Analyze how the financial relationship of Hong Kong and China has been affected by the policy.

Analyze how the financial relationship of Hong Kong and China has been affected by the policy.

Introduction “One country, two systems” is a policy (“the policy”) introduced by Deng Xiaoping during the late 1980s (Chan & Cheng, 2000). It involved finding peaceful co-existence between citizens from otherwise traditional Chinese territory but somewhat isolated from PRC and citizens of mainland China in both cultural terms and economic terms. The goal of the policy was to aid the reunification of such territories, including Hong Kong and Macau, into China. The policy first came into use in 1997 when Hong Kong was handed over to China by Britain. Hong Kong had a large degree of autonomy. It was allowed to maintain its system of administration and governance, with little interference from Beijing. Mainland China, holding a communist ideology, runs completely different to the Hong Kong administration in many aspects. Twenty years after the introduction of the policy to Hong Kong, numerous questions have arisen on how this may affect the financial relationship between Hong Kong and China. I find this topic worth exploring, as it not only links to the historical context of the 20th century China, but is also of great importance to our analysis of contemporary Chinese economy with reference to two economic systems. The primary aim of my research is to analyze how the financial relationship of Hong Kong and China has been affected by the policy.