Author(s): Nicolas Stefano
Mainland China, Hong Kong and Taiwan have operated under different systems of governance for many years, preventing full economic integration across Greater China. Nonetheless, these three regions complement each other in many ways, and given their various stages of economic development, there are distinct opportunities for gains through cooperation. Following the return of Hong Kong’s sovereignty to Mainland China in 1997, the two regions have been more closely integrated; their 2003 Closer Economic Partnership Arrangement (CEPA) further boosted their relationship by reducing restrictions to economic integration and Hong Kong has enjoyed preferential treatment relative to other countries. More recently, Taiwan has moved toward increased cooperation with the Mainland, as newly elected President Ma Ying-jeou has implemented measures to heighten cross-strait business activity. Although such developments could lead to some form of preferential treatment arrangement, full economic integration is not expected in the near future. As a result, Hong Kong will continue to play a key role in facilitating cross-strait relationships, given its deep integration with both Mainland China and Taiwan. This Asia Focus report evaluates Hong Kong’s role in the changing economic and financial connections between Mainland China and Taiwan.
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