We hear about Hong Kong and China together in the news all the time and we know that they are intertwined, but are not exactly sure to what extent. To help shed some light on this, I did some research (and relied on testimony from a Hong Kong native on our staff), and below I present a concise and factual overview of Hong Kong and its relationship to China .
Hong Kong became a colony of the British Empire in the mid 1800’s and remained a colony until 1997. On the 1st of July of that year, Hong Kong’s sovereignty was transferred from the United Kingdom to the People’s Republic of China (PRC). As part of the rules of the transfer, Hong Kong was allowed to retain a large amount of autonomy, or self-governance, for fifty years (until July of 2047).
Hong Kong is now considered a Special Autonomous Region (SAR), which has a separate legal system, taxation policy, parliamentary system and business guidelines than that of mainland China. Hong Kong even has its own currency, the Hong Kong Dollar, which can’t be used as legal tender in mainland China. Perhaps the biggest distinction of all? It is a free-market economy and is now considered one of the freest economies in the world; In 2008 Hong Kong generated a GDP of USD 223 Billion and utilized USD 63 Billion in Foreign Direct Investment (FDI).
This paired with the sophistication of Hong Kong’s logistics and transportation industry, has made it a particularly enticing place to companies looking to invest in China. Extensive investment promotions are available to foreign companies looking to invest.
Hong Kong definitely operates as its own “mini-country”, but continues to remain part of China through its sovereign ties. What will happen in 2047?…I guess we will have to wait and see.Tags: China, Hong Kong, Hong Kong FDI, Hong Kong GDP, Hong Kong SAR, Invest Hong Kong.