Dance with the Dragon : Closer Economic Integration with China and Deteriorating Democracy and Rule of Law in Taiwan and Hong Kong?

This article turns upside down the conventional wisdom of “learning effects”, which suggests that when less developed countries trade with developed countries, more democratic countries, and those with better rule of law, the less developed countries will gradually democratize and adopt and improve their domestic rule of law. It explores whether closer economic integration with China, an undemocratic country with poor rule of law, would undermine democracy and the rule of law in Taiwan and Hong Kong. By examining the correlation between four fundamental freedoms, namely, free movement of goods, free provision of services, free movement of capital, and free movement of persons, and the World Bank Good Governance Indicators and press freedom indexes by Freedom’s House and Reporters without Borders, this articles finds generally closer economic integration with China undermines press freedom in Taiwan and Hong Kong and specifically trade dependence in services on China is negatively related to Hong Kong’s performance in the Good Governance Indicators