other regions of China (for example, the Yangste Basin) could be a major benefit if Guangdong responds by trading efficiently with them.
Threats from Hong Kong
2.102 Developments in Hong Kong might also affect the Province's own development - though not in any catastrophic sense. It can be argued that a continued reliance on Hong Kong services may hinder the development of Guangdong's own service industries. As such, any "threats" from Hong Kong are likely to come through its regional domination of ports and airports and the financial services and marketing sectors.
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2.103 Congestion at Kwai Chung could also slow economic growth if container facilities are not provided elsewhere. It is, however, likely that if insufficient container facilities are provided in Hong Kong, Guangdong will be able to provide its own facilities probably with the help of Hong Kong entrepreneurs. Some people in Guangdong actually see this as being in the Province's best long term interest - they do not like to be reliant on Hong Kong - they know that, although the Territory will revert to China in 1997, it will remain a separate economy and its wealth will not be shared.
2.104 In the Consultants' opinion, lack of air transport is rather less of a threat. There are, however, those in Guangdong who see Hong Kong's domination of the regional air transport market as, once again, a hindrance to the province's own development. Many would welcome congestion in Hong Kong -believing that the transfer of air services from Hong Kong to Shenzhen or Guangzhou, would boost their local economy at Hong Kong's expense. The Consultants consider, however, that this is a misconceived notion, congestion in Hong Kong will be to Guangdong's detriment as well as Hong Kong's.
2.105 Also, the main thing that will hinder development of Guangdong's own financial and other service sectors is not the rivalry of Hong Kong, but the quality of its own "soft" infrastructure (this includes professional skills, a proper legal framework for doing business, administrative efficiency etc.). Even if Guangdong is perceived to have the capability of supporting major investment in services, the proximity and familiarity of Hong Kong with its hinterland is more likely to facilitate that investment than to hinder it.
2.106 In the short term, Hong Kong should remain
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the main provider of banking and other financial services. Hong Kong's strengths in financial services are, however, unlikely to hinder the long term development of financial services in Guangdong. Hong Kong is, however, likely to continue to provide the links to the global financial market. The Territory's present domination of the service sector is, therefore, unlikely to be a threat. In both the short and longer term, it should, indeed, be an advantage.
3
Development Profile
3.1 Introduction
3.1 Rapid growth is not always positive or sustainable. Inevitably there are cracks in the miracle, if only temporary: accelerating inflation, rampant property speculation (which may have been tempered by recent austerity measures), social disorder, environmental problems and, of course, infrastructure deficiencies. The authorities in Guangdong and China also have to navigate the hazards of market excesses, "economic overheating" and bureaucratic suffocation still attributable to "the plan". Getting the balance right will not be easy.
3.2 While considerable attention is now focussed on the role of markets, there are many institutional and other problems that need to be overcome to ensure the province's long term success. Guangdong's hitherto advantages of low wages and land prices must now be replaced by other, more lasting, advantages. In an age of rapid change and footloose capital forever seeking out new sites of low cost production, the challenge will be to turn the province's present advantages into something with long term sustainability. With the help of Hong Kong's entrepreneurs there should, however, be little difficulty.
3.2
Economic Development
General
3.3 The concensus amongst foreign investors appears to be that growth over the next five years is likely to continue at around the 13 per cent per year recorded during most of the 1980s. Much will, however, depend on continuing political stability and the ability of the Chinese Government to control macro- economic policy - particularly inflation. Credit controls to dampen the overheating economy and inflation may lead to a short term reduction in the growth rate.