ABSTRACT
The inauguration of the People’s Republic of China’s Open-door Policy in 1978 has led to the rapid integration of Hong Kong with China, especially with Guangdong Province. The importance of cultural affinity is quite evident; Guangdong has received the bulk of Hong Kong's investment in China; Taiwan's investment is similarly concentrated in Fujian. Hong Kong's investment in China is very diversified, ranging from small-scale labor-intensive operations to large-scale infrastructural projects. China's investment in Hong Kong is likely to exceed Hong Kong's investment in China. China's investment in Hong Kong is thus likely to exceed Hong Kong's investment in China. As expected, the further decentralization of China's trade enhanced the middleman role of Hong Kong. It is often alleged that if South Korea and Taiwan were to establish direct commercial links with the mainland, the role of Hong Kong as a middleman in China's trade would decline.
