Lingnan University launches the first Economic Integration Index for Mainland China and Hong Kong

Economic integration (EI), i.e., liberalized movement of goods, capital and people between regions, is vital for economic growth. While there are many international EI indices, scholars have yet to offer a definitive measure for Mainland China and Hong Kong. Therefore, the Hong Kong Institute of Business Studies (HKIBS) of Lingnan University constructed the Mainland China-Hong Kong Economic Integration Index (Mainland-Hong Kong EI Index), covering the period from 1996 to 2016, to fill this gap. A public forum was held today (4 October) at Lingnan University’s Fong Sung Wood library to share the findings with the public.
 

The HKBIS’s Mainland-Hong Kong EI Index will provide local policymakers and researchers with a reliable quantifiable basis to gauge the economic integration between the two economies as they attempt to finesse future policies and assess EI’s social consequences.

 

The importance of the Mainland-Hong Kong EI Index for HK policy discourse

At the public forum, Prof CUI Geng, the director of HKIBS explained the findings of his institute’s study to his fellow academics, public policymakers, students and interested members of the public. In his presentation, Pro CUI pointed out that the Mainland-Hong Kong EI Index can play a key role in Hong Kong’s public policy discourse. The Mainland-Hong Kong EI Index provides a quantifiable basis for policy discussion and will enable better assessment of any potential economic and social impact of future EI initiatives. Data from the existing Mainland-Hong Kong EI Index research will also serve as a valuable resource for international institutions that have begun developing their own EI indices. Examples include the European Union’s (EU’s) 2010 announcement of plans for its own annual EI Index; and the Pacific Economic Cooperation Council’s introduction of a regional index in 2013. In 2015, the Africa Development Bank rolled out its own Regional EI Index.

 

Major findings and research outcomes of the Mainland-Hong Kong EI Index (1996 to 2016)

Prof CUI then shared the major findings and research outcomes of the Mainland-Hong Kong EI Index (1996 to 2016). “Despite the respective Asian and global financial crises of 1997 and 2008, the period between 1996 and 2016 saw EI between Hong Kong and Mainland China surge from roughly 8% to 93%,” said Prof CUI.

 

“Analyzing the two decades under study, it is clear that EI’s drivers, channels, and consequences have all closely followed one another. Further co-integration analysis indicates that the current high level of EI mirrors the continuous expansion of Hong Kong’s economy and per capita GDP. Although local unemployment rates reached historic highs in the early 2000s, they have been steadily declining ever since,” Prof CUI added.

 

Prof CUI went on to explain “while there is no shortage of data on the nature and processes of EI between Mainland China and Hong Kong, the consequences of greater integration have yet to be explored in depth. Mainland-Hong Kong EI Index fills this gap to identify the empirical evidence needed to address this shortfall.”

 

Possible applications of the Mainland-Hong Kong EI Index for future studies

Asked to pinpoint possible applications of the Mainland-Hong Kong EI Index for future initiatives, Prof CUI said: “In addition to examining the long-term relationship between various levels of EI and economic growth, future studies can deploy this EI to study its effects on employment, property prices, income disparity, social mobility, satisfaction with the government, and ethnic identity, etc..”

 

“Each of these areas represents an important economic, social or political aspect that is of real and lasting public interest,” added the professor. “The Mainland-Hong Kong EI Index can serve as a launch pad for future studies and policy discussions aimed at both resolving outstanding issues and developing plans for sustaining territory-wide economic development. Moving forward, HKBIS may also consider embarking on a similar study of the extent and effects of EI within the Guangdong-Hong Kong-Macao Bay Area,” Prof CUI concluded.