Financial Relations between Hong Kong and the Mainland

Abstract

The financial crisis caused by the subprime mortgage crisis in the United States in 2006 has deeply plunged many Western capitalist countries into multiple political, economic and social crises. This has forced many financial institutions in developed countries to redistribute their assets to strengthen the stability of financial institutions, forcing many Europeans and Americans to return funds to their own countries. As a result, the domestic currency depreciated, and the economic growth slowed down or even went into recession. As an emerging economy, China has been faced with both opportunities and challenges. The financial market has long been regarded as the "barometer" of the national economy, so the deepening relationship, such as the research and cooperation between the financial markets in Hong Kong and the Mainland, can certainly improve the international financial status of both sides. It also promotes the process of building a fair, orderly and inclusive new international order. This paper systematically introduces the political and financial relations between Hong Kong and the Mainland, focusing on the relationships between Shanghai-Hong Kong and Guangdong-Hong Kong financial centers and advocating some suggestions on how to balance the relationship between the three financial centers while speeding up the construction of the national financial center. Using a variety of financial theories and statistics of Hang Seng AH Share Premium Index and Centaline City Leading Index, etc., this paper reaches the conclusion that the financial relationships between the Mainland and Hong Kong have always been close, while the differences between the two markets are more pronounced, steps can definitely be taken to benefit both of them (Zhu, 2013).