The China Circle refers to the economic relationship between the PRC, Hong Kong, and Taiwan. Professor Barry Naughton coined the term in his book, “The China Circle.” During the 1960s and 1970s, Hong Kong and Taiwan specialized in labor-intensive manufactured exports that mainly went to the United States market. By the mid-1980s, however, rising land and labor costs, coupled with current realignments, created pressures for manufacturers to move to lower-cost locations. Additionally, national capabilities moved up as scientific education increased and commercial and financial experience accumulated. This created a “pull” for Hong Kong and Taiwan to move to high-skilled sectors.