One country, two systems: The economic integration between Hong Kong and China
Date
2011
Authors
Lee, Foong May
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Publisher
Bachelor of Commerce Best Business Research Papers
Abstract
Hong Kong has enjoyed political and economic development after being ceded over to the British in 1842. Even while being a British Colony, Hong Kong has managed to maintain an intimate relationship with China, partly due to history, culture and language similarity, and geographic proximity. This also resulted in a highly integrated economic relationship between them, even if there was no governmental intervention since the beginning. The relationship never ceased after Hong Kong was returned to China, and all the while with Hong Kong preserving its political and economic system under the ‘One Country, Two Systems’ policy. The introduction of the Mainland and Hong Kong Closer Economic Participation Agreement (CEPA) signifies the official start of a co-operative relationship. Hong Kong’s and China’s economies were able to mutually benefit from the agreement, especially for businesses in both regions. Not only was there exchange in physical goods and labour, there was also an exchange of skills and knowledge as well. CEPA was also able to bring upon a further increase in foreign direct investments into Hong Kong, benefitting the economy. Furthermore, the intention of the Chinese government in making the RMB an international currency gave Hong Kong the opportunity to further develop its position as a major international financial centre. The potential of an offshore RMB trading centre is huge and Hong Kong has been able to gain a first-mover’s advantage into that market.
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Citation
Lee, F. M. (2011). One country, two systems: The economic integration between Hong Kong and China. Bachelor of Commerce Best Business Research Papers, 4, 75–86.