Hong Kong: From a British Colony to a Massive Enterprise essay

Possibly one of the economically richest cities around the world is Hong Kong. Up to this day, the city remains as the highest capitalist economy which has a policy on low taxation and free trade without any intervention from the government. The city’s free enterprise and massive marketing possibilities resulted in Hong Kong being the hub of international finance and trade, with a significant concentration of its corporate entities located in the Asia-Pacific region.

In addition, Hong Kong is wealthiest city among all the other cities belonging to the Peoples Republic of China in terms of gross domestic product (GDP) per capita and gross metropolitan product. In fact, the city’s GDP exceeds the four major economies in Western Europe, namely Germany, France, the United Kingdom and Italy and also surpasses the GDP of Japan. The city is also ranks as the eleventh largest trading entity in the world with its value of imports and exports exceeding its own GDP.

Moreover, this year, the City of London Corporation’s Global Financial Centres Index (GFCI), the body which evaluates the competitiveness of financial centers worldwide, ranked Hong Kong as the third-best financial center globally and the wealthiest and strongest in Asia. Furthermore, the rapid growing economy of the city earned it a place among the Four Asian Tigers together with Taiwan, South Korea, and Singapore which are the countries who have experienced significantly high industrial and economical growth rates after World War II, from the 1960s to 1990s.

However, before the city became the power house economy that it is today, Hong Kong first went through a history that was marked by centuries of turmoil and wars among countries fighting over the control of the land. Nevertheless, the significant events in the city’s history enabled it to develop a diverse and rich economy that is globally recognized. Pre-British period The earliest evidences of human settlement in Hong Kong can be traced to the Paleolithic Era. However, the city was first incorporated into mainland China, during the Qin Dynasty.

Years later, due to Hong Kong’s strategic location in the sea, the city was then transformed into a trading post and also a naval military base under Tong and Sang Dynasty. Its years as a part of China began to end however, after the British East India Company of the United Kingdom found a trading post in the city of Guangzhou, which is very near Hong Kong. In addition, during the 19th century, other expanding countries such as India, France, Great Britain, and even Americans realized that China, being an untapped country, could prove to be a major economic contributor in terms of marketing and trade (Welsh, 1997).

The United Kingdom’s expedition According to Tak-Wing Ngo’s book, Hong Kong’s History: State and Society Under Colonial Rule, in 1840, after the Qing Dynasty, which was Imperial China’s last dynasty, refused to engage in the import of opium, the British, under the name of Queen Victoria, three years after she succeeded the throne. The battle between China and Britain is more popularly known as the Opium Wars where in the European invaders were victorious and were formally able to occupy Hong Kong in 1841, under an agreement called the treaty of Nanjing.

In the following year, the British designated Hong Kong as its Crown Colony with the establishment of Victoria City, a city named after Britain’s queen. In 1860 China and Britain were again engaged into what is now known as the Second Opium war in which the latter emerged victorious once again. Following the defeat of the Chinese, the British, under a new agreement called the treaty of Beijing, gained control of the Kowloon Peninsula.

Moreover, in 1898, seeing that Hong Kong could not be properly defended its surrounding areas are also secured under British control, the United Kingdom obtained a 99-year lease called The Convention for the Extension of Hong Kong Territory, which authorized them to seize nearby lands that were called the New Territories. The expiration date of this lease would be on June 30, 1997 (Ngo, 1997) and this historical date would play an important role in further shaping the economy of Hong Kong. However, despite being under foreign rule, the city still flourished drastically.

The British declared Hong Kong as a free port area that would serve as a venue for global trade. The declaration of the land as a free port basically set the foundation for the massive economy that Hong Kong has today as well as a springboard for several economic turning points. Since one of the nearest major countries in Hong Kong was China, the latter became a major supplier of teas to the British who were living there. In addition, certain items, such as clocks and watches were also traded by the British to the Chinese in exchange for tea.

According to Steve Tsang’s book, A Modern History of Hong Kong, at the height of World War II, however, Hong Kong’s sovereignty was again put into jeopardy as Japan, being allied with the Axis powers, invaded the island after crushing both the British and Canadian forces who formally surrendered the city in December 25. Under Japanese rule, the city’s citizens suffered massive damages such as food shortages and the economy’s hyper-inflation. However, after the Axis powers were defeated in the war, in 1945 the United Kingdom reclaimed Hong Kong. China’s Reclamation of Hong Kong

As the expiration date, June 30, 1997 neared, talks about Hong Kong’s transfer of sovereignty began. However, the actual talks between the Chinese and the British governments began in 1982, with then British Prime Minister Margaret Thatcher spearheading the negotiations. Although the talks delivered promising benefits, such as economic and government reforms for Hong Kong, not everything went smoothly for both sides. Thatcher was pushing for a continued presence of the United Kingdom in Hong Kong even after the expiration date of the, which was strongly opposed by the Chinese government.

On the other hand, the People’s Republic of China, being the successor of the Qing Dynasty, which was the last dynasty of Imperial China, argued that all the lands seized by the United Kingdom, Hong Kong Island, Kowloon and the New Territories, should belong to them and refused to recognize the validity of the three treaties that were made to obtain these lands (Tsang, 2004). Even after Thatcher visited Hong Kong to formally negotiate with Chinese officials, the two governments could still not reach an agreement and as a result, the talks about the land’s sovereignty died down, with both sides refusing to back down.

Subsequently, Deng Xiaoping, the Chinese official in charge of the negotiations with the United Kingdom and a leader of the Communist Part of China, declared that the British government should give up its position or else the Chinese government would come up with a unilateral resolution that would ultimately decide Hong Kong’s fate. Amid the political tension between China and Britain, in 1983, a strong typhoon devastated Hong Kong and cause massive damage hundreds of properties. Moreover, the Hong Kong dollar took a nosedive which officials attributed to the rising political instability and the uncertainty of Hong Kong’s fate.

The worsening conditions in the region prompted Chinese officials to further condemn the British government for their continued refusal to entirely give up their control over Hong Kong (Tsang, 2004). Shortly afterwards, Hong Kong governor Edward Youde together with members of the Hong Kong Executive Council traveled to London to discuss with Thatcher about the sovereignty of the region and also to possibly resolve the crisis. At the end of their session, Thatcher wrote a letter addressed to the Chinese Prime Minister wherein she said that the British government is willing to give up its position of maintaining British presence in Hong Kong.

Ultimately, during official negotiations between the two governments in November 1983, the British government formally gave up its plans of a continued administration and exercise of power after the treaty expires. In December 19 1984, British and Chinese officials signed agreement called the Join Declaration wherein China would reclaim the lands seized by the United Kingdom but Hong Kong would still retain its capitalist policy. Under this agreement, Hong Kong would be an autonomous region except for In addition, the Basic Law, which is basically the mini-constitution of Hong Kong, was officially implemented on April 4 1990.

The official hand-over ceremonies of Hong Kong took place on the night of June 30 1997 (Tsang, 2004). Effects of Hong Kong’s Sovereignty Possibly one of most significant effect of the transfer of Hong Kong’s sovereignty is the economical benefits it brought to mainland China. With the addition of Hong Kong under its control on 1997, China gained a new source of economic strength. Moreover, the strategic location of Hong Kong near the sea also provides the mainland a major venue for trading and shipping.

In short, China’s recover of Hong Kong basically boosted its global status and, in effect, posed a threat to other power house countries. While the transfer of sovereignty had very little effects on China in terms of culture and lifestyle, Hong Kong, on the other hand, experienced a lot of dilemmas. One problem of the region’s residents was that it was uncertain whether or not they will be given British citizenship after Hong Kong became part of mainland China (Modi, 1997).

In addition, although the Chinese government agreed and signed the Joint Declaration in 1984, the citizens are also concerned if after several years after the transfer, they would still honor the agreement and retain Hong Kong’s capitalist system, which enabled them to become the enterprise that they are today. Despite these problems, however, at present, Hong Kong still retains its title as one of the richest cities in the world and China economic and military prowess continues to grow with each passing year.


Mondi, M. M. (1997). The Instability of Citizenship in Hong Kong. New England and Comparative Law Annual. Retrieved December 11, 2007, from http://www. nesl. edu/intljournal/vol3/hong. htm Welsh, F. (1997) A History of Hong Kong. HarperCollins Publishers Ltd. Ngo, T. (1999) Hong Kong’s History: State and Society Under Colonial Rule (Asia’s Transformations). Routledge. Tsang, S. (2004). A Modern History of Hong Kong. I. B. Tauris.