ABSTRACT
As indicated in Chapter 5, the income gap between Mainland China, Hong Kong and Macau has been contracting at both the national and regional level since the beginning of the economic reforms. In the process, Mainland China as a whole, as well as its geographical regions, has reduced its income disparity with both Hong Kong and Macau. Amongst the regions, the coastal region and Shanghai have the smallest income gap with Hong Kong and Macau at regional and city level. Furthermore, the estimations carried out in Chapter 5 have also suggested both absolute and conditional income convergence among Mainland China, Hong Kong andMacau at the provincial and regional level in the post-reformperiod. That is, the initially poorer Chinese economies can grow faster than the initially richer Hong Kong and Macau economies, reducing the income disparities between them to arrive at absolute income convergence. In addition, when additional control variables, such as investment to gross domestic product (GDP) ratio, openness or foreign direct investment (FDI) to GDP ratios, etc. were considered in the estimations, it was found that different provinces or regions of the Mainland were able to converge to their steady-state level of income to achieve conditional income convergence. Nevertheless, absolute or conditional income convergence indicates atmost a declining trend in the income gap and the tendency for further reduction in income disparities betweenMainland China, HongKong andMacau. A significant difference is still observed on a per capita basis. As stated in Table 5.4, the coastal region had the highest income level in the Mainland among all the geographical regions. Its per capita GDP in US dollars at 1995 constant prices was just 8 per cent of HongKong’s in 2002, or HongKong’s per capita GDPwas 12.6 times that of the coastal region. At the city level, Shanghai, which was the richest Chinese city, had a per capita GDP at 1995 constant prices at around 20 per cent of Hong Kong’s in 2002, or Hong Kong’s per capita GDP was 5.1 times that of Shanghai. The other regions and cities of the Mainland that are relatively backward in terms of growth and development have even larger income gaps with Hong Kong. It may be harder or take a longer time for all the provinces or regions to converge their incomes with Hong Kong, although the estimations suggest income convergence as a whole. This chapter is thus organized to search for ways that may contribute
to reduce the income gap between Mainland China, Hong Kong and Macau, so as to allow income convergence to take place between the Mainland and the SARs at a faster pace.
