Dubbed as the Pearl of the Orient and a symbol of freedom and prosperity in the Asian region; it functions as a special window for China to connect with the outside world and is a special region for China to implement "one country, two systems".
In the course of China's opening up, Hong Kong as the special window and channel has contributed greatly to China. As an international financial center and free port, most international capital and trades have entered the Mainland through Hong Kong, and foreign investment and trade in the Mainland have often reached out to the world through Hong Kong. Since the reunification in 1997, the central government has provided Hong Kong with an institutional guarantee to maintain its special characteristics with "one country, two systems." As China's overall opening up has deepened, the Mainland has raised various questions and discussions about the status and role of Hong Kong. For example, as the Mainland becomes more open to the outside world, does it still need Hong Kong as the window? Does it want to include Hong Kong in the Mainland's economic system? How should Hong Kong be positioned in the development of the Greater Bay Area of Guangdong, Hong Kong, and Macau? These problems have not only caused a lot of controversy in China and Hong Kong but also in the international arena. Recently, with growing trade friction between the United States and China, the United States-China Economic and Security Review Commission (USCC), a subordinate to the U.S. Congress, recently recommended that the U.S. Department of Commerce cancels the special tariff status of Hong Kong and treat Hong Kong as the same customs territory as the Mainland. The report has caused a lot of reactions in Hong Kong as it might affect the future and destiny of Hong Kong.
As an independent Chinese think tank that has long been tracking the development of Hong Kong, Anbound's scholars believe that the "one country, two systems" established in the Chinese Constitution and the Basic Law of the SAR is the cornerstone of Hong Kong's special status. From the perspective of history and reality as well as future development, Hong Kong's special status should be ensured for a long time. This is not only an expedient measure for Hong Kong's reunification with Mainland China but also a strategic layout for China's long-term development.
Historically, since the founding of New China, although Hong Kong has not been reinstated, Hong Kong was a special window for the mainland to connect with the world, especially with Western developed countries. People, knowledge, technology, and goods came to the mainland through Hong Kong. This was unique for China and not found in other countries, and it allowed China to receive emerging technologies and commodities when it faced blockade, making China keeping up with the trend of the times, and paving the way for China's reform and opening. To a certain extent, the presence of Hong Kong had helped China avoid the fate of some former socialist countries in the Soviet Union and Eastern Europe. At the same time, Hong Kong's window role brought prosperity and economic take-off to Hong Kong itself.
In reality, the role of Hong Kong as a free port and international financial center has not been weakened by the opening up of the Mainland after the reunification, but rather it has been further consolidated and developed. The entrepot trade and the size of the financial market in Hong Kong have continued to increase; both Hong Kong and the Mainland have benefited from investment and trade to the internationalization of the RMB and the opening of the Mainland capital market. This also shows that under the institutional arrangement of "one country, two systems", the special status of Hong Kong and the institutional differences between the two countries are not obstacles to the economic development of these two places; rather it is an advantage for common development.
From the perspective of future development, although Hong Kong's proportion in the entire Chinese economy is declining, it still plays a pivotal role in the Pearl River Delta, one of the two engines to drive the Chinese economy, and still plays an important role in regional economic development. If Hong Kong is no longer vibrant, it would lose its uniqueness, its freedom and the rule of law, and ultimately leads to decline in Hong Kong's economic strength, and the Pearl of the Orient would lose its luster. The impact can be far more than Hong Kong itself; it will also cause the development of Shenzhen, Guangdong, the Pearl River Delta, and even southern China to be severely affected. This potential huge impact and loss will bring the enormous cost to China's economic development. In addition, if Hong Kong cannot become a long-term success model of "one country, two systems", it will also affect cross-strait relations and even affect the future of Taiwan. Therefore, maintaining Hong Kong's uniqueness, its status as a free port and the characteristics of its rule of law society has become an important prerequisite for maintaining its prosperity.
Although "one country, two systems" provides Hong Kong with institutional guarantees, as the mutual influence of the economy and society between the Mainland and Hong Kong is deepening, the "infiltration" and changes in the Mainland to Hong Kong will continue to occur. One question that cannot be avoided is that, will there be actual "Mainlandization" of Hong Kong? The basic core of "one country, two systems" protects the uniqueness and prosperity of Hong Kong; therefore, maintaining the system of Hong Kong under the political framework of "one country, two systems" has become a big issue concerning the destiny of Hong Kong. Hong Kong's legal system, trade rules, and its linked exchange rate system are the foundations of its free port of trade and capital; these special systems cannot be replicated for the Mainland and are the basis for Hong Kong's prosperity and further development. The advantages of legal, professional and financial services brought by the uniqueness of these systems in Hong Kong will benefit the economic development of Guangdong, Hong Kong and Macao, and will increasingly become a hub for the development of the Belt and Road Initiative.
From a longer-term perspective, the implementation of different systems in the Mainland and Hong Kong has also enabled China's development to maintain institutional diversity. Under "one country, two systems", the Mainland and Hong Kong can learn from each other, complement each other and promote each other, which is more conducive to China's long-term stability and lasting prosperity. This should be the vision of the "one country, two systems". We believe that regardless of Hong Kong or the Mainland, there should not be simplified homogenization due to the increasingly close links between politics, economy, society, and culture. Although Hong Kong's special status may face some short-term fluctuations, in the long run, the difference between the two systems will bring vitality to the Victoria Harbour and attracting dynamics from overseas, which is much better than remaining stagnant.
If the United States uses the Hong Kong customs territory as a bargaining chip for the U.S.-China trade negotiations, China should maintain Hong Kong's special status rather than "Mainlandize" it. This will not only further demonstrate China's determination to open up to the outside world, but also make it easier to break the blockade and the barriers of trade protection. Some analysts in Hong Kong also believe that even when the U.S.-China relations are bad, the United States needs Hong Kong as a connecting point with China; this is something that other cities cannot replace. Especially during the trade war, American companies need Hong Kong financing and trade, and China allows the United States to carry out activities at the economic and trade level of Hong Kong. If Hong Kong is "Mainlandized", or if the United States achieves a "full blockade" against China, then all parties will lose room for manoeuvre, which would lead to losses for both sides.
Final analysis conclusion:
Hong Kong's status as the Pearl of the Orient and a special window is historically formed and recognized by the world's business and capital. It has brought diverse customs and culture to China, allowing tolerance and freedom to take root here. Such a free port and international financial center provide a pivot for China's participation in economic globalization and an important bridge connecting China with the United States, Europe, and Southeast Asian countries. With counter-globalization and U.S.-China trade frictions, maintaining Hong Kong as a unique window is of great significance for China.
