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In the early
20th century Hong Kong began a gradual shift away
from trade to manufacturing. This move was hastened
by the civil war in China during the 1920s and
by the Japanese invasion in the 1930s, when Chinese
capitalists fled to the safer confines of the
colony. When the US embargo on Chinese goods during
the Korean War threatened to strangle the colony,
it was forced to increase its manufacturing capacity
and develop service industries, such as banking
and insurance. Hong Kong's existence was threatened
again when the Communists came to power in China
in 1949 and during the Cultural Revolution in
the 1960s. Although the Chinese could have re-taken
Hong Kong with ease, a precarious peace prevailed.
In December
1984, the British agreed to hand over the entire
colony when the lease on the New Territories ran
out in 1997, rather than hang on to a truncated
colony consisting of Kowloon and Hong Kong Island.
The agreement theoretically allows Hong Kong to
retain its pre-1997 social, economic and legal
systems for at least 50 years after 1997. As the
handover approached, controversies raged over
the building of Hong Kong's expensive new airport
and the amount of democracy the Chinese were willing
to accept.
Hong Kong
has suffered fallout from Asia's economic crises
in the late 1990s, and has experienced rising
unemployment, falling property prices and close
to zero growth. However, although not as robust
as it has been, Hong Kong is still a vibrant financial
centre - and one of the world's great cities.
China's official policy with regard to Hong Kong
is 'one country, two systems', and the common
view is that as long as Hong Kong continues to
make money (and little noise) its autonomy is
assured. But a number of crucial interventions
by Chinese authorities in Hong Kong's affairs
have made it evident that there is not quite as
much autonomy going on as the slogan suggests.
Nevertheless, the European Commission has described
Hong Kong as one of the freest societies in Asia
despite not having full democracy. It appears,
on the surface, that little has changed since
the handover.
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