This research primarily concerns the current economic development in Taiwan, Hong Kong and south China, especially in China's Special Economic Zones and Pearl River Delta Economic Zone. Extensive literature review, secondary data sources from government statistics, economic and business periodicals and conference papers are used for analysis. The major objectives of this report are: (1) To examine the distinctive development of each of these individual economies and the current economic linkages among them, (2) To analyse the feasibility for the formation of a "common market" among them in the coming decades, (3) To discuss the most likely problems for the formation, (4) To conclude the most feasible form of economic integration in the near future.
This research indicates that the economic development of this region is very rapid and dynamic. These three Chinese economies have already developed a vertical and intra-industry division of labour. While Hong Kong and Taiwan provide marketing networks, capital and expertise, south China offer its abundant land labour for investment. Their economies are already complementary and mutually beneficial. This relation has enabled both Hong Kong and Taiwan to remain competitive in the world market. However, this research reveals that in the near future, it is impossible and impractical for the formation of a "common market" among them. It is mainly due to the following factors: disparities in their stages of economic development; differences in the economic systems; political confrontation between China and Taiwan and high dependence on foreign markets.
I would like to suggest Hong Kong and China should engage in a more comprehensive form of integration, such as industrial collaboration .in high-technology industries. The most feasible form of integration for them is Free Trade Area with several limitations. On the China-Taiwan relation, I would like to suggest their primary aim be the establishment of a mutually trustful and a harmonised relation and perhaps be the relaxation of control on their direct link in transportation and commerce. For Taiwan and Hong Kong, both should be more cooperative in industrial upgrading and joint efforts in modernising China, not just focusing on treating Hong Kong as a stepping stone and middleman between the indirect economic activities across the Strait of Taiwan.