HONG KONG, July 14, 2022 /PRNewswire/ — Celebrating the 25the Birthday of that of Hong Kong return to Chinathe Hong Kong Institute of Business Studies (HKIBS) of Lingnan University (LU) in hong kong launched the very first “hong kong – Chinese Mainland Economic Integration Index (1990-2019). economic integration. The results indicate that the two economies have become highly integrated and interdependent over time. The results reveal the positive effect of economic integration on the hong kong economy, while highlighting the significant challenges for economic development and governance in the SAR.
The hong kong – The Mainland China Economic Integration Index (1990-2019), developed by the LU research team, includes three dimensions: driving forces (i.e. the development of institutional arrangements that reduce the transaction costs of cross-border economic activities), the debit process (i.e., the trade and investment activities of both parties) and the convergence of results (i.e. the effects of market homogeneity and symmetry due to economic integration). To measure the indicators of each dimension, archival data was extracted from government sources and international organizations, including the Census and Statistics Department (HKCSD), the National Bureau of Statistics of Chinaand the World Bank.
The results show that the overall index of economic integration shows a gradual upward trend over the past three decades (Figure 1). Although the index remained at a very low level in the early 1990s (below 10 points), the overall index has since accelerated. hong kong returned to the mainland China in 1997 (more than 20 points). In 2003, the first Closer Economic Partnership Agreement (CEPA) between the mainland and Hong Kong was signed and the individual travel program was introduced. Since then, the level of economic integration has continued to grow at an accelerated pace and reached more than 60 points during the financial tsunami of 2008. Since 2013, hong kong was positioned as a connecting hub in the mainland’s Belt and Road Initiative (more than 80 points) and the level of economic integration reached a remarkably high level by the end of the study period in 2019 (more of 90 points).
With respect to the three sub-indices, the production process played a key role in deepening economic integration in the early years. In 2006, CEPA, as a major driving force, facilitated closer cooperation between the two economies. Overall, the three sub-indices have gradually increased in a monotonous linear trend.
Teacher Cui GengProfessor in the Department of Marketing and International Trade of Lingnan University in hong kong, says that economic integration between hong kong and the mainland China contributes to eliminating barriers to trade and investment, freeing the factors of production and encouraging the efficient allocation and production of resources between economic entities. “The level of economic integration between hong kong and the continent has grown steadily from 1996 to a remarkably high level in 2019, indicating an overall positive long-term relationship between the integration index and the economic development of hong kong. The index is also proportional to the growth of two major economic indicators, including GDP and GDP per capita, indicating that economic integration makes an important contribution to that of Hong Kong economic growth. Moreover, this integration goes hand in hand with real estate prices, in part because of monetary flows from the continent to hong kong because venture capitalists diversify their investments by investing in real estate, and therefore hong kong residential real estate prices continued to rise. Continued economic integration also coincides with growing economic disparity across the territory, as indicated by the Gini coefficient, one of the highest in the world.”
Furthermore, Professor Cui said that bilateral price equalization is the result of continued economic integration. The negative relationship between the integration index and the price variation coefficient shows a higher level of price convergence between the two economies.
However, the upward trend in economic integration has not had a significant impact on several social indicators, including the happiness of hong kong people, people’s satisfaction with government and trust in that of Hong Kong coming. Indeed, these last two indicators have been in constant decline since the mid-2000s, which may be associated with the increase in income disparities and the surge in prices of private residential properties.
Professor Cui added that these results provide quantitative information on economic integration and other socio-economic indicators as well as public sentiment towards government and society. He said that even though hong kong-Links to the continent have been hotly debated, whether economic integration can lead to social cohesion and long-term stability remains uncertain. He believes that the newly established index will serve as an important benchmark for policy makers and researchers when formulating and analyzing public policies.
The full report on thehong kong – Chinese Mainland Economic Integration Index (1990-2019)” will be published in the Asia Pacific Business Review.
THE SOURCE Lingnan University (READ)