Abstract
This paper attempt at applying the gravity model to identify the evolution of a trading block within Greater China, including Mainland China, Taiwan and Hong Kong, for the era after the openness of Mainland China. Special attention is paid on the role of special economic and political events in shaping the greater Chinese circle’s trade pattern. The major findings are as follows, Firstly, this study clearly shows that under the current political restrictions on both sides of the strait, the trade flows reflect the highly-developed economic and trade relations between Mainland China, Taiwan and Hong Kong. Second, Our empirical results show that the important role of Hong Kong as an agent in facilitating the trade within greater China since 1987. Finally, the application of gravity model to both sides of the straits trade flows reflects the intensity of trade both sides of the straits, this is represents the market power breaking through the regulation of government policies.