Sustaining Hong Kong’s Services amid the Changing Dynamics of China’s Economy

ABSTRACT: Hong Kong’s greater economic integration with China has continued to underpin its service oriented economy following the manufacturing sectors’ hollowing out since the 1990s. Hong Kong is an important transit hub for China’s external trade, especially for the Pearl River Delta Region. China’s deregulation of mainland visitors to Hong Kong under the Individual Visit Scheme since 2003 has contributed to Hong Kong’s bulging trade surplus in travel. Nonetheless, the tremendous business opportunities from China’s financial reform won’t unseat the US and the UK as Hong Kong’s top trade partners in financial services. Overall, Hong Kong’s service economy will continue to prosper in the near term with China’s continuous granting of special treatment. In the long run, strengthening Hong Kong’s bridging role between mainland China and the global market will be crucial for the viability of its services. KEYWORDS: Hong Kong’s economy, Hong Kong’s service sectors, Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA), China’s economy, trade in services.