Since the last century, the main economic ties of Hong Kong with the outside world have been those with South China. Most of such ties were severed in the early 1950s however when the United Nations imposed a trade embargo on China following the outbreak of the Korea War. With the Chinese economy moved rapidly towards central planning, Hong Kong then had to turn to develop and expand economic relations with the West in the ensuing decades.
China embarked on economic reform and opened up its economy in the late 1970s. Since then, Hong Kong has, in an economic sense, recaptured the hinterland in South China, especially Guangdong Province. Integration between the economies of Hong Kong and Mainland China forged ahead.
The economic integration between Hong Kong and South China is not taking place at all fronts. Most prominently, there is no integration in the labour market, monetary arrangements and fiscal concerns. Labour mobility from the Mainland to Hong Kong is highly restricted. The two economies continue to have different currencies and monetary systems, and their government budgets are independent of each other. Nevertheless, the integration has proceeded with such scope and pace that the whole South China, including Hong Kong, has greatly transformed since the mid-1980s. Today, the South China region covering Hong Kong, Guangdong, Fujian and Taiwan has become a major trading area with vibrant cross-border direct investments.
How did economic interactions in South China take place? What is the situation of trade and investment flows within the region? How important is the region relative to other major economic blocs in the world? From Hong Kong's perspective, what are the benefits and costs of being the core economy in this regional integration? What are the future prospects of the whole area? What are the relevant policy considerations?
This book deals with all these issues. Although it focuses on Hong Kong and Guangdong, the books pays due coverage to Taiwan, Fujian, and Shanghai. It traces the changes in government policies and institutions in the respective economies. Using consistent indicators, it pulls together official figures and surveys and presents a clear picture of economic activities, especially trade and direct investment, that have been going on in the region.
Recent commentators have espoused the idea of promoting the so-called "Chinese Economic Area". While economic restructuring in Hong Kong and South China has been a result of China's opening up, concrete policies to further integration in any specific manner may or may not be warranted. This book analyzes some policy proposals such as the formation of a trading bloc, the establishment of "bonded areas", and the co-ordination of infrastructure development between Hong Kong and South China.
The author of this book, Professor Yun Wing Sung, is a long-time researcher in the economic synergy between the Chinese Mainland and Hong Kong. He has written extensively on the subject and this book represents his most updated views and findings. So it is a valuable reference for discussing the future of the Hong Kong economy in the regional context.Y. F. Luk
School of Economics and Finance
The University of Hong Kong