| Summary: | 碩士 === 國立臺灣大學 === 國家發展研究所 === 91 === The purpose of this study is to quantitatively evaluate the benefits and influences of the further economic integration between Hong Kong and Mainland China. With its “front-shop, back-factory” model, a capitalist Hong Kong has successfully served as the window to China, with the Pearl River delta as the hinterland of the “Greater Hong Kong.” In an attempt to enhance integration with China as a way to boost Hong Kong’s recent faltering economy, the government of Hong Kong Special Administrative Region proposed to establish a form of “China-Hong Kong Free Trade Area,” which afterwards was formally named as “Mainland/Hong Kong Closer Economic Partnership Arrangement,” or CEPA, and sealed on June 29th, 2003.
The CEPA covers three broad areas: zero tariff on trade in goods, early access in certain service industries, and measures on trade and investment facilitation. The major difficulties in striking the deal were the definitions of Hong Kong products and companies, given Hong Kong’s extent of globalization and entrepôt characteristic.
This study applies a widely used Computable General Equilibrium (CGE) model, namely the Global Trade Analysis Project (GTAP) model, to simulate the main component of the CEPA─the zero-tariff scheme. The results show that industries of apparel, textiles, other light manufactures, and electronics would be biggest winners thanks to the elimination of barriers to trade in goods, while motor vehicles and parts, other transport equipment, and leather and shoes, where Hong Kong has explicitly comparative disadvantage, would wane further. The service industries, especially trade and transportation services, would also flourish due to the expansion of trade in goods, if and only if Hong Kong manages to remain free and attractive to foreign capital. While a manufacturing-biased CEPA clearly deepens Hong Kong’s integration with the Mainland and, Hong Kong cannot afford to, and does not have to, pursue “Hong Kong-China” at the expense of “Hong Kong-International.”
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