With increasingly frequent socio-economic interactions and closer economic integration, it is inevitable to cause conflicts between Hong Kong and the Mainland due to differences in cultures and values. Since Hong Kong’s reunification with China, the Central Government has not only given tremendous support to Hong Kong but also introduced many measures to revitalize the city’s economy.  Hong Kong has long been contributing to the country’s reform and opening up, while at the same time expanding its economic hinterland. Looking forward, Hong Kong should maximize its strengths by supporting and tapping into the Mainland’s array of reforms for better opportunities.

Since the reunification, interactions and economic relations between Hong Kong and the Mainland have grown closer. But despite the closer links, Hong Kong sees an upsurge of negative sentiments towards the Mainland owing to widening disparity of cultural differences and values between the two places. The reasons for such prevailing conflicts between the Mainland and Hong Kong are not simple but complicated. In all fairness, there is nothing extraordinary about   two places having conflicts. For the HKSAR Government, which serves as a bridge for communication, the most important task is to strengthen the links, cooperation and exchange between the two places, with a view to mitigating the short-term pain from integration and forging healthy development in their relations.

The two places have taken on different paths in social and cultural development since Hong Kong was ruled as a colony. The HKSAR Government is a political regime authorized by The Constitution of the People’s Republic of China and the Central People’s Government and runs according to the Basic Law. Hong Kong’s society and economy works according to the law and the various pre-1997 relationships remain unchanged. Yet, Hong Kong’s economic integration with the Mainland is an irreversible trend.

Central Government Helps Hong Kong to Tide over Crises

Since the reunification, the Central Government has been strictly adhering to the fundamental policies of “One Country, Two Systems, Hong Kong People Ruling Hong Kong, and High Degree of Autonomy”. It has never taken any economic advantages from Hong Kong. On the contrary, whenever Hong Kong was in difficulty, the Central Government always lent a helping hand, providing great support to tide the SAR over.

The strong rise of China comes with a huge number of Mainland people coming to Hong Kong for shopping, property purchase, work and study. Hong Kong people’s worries about jobs being taken away and core values being eroded have turned into concrete negative sentiments. Recently there have been signs of worsening in their resentment and the way they vent it; some social behaviors featuring nativism have gradually emerged. The situation is worrying.

The Mainland Has Introduced Measures Benefiting Hong Kong

The Mainland economy has been burgeoning since China’s reform and opening up. By contrast, in face of economic globalization and the Mainland’s reform and opening up, the economy of Hong Kong has failed to upgrade and transform its industries and pull out of the plight of “de-industrialization” over the years, due to its inherent deficiencies in technological development and creative culture. Now Hong Kong’s contribution to the country’s economy is not as significant as in the past. Fortunately, the Mainland has introduced a series of measures benefiting Hong Kong, such as CEPA and initiatives for Pan-PRD regional development, which has helped Hong Kong to find vital ways-out.

Since its implementation a decade ago, as one of the Central Government’s important measures benefiting Hong Kong, CEPA has speeded up Hong Kong businesses’ pace in tapping into the Mainland market for trade in goods and services. At the end of 2013, the Mainland had rolled out 403 liberalization measures for Hong Kong, and opened up 149 sectors for trade in services with Hong Kong, which represented 93.1% of the 160 sectors classified by the WTO for trade in services. Trade in services is not the only area benefiting from the Mainland. Trade in goods between Guangdong and Hong Kong has also increased more than 10-fold, with tariff concessions of about RMB4 billion in total granted. The implementation of CEPA has facilitated Hong Kong’s repositioning, through which its dominant entrepôt trade-oriented role transformed to a service trade-oriented one. This attests the importance of the Mainland to Hong Kong.

On the front of financial services, the Mainland market has become the main growth engine of Hong Kong’s financial services, especially after CEPA came into effect in 2004 and offshore RMB businesses were launched in Hong Kong in 2007. As for the stock market, data show that the trading volume and market capitalization of the Mainland’s main board represented 53% and 39% of the aggregate of Hong Kong’s stock market in 2013 respectively. The Mainland’s main board has thus become the biggest market participant and holds a prominent position.

The newly-launched Shanghai-Hong Kong Stock Connect has enabled Hong Kong’s financial industry to expand to the Mainland market and tap into the abundant opportunities there. Hong Kong’s status of an international financial center will thus be enhanced. The Stock Connect is also an important step forward for RMB in going international and playing a greater role in the global arena. This will in turn drive the Mainland and Hong Kong economies to grow rapidly.

On tourism, the number of Mainland residents visiting Hong Kong has increased more than 15-fold from 1997 to 2013. Since coming into force in 2004, CEPA has boosted the growth of visitor arrivals under the Individual Visit Scheme, with the number of visitors growing at an average annual rate of nearly 24%. The added value of Hong Kong’s tourism as a percentage of GDP has risen from 2.6% to 4.4%, and the number of workers in tourism as a percentage of total employment has gradually increased from 3.4% to 6.2%. In spite of the very limited contribution to GDP, the impetus tourism gives to the development of related local industries such as F&B, aviation, maritime and land transport, and conference & exhibition is innegligible.

Seeking Opportunities from China’s Reform

After all, Hong Kong as a typical export-oriented economy can hardly develop its economy independently, and the “One Country, Two Systems” policy has already taken deep root. Therefore, it is beyond dispute that the Mainland and Hong Kong have to prosper and suffer together. History shows that Hong Kong has served as a gateway for the Mainland’s connection with the rest of the world, playing a role in going global and attracting foreign investment. While contributing much to China’s reform and opening up, Hong Kong itself has benefited greatly as its economic hinterland has broadened.

The Central Government has made it clear that “reform will yield the greatest dividend for China”. Tremendous potential will be seen in future - whether it is in the development of the professional service sectors and the building of offshore RMB center. All these will widen the channels for economic cooperation between the Mainland and Hong Kong and offer valuable new opportunities for the SAR.

To move forward, we have to explore ways to maximize our strengths, keeping pace with the Mainland’s reform and restructuring while repositioning. Hong Kong should also strive to integrate itself with the regional economic development. Cooperation should extend from economic aspects to social and livelihood aspects, so as to ensure Hong Kong’s stability and prosperity.