Economic links between Hong Kong and China

80 p.This study seeks to establish quantitative links between Hong Kong and China in terms of economic growth, investment and trade, which hopefully could facilitate a more comprehensive analysis of economic integration with a Hong Kong - China model in the future. In specifying equations, special attention has been paid to the main features of the economic relationship between the two economies. Five equations describing the behaviour of Hong Kong's FDI in China, China's GNP growth, Hong Kong's imports from China, Hong Kong's exports to China and Hong Kong's exports to the rest of the world are estimated using annual data. The estimation results reveal the importance of Hong Kong in its outward processing trade with China and as a middleman between China and the rest of the world. Finally, we will speculate on the policy implications of our empirical results.BUSINES