2 Hong Kong Special Administrative
Region: background
Hong
Kong under British rule
10. The distinct legal and political systems that
Hong Kong enjoys as a Special Administrative Region of China evolved
from its history as a British colony and free-trading port. British
rule over Hong Kong Island began in 1842 after the first Anglo-Chinese
War, expanding further in 1860 and again in 1898 with the issuing
of a 99-year lease over the entire Kowloon peninsula south of
the Shenzhen River (an area known as the New Territories). By
the end of the 19th Century, British Hong Kong was
entrenched as the main entrepôt in southern Asia and the
primary gateway for international trade with China. Hong Kong's
population and prosperity grew rapidly throughout the twentieth
century, bolstered by refugees fleeing political upheaval, war
and Communist rule on the Chinese mainland. By the early 1980s
Hong Kong was one of four so-called "Asian Tiger" economies,
characterised by a high growth rate and a focus on international
financial services.
11. British Hong Kong was administered by a Governor,
appointed by the Crown on the advice of the Foreign Secretary.
The Governor held full executive power, chairing the Executive
Council (his cabinet) and appointing most of the members of the
Legislative Council (LegCo) which played an advisory role. From
1985 onwards gradual reforms were introduced to the selection
process for LegCo members, including indirect elections, with
the aim of transforming LegCo into a working legislature. These
reforms were accelerated by the last Governor of Hong Kong, Chris
(now Lord) Patten, but the franchise remained narrow, and LegCo's
powers relative to the Governor were in any event very limited.
The majority of Governor Patten's reforms were reversed after
the handover of sovereignty from Britain to China in 1997.
The Joint Declaration and the
Basic Law
12. In the early 1980s, the UK and Chinese governments
opened negotiations to pave the way for the return of Hong Kong
to Chinese sovereignty after the expiry of the UK's 99-year lease
on the New Territories.[11]
Rather than insisting that Hong Kong adopt China's socialist economy
and legal structures, China was willing to preserve Hong Kong's
capitalist economy and common-law system in order to benefit from
its prosperity and status as a global financial centre. It was
also hoped that allowing Hong Kong to maintain its existing economic,
social and legal structures under Chinese sovereignty could provide
a model for the eventual reunification of Taiwan with the mainland.
13. On 19 December 1984, the Governments of the UK
and China signed the Sino-British Joint Declaration, which established
the general principles under which Hong Kong would be governed
after the handover of sovereignty. According to the agreement,
Hong Kong would be "directly under the authority" of
the Chinese Central People's Government, but would "enjoy
a high degree of autonomy". The Declaration also stated that
the social and economic systems of Hong Kong would remain unchanged
for 50 years following the handover, as would its rights, freedoms
and "life-style".[12]
This concept is known as "one country, two systems".
14. The Joint Declaration decreed that the policies
outlined above would be stipulated in a Basic Law, to be adopted
by the Chinese National People's Congress (NPC). Drafted between
1985 and 1990 and formally promulgated on 4 April 1990, the Basic
Law is the mini-constitution of Hong Kong. It codifies the concept
of "one country, two systems", declaring that "the
socialist system and policies will not be practised" in Hong
Kong for 50 years, but also stating that Hong Kong is an "inalienable"
part of China.[13] The
law grants Hong Kong a high degree of autonomy, except in foreign
affairs and defence matters which remain under Beijing's direction.[14]
The Basic Law guarantees that Hong Kong will be vested with executive
and legislative power, and establishes Hong Kong's independent
judiciary including a Court of Final Appeal. Chapter III of the
Basic Law preserves freedoms and rights that do not apply to the
same degree in mainland China, including freedom of speech and
the press, freedom of assembly, freedom of the person, and private
property rights.[15]
The Law took effect formally on 1 July 1997, the date of the handover.
Hong Kong since the handover:
economy, society and politics
15. Despite several setbacks including the Asian
financial crisis of the late 1990s and the burst of the dot-com
bubble, Hong Kong today remains a wealthy financial hub. In 2013,
Hong Kong had a per-capita GDP of USD$38,124 (in current US Dollars),
26th-highest in the world.[16]
According to the index of Global Financial Centres compiled by
the London-based Z/Yen think tank, Hong Kong is the world's third-largest
financial trading centre after New York and London, with an economic
system characterised by heavy reliance on services, very low taxation
and free port trade.[17]
The Index of Economic Freedom, compiled by the Wall Street
Journal and the Heritage Foundation, has ranked Hong Kong
SAR as the most "free" economy in the world for 21 consecutive
years.[18] Hong Kong's
level of income inequality, however, is among the highest in the
developed world. According to research by Credit Suisse, the richest
10% of the population control 77.5% of the total wealth.[19]
Increasing economic integration with mainland China, concurrent
with China's rapid growth, has been a major factor in Hong Kong's
ongoing economic success. It has also made Hong Kong more economically
dependent on China than it was at the time of the handover.[20]
In 1997, Hong Kong's share of China's total GDP stood at 16%,
and it accounted for 51% of China's exports. Today, Hong Kong
makes up only 3% of China's total GDP.[21]
Mainland firms are also increasingly prominent in Hong Kong, now
accounting for 54% of companies traded on the Hang Seng Index.[22]
16. Hong Kong is governed by the Chief Executive,
who is ultimately accountable to both the Chinese Central People's
Government (CPG) and Hong Kong SAR in accordance with the Basic
Law. The Chief Executive is supported by the Executive Council,
all members of which he or she appoints. The Executive Council
is, in turn, supported by a Government Secretariat (civil service),
covering all policy areas over which Hong Kong's government has
autonomy. The legislature, LegCo, today has 70 members. In the
last LegCo election, which took place in 2012, 35 legislators
were elected directly in geographical constituencies under a system
of party-list proportional representation (in which votes are
cast for a list of candidates selected by each party, rather than
for individuals).[23]
30 legislators were elected by so-called "functional constituencies"—representing
different professional and sectoral groups—while the final
five were selected by regional councils and elected by those who
were not represented in the functional constituencies. Although
there are 16 political parties and several Independents currently
represented in LegCo, Hong Kong's legislators are generally divided
into two broad groups: the "pan-democrats", who advocate
constitutional reform to make Hong Kong SAR's government and legislature
more democratic, and the "pro-Beijing" groups generally
seen to support the political status quo. In the five LegCo
elections since 1998, the "pan-democrats" have held
between 33% and 41% of seats, with the rest held by "pro-Beijing"
legislators. The proportion of "pan-democrats" returned
in geographical constituencies is considerably higher than the
overall total, suggesting that they would be likely to hold a
majority if all legislators were directly elected. The most recent
LegCo elections returned 27 "pan-democrats", versus
43 in the "pro-Beijing" camp.
11 Although the UK technically held sovereignty over
Hong Kong Island and a small part of the Kowloon peninsula in
perpetuity under the terms of the Treaty of Nanjing (1842) and
the Convention of Beijing (1860), it was believed that without
the New Territories, which comprised over 90% of Hong Kong's territory,
Hong Kong would no longer be a viable entity. The entire territory
of Hong Kong was thus included in the handover. Back
12
Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China on the Question of Hong Kong,
para 3.5 Back
13
The Basic Law of the Hong Kong Special Administrative Region of
the People's Republic of China, Chapter I, Articles 5 and 1 Back
14
The Basic Law of the Hong Kong Special Administrative Region of
the People's Republic of China, Chapter II, Articles 12-14 Back
15
The Basic Law of the Hong Kong Special Administrative Region of
the People's Republic of China, Chapter III, Articles 27-37 Back
16
The World Bank, GDP per capita (current US$), 2013 figures, accessed
15 January 2015 Back
17
Mark Yeandle, Nick Danev and Michael Mainelli, The Global Financial Centres Index 15,
London, March 2014, p 5 Back
18
Heritage Foundation, 2015 Index of Economic Freedom, accessed
28 January 2015 Back
19
Credit Suisse Research Institute, Global Wealth Report 2014, Switzerland,
October 2014, pp 30, 33; Josh Noble, "Economic inequality underpins Hong Kong's great political divide",
Financial Times, 21 October 2014 Back
20
Q261 Back
21
Gabriel Wildau, "Hong Kong's value to China goes beyond numbers",
Financial Times, 2 October 2014 Back
22
Clare Baldwin, Yimou Lee and Clare Jim, "Special Report - the mainland's colonisation of the Hong Kong economy",
Reuters UK, 31 December 2014 Back
23
Electoral Affairs Commission of the Hong Kong Special Administrative
Region, "Guidelines on election-related activities in respect
of the Legislative Council Election, 2012", Chapter 2: Geographical Constituencies,
para 2.23 Back
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