Editor's note: Matteo Giovannini is a finance professional at the Industrial and Commercial Bank of China in Beijing and a member of the China Task Force at the Italian Ministry of Economic Development. The article reflects the author's views, and not necessarily those of CGTN.

The earlier-than-anticipated reopening of China's economy to rest of the world, resulting from the decision of Chinese authorities to optimize COVID-19 measures in early January, has had the immediate effect of a surge in investor sentiment towards domestic equities and other Chinese yuan-denominated asset classes.

The announcement from the International Monetary Fund (IMF) of an increase in China's GDP growth forecast from 3 percent in 2022 to 5.2 percent in 2023, in the newly released World Economic Outlook Update, has shown that the growth of China and India is so crucial for the entire world that their economic expansions are projected to account for half of global GDP growth together. 

As the most difficult days in the battle against the pandemic are over, with the optimization of COVID response and a critical shift in the focus to medical treatment, China can now think about making another important step towards a full recovery.

On January 3, the Hong Kong and Macao Affairs Office of the State Council announced in a statement that cross-border travel between the Chinese mainland, the Hong Kong Special Administrative Region (HKSAR), and the Macao Special Administrative Region (SAR) resumes fully on February 6.

Travelers entering the mainland from Hong Kong or Macao will no longer be required to provide proof of a negative COVID test. A stronger people-to-people exchange will give a major boost for the economies of the two cities.

The first consideration to be made here is that by announcing the resumption of normal cross-boundary travel, Chinese authorities aim to stimulate national growth, using every inch of China's territory. In the path towards a full recovery, the importance of the two SARs cannot be underestimated as they both play a vital role in terms of GDP contribution for their role as a gateway for international trade into China.

Tourism is an important pillar for the economic development of Hong Kong and Macao. The announcements that Hong Kong will launch a major tourism campaign in March, giving away more than 500,000 free air tickets to potential visitors, and that Macao tourism authorities are planning a large-scale marketing campaign to distribute 120,000 free air tickets, represent a clear sign of a coordinated effort to bring back the mainland's travelers as well as Southeast Asian tourists that recently might have preferred nearby destinations.

An increased level of cross-boundary travel helps to restore confidence in consumers, supporting a retail sector that has been severely affected by the pandemic. As consumption has been identified by China's authorities as the main driver of future economic growth, it won't be surprising to see more local retailers promoting special offers, coupons, or other digital incentives to attract the attention of new customers and incentivize tourists' spending.

From Hong Kong's perspective, the cross-border reopening does not simply mean the return to normal life but a stepping-stone in the effort to regain its status as an international finance hub. Border and quarantine restrictions have certainly affected the level of competitiveness of the city in the fierce fight for global talent with Singapore.

The full reopening of Hong Kong's border with both the Chinese mainland and rest of the world, the overhauling of visa rules to attract foreign talent, a larger and more sophisticated capital market than other Asian financial hubs, all represent elements that are conducive to allure a new wave of incoming expats who are able to appreciate the unique gateway status offered by the HKSAR.

From Macao's point of view, the resumption of normal cross-boundary travel represents an opportunity to pursue a new stage of economic development that is characterized by an increasingly important service sector and a lower level of dependence on the gambling industry.

The Chinese government's plan for a more diversified economy in Macao, with a strong focus on tourism and finance, and with the goal of making of it a center to host important international meetings, can only be achieved through a strategic re-thinking of the economic foundations as a means to achieve long-term sustainable development.

Lastly, there is another aspect that cannot be overlooked. Hong Kong and Macao share the destiny of being an important part of the Guangdong-Hong Kong-Macao Greater Bay Area project, a plan that seek to integrate the two SARs and nine southern mainland cities into a single economic and business area that is set to become a world leading hub for technology and innovation through financial and infrastructural linkage.

All things considered, the resumption of normal cross-boundary travel constitutes not only an incremental step on China's path to reconnect with the global community but also a golden opportunity for Hong Kong and Macao to reinvent themselves and to prove that their essential role as engines of growth for the world's second-largest economy has remained unchanged.

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