The Economic Implications of the Reunification of Hong Kong with China

Professor Lai presented this essay at the Vanderbilt Journal of Transnational Law Symposium 1997: Hong Kong\u27s Reintegration into the People\u27s Republic of China. Professor Lai has updated his work since Hong Kong and China reunified. The author questions whether Hong Kong will really be able to remain an independent economic entity while also being a dependent political entity under the unprecedented one country, two systems concept. In this essay, the author identifies the conditions under which Hong Kong\u27s economy can prosper, both in the short term and the long term. After reviewing Hong Kong\u27s recent economic performance, the author assesses the potential economic problems of political integration. Potential problems include corruption, threats to the rule of law in Hong Kong, self-censorship by the press, and disruption of Hong Kong\u27s tax system. The author concludes that, despite these problems, prosperity will likely be sustained in the short term. For economic prosperity to continue in Hong Kong in the long term, however, the continued expansion of the Chinese capitalist class must continue. As Hong Kong becomes increasingly integrated with China economically, it will also be increasingly susceptible to China\u27s economic woes. Thus, for Hong Kong\u27s economy to prosper in the long term, China must remain stable both politically and economically