Difference Between Hong Kong and China

Hong Kong Sky Line

Hong Kong vs China

Despite being an economic superpower and an international financial hub, Hong Kong does not have a clear identity. Is it a part of China or is it an independent country? In general, replying to this question is easy. To be considered an independent country, a nation must have:

• Territorial integrity;

• Sovereignty;

• Population; and

• Recognition of all other countries.

The last point – recognition of all other countries – often creates problems. In fact, as in the case of Palestine and Taiwan, if one – or more countries – do not recognize the nation as sovereign and independent, the country of concern cannot be part to international treaties and cannot be an official member of international organizations such as the United Nations.

In the case of Hong Kong, the situation appears to be even more blurred. In fact, while the central Chinese government manages and controls Hong Kong’s military and entertains all international relations with foreign countries, Hong Kong maintains its own passports and currency as well as independent executive, legal and judicial systems.

Historical perspective

The separation between Hong Kong and mainland China dates back to the 19th century – at the time of the Opium Wars between China and Great Britain (1839-1860). At that time, China was forced to cede Hong Kong – as well as a part of Kowloon – to Great Britain “in perpetuity”. However, in 1898, the two countries signed a 99-year lease, which ended in 1997. Therefore, at the end of the 20th century, Great Britain returned Hong Kong to China as a Special Administrative Region (SAR) called HKSAR – the Hong Kong Special Administrative Region of the People’s Republic of China. Since then, the autonomy of Hong Kong has been defined and limited by the Basic Law. The Basic Law is in accordance with the Chinese Constitution and institutionalizes the policy of the “one country, two systems.” According to the Basic Law ¹ :

• The HKSAR enjoys a high degree of autonomy;

• The HKSAR has executive, judicial and legislative powers;

• The HKSAR must respect the Basic Law – as such, no law enacted by Hong Kong can contravene or breach the Basic Law;

• The HKSAR can embrace the capitalist system instead of the communist system of mainland China;

• The Central People’s Government (CPG) of mainland China is responsible for the military defense and the foreign affairs of the HKSAR;

• The HKSAR is headed by the Chief Executive who must be a Chinese citizen and must have resided in the HKSAR for at least 20 consecutive years. The Chief Executive is directly accountable to the Central Chinese Government; and

• As international financial hub and free port, the HKSAR is allowed to have its own markets for foreign exchange as well as its own currency (the Hong Kong Dollar – HKD).

Hong Kong vs China ²

The main differences between Hong Kong and China are:

• Form of government;

• Currency;

• Executive, judiciary and legislative systems; and

• Economic system.

1. Government

It is widely known that China has a communist, one-party system and that the President is the undiscussed chief of state. The Chinese Communist Party (CCP) has strict control over the entire population and enacts a federal system to enhance economic development. In fact, as China has a huge territory and a growing population, the CCP deferred part of the economic control to local authorities – which are directly accountable to the central government. The Chinese Communist Party strictly prohibits protests and dissent, and exercises a tight control over education, religion and public space.

Despite the proximity with one of the most authoritarian governments of our age and the strong ties with the CCP, Hong Kong has a limited democracy. Here, protests and dissent are allowed and not forcibly repressed, and the civil society has a larger space to express its opinions and demands. While the Chief Executive is the head of Hong Kong, the government of the HKSAR must recognize the Chinese President as chief of state.

2. Currency

Hong Kong is considered an international economic and financial hub with an incredibly strong economic capitalist system. Due to the British influence, the HKSAR continues to use the Hong Kong Dollar (HKD) – managed by the Linked Exchange Rate System – whereas mainland China uses the Chinese yuan. In Hong Kong, the Chinese yuan is not always accepted.

3. Executive, judiciary and legislative systems

According to the Basic Law, Hong Kong is allowed to have independent executive, judicial and legislative systems, as long as their actions do not contravene the basic principles of the Chinese Constitution (and of the Basic Law). The HKSAR’s legal and judicial system are based on the model of the British Common Law, but for family and land matters, Hong Kong relies on the Chinese customary law model. While the HKSAR has its own judicial system and its own police force, the government of mainland China is believed to interfere in local Hong Kong’s policies.

4. Economy ³

In the last few decades, China has moved from a closed, strictly controlled, centralized economic system to a more open, market-oriented one – to the point that today we talk about “Chinese-style Capitalism” , which means that economic liberalization is occurring under tight political control. The main economic reforms include the liberalization of prices, increased autonomy for private companies and state enterprises and an opening to foreign investment and trade. In 2010, China became the world’s largest exporter and President Xi Jinping has undertaken steps to foster long-term economic growth.

The HKSAR is an international economic and financial hub, based on the free-market, capitalist system and is highly dependent on international trade. As such, Hong Kong’s economy is exposed and vulnerable to international shifts and market volatility. In fact, the HKSAR was deeply affected by the dramatic economic crisis of 2008, but its strong economic ties with China helped it recover quicker than expected. Hong Kong’s economy is characterized by low taxes, free trade and little governmental interference.

Strong ties

Despite the substantial differences, the Hong Kong Special Administrative Region of the People’s Republic of China and mainland China maintain continue to be strictly linked in two main areas:

• International relations; and

• Military defense.

1. International relations

As far as international diplomacy is concerned, Hong Kong and China do not have separate identities. In fact, the HKSAR does not – and cannot – have independent representation in the main international organizations and institutions, including the United Nations and all its bodies, the International Labor Office, the United Nations Conference on Trade and Development etc. However, Hong Kong may participate in trade-related events using the name “Hong Kong, China”, and can attend some meetings of the World Health Organization, the International Monetary Fund, and the Asian Development Bank. Furthermore, the HKSAR cannot have independent diplomatic relations and ties with other countries; all diplomatic procedures are conducted and supervised by the Ministry of Foreign Affairs of mainland China.

2. Military defense

As per the Basic Law, the People’s Liberation Army Hong Kong Garrison is a garrison of the Chinese People’s Liberation Army (PLA). In fact, as a non-sovereign country, the HKSAR cannot have an independent military apparatus and has to rely on the Chinese forces. According to the Basic Law, the central Chinese government is responsible for the defense of the HKSAR and the CCP has to pay for the military costs. The presence of the PLA in Hong Kong is a symbol of the tight control exercised by China over the Hong Kong Special Administrative Region for the People’s Republic of China.

Summary

The differences between China and Hong Kong date back to the British occupation, when Hong Kong became a British colony and was only returned to China in 1997, under the name of Hong Kong Special Administrative Region for the People’s Republic of China. China continues to recognize partial independence to Hong Kong and the Basic Law defines the institutionalization and the provisions of the so-called “one country, two systems” policy.

Hong Kong and China differ on several substantial issues:

• China has a one-party, communist system while Hong Kong is partially democratic;

• Hong Kong has independent executive, judicial and legislative systems;

• Hong Kong has the HKD (Hong Kong Dollar) while China has the Chinese yuan (or renminbi);

• Hong Kong has independent police forces;

• Hong Kong maintains its own passports: Chinese citizens wishing to visit Hong Kong and vice versa must apply for visas;

• Hong Kong is an international financial hub, based on the free-market, capitalist system, whereas China is based on a communist system – even though it has recently started to open up and to embrace capitalism;

• Hong Kong cannot have independent representation in international organizations such as the United Nations;

• Hong Kong does not have an independent military apparatus but relies on the Chinese People’s Liberation Army; and

• Hong Kong cannot have independent diplomatic relations with other countries.

Even if officially Hong Kong and China remain one country, the differences between the two appear almost impossible to bridge. As such, the policy of “one country, two systems” seems to be the most appropriate solution.