Integration of Hong Kong and Term Paper

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This shift in Hong Kong's economy as a response to a more open Chinese economy has been explored in detail by economists and academics.

This relationship is reciprocal and not one-sided, as China benefits from increased numbers of jobs and industry that are imported from Hong Kong, and Hong Kong benefits from the increase in service jobs and a higher quality of life and income provided by the move to away from a manufacturing focus and toward a service-oriented economy. In the following section, this paper will critically examine how Hong Kong can continue this integration with China in order to provide the most profitable outcome in both nations.

The first and most obvious way for Hong Kong to encourage and continue economic integration with China is to continue exporting its manufacturing jobs to the mainland. Despite critics who say that this is a detriment to the overall Hong Kong economy, most academics believe that the effects of shifting to service industries as opposed to manufacturing will be more beneficial for Hong Kong in the long run. This exportation of jobs will encourage integration by building more communication and exchange between the two nations; knowing that each is dependent on an aspect of the other (i.e., Hong Kong as dependent on the labor available on the mainland and the mainland dependent on the jobs provided by Hong Kong) will create an atmosphere of cooperation.

Secondly, Hong Kong can encourage continued integration with China simply by continuing to provide specialized services; in many areas, especially information technology and telecommunications, the majority of the experts are located or based in Hong Kong. The proliferation of financial and legal experts in Hong Kong will also continue to be demanded by China. The necessity of these experts in other nations, China included, will continue to demand their presence and advice in the international sphere. This inclusion will also extend to China, which will be hard pressed to re-close its economy when the experts necessary for certain functions and areas of expertise are vastly located in another nation, namely Hong Kong.

Finally, Hong Kong can continue to integrate with China by encouraging the already-established labor unions and activism that exist among the manufacturing industries.

The political participation in the form of labor unions and labor activism in the political realm has been significant among Hong Kong workers and in Hong Kong industries; the workers of southern China who are now employed in these industries will be well-served to continue this tradition of labor activism. In doing so and encouraging such activism, Hong Kong will create a protected and healthy environment for workers at its corporations, and in doing so will integrate itself with the workers of China.

Integration with China is not solely a positive occurrence for Hong Kong, however. Several aspects of integration must be carefully monitored and managed in order for integration to not pose significant risks to Hong Kong's economy.

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Integration has:

promoted price convergence, exerting downward pressures on goods and factor prices in Hong Kong SAR under the linked exchange rate system...its role as a traditional trade intermediary is likely to diminish further as the mainland's trade restrictions are lifted; direct trade relations are established between Taiwan Province of China and the mainland; and more foreign businesses are set up directly on the mainland.

These potential drawbacks of integration-lowered prices, diminished role as a trade intermediary-must be carefully managed in order to prevent their becoming a detriment to the economy of Hong Kong and to the integration of the Special Administrative Region with the mainland.

Specifically, linkages between Hong Kong and the mainland are being encouraged in the southern provinces of China, especially the Guangdong province.

Due to both the geographic proximity of the two areas as well as the supply and demand factors in each, infrastructure and transportation linkages between the two are actively encouraged by Hong Kong and will produce better integration between the two:If the State Planning Commission will take part in future planning of infrastructure linking Hong Kong and Guangdong Province, there will be greater compatibility between the two places," said Donald Tsang, Hong Kong Special Administrative Region's administrative secretary.

This encouragement of physical infrastructure as well as the theoretical and economic integration will promote the overall integration of mainland China and Hong Kong by encouraging transportation between the two areas.

In conclusion, the economy of Hong Kong has, over the past few decades, made significant changes toward becoming a service-oriented one as opposed to being focused on manufacturing. In doing this, the economy of Hong Kong has given up certain areas of development; specifically, the loss of jobs in the unskilled and low-wage areas of production and manufacturing. However, these jobs have been replaced with higher-wage, higher-skill and more internationally demanded jobs in service industries such as financial and legal services, real estate and insurance services, and other business-oriented occupations. This shift has resulted in greater integration with the mainland of China due to the large number of manufacturing jobs being exported to the mainland as a result of the cheaper labor available there as well as due to the Chinese demand for the services provided by Hong Kong. Both of these integrations are in large part due to the opening of China's economy and of Hong Kong's own liberal economic market. Integration can be continued in the future by encouraging these liberal markets as well as encouraging the creation of communication and infrastructure for transportation between China and Hong Kong, and this continued integration will result in a beneficial relationship for the two nations' economic situations

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