Impact of free movement of labor force

The FTA involves a number of measures for facilitating the exchange of talented professionals between Mainland China and Hong Kong. In China and Hong Kong there are still different accreditation systems in different areas of service sector, for which it is vital to obtain a special permit, for example, these are legal, accounting, medical, construction, and other types of services. These differences create many difficulties for Hong Kong professionals, aimed to work in the Mainland. However, along with the growing economic cooperation between the parties in the services sector a need in the free movement of labor force has emerged.

The FTA promotes mutual recognition of professional qualifications. Hong Kong and Mainland China have already signed an agreement, which covers such professions as architect, engineer, broker in securities trading, futures and insurance, lawyer, accountant, medical professional Haitao D. CEPA: the Success Practice of `One country Two Systems'. - People Daily, 2007, July 12^th. P. 26.. Mutual recognition of qualifications makes the exchange of talented professionals much more convenient and attracts more and more Hong Kong professionals to work in Mainland China, which, in turn, improves the quality of services in Mainland China.

Yet, talented professionals from the Mainland still face a lot if difficulties while looking for a job in Hong Kong, with the exception for those who studied in one of Hong Kong's top universities and received a job offer immediately after graduation.

The recovery of Hong Kong economy was possible mainly due to the implementation of CEPA. Once the implementation started the Hong Kong economy started to get rid of the negative effects of the Asian financial crisis of 1997-1998 and again began its active development.

Hong Kong has accumulated rich experience in the formation of a liberal economy, its model of economic development is often regarded as the most successful and effective. Moreover, Hong Kong's experience can be partly adapted in Russia. For example, some basic principles of the Hong Kong economic model can be used to determine the development strategy of the Kaliningrad Region or the Crimea, which can become the topic for another research.

CEPA has become a mechanism of communication and mutual coordination for the parties. However, it is been only 13 years since the signing of CEPA, so it is too early to judge about the results of political re-integration between Hong Kong and Mainland China. Still, it is pretty obvious that CEPA promotes re-integration, primarily economic, which will then be spilled over to the political and social spheres Fung H., Zhang G., Zhang Y. Op. cit. P. 19..

Conclusion

From the economic point of view, the Chinese Mainland and Hong Kong are very different in scale, the degree of openness, system of market regulation and the level of development. The economy of Hong Kong is small, open and highly developed, and the economy of Mainland China is large, fairly closed and less developed. Despite this, there is an active process of re-integration between the two economies.

Hong Kong throughout most of its history has been a strategically important port of China. After the relocation of its industrial base to the Mainland Hong Kong began to specialize in financial and intermediary operations, largely related to re-export of products. Also, Hong Kong and China are each other's large trading partners and important sources of direct investment.

Examining the re-integration process between Hong Kong and the Mainland, two landmark events of 1997 and 2004 can be observed. Until 1997 re-integration between the parties was largely initiated by market incentives, not by political considerations. In 2004 the signature of CEPA helped to speed up the process of re-integration. This agreement marked the first formal step in economic re-integration between Hong Kong and the Mainland.

In terms of traditional integration theories the re-integration of Hong Kong and China Mainland can be partially regarded from the perspective of neo-functionalism. If we try to apply the theoretical approaches of economic integration to the Hong Kong - China Mainland case, initially we can conclude that from the perspective of described stages of economic integration, currently the parties are at its first stage. Nevertheless, our final conclusion should be the following: each theory has a lot of limitations, while the example of the re-integration between Hong Kong and China Mainland is too exceptional and it would be appropriate to consider it separately and no existing integration theory can fully explain this ongoing re-integration process.

Within the "one country, two systems" model Hong Kong returned under the jurisdiction of China. From 1997 to 2003 export-oriented production model, economic and trade cooperation between Hong Kong and the Mainland remained the same as before the reunification. However, along with the increasingly active economic development the need for formal agreements and bilateral coordination at the highest levels emerged, and the parties decided to sign CEPA.

The main reason for signing CEPA for Mainland China was the stagnation in the economy of Hong Kong after the Asian financial crisis, the international factor and considerations about further relations with Taiwan. For Hong Kong, the signing of CEPA was motivated solely by economic interests. CEPA expands the access to services for Hong Kong companies in China, reduces customs duty for the goods produced in Hong Kong, and improves quantitative indicators of mutual trade and investment. CEPA was aimed at improving the conditions for cooperation in three areas: trade in goods, trade in services and investments, but it is worth noting that trade in services is the most important part of CEPA.

For Hong Kong, the benefit from CEPA is clear in the short-term period. CEPA provides an incentive for a new cycle of economic development of Hong Kong and creates favorable conditions for Hong Kong to become once again an important intermediary between Mainland China and the rest of the world. Unlike Hong Kong, Mainland China will be able to gain from CEPA in a longer period, because of various political interests involvement. This research has examined a significant impact of CEPA on the re-integration between Hong Kong and Mainland China and on the revival of the Hong Kong economy.

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