This paper examines the political and economic tensions arising from Hong Kong's 1997 handover from the United Kingdom to the People's Republic of China. Drawing on multiple scholarly sources, it traces Hong Kong's century-long development as a globally significant free-market hub and explores the fears—legal, economic, and human rights–related—that surrounded the transition. The paper also evaluates how those fears played out over the subsequent decade, arguing that while the philosophical divide between Communist mainland China and the democratized island of Hong Kong was vast, the transition proved less catastrophic than many observers had anticipated, resulting in a quasi-capitalist arrangement that ultimately benefited both territories.
One of the most striking examples of a country where political ideas are in conflict is mainland China and the island of Hong Kong. It has been more than ten years since Hong Kong, after having been a British holding for a century, was returned to mainland China by the United Kingdom in 1997, following the expiration of the UK's one-hundred-and-fifty-year lease of the island. On one hand, the mother country—Communist China, where students protesting in Tiananmen Square were cut down by Chinese soldiers—was receiving back under its control Hong Kong, a multicultural blend of Asian, European, American, and nearly every other nationality in the world. The Chinese government promised to be sensitive to Hong Kong's difficult transition as a subordinate of the mainland. However, no one believed it was going to be easy, and people the world over watched: some curious, others horrified.
There could not have been two political philosophies further apart than those of Hong Kong and mainland China. This paper examines that transition—more than ten years later—exploring how Hong Kong has changed and evolved as it readjusted itself back into the fold of mainland China after being politically divided for one hundred and fifty years (with the exception of the Japanese occupation from 1941 to 1945) (Ash, Ferdinand, Hook, and Porter 3).
Hong Kong was not just diverse—it was liberal, sophisticated, and, shaped by over a hundred years of British governance, had become a globally significant economic and trading center. Hong Kong had become synonymous with world trade and exchange, comparable to Wall Street and other major global stock and bond trading centers. It was as sophisticated as New York City, with as much to offer in the way of art, history, culture, business, and education. The transition from the enterprising liberalism of the UK to the more restrictive control of the mainland would not be an easy one. Researchers Robert Ash, Peter Ferdinand, Brian Hook, and Robin Porter (2000) discuss the transition in their book Hong Kong in Transition: The Handover Years.
On July 1, 1997, the People's Republic of China (PRC) received Hong Kong back under its political authority from the UK (Ash, Ferdinand, et al. 3). There was speculation circling the globe about whether Hong Kong would be able to sustain its free-market participation and philosophies, and the liberal freedoms enjoyed by its residents for a hundred and fifty years (Ash, et al. 3).
"Hong Kong, of course, has been a highly successful economic entity for the last 30 years. Its Gross National Product (GNP) has grown at an annual rate of approximately 7 per cent in real terms during most of that time. Per capita GNP in the territory has overtaken that of the United Kingdom, Canada, and Australia (by 1990 more investment was flowing from Hong Kong to Britain than from Britain to Hong Kong) (Cheah and Yu 241). In the region, only Singapore and Japan enjoy a higher per capita GNP. The growth rate of the PRC has been equally, if not more, spectacular over recent years, although its per capita GNP remains a fraction of that of Hong Kong. Of equal significance, Hong Kong is invariably ranked as the freest economy in the world (The Heritage Foundation 1998). In terms of national competitiveness, Hong Kong is consistently ranked in the top three in the world" (Ash et al. 3).
Roda Mushkat (1997), in his book One Country, Two International Legal Personalities, examines the dynamics that existed prior to the handoff of Hong Kong to mainland China. By virtue of Hong Kong's place as a center of free enterprise, legal contracts had been entered into that crossed borders, reflected free and global trade, and did not align with the mainland's laws. There was concern that those contracts and legal arrangements would become subjugated to the mainland's laws and political discretion (Mushkat 85). This potentially financially disastrous concern was a legitimate one, but the mainland assured the many observers focused on Hong Kong that those fears were unfounded (Yim Yu Wong 16).
"Pre-handover governance and refugee protection"
"Research findings on post-handover outcomes"
There have been few issues concerning human rights, and even fewer issues concerning the international legalities of the transactions conducted between Hong Kong and other parts of the world. Today, Hong Kong is as bustling a cultural center as it was during the years it was governed by the UK; yet it is, at the same time, distinctly governed by its Communist mainland, and there is, in that way, a noticeable difference in how the public conducts itself. The spirit of entrepreneurial endeavor did not end with the reversion of Hong Kong back to the mainland (Wong 1996).
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