Farewell sad wasteland
When Chinese and international artists tackled the subject of the Pearl River Delta at the second Guangzhou Triennial in November 2005, the result was scary - installations with drifting plastic bags blown by factory fans and images of giant piles of slag and rubbish.
The artists weren't exaggerating. All it takes to view some of the grimmest industrial scenes on earth is to hop on the bus to Guangzhou or Foshan, the city that holds first place for air pollution in the delta. The view from the windows is of black, garbage laden waterways, cramped and dilapidated factories, hills with gaping holes where they have been mined for landfill, and people who seemed to be perennially shrouded in a film of dust.
This apocalyptic landscape is Hong Kong's dirty little secret. Its wealth has created both the economic miracle next door and its calamitous consequences for health and the environment. But the ride is almost over.
In the past six months, Guangdong has adopted a range of policies which, if properly enforced, will re-engineer the provincial industrial map. Small-scale, labour-intensive and polluting industries will be driven out, and replaced with knowledge and capital-intensive industries such as cars and electronics. Policy tools include bank loans and to forcibly remove polluting factories. A new uniform national tax-code, which will come into effect next year, ends lower tax rates for export industries. A system of selective tax rebates for export industries is also swiftly coming to an end. These new policies are intended to support a shift up the value chain for Guangdong, which, if successful, will make it an altogether different type of neighbour.
It will leave its mark on Hong Kong, too. Hong Kong's legacy industries in Guangdong - representing US$168 billion in direct investment between 1979 and 2005 - must change or be squeezed out. Small-scale, labour intensive toy, footwear, textiles, consumer appliances and ceramic industries moved from Hong Kong and multiplied in the export-friendly environment of the Pearl River Delta over three decades.
These have generated the air and water pollution, slag heaps and rubbish piles, as well as locking millions of migrant workers into low-skilled jobs in sub-human conditions, which the province is now determined to improve.
The dual role of Hong Kong in the delta - wealth for some, jobs but also misery for many others, environmental degradation of the region as a whole - is masked behind a fog of statistics. Neither government seems able to produce business registrations or effectively monitor compliance with environmental, labour or product standards.
Guangdong counts 35,672 factories under the category of Hong Kong, Macau and Taiwan enterprises, representing 6 per cent of industrial establishments and 12 per cent of employment in 2005. An independent survey by the Hong Kong Centre for Economic Research estimated 54,000 Hong Kong enterprises in the delta in 2006.
The discrepancy is based on history. Starting in the late 1970s, Hong Kong enterprises jumped over a fence of regulations by offering goods for export processing, in deals that often included equipment as well as raw materials. Whole businesses were built up this way without the need for the government approvals required for foreign investment. This supported double-digit growth in both Hong Kong and Guangdong for most of the past three decades.
Whether Hong Kong remains relevant to the Guangdong economy will depend on how well it adapts to the provincial drive for quality. Some Hong Kong manufacturers, such as fabric maker Esquel, have moved up the technological ladder.
In its vast, highly automated factory in Foshan, one of Esquel's weaving mills produces more woven fabric than all of Italy.
Li & Fung and Noble Group represent an alternative business model of Hong Kong companies that have made a sophisticated global business out of supply-chain management, helping manufacturers comply with increasingly stringent environmental and social standards of their name-brand customers.
But many more companies will be forced to shut down or leave. One Guangdong academic guesses that no more than 20 per cent of Hong Kong factories will be able to survive.
This may be rough justice. The World Bank recently estimated that air and water pollution cost China more than 2 per cent in economic growth, as well as the premature deaths of more than 800,000 people annually. Hong Kong can no longer afford to treat the environmental debate as a nuisance, or ignore its moral responsibility for the sad wasteland its retreating industries will leave behind.
Edith Terry is a writer based in Hong Kong
