In the negotiations between the British and Chinese governments leading up to the Joint Declaration, the major anxiety for Hongkongers was the possible extension of the mainland socialist system to Hong Kong. This was quickly laid to rest by the Chinese government’s “one country, two systems” formula.
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This framework allowed Hong Kong to retain its capitalist system after the handover. The resultant provision in Article 5 of the Basic Law states: “The socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.”
Chapter V of the Basic Law acts as a charter for capitalism, granting Hong Kong autonomy in all its economic affairs. The city “shall be a separate customs territory” and may “participate in relevant international organisations and international trade agreements”.
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Hong Kong was thereby able to become a separate member of the World Trade Organization and it led to the US-Hong Kong Policy Act recognising Hong Kong’s trade and economic autonomy.
However, the recent passing of the Hong Kong Economic and Trade Office (HKETO) Certification Act by the US Congress threatens to destroy this autonomy. If the act is signed into law, American firms might have to deal with the Chinese embassy and consulates on trade matters related to Hong Kong.