Hong Kong’s economic integration with Chinese mainland: an index and cointegration analysis of socio-economic indicators

ABSTRACT

We use archival data from various sources between 1990 and 2019 to construct a comprehensive index of economic integration between Hong Kong and Chinese mainland. The results indicate that the two economies have become highly integrated and interdependent over time. Cointegration tests of the long-run relationships between the index and economic and social indicators suggest that such integration is largely in tandem with the economic development of Hong Kong (e.g. GDP growth, unemployment, and property prices). However, the index is also associated with increasing disparity, a lack of confidence in the government and the future of Hong Kong, and the identity of Hongkongers. The findings reveal the positive effect of economic integration as well as deep-rooted problems in the territory. These problems present significant challenges for economic development and governance under the ‘one country, two systems’ and call for policy discourse on effective solutions.

KEYWORDS:

• Economic integration
• index
• Hong Kong
• Chinese mainland
• socio-economic indicators
• cointegration analysis

Acknowledgements

The authors acknowledge the financial support of the Policy Innovation & Coordination Office of the HKSAR Government (2016.A3.009.17A) and that of Lingnan University, Hong Kong (KT21A7).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Geng Cui

Geng Cui is a Professor of Marketing and International Business at the Faculty of Business of Lingnan University, Hong Kong and the Executive Director of the Academy of International Business(AIB) Asia Pacific Chapter. His research interests include consumer behaviour and marketing in China, foreign direct investment strategies and performance, e-commerce, Internet marketing, and machine learning. His works have appeared in leading academic journals. He has been a consultant to local and overseas organizations on China business and marketing strategies.

Yuho Chung

Yuho Chung is an Assistant Professor at the Faculty of Business of Lingnan University, Hong Kong. His research interests include using quantitative methods to investigate emerging marketing phenomena on the internet, the mechanism of communication and information flow of online platforms, and user-generated content.