Contrary to most predictions, Hong Kong’s most serious post-handover problems have been economic and social rather than political (Tang, 1999). Both the pre-handover doomsayers’ prediction of lost freedom under Beijing’s repression and the optimal forecast of post-1997 economic prosperity have been wide off the mark (Hsiung, 2000). Since the reversion, Hong Kong has been confronting economic recession, rising unemployment, the collapse of the real estate and stock markets and serious disrupti

Although the debate continues and the majority of the results on the subject are still at a speculative level, as the Mainland market liberalizes, significant business opportunities will emerge. There are, of course, risks and drawbacks, especially in the short term while companies and economy adapts to the change and increased competition. However, it can be said that, in the long-run, both China and Hong Kong stand much to gain from China’s accession to the WTO from an economic point of view. Hong Kong holds pivotal position as both an aid for Chinese companies to adapt to the free market economy and a bridge and supporting hub for foreign companies who are willing to enter the Chinese market. Hong Kong’s major strengths rely on its well-developed financial, transportation and professional services which will serve both the needs of foreign investors and China's local enterprises when China joins the WTO. These comparative advantages will be the central focus of Hong Kong’s opportunities and benefits as external trade in China vastly and rapidly increases. Even though the WTO membership could imply a ‘diversion effect’ that would ‘take-away’ business from the island, forecasts tend to point toward affirming that the ‘creation’ effect of the WTO agreement will be greater. The financial skills (know-how), infrastructure and connections that Hong Kong has with organizations in China provide an excellent environment in Hong Kong for business to thrive; this will tend to enhance the island’s status as a key world trading power and reinforce its historical role as intermediary to China. In conclusion, Hong Kong seems to be well placed to reap the trade and economic benefits arising from China’s WTO membership.

Three main reasons have been contemplated to justify China’s WTO membership. First of all, China’s economy over the past two decades has been driven through foreign investment and exports. In exchange for allowing foreign access to the Chinese market, China expects that joining the WTO will promote an increased flow of foreign investment which would boost economic growth and accelerate China’s economic development.

In practice, WTO membership means that it has agreed to accept globally common trade rules for the first time in its history (Jianrong, 1999). Thus, China will be on the way to free market reform; it must reduce tariffs on a broad range of products and eliminate most of the investment and trade barriers; thus, moving towards Hong Kong’s already and far-long established system. The result will be the creation of many exciting business opportunities for foreign companies (Yam, 2000).

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