China's Golden Goose: The Economic Integration of Hong Kong‪.‬

AT MIDNIGHT ON JULY 1, 1997, GREAT Britain's 99-year lease on Hong Kong will expire, and jurisdiction over one of the most modern capitalist cities in the world will officially pass into the hands of the People's Republic of China (PRC). Hong Kong presents China with a great economic opportunity. Hong Kong is the world's eighth largest trading entity and the sixth busiest foreign exchange market. Its growth has been exceptional. In the 1990s, Hong Kong's real GDP has grown by approximately five percent per year. With a 1993 per capita GDP of US$18,800, Hong Kong ranks alongside Great Britain and Australia in income--an impressive accomplishment for an island only 75 square kilometers in size. This spectacular growth has occured despite the fact that, since 1984, Hong Kong's economy has been shadowed by the impending change in government. In 1984, China denied Great Britain's efforts to renew its lease on the colony. The only agreement that Britain could attain was the Sino-British Joint Declaration. In this statement, Britain agreed to give up its colony on July 1, 1997, on the conditions that Hong Kong would maintain a high degree of autonomy and that its lifestyle would continue unchanged for the next 50 years. After July 1, 1997, Hong Kong would become a special administrative region (SAR) within the PRC. This policy is known as "one nation, two systems."