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Case
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Reference no. HKS1700.0
Published by: Harvard Kennedy School
Published in: 2003
Length: 20 pages
Data source: Field research
Notes: For terms & conditions go to www.thecasecentre.org/freecaseterms

Abstract

In the first years after its reunification with China in 1997, the economy of Hong Kong, the former British crown colony that had developed as a post-World War II economic powerhouse, was sputtering. Growth in gross domestic product had slowed and real estate values had dropped sharply. More broadly, the economic roles that Hong Kong had played as it grew appeared to be threatened. Mainland cities increasingly demonstrated the capacity to play the same roles. Into this relatively bleak picture, stepped one of the city?s famed ?tycoons? - Sir Gordon Wu, chairman of the construction firm Hopewell Holdings International - with a proposed project he asserted could reinvigorate and sustain the Hong Kong economy. Sir Gordon, as he was widely known, tirelessly promoted the idea of constructing a major new bridge linking the westernmost of Hong Kong?s islands, and site of its ultra-modern international airport, with mainland China and the former Portuguese colony of Macau. The proposed $HK15 billion ($US2 billion), 19-mile Hong Kong-Macau-Zhuhai combination bridge and tunnel would, said Wu, bring long-lasting benefits to the Hong Kong economy by linking it to the manufacturing centers of the Pearl River Delta and west to Vietnam. Both Hong Kong and mainland China officials would have to decide whether Wu was right and whether and how to support the project, which many economic interests in Hong Kong and south China opposed. This case supports discussion about the economics of major infrastructure projects. Should they be financed privately or publicly? Should they be subsidized? Are passenger and toll projections for this bridge plausible? More broadly, what role do infrastructure projects play in spurring and sustaining the economic development of cities? Is Wu right to compare the bridge he would build with the Erie Canal? Under what circumstances, and in what types of cities, can major transport projects lead to significant economic growth? This case may also be relevant to those with an interest in mainland China politics because of the role potential approval of the bridge was thought to play in Beijing's deliberations as to how to mollify popular discontent in Hong Kong about proposed security laws, as well as the implications of the Beijing-Hong Kong relationship for 'cross-straits' relationships between Beijing and Taiwan.

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Abstract

In the first years after its reunification with China in 1997, the economy of Hong Kong, the former British crown colony that had developed as a post-World War II economic powerhouse, was sputtering. Growth in gross domestic product had slowed and real estate values had dropped sharply. More broadly, the economic roles that Hong Kong had played as it grew appeared to be threatened. Mainland cities increasingly demonstrated the capacity to play the same roles. Into this relatively bleak picture, stepped one of the city?s famed ?tycoons? - Sir Gordon Wu, chairman of the construction firm Hopewell Holdings International - with a proposed project he asserted could reinvigorate and sustain the Hong Kong economy. Sir Gordon, as he was widely known, tirelessly promoted the idea of constructing a major new bridge linking the westernmost of Hong Kong?s islands, and site of its ultra-modern international airport, with mainland China and the former Portuguese colony of Macau. The proposed $HK15 billion ($US2 billion), 19-mile Hong Kong-Macau-Zhuhai combination bridge and tunnel would, said Wu, bring long-lasting benefits to the Hong Kong economy by linking it to the manufacturing centers of the Pearl River Delta and west to Vietnam. Both Hong Kong and mainland China officials would have to decide whether Wu was right and whether and how to support the project, which many economic interests in Hong Kong and south China opposed. This case supports discussion about the economics of major infrastructure projects. Should they be financed privately or publicly? Should they be subsidized? Are passenger and toll projections for this bridge plausible? More broadly, what role do infrastructure projects play in spurring and sustaining the economic development of cities? Is Wu right to compare the bridge he would build with the Erie Canal? Under what circumstances, and in what types of cities, can major transport projects lead to significant economic growth? This case may also be relevant to those with an interest in mainland China politics because of the role potential approval of the bridge was thought to play in Beijing's deliberations as to how to mollify popular discontent in Hong Kong about proposed security laws, as well as the implications of the Beijing-Hong Kong relationship for 'cross-straits' relationships between Beijing and Taiwan.

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