ABSTRACT
On July 1, 1997, the ceremony for the handover of Hong Kong to China was held, and the last British governor, Mr. Chris Patton, regrettably departed. The island of Hong Kong was ceded to Britain after the Opium War of 1842. Hong Kong performs six key functions. It is a world-class center of financial, trade, transport, tourism, and information services and of light industry. Within local exports from Hong Kong to China, consignment processing goods occupy more than forty percent. This chapter provides figures for the share of Chinese products in Hong Kong's reexports. Against Hong Kong's exports to Taiwan in 1996 of US$4.0 billion, imports from Taiwan were US$16.0 billion, fourfold greater. Economic exchange has a tendency to develop from trade to investment. The chapter discusses the shares of Taiwan and Hong Kong as sources of foreign direct investment in China. The Taiwan government's acceptance of direct investment in China dates only from the 1990s.
