1 The economic relationship between Hong Kong and the mainland

2 “Triangular” relationship Chapter focus

3 1Can you name some major cities within the Pearl River Delta? Ans. Hong Kong, Macau, Dongguan, Guangzhou, Panyu, Foshan, Shunde, Shenzhen, Zhongshan, Zhuhai, etc. Chapter focus

4 2The Hong Kong-Zhuhai-Macau Bridge will strengthen the transport links between Hong Kong and some mainland cities. What are those cities? Ans. Cities in Pearl River West Chapter focus

5 3What advantages will the Hong Kong-Zhuhai- Macau Bridge bring to the economic development of Hong Kong and the mainland cities? Ans. ‧ Mainland cities: Chapter focus → The Pearl River West will be better positioned to take advantage of the effect radiating from Hong Kong as the hub of the region → It will stimulate Hong Kong and foreign firms to invest there

6 → The reduction in the traveling time and transport costs from and to Pearl River West helps reinforce Hong Kong’s status as an international shipping and aviation centre → This promotes the development of tourism in the Pearl River Delta Chapter focus ‧ Hong Kong: Ans.

7 Hong Kong is located on the southeastern coast of the mainland, east of the mouth of the Pearl River. It is a main port that links southern China to the outside world 1Development Hong Kong is a main port that links southern China to the outside world

8 A closer economic relationship between Hong Kong and the mainland: →The mainland has started economic reforms and an open door policy →The mainland’s accession to the WTO →The signing of the CEPA

9 Perfect match Info-analysis

10 Study the following charts carefully and answer the questions. The total value of Hong Kong’s merchandise trade (2003) Info-analysis

11 1Based on the above charts, which country takes up the largest share of Hong Kong’s total value of merchandise trade? The mainland Ans. Info-analysis

12 2How would you describe the merchandise trade links between this country and Hong Kong? ‧ The merchandise trade links between the mainland and Hong Kong are close Ans. ‧ The mainland is Hong Kong’s largest trading partner Info-analysis

13 3Besides merchandise trade, is there any invisible trade and investment links between Hong Kong and the above country or region? ‧ Invisible trade: Ans. → Hong Kong is a major services centre for the mainland. It provides the mainland with supporting infrastructural facilities, professional and business support services → Hong Kong visitors bring the mainland a large amount of foreign exchange. In turn, mainland tourists provide Hong Kong’s tourist industry with huge revenue Info-analysis

14 ‧ Investment: → Hong Kong’s investment accounts for nearly half of the foreign direct investment in the mainland → There has been a huge inflow of capital from the mainland to Hong Kong Info-analysis Ans.

15 2Economic cooperation between Hong Kong and the mainland 1 Merchandise trade Hong Kong and the mainland become important trading partners for each other The total value of Hong Kong’s merchandise trade (2003)

16 2 Invisible trade Hong Kong is a major services centre for the mainland (in particular Guangdong Province): Provide professional and business support services, e.g. banking, marketing services, etc. Provide supporting infrastructural facilities, e. g. ports and airports

17 Keep coming Info-analysis

18 Study the following table carefully and answer the questions. Tourism link between Hong Kong and the mainland Year Number of visitor arrivals from the mainland Number of visitor departures to the mainland Info-analysis

19 ‧ Both are rising Ans. 1Describe the following trends: (a) Number of visitor coming from the mainland (b)Number of visitor going to the mainland ‧ The former shows a greater increase Info-analysis

20 2State the factors attracting tourists to visit Hong Kong and the mainland respectively? Ans. Info-analysis For example: ‧ Hong Kong is a shopper’s and a gourmet’s paradise ‧ The mainland is a large country with lots of famous scenic spots

21 3How does tourism benefit the economies of Hong Kong and the mainland? Ans. ‧ Tourism brings the mainland a large amount of foreign exchange ‧ Tourism provides Hong Kong with huge revenue and promotes the development of other related industries (such as hotel, catering and retail industries) Info-analysis

22 2 Invisible trade Visitors from Hong Kong make the mainland earn a large amount of foreign exchange Mainland tourists make Hong Kong’s tourist and related industries earn a huge revenue Tourism

23 My opinions on economic integration EPA forum

24 The following people are having a discussion about the impacts of CEPA on Hong Kong’s economy. Study the dialogue carefully and answer the questions. The CEPA applies zero import tariff on some 270 Hong Kong- made products. This offsets the disadvantage of Hong Kong in terms of high land prices, wages and costs of production, so some industries will be encouraged to move back. EPA forum

25 Many large companies in Hong Kong have set up their back offices in the mainland. The CEPA may further encourage relocation of service industries to the mainland, thereby worsening the unemployment situation in Hong Kong. EPA forum

26 Hong Kong, with its international status, can help channel mainland capital to more diversified uses. EPA forum The CEPA raises labour mobility. Local talents in the service sector, such as doctors and actuaries, may set up business or work in the mainland.

27 1What advantages does CEPA bring to Hong Kong and the mainland? → Zero import tariff can offset the high land prices, wages, and costs of production. Thus some industries will move back to Hong Kong → Labour mobility raises, as local talents in the service sector may set up business or work in the mainland ‧ To Hong Kong: Ans. ‧ To the mainland: → Hong Kong can help channel mainland capital to more diversified uses EPA forum

28 2According to Mr. Lee, what is the adverse effect of CEPA on Hong Kong? Do you agree with him? Explain your answer. ‧ Mr. Lee thought that: Ans. ‧ Any reasonable answer will be accepted. EPA forum → Since many large companies in Hong Kong have set up their back offices in the mainland, the CEPA may further encourage relocation of service industries to the mainland → Thereby worsening the unemployment situation in Hong Kong

29 1 Merchandise trade 3Mutual benefits of economic cooperation Benefits to Hong Kong: →The mainland is a major market for Hong Kong’s domestic exports and the largest supplier for Hong Kong’s imports → Prices of products and raw materials from the mainland are much lower →Hong Kong’s re-export trade flourishes

30 Benefits to the mainland: →Earn a lot of foreign exchange through exporting goods to Hong Kong 1 Merchandise trade →Trade with other countries by using Hong Kong as a re-export centre, and obtain overseas products

31 2 Invisible trade Benefits to Hong Kong: →Greater room for the development of its service sector Receipts from visitors by country / territory of residence (2001) →Mainland visitors bring huge revenue to its tourist industries

32 Benefits to the mainland: →Hong Kong provides mainland enterprises with various support services →Hong Kong visitors make the mainland’s tourist industry earn a huge amount of foreign exchange 2 Invisible trade

33 3 Investment Benefits to Hong Kong: →Manufacturers have set up factories in the mainland. The production costs will be lower. →Many mainland enterprises raise capital in Hong Kong. As a result, the financial industry in Hong Kong benefits from it.

34 Benefits to the mainland: →Mainland enterprises can raise capital and finance their development projects through Hong Kong In 2002, over five million workers in Guangdong Province worked in factories owned by Hong Kong manufacturers. This is more than 21 times the labour force working in Hong Kong’s manufacturing industries. →Factories set up by Hong Kong manufacturers provide job opportunities for the mainland workers 3 Investment

35 End