Since Hong Kong's return to Chinese rule in 1997, a central question has tantalized economists: will Beijing emulate the city's success or crush its animal spirits?
China's new blueprint for a Greater Bay Area provides the clearest answer yet, and the free-markets crowd will not like it.
The plan is ambitious enough. President Xi Jinping wants to create a $1.6 trillion Silicon Valley in the Far East, clustering four coastal cities into a high-tech megalopolis. Guangzhou will be the administrative hub. Macau's portfolio will be trade and tourism, Shenzhen's technology, and Hong Kong, the financial nucleus.
Banking executive Peter Wong of HSBC speaks for many in applauding Xi's "clear vision for a global economic powerhouse" in southern China. Yet the 60-page plan is disturbingly vague about Hong Kong's status within the broader enterprise.
One glaring omission is which legal, customs and monetary systems will predominate. Rather than clarifying the details of Xi's "Chinese Dream" vision, this plan is sure to fuel more concerns about the erosion of the autonomy that has long been the source of Hong Kong's dynamism.
Does the Hong Kong Monetary Authority have a future? What about the city's currency or its peg to the U.S. dollar? If Goldman Sachs or Nomura Holdings has a legal dispute, whose laws will ultimately apply? What of press freedom? Which tax system will prevail? What of cross-border currency transactions and who can open bank accounts where?
Xi's plan for a "world-class cluster of cities" addresses none of these. The fuzziness of details in a 27,000-word document is probably by design. And yet, it is hard not to see echoes of China's Pearl River Delta zone already linking Guangzhou, Shenzhen and Hong Kong.
It is important to note how little good has come from Beijing's previous "special enterprise zones." They have been great for construction companies all too happy to grab a piece of wasteful infrastructure projects. The same goes for real estate speculators betting on higher property prices.
As political risk expert Ian Bremmer of Eurasia Group points out, China has nearly 65 million empty apartments, more than 20% of residences in sizable mainland cities. China's eerie ghost towns are just one symptom of a post-2008 model of debt-fueled spending. That model is being stretched still further as Donald Trump's trade war slams the brakes on China's export growth engine.
Is Xi's team setting up these chosen four cities for epic property bubbles far beyond anything developers have seen? That is indeed a risk, one that could increase the social fissures already appearing in Hong Kong's seams. The city's Gini coefficient, a key measure of inequality, rose to the highest level in 45 years in 2018. Its 0.539 reading compared with 0.458 in Singapore and 0.411 in President Trump's America.
So far, the headlines are precisely what Xi and his supporters want. They focus on the audacity of transforming a southern China region that's home to 70 million people into the world's fourth-largest exporting machine, eclipsing Japan.
The contrast with Trump bringing back coal is more striking than ever. And investors got the message. Monday's announcement sent shares of Guangzhou Port, Shenzhen Yan Tian Port, Zhuhai Port and other potential Greater Bay Area winners rallying to the 10% daily limit set by the exchange.
But as with so many of Xi's global ambitions, Beijing risks putting the cart before the proverbial horse.
Trillions of dollars in shares have changed hands since China established the Shanghai-Hong Kong stock connect scheme in 2014. Has all that transacting made China Inc. any more transparent, shareholder-friendly or socially conscious? Not so much. Beijing reformers argued that China's inclusion in MSCI's indices in 2018 amounted to a reform in itself. Hardly.
So was, apparently, prodding the International Monetary Fund to include the yuan in its elite reserve currency club. Listing it as a top five monetary unit, reformers said, would force China to loosen the capital account, reduce opacity, allow the yuan to float freely and rein in the monster of shadow banking.
Xi's colossal Belt and Road Initiative, meanwhile, is doing more to export Beijing's eccentricities, overcapacity and addiction to debt than to empower the developing world. It is but one sign of many that Xi's China is sharing financial risks far beyond its borders before its domestic institutions are ready.
China's banking system is making new loans which are almost sure to go bad. This, too, speaks to a short-termism that imperils Xi's longer-term ambitions. In order to keep economic growth above 2018's 6.6%, the slowest since 1990, Xi's stimulus drive is increasing Beijing's risk profile.
Instead of championing private enterprise, Xi's government is pumping even more support into the state-owned-enterprise sector. The risk is that Trump's efforts to curb Xi's "Made in China 2025" scheme catch on globally. The troubles Shenzhen's homegrown Huawei Technologies is facing could become the norm.
This, of course, is partly the challenge Xi's Greater Bay Area scheme purports to address. It would be far more convincing if the Communist Party were not trying so hard to remake Hong Kong in the mainland's image. Beijing should be doing the exact opposite, emulating Hong Kong.
Xi's plan to lump China's financial green-zone with other cities is disturbingly packed with industrial planning jargon. There is too much of how the "Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era" ideology will be applied in this special enterprise area.
Missing is any discussion of intercity rivalry that tends to be Hong Kong's forte. China's "one country, two systems" construct works for Hong Kong thanks to its first-world banking system, unfettered markets, rule of law, low taxes and free press. Take these attributes away and the city's relevance is immediately open to question.
Hong Kong has long reveled in its rarified status as a gateway to China. Is it now looking at a future as just another cog in Xi's economic wheel? Beijing had 27,000 words in which to give us an answer but it did not, raising existential questions about the animal spirits that have served Hong Kong so well.
William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades." He was given the 2018 prize for excellence in opinion writing by the Society of Publishers in Asia for his Nikkei Asian Review work.