Kevin C.

Arreglo Socio101 MWF(4:30-5:30 PM)

Democratic Crisis in Hong Kong

Hong Kong exists as a Special Administrative Region controlled by The People’s Republic of

China and enjoys its own limited autonomy as defined by the basic law. The Principle of “one country,

two system” allows for the coexistance of the socialism and capitalism under “one country,” which is

mainland China.

To understand the root of Hong Kong’s separation from the mainland, one must go back to the

opium wars between Great Britain and China. During the military and trade clashes, China was forced to

code Hong Kong Island and a part of Kowloon to Great Britain in perpetuity. In 1898, Britain negotiated a

major land expansion of the Hong Kong colony and signed a ninety-nine year lease with China. The lease

ended in 1997, at which time Britain retured Hong Kong to China peacefully as a Special Administrative

Region of the People’s Republic of China. Under the doctrine of “one country, two systems,” China

allowed the former colony to continue to govern itself and maintain many independent systems for a

period of fifty years.

For the first decade after the handover of the treaty, China respected that treaty as HongKong

was China’s most economically productive city. In the early nineties before the hand over, the one cities

economy was more than a quarter of the size of China’s entire economy. This make sense that China

would agree on the agreement stated in the treaty, to keep HongKong economically free. As China’s

rapid economic development has diminished Hong Kong’s relevance to mainland over time, thus giving

China leeway in treating Hong Kong with a heavy hand. Though Hong Kong’s economy has shunk relative

to the mainland’s, it remains vital to China as a whole. Hong Kong’s importance to the Chinese economy

is disproportionate to its size. Since Hong Kong’s handover in 1997, China has developed massive

economic and business interests in the territory. The Chinese leadership realizes that for the sake of its
Kevin C. Arreglo Socio101 MWF(4:30-5:30 PM)

own prosperity, China still needs a capitalist Hong Kong. However, Beijing must know that preserving

Hong Kong’s unique economy means more than allowing free enterprise. It entails a strong and

unwavering commitment to its rule of law, the key to Hong Kong’s economic success.

The case of ample liqudity in Hong Kong is that the Hong Kong’s short term interest rate have

not followed long term interest rate is that Hong Kong has too much liquidity. It’s not difficult to

understand that the money comes from mainland China as cross-border businesses between the two

have continued to increase. The risk of tighter liquidity in Hong Kong could come from increasing

regulations about money leaving in China, but the risk is not high. (Pang, 2018)

Underlying all the advantages Hong Kong possesses over the mainland is the territory’s core

strength of rule of law the very cause that over a million Hong Kongers have taken to the streets to

defend since June 2019. Beijing needs to understand that preserving Hong Kong’s capitalist system

distinct from the rest of China is in its own best interests. It entails adherence to free-market capitalism

and, more importantly, an unwavering commitment to the rule of law, which no one should take for

granted.
Kevin C. Arreglo Socio101 MWF(4:30-5:30 PM)

Pang, I. (2018, April 26). Hong Kong: Is proximity to China still an advantage? Retrieved from
https://think.ing.com/articles/hong-kong-is-proximity-to-china-still-an-advantage/#a4