Cross‐border connection between hong kong and mainland china under ‘two systems’ before and beyond 1997

Abstract

Cross‐border flows of people, goods and capital are fundamental forces triggering spatial and economic transformations in any cross‐border regional production system. This study focuses on such cross‐border links between Hong Kong and mainland China in the context of cross‐border regional production systems. The paper examines first the close demographic ties and investment and trading relations between Hong Kong and mainland China before 1997. In terms of total direct and indirect trading, and outward investment, Hong Kong was the largest partner of mainland China and vice versa. The recent development in the cross‐border development between Hong Kong and the mainland after 1997 is also analyzed. The political change, the return of Hong Kong to China in 1997, did not alter the demographic‐economic linkages significantly as such connections had been well established during the period 1978 to 1997 after China's opening to the outside world. Hong Kong and mainland China are two independent economic entities practicing ‘two systems’ of capitalism and socialism respectively. Contrary to common expectation, the new government in Hong Kong only played a limited role after 1997. However, a bottom‐up approach has been working spontaneously and the local people and businessmen in Hong Kong have been the primary force in establishing strong relations with the mainland facilitated by the close demographic‐cultural ties both before and after 1997.