The Effect of Qianhai Cooperation on Innovation-Led Profits in the Hong Kong-Shenzhen Region

How many innovation-led profits could Qianhai – an innovation park in Shenzhen – generate for Hong Kong, Shenzhen and in the ‘Qianhai region’? In this paper, we develop a model of profit-led innovation, and use it to deduce how many profits Qianhai could help foster. We find that such a zone would increase innovation-led profits in the logistics, IT, and other Qianhai-targeted sectors by a factor of four (4) in the short-run and a factor of ten (10) in the longer run. However, such profits depend on deep, fundamental changes in the regulations governing Qianhai - and by implication, Hong Kong and Shenzhen. The current design seems unlikely to produce any benefits