Import of Capital and Political and Economic Autonomy in HongKong

Economic globalization resulted in the asymmetrical interdependence of actors, transferring foreign economic relations from being purely economic tool for increasing national welfare into a tool of foreign policy. Regulation of trade, capital and investment flows has become a warfare of the 21 century. Countries aim to increase the dependence of their counterparties and decrease their own sensitivity and vulnerability against external effects in order to protect their national security. This research analyses impact of capital import from the Mainland China and the US on Hong Kong state autonomy. Comparison of the pure numbers of economic cooperation and calculation of Bilateral trade intensity index (BTII) showed that Hong Kong is much more dependent on the Mainland rather than the US, though the trend of increasing role of the US during past years can be observed. Empirical models testing the importance of FDI inflows from the Mainland China and the US on Hong Kong’s inflation and unemployment showed that the dynamic of these indices is partly influenced by the capital inflows. Research also highlighted the possible threats to Hong Kong’s autonomy, which are: further liberalization of the Mainland China economy, Beijing steps to free-float yuan exchange rate, Hong Kong dollar exchange rate linked to US dollar and implementation of OECD’s BEPS Action Plan.