Development trajectories: Hong Kong vs. Shanghai

Over the past three decades, Shanghai and Hong Kong, leading cities in China's Yangzi River Delta and Pearl River Delta, respectively, have seen rapid economic development and institutional transformation. Shanghai has experienced a major breakthrough in its export-driven economy and in industrial upgrading since the opening of the Pudong area in the 1990s. Shanghai has also ramped up its efforts to catch up with Hong Kong and has already become one of the world's foremost manufacturing and export hubs. At the same time, and particularly following the 1997 Asian economic crisis, Hong Kong has redoubled efforts to identify shortcomings in its economic architecture; and has explored plans to transcend its traditional role as a financial hub, to attract entrepreneurial hi-tech talent, and to overcome inequitable income growth. This paper explores the development trajectories of these two cities and how they depart from the pre-1978 development models. The paper also examines the extent to which the current trajectories are complementary or in competition.