The Greater China Area: Retrospect and Prospect

The Greater China area is defined in this chapter as one which includes Taiwan, Hong Kong, Macau and mainland China.1 In spite of their common history, cultural and linguistic homogeneity, in recent decades the four economic areas have followed divergent political systems, which have resulted in different social and economic performances. As soon as the PRC was founded in 1949, mainland China had effectively adopted and practised a Marxist-Leninist command economy as imposed by the Soviet Union, before it decided to introduce structural reform in the late 1970s. Two former colonial economies under the British and Portuguese administrations, respectively, Hong Kong and Macau have been fundamentally incorporated into the Western-style society, albeit that Chinese culture and language are still accepted by most of the citizens that live there. Taiwan had been under the colonial rule of the Japanese for 50 years before it was liberated and returned to China in 1945. With the Civil War (1946–49) coming to an end, however, the newly reunified nation was separated by two ideologically rival regimes — the Nationalists (Kuomintang, or KMT) in Taiwan and the Communists (CCP) on the mainland. Backed by the United States, the Taiwanese economy followed the capitalist road of economic development. While both sides of the Taiwan Strait have declared that there is only one China in the world and that their motherland should be reunified sooner or later, many of the political issues arising from the bloody war which was eventually detrimental to national cooperation still remain unresolved.