The impact of economic integration among Taiwan, Hong Kong and china : a computable general equilibrium analysis

Abstract

This paper investigates the effects of economic integration among Taiwan, Hong Kong, and China (CEA). A seven-region, seven-sector computable general equilibrium model for world production and trade is developed for this purpose. The simulation results demonstrate that the three Chinese economies would benefit greatly from further integration by means of liberalizing trade policies. The opportunity cost of isolating the United States from East Asia is high for both the US and the three Chinese economies and suggests that an economically integrated CEA is in the long term strategic interest of the United States. Key Words: CGE Model, three Chinese economies, Economic integration, and U.S. Long term interest