Macroeconomic Linkages between Hong Kong and Mainland China

　　Economic integration between Hong Kong and Mainland China is a topic of great interest among both policy circles and the academia. This book is a collection of relevant research papers of the Hong Kong Monetary Authority in the past two years, which study the economic integration process between Hong Kong and the Mainland from different perspectives, including linkages through both the trade and financial market channels.

　　This volume sheds light on the important policy issues facing both Hong Kong and the Mainland, including how resilient the Hong Kong economy is against external shocks, how large portfolio capital outflows from China will be once its capital account is liberalized, and in what ways fund flows between Hong Kong and the Mainland affect Hong Kong’s monetary and financial conditions. With 11 essays, this monograph can be divided into 2 parts. Part I studies the “real” linkages between Hong Kong and the Mainland, while Part II focuses on the financial linkages. A detailed introduction written by the editors will serve as a non-technical summary of the essays.

　　The rigorous analysis in the volume is in line with the professional standards set by researchers in the major central banks, yet the style is not overly technical, and should be accessible to readers with a general background in economics, social and political sciences.

Foreword —Joseph YAM

1. Introduction

2. The Macroeconomic Impact on Hong Kong of Hypothetical Mainland Shocks
—Dong HE, Chang SHU, Raymond YIP and Wendy CHENG

3. Hong Kong’s Economic Integration and Business Cycle Synchronisation with Mainland China and the US
—Hans GENBERG, Li-gang LIU and Xiangrong JIN

4. Hong Kong’s Trade Patterns and Trade Elasticities
—Li-gang LIU, Kelvin FAN and Jimmy SHEK

5. Service Exports: The Next Engine of Growth for Hong Kong?
—Frank LEUNG, Kevin ChOW, Jessica SZETO and Dickson TAM

6. How Much of Hong Kong’s Import from Mainland China is Retained for Domestic Use?
—Frank LEUNG and Kevin CHOW

7. Cross-Border Fund Flows and Hong Kong Banks’ External Transactions vis-a-vis Mainland China
—Joanna SHI and Andrew TSANG

8. How Do Macroeconomic Developments in Mainland China Affect Hong Kong’s Short-term Interest Rates?
—Dong HE, Frank LEUNG and Philip NG

9. Outward Portfolio Investment from Mainland China: How Much Do We Expect and How Large a Share Can Hong Kong Expect to Capture?
—Lillian CHEUNG, Kevin CHOW, Jian CHANG and Unias LI

10. Share Price Disparity in Chinese Stock Markets
—Tom FONG, Alfred WONG and Ivy YONG

11. Price Convergence between Dual-listed A and H Shares
—Wensheng PENG, Hui MIAO and Nathan CHOW