Hong Kong became a part of the British Empire in the mid-19th century. During the next several decades, migrants from mainland China led the island's population to grow. In the 1970s, Hong Kong went through a major economic boom and was nicknamed the “Asian Tiger.”
Following the 1984 Sino-British Joint Declaration on the Question of Hong Kong, the island was transferred back to Chinese control in 1997. Hong Kong is now ruled according to a mini-constitution: the Basic Law. China promised that, under its "one country, two systems" formula, China's socialist economic system would not be imposed on Hong Kong for at least 50 years to its Special Administrative Region. This agreement protects all areas except foreign and defense affairs.
Pro-democracy forces would like there to be more political freedom, but proposals for electoral reforms were defeated in 2005. China continues to control Hong Kong’s defense and foreign policies. The island has its own currency system.
On the economic field, Hong Kong’s deepwater port, one of the busiest in the world, and its financial industry – once the bright and shining light of East Asia – now face competition from the rise of rival economic centers in the mainland. The territory’s economy is moving from manufacturing to services, focusing on financial services, logistics, tourism, and professional services.
Hong Kong has a Closer Economic Partnership Arrangement with mainland China that allows its companies access to Chinese markets, especially in the services area, as Hong Kong suppliers are given preferential treatment. By September 2007, one-third of the companies listed on the Hong Kong Stock Exchange were from the mainland. Companies in Hong Kong employ millions of workers in the Chinese province of Guangdong, which borders the territory. Hong Kong still remains a major corporate and banking center and also a passageway for China’s ever-expanding exports.
Current concerns include air and water pollution, the results of heavy urbanization.
Last updated: July 7, 2010
Sources: BBC, UN Data, World Bank, International Crisis Group, CIA World Factbook.