Growing up in central China in the 1990s, Mia Gu dreamed of distant Hong Kong. She idolized the city’s movie stars, devoured its television cop shows and dearly wanted to visit.
Gu now works for a major Chinese multinational in Shenzhen, the fishing village turned mega-city that sits to the immediate north of the former British territory on the Pearl River Delta. And she has little desire to cross the border.
“Hong Kong seemed very prosperous compared to the mainland,” Gu said, recalling her childhood. Today she rarely needs to travel through the city on business—Shenzhen airport has direct flights all over the world—and even its celebrities seem “lower caliber” than before. “Hong Kong is not as appealing to me now as when I was a kid,” she said.
Hong Kong’s waning allure for ambitious mainland Chinese like Gu is symbolic of the shifting balance of power and opportunities between the neighboring cities. Where Hong Kong is a former colony whose historic role as a trading hub and gateway to China is fading, Shenzhen is young, hopeful and looks optimistically toward a future where it can help drive China’s push to dominate the next century through an innovative economy that sidesteps political freedoms.
For all the differences in outlook, the cities’ proximity and growth prospects means they are becoming intertwined regardless, as are the systems that govern them: The Communist Party is steadily eroding Hong Kong’s civil liberties, while also stepping up measures to prevent any subversive ideas from taking root in the mainland. It’s a source of tension that gets to the root of Hong Kong’s turmoil as the youth try desperately to hang onto freedoms promised to them when Britain handed the territory back to China more than 20 years ago.
“I don’t trust the Chinese government,” said Jake Ip, 30, a civil servant who has participated in some of the recent protests. He said he has no desire to live or work in Shenzhen, for all its apparent attractions, and cited “lots of news about corruption and people disappearing.”
Neighbors and Rivals
Beijing clearly wishes Hong Kong would accept its place within China’s ambitious “Greater Bay Area” plan to more closely bind it to the mainland. But that’s anathema to many in what was once a shining outpost of wealth and free speech.
The people of Shenzhen have never known such rights, yet have helped their city to flourish as innovative and dynamic while firmly under the thumb of the Communist Party. Helped by local companies like telecoms giant Huawei Technologies Co. and social messaging firm Tencent Holdings Ltd., Shenzhen’s economy grew 7.5% last year, matching or even edging past Hong Kong’s gross domestic product for the first time, depending on the measures used.
In many ways, the two cities represent competing visions of China’s destiny. Shenzhen has the centralized control, relentless efficiency and advanced manufacturing that lie at the root of President Xi Jinping’s concept of China’s future greatness. Hong Kong’s freedoms and advanced service sector, coupled with a laissez-faire capitalism—and unpredictable politics—hint at the type of liberalization that many western governments have long hoped Beijing would implement. It’s a contest that might appear to be going Shenzhen’s way, but which remains far from settled.
Shenzhen’s transformation from village to gritty manufacturing town goes back to 1979 and Deng Xiaoping’s decision to promote a plan to create China’s first “special economic zone.” That allowed foreign direct investment and private enterprise in a country where talk of such things would have been a political crime just a few years earlier.
Armed with its new status, Shenzhen was permitted to experiment with more market-oriented policies than the rest of China, which was emerging from decades of man-made famines and communist factional violence.
Shenzhen’s opening came at just the right time. Hong Kong, which had boomed for the last two decades, was upgrading its economy away from manufacturing and toward legal and financial services. Its mainland neighbor was perfectly positioned to pick up the slack. From that moment, investment poured in from across the border and the two cities’ fates were locked together.
“I was one of the first ones that walked across to Shenzhen” after Deng announced the new policy, said Jeffrey Lam, a member of Carrie Lam’s Executive Council and owner of a business that makes toys in factories in nearby Foshan. “In Hong Kong we were short of space, we were short of labor, and we had to find a way to expand.”
If Shenzhen represented a business opportunity for Hong Kongers, Hong Kong represented something much more profound to those across the border: an accessible, Chinese version of modernity.
“We thought of China as socialist and Hong Kong as a capitalist place,” said Mr. Shen, who arrived in Shenzhen in the mid-1990s to work in the city’s health care industry. He declined to give his full name, showing the fear of reprisals among many people in China for saying the wrong thing. “We envied Hong Kongers.”
The dramatic gap between the cities was never likely to last. In 1997, Hong Kong returned to the mainland and a 50-year clock started ticking down on Hong Kong’s future. It and the mainland would be governed under “two systems” until 2047. The question then was whether Hong Kong could transform mainland China before mainland China transformed Hong Kong.
As Shenzhen’s wealth grew, the city’s leaders began to dream bigger than outsourced manufacturing.
Francine Hadjisotiriou, who runs the South China chapter of the European Chamber of Commerce, moved to the city in 2006. She remembers being shown development plans for a manufacturing zone replete with tree-lined promenades, glitzy shopping malls, movie theaters and world-class companies. Skeptical at the time, she says the plans have largely come to fruition.
The city began aggressively pursuing high-end talent from around the country, offering young graduates a way around the stifling “hukou” household registration system which made it difficult for outsiders to lay down roots in traditional centers like Shanghai or Beijing. “If you come to Shenzhen, you’re a Shenzhener,” one government slogan promised.
The city’s efforts began to really pay off in the early 2010s. DJI Technology Co. released its first drone in 2012. Huawei began to expand rapidly across the world. Tencent released Wechat and leapfrogged Facebook Inc. and Apple Inc. across messaging and later electronic payments. By the late 2010s, global investors were talking about Shenzhen as the “silicon valley of hardware,” with the promise of rewards to match attracting ambitious young people from across China and the world.
Overtaking Hong Kong
Katie Chen, 22, an employee of a major global technology company in Shenzhen, says people in the city talk about the “Shenzhen speed,” where a week there “is like a month elsewhere.” Chen was drawn to the city after studying in the U.S. partly because it seemed so open to outsiders. “Everyone here is a workaholic,” she said. “You’re either here for dreams or for money.”
Deng Yumian gave up a job at Microsoft Corp.’s Seattle headquarters to return home and work at pioneering drone company DJI. Shenzhen is “the best place for hardware in the world,” said Deng, who now runs his own design firm.
“Hong Kong is still important for money coming in and out of China,” he said. “But for design and tech, Hong Kong is not a significant player.” In fact, he feels sorry for young people there. “Hong Kong is just kind of stagnant,” he said.
As Shenzhen experienced its growth spurt, life in Hong Kong began to look less rosy: The city’s economy went from being synonymous with opportunity to a symbol of oligarch rule.
Developers, mostly owned by local billionaire families, wielded ever greater power, controlling industries including utilities and mobile phone carriers. The city’s real estate came to be ranked as the world’s least affordable, leaving home ownership out of reach for many young people, with some even squatting in industrial buildings or shipping containers.
As this transpired, the mainland’s economy continued to grow without liberalizing politically and even began to chip away at Hong Kong’s autonomy. The mainland reinterpreted the city’s Basic Law to remove so-called localist lawmakers who favor greater home rule, its liaison office became increasingly assertive, and Chinese authorities even snatched billionaires and booksellers from across the border.
All of this fueled discontent in the city. In 2012, high school students, parents and teachers thwarted the Hong Kong government’s attempt to introduce a curriculum lauding China’s Communist Party and criticizing democracy. Two years later, student-led demonstrators occupied the city’s streets for 79 days, demanding direct elections for the chief executive.
The building anger erupted this year with a series of marches against proposed legislation to allow extraditions to mainland China, which soon escalated into sometimes violent mass protests aimed at challenging Beijing’s grip on the city.
Despite the recent turmoil, Hong Kong’s banks, stock exchange, professional services firms and bustling port remain at the heart of Asia’s financial system, at least for now. Independent courts, political freedoms and low tax rates still make it a worthwhile place for multinationals to base themselves, even as the relentless economic rise of mainland Chinese cities like Shenzhen threatens Hong Kong’s legacy position as a gateway to China.
“If Hong Kong disappears, China would need to recreate it,” said Scott Kennedy, a senior adviser at the Center for Strategic and International Studies in Washington.
Shenzhen may look more appealing on one level, but it’s still regarded with suspicion by many in Hong Kong.
A Hong Kong suburb called Sheung Shui near the Shenzhen border pays witness to a glaring reminder of the uncertainty of the mainland. It’s here that people come across to buy high quality baby formula, children’s vitamins, medicine and cosmetics that many in China don’t trust. The streets of Sheung Shui are packed with pharmacies catering to mainlanders. In July, the city’s streets swarmed with protesters angry about rising prices and a distorted local economy. Some vandalized a pharmacy while others held up banners saying “Reclaim Sheung Shui.”
In Shenzhen and the industrial sprawl outside the city, meanwhile, there’s little sympathy for the Hong Kong protesters. Already hit hard by the U.S.-China trade war, residents see the demonstrations as an attempt to “create chaos which will be bad for business,” according to Mr. Zhang, 57, who runs a store selling agricultural products in the town of Humen and who declined to give his full name. “It’s not good to get involved.”
It’s not that Shenzhen doesn’t have problems. Sky-rocketing real estate prices, ranked the world’s fifth highest by CBRE, are making it harder to live in the city. A working culture of the tech giants dubbed “996”—where employees work from 9 a.m. to 9 p.m. six days a week—has been highly controversial. And, like the rest of mainland China, the government deals with dissent harshly. It’s particularly squeezed labor organizers and Marxist activists in the city.
Chinese authorities have also bolstered efforts to prevent news of the protests from spreading in the mainland. In August, border agents began asking Hong Kong residents to unlock their smartphones so officers could examine chat messages and social-media posts. Police also detained a staffer at the U.K. consulate in Hong Kong for 15 days as he sought to return from a visit to Shenzhen, sparking fears about traveling to the city.
Some Shenzhen residents have joined the protests in Hong Kong, including a 32-year-old IT worker who would only be identified by his surname Tan. He uses a virtual private network to circumvent China’s tight controls on the internet to access news about the protests.
“China is strictly controlling what people think and something like this is absolutely impossible there,” Tan said while participating in national day protests in Hong Kong on Oct. 1. “People say the U.S. is financially supporting the protests but I don’t think Donald Trump would do that. Without people’s belief, this movement would not have lasted this long.”
Still, in common with the rest of the mainland, most of Shenzhen’s residents seem willing to be pliant as long as they’re able to keep growing rich. The government in Beijing is hoping the same is true for Hong Kongers.
Right now it’s unclear what will happen in 2047, when China is no longer bound by the “one country, two systems” framework. It’s possible it could be extended: Xi himself endorsed the principle just this week. Much depends on the economic impact of the U.S. pulling the city’s special trading status, which hinges on Hong Kong remaining sufficiently autonomous.
To that end, Beijing and the local Hong Kong government suggest the city, its businesses and particularly its youth need to buy into the long-term vision of the Greater Bay Area.
It’s an ambitious plan, said Anson Chan, Hong Kong’s former chief secretary, “but it will only work if you have greater openness, greater transparency, if you reduce corruption.” In mainland China, “people think you can have economic vitality without political liberalization,” she said. “But we know you need both to have sustainable economic growth.”
For Ip, the civil servant, and many more of Hong Kong’s fiercely independent residents, the idea of a closely-linked regional economy looks like a marketing slogan: It’s the last thing most people want, yet they may be powerless to stop it.
“The government wants to attract more people and investment to have this big economic zone, but none of my family or friends are interested,” Ip said. “I’m worried about the closeness of Hong Kong to China, but there’s nothing we can do.”