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Becoming Part of One National Economy: Maintaining Two Systems in The Midst

of The Rise of China

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Reflection

According to Sung, 2018, economical trade is considered shallowly integrated when

products are traded since they may be done at arm's length and do not need considerable human

interaction. In contrast, service integration is considered deep integration since services are

conducted directly on individuals. Customers must either go to the producer's location directly in

the services industry, or producers must invest directly in another country to offer services there.

The services industry needs a high volume of face-to-face interactions. As a result of Hong

Kong's 1997 return to China, services have become more integrated and need more coordination

between Hong Kong and the rest of China. Not much progress was made in services integration

during the first five years of Hong Kong's return. The ruling elite was wary of the negative

effects of deep integration on Hong Kong's autonomy and international image. Only in January

2003, around five and a half years after Hong Kong's return to British rule, was a tiny but

significant step toward economic integration the 24-hour operation of a single passenger border

crossing between Hong Kong and the Mainland adopted (Sung, 2018).

Indeed, Since China's openness in 1979, the economic interdependence between the

Chinese Mainland and Hong Kong has been extraordinarily fast. Economic integration between

Hong Kong and the Mainland began due to market forces and was initially unplanned. By taking

advantage of reduced salaries and prices (Jones, 1999), Hong Kong's export-oriented

manufacturing businesses shifted over the border in large numbers, quickly building a global

factory in Guangdong that relied on Hong Kong for producer services. Hong Kong's

transformation from a labor-intensive manufacturing base to a global services center has been

remarkable (Sung, 2018). The Mainland and Hong Kong have become the most important

trading and investment partners for each other. Alternatively, the Mainland's early integration
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with the global economy was confined to foreign investors who used the Mainland as a

manufacturing base for labor-intensive, export-oriented products. For consumer products,

China's domestic market was not extremely open.

In the early years of China's openness, Hong Kong played a significant role since it was

the primary middleman in China's foreign commerce and investment (Jitaru et al., 2017). A

Special Economic Zone (SEZ) in Shenzhen, China, was designed expressly with Hong Kong in

mind to take advantage of the SEZ's many economic prospects. From 1997 to 2003, Hong

Kong's economy was in crisis and stagnated, whereas the Mainland's economy was rapidly

developing. To strengthen its economy, Hong Kong has to make changes to its policies in order

to take advantage of possibilities on the Mainland and leverage its relationships there. Economic

integration with the Pearl River Delta (PRD), the natural hinterland of Hong Kong and

Guangdong's primary economic area, was one of Hong Kong's policy goals.

The Framework of integration

When Hong Kong returned to China's control in 1997, the Basic Law, a mini-constitution

approved in April 1990, detailed the foundation for economic integration between Hong Kong

and the Mainland. International and national economic integration may be found in economic

integration under "One Country, Two Systems." If you look at Hong Kong and China as two

separate economies, the two economies seem to be intertwined rather than separate. Hong Kong

will keep its currency (the Hong Kong dollar) and central bank, allowing it to remain fiscally and

monetarily independent. To facilitate commerce, Hong Kong would remain a free port, a distinct

customs territory, and a World Trade Organization (WTO) member. Hong Kong would preserve
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the free movement of capital with unfettered convertibility, no exchange restrictions, and its own

immigration rules to flow money and labour.

Additionally, Hong Kong will have its ship and plane registry. Economic integration

between Hong Kong and the Chinese Mainland is more difficult than among EU members

because of the "Two Systems" institutional framework. EU members share one common external

tariff and negotiate as one in international commerce. The European Union is a united customs

territory, but Hong Kong and the Mainland are independent customs territories with differing

external tariffs. Hong Kong and the Mainland are not part of an EU customs territory. In this

case, Hong Kong has a free port while China has tariffs. Second, EU firms can set up shop in

other EU members and supply services there. Despite the 2003 Mainland-Hong Kong CEPA's

liberalization of services, the movement of goods and services between the two countries

remains restricted. There is no free movement between Hong Kong and the Mainland in the EU.

Three fundamental asymmetries define economic integration between the Mainland and Hong

Kong: variations in economic development level, economic scale, and degree of openness.

Economic integration

'One Country, Two Systems' has advantages and disadvantages for Hong Kong. It is

easier to tap into China's vast pool of human capital, technological know-how, and financial

resources when the country is unified under a single government (Cheung, 2014). The central

government can also provide policy support by utilizing Hong Kong as a global hub for

Renminbi internationalization. Local salaries, social services, and income distribution all suffer

due to immigration. Hong Kong's economy is likewise susceptible to changes in the Mainland.

Numerous advantages may be gained by using two systems at the same time. It means that Hong
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Kong may continue to run its government and courts and its budget and currency. Customs and

financial matters in Hong Kong are mostly independent of the rest of China. Two systems come

with a price tag. Several systemic disparities between Hong Kong and the Mainland make policy

cooperation challenging. For Hong Kong citizen, working and living on the Mainland is also a

challenge. Another theory is that Beijing prefers the financial centre of Shanghai over Hong

Kong because Hong Kong is more difficult to manage (Jayasuriya, 2006).

There are numerous areas where Hong Kong and the rest of China may complement each

other, despite the growing rivalry. The political, legal, cultural, and social landscapes of Hong

Kong and the Mainland are very different. According to geopolitics, China's rise to power poses

a danger to its neighbours, whereas Hong Kong is an open, cosmopolitan city welcoming to the

business community (Clark, 1989). For the HKSAR passport, 156 countries/territories have

allowed visa-free entry; just 50 countries/territories have done the same for the Chinese Passport.

Only in Hong Kong are property rights and individual liberties protected by a common law

system. As might be expected, Beijing is well aware of Hong Kong's role as a global arbitration

centre.

PART 2

Following the "one nation, two systems" principle, Hong Kong returned to Chinese

control in 1997. Hong Kong's Basic Law codifies this system and grants territory-wide latitude in

all areas except defence and foreign policy. The Chinese government views it as a strategy to

integrate Hong Kong into the country's overall economy fully (Information Office of the State

Council, 2014). With this agreement, Hong Kong citizens should expect greater control over

their government and judiciary and civil freedoms and progress toward a more democratic
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society. To persuade Taiwan to join China, "One nation, two systems" was established in 1981,

promising Taiwan a high degree of autonomy and an unaltered economic system if it agreed to

join.

Despite Hong Kong's independence in economic matters, the 'One Country' principle

dictates that Hong Kong's sovereignty in these matters must be subordinated to China's national

interests. For example, Beijing might compel Hong Kong to follow suit if China imposes a trade

embargo on another country due to war or foreign policy issues. Because they are considered

Chinese citizens, Hong Kong Chinese do not need a visa to access the Mainland. Mainland-Hong

Kong economic policy coordination is challenging because of the significant contrasts between

the two systems, yet the two economies are increasingly coordinating their economic policies

(Ng et al., 2016).

Academic autonomy, freedom of speech, press and publishing, freedom of organization

and quality before the law, and the right to protest, strike and vote are all included in the

protection of civil freedoms detailed in the Basic Law (Morris, & Vickers, 2015). International

Covenant on Civil and Political Rights (ICCPR) clauses are also applicable in Hong Kong.

Human rights in Hong Kong have been particularly sensitive since the P.L.A. removed protestors

from Tiananmen Square in 1989. Civil liberties were cited as a major issue in the 2003 national

security law debate. These challenges to Hong Kong civil rights have escalated substantially in

recent years. These may be regarded from the perspective of a tightening of security rules and

freedom of speech on the Mainland. They offer little to promote the ongoing usefulness of "one

nation, two systems" as a legitimating ideology

Pro-establishment and democratic organizations have long clashed over the lack of a

schedule for drafting Hong Kong's new constitution. It was hoped that two clauses of the Basic

Law, which declared that universal suffrage would be the ultimate goal, would lead to success

for pro-democracy parties, who have garnered up to 60% of votes in Legislative Council

elections but have never been able to win the same number of seats (Ortmann, 2016). The

democrats were shocked and disappointed by these events, which they saw as a breach of the

Basic Law and the promises made under the slogan "one nation, two systems." When young

people were more disillusioned with growing economic inequality, overpriced housing, and

limited chances for social mobility, they turned their anger toward the democratic process and

policies that were more responsive to their concerns. The Umbrella Movement's emphasis on

genuine universal suffrage was legalistic as the Scotts, (1993) points out, in contrast to the false

universal suffrage offered by the governments of China and Hong Kong. The general idea of the

1990s that what was put into law under "one nation, two systems" would come to fruition seems

to be the source of this legalistic approach.

Legitimating like "one nation two systems", preservation needs to be altered and

maintained in light of changing conditions. It is necessary if they are to be sustained. There may

be no requirement for the Chinese government to conduct a review of a concept that has

successfully served to reassure anxious Hong Kong citizens that their way of life, civil liberties,

and economic and legal systems would be preserved after 1997. This concept has been called the

"one country, two systems" formula. Because China has sovereignty over Hong Kong and

because Hong Kong is a part of China, the only justifications required to speed up the process of

integration are that China has sovereignty over Hong Kong and that Hong Kong is a part of

China. Mainland officials seem increasingly intent on speeding up the process. It is possible that
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the slogan "one nation, two systems" still has some propagandist value and some bearing on the

state of the economy (Scotts, 2017).

However, suppose the steadily increasing number of breaches of its core premises and

assurances are allowed to continue. In that case, it will be nothing more than a shell of what

many people in Hong Kong believed was meant to be the result of these reforms. Fewer than half

of those who took part in the Public Opinion Poll conducted by the University of Hong Kong at

the end of 2016 expressed trust in the "one nation, two systems" formula. Suppose there is no

indication that there will be beneficial improvements to the electoral system, the preservation of

civil freedoms, judicial independence and the rule of law by 2047 when the Basic Law expires.

In that case, confidence is likely to collapse much more. Both rapid incorporation of Hong Kong

into China and a gradual continuation along the current scenario would have very negative

repercussions for Hong Kong. However, the latter will likely have more of an impact. The first

option will most likely result in additional radicalization and an increasing lack of faith in the

notion of "one nation, two systems," whilst the second option will not alleviate the challenges

involved with putting the concept into practice. Every time there is an allegation that "one nation,

two systems" has been broken, another nail is driven into its coffin. Suppose action is not done

quickly on both sides of the border to prove that the notion implies something more than hollow

promises. In that case, its days as a legitimating ideology seem to be numbered, and its days as a

legitimating ideology appear to be numbered.

References

Cheung, C. Y. (2014). Hong Kong's Systemic Crisis of Governance and the Revolt of the 'Post-

80s' Youths. New Trends of Political Participation in Hong Kong. Hong Kong: City

University of Hong Kong Press, Print, 417-448.

Clark, D. (1989). A high degree of autonomy under the Basic Law: An analysis. Hong Kong:

The challenge of transformation, 153-188.

Information Office of the State Council. (2014). The practice of the "One Country, Two

Systems" policy in the Hong Kong Special Administrative Region.

Jayasuriya, K. (2006). Law, capitalism and power in Asia: the rule of law and legal institutions.

Routledge.

Jitaru, Loredana & Popescul Dumitrașciuc, Lorena. (2017). China’s Rise and Its Implications for

the Global Economy. Analele Universitatii Ovidius Constanta. 17. 48-50.

Jones, C. (1999). Law as a substitute for politics in Hong Kong and China. Law, Capitalism and

Power in Asia, 38.

Morris, P., & Vickers, E. (2015). Schooling, politics and the construction of identity in Hong

Kong: The 2012 "Moral and National Education" crisis in historical context. Comparative

Education, 51, 305–326

Ng, J., Lau, C., Lam, J., & Cheung, T. (2016). Barred Hong Kong localists vow to keep fighting

after the High Court decision. South China Morning Post, 16.

Ortmann, S. (2016). The lack of sovereignty, the Umbrella Movement and democratisation in

Hong Kong. Asia Pacific Law Review, 24, 108–122.

Scott, I. (1993). Legitimacy and its discontents: Hong Kong and the reversion to Chinese

sovereignty. Asian Journal of Political Science, 1(1), 55-75.

Scott, Ian. (2017). "One country, two systems": the end of a legitimating ideology?. Asia Pacific

Journal of Public Administration. 39. 83-99. 10.1080/23276665.2017.1325619.

Sung, Y. W. (2018). Becoming part of one national economy: Maintaining two systems in the

midst of the rise of China 1. In Routledge Handbook of Contemporary Hong Kong (pp.

66-85). Routledge.