What Happens to Hong Kong When ‘One Country, Two Systems’ Expires in 2047

(Bloomberg) -- When China regained sovereignty over Hong Kong from the British in 1997, it was under an agreement to allow the city a “high degree of autonomy” for 50 years. That arrangement, known as “one country, two systems,” is almost halfway to its expiration date. Months of turmoil on Hong Kong’s streets, with hundreds of thousands demonstrating against the perceived erosion of the city’s freedoms, have sharpened the focus on one question: What will happen in 2047?

1. Is there any legal arrangement?

No. As it stands, the city of 7.5 million people will lose its status as a special autonomous region along with the freedoms it enjoys under its mini-constitution, known as the Basic Law. Beyond that, Hong Kong’s fate will be a decision for the Chinese Communist Party.

2. Any indication of China’s intentions?

The only public hint of how Chinese President Xi Jinping views the issue came in 2017, when he told the party’s 19th Congress that “we should ensure that the principle of ‘one country, two systems’ remains unchanged.” Some observers interpreted his language as indicating a willingness to extend the status, or something like it.

3. What are the other options?

Hong Kong could formally join the People’s Republic with an enhanced version of the autonomy enjoyed by some of China’s more dynamic regions, such as the special economic zone that encompasses Shenzhen. The privileges of those zones, however, relate to business and trade rather than democratic governance or an independent judiciary.

4. How did it come to this?

As an outpost of the British Empire for 156 years, Hong Kong’s citizens were denied the right to vote for their leader, but enjoyed other freedoms that helped transform the city into a global business hub. The 1984 Sino-British joint-declaration, which set out the terms of the handover, included guarantees of free speech, a free press, capitalist markets and English common law. Many in Hong Kong don’t want to give up those freedoms and are demanding greater self-determination -- a call that’s gained urgency as China increasingly asserts its authority over restless outposts such as Xinjiang, Tibet and Hong Kong itself.

5. What happens to the economy?

Hong Kong’s distinct governance helped it become the primary gateway for foreign investment into China, in part because many global companies don’t trust the mainland’s regulators and legal system. The U.S. also considers Hong Kong distinct from the rest of China for trade purposes, which means, among other things, that it’s exempt from President Donald Trump’s tariffs on Chinese goods. U.S. lawmakers from both major parties have said they will reconsider Hong Kong’s special status if they believe China is undermining the city’s autonomy. There’s no mention in the U.S. law of what happens post-2047.

6. Will ‘one country, two systems’ last until 2047?

It’s an arrangement that works for China in many ways, including by underpinning Hong Kong’s status as a global financial hub. China has an interest in preserving the city’s status because it’s seen as a model for the reunification of Taiwan, Jonathan Robison wrote in a article published by the Center for Strategic & International Studies. He argues that “one country, two systems” should not be viewed as a framework for liberal democracy -- something Hong Kong never had even under the British -- but as a compromise over what the Communist Party can tolerate.

The Reference Shelf

• Protests raise ominous questions about “one country, two systems.”
• Robison’s CSIS article on whether Hong Kong’s system will survive.
• QuickTakes on the 2019 protests, China’s military presence and Hong Kong’s autonomy.
• A Bloomberg infographic charts the 2019 protests.
• Hong Kong’s Basic Law.

To contact the reporter on this story: Matthew Campbell in Singapore at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Grant Clark, Paul Geitner

©2019 Bloomberg L.P.