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THE ROLE OF HONG KONG IN SINO‐TAIWAN AND SINO‐KOREA TRADE, 1981‐87
Author(s) -
Wong Teresa Y.C.
Publication year - 1990
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/j.1467-8381.1990.tb00148.x
Subject(s) - china , international trade , commodity , business , trade barrier , investment (military) , international free trade agreement , economic integration , legalization , economics , international economics , political science , market economy , politics , law
Sino‐Taiwan and Sino‐Korea trade through Hong Kong has been growing steadily since early 1980's. Direct trade is impossible because of the lack of diplomatic relations between China and Taiwan and China and S. Korea, Thus, an intermediary is essential to carry out the transactions. Then, there is the issue of why Hong Kong is chosen as the major intermediary. This relates to the transportation costs and transaction costs advantages that Hong Kong possesses as an entrepot. As the major intermediary in Sino‐Taiwan and Sino‐Korea trade, Hong Kong is playing multiple roles. It is serving as an entrepot in commodity trade; as an agent in the export of technology from Taiwan and S. Korea to China; as a mediator in trade disputes; and as the middle‐man in some trade related issues such as the application of patent protection and the establishment of trade offices. Above all it is observed that Hong Kong has major roles to play not only in the case of indirect trade, but also in the case of direct trade. In the future, there might not be much chance for the legalization of direct trade. Nevertheless, the recent change in the trade and investment policies of Taiwan and S. Korea has shown that the future prospect of indirect trade is very bright.