luxury brands and private education companies.
The tax system further complicates the issue of wages. In mainland China, the income tax rate can go up to 45 percent for the top tax bracket, and expats enjoy the same rate as Chinese nationals. Currently, expats enjoy deductions for housing rental and children’s education, but Beijing has announced plans to phase out these tax breaks by 2022. Together with restrictions on the flow of capital, individual investors and job seekers have always been wary of injecting their financial resources into the Chinese market.
Skepticism, geopolitics and Covid-19
Without the recognition and interest of the international community, GBA is just another television drama made for local audiences. Internationally, there is general skepticism towards China’s grand experiments of development. From the “Go West Plan” to develop northwestern China at the start of the century to all the free trade zones across the country and the well-known Belt and Road Initiative, the international community is not unfamiliar with Chinese economic plans with ambitious goals but moderate success.
Will the international community place their bets on the GBA game? It is perhaps still too early to say.
The geopolitical backdrop of the China-US rivalry may have further complicated the potential success of the GBA strategy. Bearing the collateral damage of the rivalry, Hong Kong’s reputation has suffered. In 2020, the city’s top officials were subjected to economic sanctions by the US government over human rights allegations. The US-based conservative Heritage Foundation removed Hong Kong from its Index of Economic Freedom in 2021, after it had topped the ranking for 25 years. Thus, it should come as no surprise if more international investors refrained from increase their investments in or via Hong Kong. Without Hong Kong performing its role as the gateway to international capital, the GBA plan faces a bumpy road ahead.
Needless to say, new norms will arise in the aftermath of the disastrous Covid-19 pandemic. One of the phenomena in discussion is the remapping of the global supply chain, with more international firms diverting away from China their production plants, which are currently concentrated in Guangdong province. This trend has yet to become widespread, but it could be intensified by unexpected US tariffs, punitive sanctions or other China-containment policies. If that happens, the GBA plan may only be left with the domestic market.