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Hong Kong History

Human settlement in Hong Kong can be traced back to the Paleolithic era. The region was first incorporated into Imperial China in the Qin Dynasty, and served as a trading post and a naval base during the Tang Dynasty and the Song Dynasty. The area's earliest recorded European visitor was Jorge Alvares, a Portuguese mariner who arrived in 1513. Contact with the United Kingdom was established after the British East India Company founded a trading post in Canton, Guangdong Province.

The refusal by Qing Dynasty's authorities to import opium in 1839 leads to the First Opium War between China and the British Empire. The British forces first occupied Hong Kong Island in 1841 and the initial colonial government was established on January 25 that year. When the First Opium War was ended in the following year, the island was formally ceded from China under the Treaty of Nanking, which was signed on August 29, and then the British established a Crown Colony with the founding of Victoria City. In 1860, after China's humiliate defeat in the Second Opium War, the Kowloon Peninsula that located at south of Boundary Street and Stonecutter's Island were ceded to Britain permanently under the Convention of Peking. In 1898, Britain obtained a 99-year "lease" of the adjacent northern lands and Lantau Island with outlying islands, where became known as the New Territories.

Hong Kong was formally declared a free port to serve as an entrepot for the British Empire. An education system based on the British model was introduced. The areas near the Victoria Peak where the European wealthy tai-pan community settled that the local Chinese were hardly contacted.

Japan invaded the territory on December 8, 1941. The Battle of Hong Kong ended with British and Canadian defenders surrendering control of the colony to Japan on the Christmas Day. During the Japanese occupation, civilians suffered from widespread food shortages caused by imposed rations, and hyperinflation due to forced exchange of currency for military notes. Hong Kong's population declined from 1.6 million before the invasion to about 600,000 in 1945, when the United Kingdom resumed control over the colony following Japan's surrender.

Hong Kong's population grew rapidly after the war, as a wave of Mainland migrants arrived for refuge from the ongoing Chinese Civil War. And after 1949, more migrants settled in the territory. Many corporations in Shanghai and Guangzhou also shifted their operations to Hong Kong. The colony became the sole place of contact between the Mainland China and the Western world.

The textile and manufacturing industries grew with the help of population growth and low cost of labour. As Hong Kong rapidly industrialised, export trade was the driving force to the economy. The construction of Shek Kip Mei Estate in 1953 marked the beginning of the public housing estate programme and the living standards rose steadily.

Established in 1974, the Independent Commission Against Corruption (ICAC) dramatically reduced corruption in the government. When the People's Republic of China implemented the Reform and Opening Policy in late 1970s, Hong Kong became the main source of foreign investments to the Mainland. A Special Economic Zone was established the following year in Shenzhen, the economy of Hong Kong gradually displaced textiles and manufacturing with services, and the financial and banking sectors became increasingly dominant.

As the lease of the New Territories is about to expire within two decades, the governments of the United Kingdom and the People's Republic of China began to discuss the issue of Hong Kong's sovereignty in the 1980s. In 1984, the two countries signed the Sino-British Joint Declaration, agreeing to transfer the sovereignty of Hong Kong to China in 1997. The declaration stipulated that Hong Kong would be governed as a special administrative region which based on "One Country, Two Systems" principle, thus retaining its laws and high degree of autonomy for at least fifty years after the reunification.

The Basic Law of Hong Kong, which would serve as the constitutional document after 1997, was ratified in April 1990. In autumn 1992, Chris Patten, the last Governor of Hong Kong, introduced drastic democratic reforms to the election process for the Legislative Council of Hong Kong, which was strongly opposed by Beijing. Despite the heated debate between Beijing and London and the dissonance in the society, the solemn ceremony of Hong Kong's sovereignty transfer held smoothly and successfully in the Hong Kong Convention and Exhibition Centre at midnight on July 1, 1997. Tung Chee Hwa assumed office as the first Chief Executive of Hong Kong Special Administrative Region.

Hong Kong's economy was hit by the Asian financial crisis in autumn 1997. The strong backup from Beijing's central government had helped the territory to go through the hard time. The Implementation of the Airport Core Programme, which was drafted in 1980s, had led to the opening of the new Hong Kong International Airport and adjacent infrastructure facilities in 1998. In March 2005, Tung Chee Hwa submitted his resignation as Chief Executive. Donald Tsang, the then Chief Secretary for Administration, was replaced Tung as Chief Executive to complete the term and re-elected for a full five-year term in 2007.

Politics and Judiciary

Hong Kong is now a special administrative region and an area of provincial administrative level in People's Republic of China, with maintaining its existing administration system. Pursuant to the Basic Law, the Hong Kong SAR government retains sovereignty over the territory except in areas of national defence and foreign relations; the common law, which was used in the colonial era, can also be retained according to Article 84 of the Basic Law, that Hong Kong's courts to refer to decisions (precedents) rendered by courts of other common law jurisdictions. Articles 82 and 92 allow judges from other common law jurisdictions to participate in proceedings of Hong Kong's Court of Final Appeal and sit as Hong Kong judges.

On 1 July 1997 China's People's Liberation Army (PLA) Garrison manages defence affairs in Hong Kong. The stationing of the PLA troops in Hong Kong is a significant symbol of the PRC government's sovereignty over Hong Kong.

Hong Kong is divided into 18 geographical constituencies, of which a Regional Council corresponding to a geographical district; its function is to advise the Hong Kong government on local matters such as public facilities, community programmes, cultural activities and environmental improvements. The Home Affairs Department is the governmental board responsible for coordinating services and communicating government policies and plans to the public. It interacts with the public at the local level through corresponding district offices.

In 2006, there are 114 countries having consulates in Hong Kong, more than any other city in the world.


Hong Kong's economic system maintains a highly capitalist that built on a policy of free market, low taxation and government non-intervention. It is an important centre for international finance and trade, with the greatest concentration of corporate headquarters in the Asia-Pacific region. The GDP per capita of Hong Kong exceeds the four big economies in Western Europe (UK, France, Germany and Italy) and Japan in Asia.

The territory has little arable land and few natural resources within its borders, so it must import most of its food and raw materials. Hong Kong is the world's eleventh largest trading entity, with the total value of imports and exports exceeding its gross domestic product. Much of Hong Kong's exports consist of re-exports, which are products made outside the territory, especially in the Mainland China, and distributed through Hong Kong.

The currency used in the city is the Hong Kong Dollar. Since 1983, it has been pegged at a fixed exchange rate to the United States Dollar. The currency is allowed to trade within a range between 7.75 and 7.85 Hong Kong Dollars to one United States Dollar. The Hong Kong Stock Exchange is ranked 7th largest in the world, with a market capitalisation of about US$1.69 trillion as of February 2007. Hang Seng Index, which reflects the stock market trend in Hong Kong, is one of the famous indexes in the world.

Hong Kong's service economy accounts for over 90 percent of its GDP. In the past, manufacturing had been the most important sector of the economy. With export as the driving force, the economy began to grow fast in the late 1960s. Hong Kong underwent a rapid transition to a service-based economy in the 1980s. Many manufacturing operations moved to Mainland China during this period, and the industry now constitutes just 9% of the economy. As it became a financial centre, together with Singapore, South Korea, and Taiwan, Hong Kong was known as one of the Four Asian Tigers for its high growth rates and rapid industrialisation between the 1960s and the 1990s.

The economy suffered decline during 1998 in the Asian financial crisis, which many Hong Kong house owners became "negative asset" holders, the market values of their properties fell below the purchase prices, so they had to continue to service their debts to banks even if they sold their properties. With the strong financial support from the central government, a period of recovery followed and the 68-month-long deflationary period ended in mid-2004, with consumer price inflation hovering at near zero level. Beginning in 2003, the Individual Visit Scheme has allowed travellers from some cities in Mainland China to visit Hong Kong without an accompanying tour group. As a result, the tourism industry of Hong Kong has benefited from an increase in Mainland visitors, further aided by the opening of Hong Kong Disneyland Resort in 2005. Hong Kong is still enjoying low rates in both personal and corporate taxation. As the signing of the CEPA (Closer Economic Partnership Arrangement) with the Mainland in June 2003, the closer economic tie between Hong Kong and the Mainland will benefit the development of the two regions.


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