An Economic Analysis of the Greater China Area

Abstract

The greater China area is defined in this chapter as one which includes Taiwan, Hong Kong, Macau and mainland China.¹ Against their common history, cultural and linguistic homogeneity, during the past decades the four Chinese areas have followed divergent political systems, from which different social and economic performances have resulted. As soon as the PRC was founded in 1949, mainland China had effectively adopted and practised a Marxist-Leninist command economy as imposed by the Soviet Union, before it decided to introduce structural reform in the late 1970s. As two colonial economies under British and Portuguese administrations respectively, Hong Kong and Macau have been fundamentally westernized, whereas the Chinese culture and language are still accepted by most of the citizens living there. Taiwan had been colonially ruled by the Japanese for 50 years before it was liberated and returned to China in 1945. With the Civil War (1946–49) coming to an end, however, the newly reunified nation was separated by two ideologically rival regimes — the Nationalists (KMT) in Taiwan and the Communists (CCP) in the mainland. Backed by the United States, Taiwan followed the capitalist road of economic development.