In the first 100 of its 150 years of ruling the region, the UK made use of Hong Kong as a useful warehousing and distribution center for its trade in South China. The region began taking shape towards its current form from 1949, when hundreds of thousands of people fled there from China with the communist takeover of the mainland. Aided by its strategic location and the growing number of inhabitants, Hong Kong quickly became an economic success and a center for manufacturing, commercial, finance, and tourism.
In July 1997, China regained sovereignty over the region, according to an agreement signed by China and the UK in December 1984. This agreement made it into the Hong Kong Special Administrative Region (SAR) of the People’s Republic of China. Under the agreement, China promised that its own socialist economic system would not be imposed on Hong Kong and that Hong Kong would enjoy a high degree of autonomy in all matters except for foreign and defense. China’s policy is dubbed the “one country, two systems” formula and is officially set to last to 2047.
Hong Kong has one of the world’s most active and open economies, enabling it to respond quickly to changing circumstances. The region boasts a number of additional economic strengths, including a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves and an able and strictly enforced anti-corruption system. With China joining the World Trade Organization (WTO), Hong Kong has strengthened its efforts at establishing itself as a commercial and trading center. It has also become increasingly close to mainland China in the past few years through trade, tourism and financial ties. Mainland China continues to be Hong Kong’s largest trading partner, accounting for approximately half of Hong Kong’s exports trade. The number of mainland tourists traveling to the territory has increased by almost 10 million over the past decade, outnumbering visitors from all other countries combined.
Hong Kong’s own population has increased steadily over the past decade, reaching over 7 million in 2009, and it has become one of the most densely populated areas in the world. Still, it enjoys high life expectancy, literacy, per capita income, and other positive socioeconomic measures. 100% of Hong Kong’s total population lives in urban areas.