Hong Kong and Taiwan provide the know-how and capital to the abundant manpower in China, leading to the emergence of the economy of so-called Greater China, which is competing with the economies of the United States, the European Union and Japan. In the Greater China economy, Hong Kong and Taiwan are respectively the first and second largest investors. China opened its door to foreign investment in 1979 and achieved the status of an economic power by 2004. These three countries are often referred to as the trio and the trio forms Greater China, or the China Circle, or the Chinese Economic Area (CEA). Macau lately has become part of the CEA. In this study of the emergence of a giant economy, the author takes pains to warn that Greater China has been understood in economic rather than political sense. Hong Kong and Macau reverted to the mainland in 1997 and 1999 respectively while Taiwan remains an independent nation even though it is claimed by China. Another warning is that whenever we talk about China's economy, it is the economy of the mainland only because the other parts in Greater China have their separate economic zones. This study provides ample statistics that would prove useful for readers with knowledge of economics to understand the potential development in East Asia in which Greater China plays a dominant role.

The China Circle thus has significant impact on the world economy. From 1979 to 2002, China's real GDP has grown an annual average of 9.3 percent, giving China a GDP of 1.2 trillion dollars in 2001. Despite that huge achievement, China's GDP in that year stood at only 28 percent of Japan's GDP and 12 per cent of the US GDP. In explaining further the working of Greater China, the author says there are three concentric circles, with the Hong Kong -Guandong economic nexus as the core, while the Guandong, Fujian, Zhejiang, Jiangsu and Shanghai as the inner core and the Hong Kong Taiwan and mainland as the outer core. Greater China has important links with the Association of Southeast Asian Nations (ASEAN) because of its association with ethnic Chinese in that region. There are 300,000 Taiwanese and 100,000 Hong Kong residents in Shanghai. Of all the coastal provinces, Fujian benefits most from Taiwanese investment, partly because 70 percent of Taiwanese originated from that province.

The study shows economic activities in each of the Chinese provinces in the inner core of the circle. China has become the world's largest recipient of foreign direct investment (FDI), surpassing the US. If China and Hong Kong have a better working relationship, it is not the case between the mainland and Taiwan because of the continuing political animosity across the Taiwan Strait. Taipei-Beijing relations have stalled since 1994 because of pro-independence sentiments in Taiwan. Despite that atmosphere of political hostility, sometimes aggravated by military threats from the mainland, Taiwanese investments in the mainland have grown over the years. Each side usually makes unilateral economic move and anticipates a reciprocal response from the other side. Taiwan's cumulative approved investment in the mainland totaled over 34 billion dollars from 1991 to 2003. Taiwan also provided a high amount of foreign direct investment to China. "The surge of Taiwanese investment in the mainland raised fears that such investment would lead to the hollowing out of Taiwan industry and pose security threat," the author writes. The Taipei government repeatedly tried to cool down the investment boom in the mainland and has tried to shift it to Southeast Asia regions. But the author says Taipei has not been successful in slowing down Taiwanese ventures in the mainland. Taiwan investors use companies in other countries and in Hong Kong to channel investments to the mainland. The bulk of Taiwanese investments in China consist of manufacturing products while investments in services remain small. Trade also has been unbalanced with Taiwan's exports to the mainland at 47.4 billion dollars while its imports from China were just 11 billion dollars in 2003. Flows of visitors remain unbalanced with 3.66 million Taiwanese visiting the mainland while less than 200,000 mainland Chinese visited Taiwan in 2002.

"A more balanced integration of the mainland and Taiwan has to wait for the resolution of political differences between the two," the author says.