Reexamining the Formula of “One Country, Two Systems”, with Reference to Hong Kong

Yuhan Hu is an MPhil Candidate in Politics (Comparative Government) at the University of Oxford. She completed her master’s degree in China in Comparative Perspective with distinction at the London School of Economics and Political Science. Before coming to the UK, she obtained her bachelor’s degree in political science in Hong Kong. 

In the early 1980s, the “One Country, Two Systems” principle, which addresses the issue of Hong Kong, Macau, and Taiwan’s then-prospective reunification with China, was introduced by China’s paramount leader, Deng Xiaoping. In 1997 and 1999, with relatively smooth handovers, Hong Kong and Macau became special administrative regions (SARs) to the People’s Republic of China (PRC). According to the June 10 White Paper of the PRC of 2014, the SARs are part of China’s sovereignty; mainland China adopts the socialist system while these SARs can enjoy their capitalist system and lifestyle; the SARs are to enjoy a high degree of autonomy, for example, they have freedoms (such as those of speech, of the press, of assembly), executive, legislative, and independent judicial powers, and can run their own security, whereas mainland China is responsible for the SARs’ defense and foreign affairs¹. 

Beijing has always highly praised the formula as a successful one for the governance of the SARs. However, with a series of protests expressing dissatisfaction with the governance of Hong Kong, such as the 2014 Umbrella Movement, 2016 Mong Kok Riots and the 2019 Anti-Extradition Bill Movement, some people suggest that “One Country, Two Systems” has encountered an unsolvable crisis is thus a failure. This paper seeks to re-examine the model of “One Country, Two Systems” and, with reference to Hong Kong, will discuss the principle as a fluid notion through four lenses: progress toward “One Country, One System”;  progress toward “One Country, 1.5 Systems”, the relationship between “One Country” and “Two Systems”, and the interpretation of the formula.

“One Country, Two Systems”: A Fluid Notion

In 1984, Deng Xiaoping said “the mainland, with its one billion people, will maintain the socialist system while Hong Kong and Taiwan continue under the capitalist system”². He also stated that “our policies with regard to Hong Kong, (‘One Country, Two Systems’) will remain unchanged for 50 years, and we mean this”³. It has been almost 23 years since the application of the “One Country, Two Systems” in Hong Kong, and a lot of things have changed and keep changing under this framework. The following paragraphs adopt four possible interpretations, to articulate and explore, as much as is possible, the fluid nuances of this concept: 

1.1 Progress Toward “One Country, One System”?

In 2019, the Hong Kong government proposed the extradition bill that “would have allowed criminal suspects to be extradited to mainland China”⁴ for trial. This move was seen by many Hong Kong people and scholars as actively undermining Hong Kong’s judicial independence, which was guaranteed by the “One Country, Two Systems” framework. Some Hong Kong people are worried that Beijing is eager to change the formula to “One Country, One System”, so Hong Kong would be nothing more than a normal city in China. 

However, this may not happen in the near future as Hong Kong is still important to China’s economy. Although the contribution of Hong Kong’s GDP to China’s GDP shrank from 27% in 1993 to 2.9% in 2017⁵, foreign direct investment (FDI) from Hong Kong still accounted for 70% of China’s total inflow of FDI in 2019⁶. Also, “Hong Kong has the world’s deepest RMB liquidity pool outside mainland China of over RMB600 billion, supporting the vibrant offshore RMB business”⁷. These economic benefits that Hong Kong brings to China primarily stem from Hong Kong’s rule of law, freedom of information, and constitutional separation from China, which every mainland China city lacks. Therefore, considering the economic interests that only Hong Kong can bring to China, it is too early to suggest that Beijing is eager to transform Hong Kong into a mainland Chinese city.

With that said, whilst Hong Kong still plays a pivotal role in China’s total flow of FDI and RMB internationalization, the ostensible irreplaceability of Hong Kong should be questioned. The Chinese leadership has deliberately “reduced its reliance on Hong Kong capitalism as an intermediary force; differential policies and strategic plans have been introduced to groom other Mainland cities such as Shenzhen and Shanghai as alternative business enclaves to replace the economic roles served by Hong Kong”⁸. Moreover, in the long run, if the RMB or the Euro is able to gradually challenge or partially replace the dominance of the U.S. dollar, this may further weaken Hong Kong’s central role in China’s off-shore RMB currency exchange⁹. Additionally, in the short run, we should not overlook the Chinese government’s resolve to sacrifice the economic benefits offered by Hong Kong, for greater political security and stability in the country. Thus, instead of holding onto the “irreplaceability of Hong Kong to China” as an unchanged and unchangeable truth, the Hong Kong administration and people ought to think seriously about how to maintain its current competitiveness in the arenas like the financial sector and how to cope with the potential future changes by embracing a more diversified economy¹⁰. They should also plan to play a leading role in other promising fields, such as artificial intelligence, in relation to and conjunction with their counterparts in China. These reforms would enable the city to survive the prospective onslaught of “One Country, One System”-minded assimilation – neither Beijing nor Hong Kong’s elite could disregard, of course, the immense potential the dualism of systems could offer the city’s and the country’s future. 

1.2 Progress Toward “One Country, 1.5 Systems” (Further Integration)

The previous paragraph argues that China is not eager to apply the formula of “One Country, One System” to Hong Kong. However, this does not imply that China does not intend to promote integration between Hong Kong and mainland China. In fact, over the past two decades, China has made efforts to cultivate Hong Kong’s dependence on mainland China by integrating Hong Kong more into the mainland. This can be seen as a way to transform Hong Kong into “One Country, 1.5 Systems”, where Beijing increasingly reduces Hong Kong’s “bargaining power and political autonomy”¹¹, whilst ensuring that it remains a vital gateway to China’s inflow of FDI and the offshore RMB market. 

Economically, on 29 June 2003, Hong Kong and mainland China signed a CEPA (Closer Economic Partnership Arrangement), which included “tariff reduction of goods that Hong Kong exports to mainland China, preferential opening of the Chinese market to Hong Kong service providers and a series of measures aimed at facilitating bilateral exchanges of goods”¹². Also, while causing many Hong Kong people to blame the mainland Chinese for “uncivilized” behavior, the introduction of the Individual Visit Scheme (allowing mainland Chinese to visit Hong Kong for seven days) in 2003 had also contributed significantly to Hong Kong’s GDP. In 2012, the economic profits generated by the scheme accounted for 1.3% of Hong Kong’s GDP and it also helped to provide Hong Kong with approximately 110,000 jobs¹³. Moreover, the human capitals have been increasingly flowing from mainland China to Hong Kong through the Quality Migrant Admission Scheme which attracts the professionals to work in Hong Kong. 

Thus from the economic aspect, there is no doubt an increasing trend of economic integration between Hong Kong and mainland China. Politically speaking, freedom of speech seems to be lessened in post-handover Hong Kong, which makes it one step closer to mainland China’s political system. For instance, five people working in the Causeway Bay Books store disappeared in October and December 2015, with some alleging that they were abducted across the border. The bookstore was renowned for selling politically charged, quasi-conspiracist books about the trysts and scions of Chinese politics. 

1.3 The Relationship Between “One Country” and “Two Systems”

With increasing integration between mainland China and Hong Kong, some Hong Kong people see “One Country” as inevitably dominating the “Two Systems”. Under this narrative, “One Country” implies Beijing’s arbitrary influence on Hong Kong affiliates. At Deng Xiaoping’s inception of the concept, the main differences between the two systems lie in primarily the economics – Hong Kong and mainland China were to maintain distinct economic systems, with political autonomy as a logical corollary. Yet the economic gulf between the two has steadily narrowed over the years, with the economic reform and liberalisation of China. Over the past two decades, the main difference between the two systems has hence shifted to become primarily politically centered. It appears now that the “two systems” are far more about the political differences between Hong Kong and mainland China.

The previous paragraphs suggest that over the past decade, Beijing has sought to increasingly integrate Hong Kong into mainland China. This can be seen as Beijing pushing Hong Kong more towards “One Country”. However, if mainland China pushes Hong Kong too far, this could well yield adverse effects on the “two systems”. In moulding Hong Kong to resemble them, Beijing may well be inducing Hong Kong to shed some of its more characteristic features, particularly in the political arena. Consider the analogy of balancing a scale: when the “One Country” weighs more heavily, the “Two systems” become lighter. On the contrary, when “One Country” is lighter, the “Two Systems” emerge heavier. The most ideal model for the principle of “One Country, Two Systems” is to maintain an equal balance. This model necessitates Hong Kong’s governing individuals to “stand productively and adamantly by values and features that make Hong Kong special”, whilst “remaining responsive to both Hong Kongers’ and Beijing’s needs”, such as political security and stability¹⁴. As Brian Wong argues, “the case for 1C2S (One Country, Two Systems) must be made in a way, such that both Beijing and Hong Kongers alike see a mutual future and stake in the system’s maintenance”¹⁵.

According to the data from the Public Opinion Program of the University of Hong Kong, from 1997 to 2007, around 50%-60% of Hong Kong people held confidence in the “One Country, Two Systems”; Compared to approximately 40% of Hong Kong citizens who expressed confidence in the framework from 1993 to 1996, the percentage of Hong Kong citizens had positive attitudes towards the framework increased over 10% one decade after the handover. Prior to 1997, many Hong Kong people were afraid of the communist rule, and the events of the late 1980s and early 1990s only reinforced their fear. Many felt pessimistic about the future practice of “One Country, Two Systems”. However, “a largely non-interventionist approach” China adopted to deal with Hong Kong affairs in the decade following the handover enhanced the Hong Kong people’s confidence in the framework. Such public confidence later reached a peak in 2008 at approximately 73% (this may be largely due to the success of the 2008 Beijing Olympics which generated national pride)¹⁷.

However, the events that have occurred in Hong Kong over the past decade, especially the major protests, suggests that the relationship between “One Country” and “Two Systems” has operated, in practice, more like a moving scale: whenever one side tried to upset the balance or the status quo, the other side would indeed resist. To put it more concretely, the 2014 Umbrella Movement actively undermined the law and order in the eyes of Beijing hawks, which culminated at a gradual calcification of the mediating parties’ stances, which indirectly precipitated last year’s events, through sowing the seeds for mutual distrust. When an extradition bill was proposed in 2019, which posed a perceived threat to Hong Kong’s judicial independence and freedom of speech, millions of Hong Kong people demonstrated against the bill. The conflicts under “One Country and Two Systems” have become more intense, shifting from the mainly peaceful Umbrella Movement to much more violent anti-extradition bill protests. 

What “One Country, Two Systems” currently struggles at doing, is to establish clearly adherable and mutually advantageous guidelines for the increasingly intense conflicts to be mediated peacefully. Indeed, some have posited that the 2019 anti-extradition bill protests showed the complete failure of “One Country, Two Systems”. From 2009 to June 2019, the proportion of people who had confidence in the formula fell to 41.3%¹⁸. As reported by the Hong Kong Public Opinion Research Institute, which carries out the research for the Public Opinion Program of the University of Hong Kong from 30 June 2019, in February 2020, around 27% of Hong Kong people had confidence in the framework, which is the lowest figure after 1997¹⁹. Only a minority of Hong Kong people have confidence in the formula, which suggests it is seen as a failure of the formula. The 2014 Umbrella Movement and the recent Anti-Extradition Bill Movement, which together gave rise to the idea of “Hong Kong independence”, were seen by Beijing as a threat to national instability, and therefore a threat to national security. Within this decade, authoritarian tightening by Beijing  which was intended to enhance political stability in Hong Kong frequently blurred the lines between the “two systems” and upset a great number of Hong Kong citizens.

Interestingly, from the report by the same institute, according to the poll conducted in December 2019, there was around 17% of Hong Kong people supporting Hong Kong independence²⁰. Due to many Hong Kong people’s antipathy towards the extradition bill, “One Country, One System” may be the last choice among “One country, One system”, “One Country, Two Systems”(27%) and “Two Countries, Two Systems (Hong Kong independence: 17%)”. It seems that “One Country, two systems” is still the most popular choice from the three options. Given this, it seems that it is too early to declare the framework as a complete failure. 

One thing that should be kept in mind is that there was an increasing trend of Hong Kong people’s support for independence from the end of 2019 to mid-2020, which slightly decreased in August 2020. Support has been increased from 11% in October 2019²¹ to 17% in December 2019, with a further increase to 21.2% in June 2020²². The failure to gain any concession from the Hong Kong government following the withdrawal of the extradition bill in September 2019 may have contributed significantly to this increase. However, the support dropped slightly to 19.5% in August 2020²³ following the introduction of Hong Kong national security law, set to take effect on 30 June 2020. The national security law outlaws the separation of Hong Kong from China and its passing appeared to remind some Hong Kong people of the infeasibility of Hong Kong’s independence.

1.4 Towards A Renewed Interpretation of “One Country and Two Systems”

Last but not least, beyond the changes in Hong Kong under the “One Country and Two Systems” framework and the Hong Kong people’s changing perception of it, the implementation of “One Country, Two Systems” has also been expanded. On 14 October 2020, at a ceremony marking the 40th anniversary of the establishment of the Shenzhen Special Economic Zone, Xi Jinping, in his speech, further broadened the implementation of “One Country, Two Systems” (which is no longer limited in Hong Kong and Macau but also exists in Shenzhen). He called on Shenzhen “to set an example for cities of a modern socialist country…(and) to enrich the new practice of ‘One Country, Two Systems’”²⁴. The “Two Systems” concept has expanded to describe the difference between economic systems adopted by the majority of Chinese cities and by the Chinese region which implements a pilot reform plan²⁵. A pilot reform plan grants the region more autonomy to improve its market-oriented economic system and legalized business environment. This new interpretation of the “One Country, Two Systems” formula may be superficially weakening Hong Kong’s special role in the “Two Systems” and should ring alarm bells for the people holding onto the idea of “the irreplaceability of Hong Kong to China”²⁶; on the other hand, it offers much food for thought for the politically entrepreneurial – perhaps there yet remains a path out for Hong Kong, but finding and trekking it is by no means an easy task. 

Conclusion

This paper has argued that the principle of “One Country, Two Systems” should be conceived of as a fluid concept. Firstly, this paper rejects the idea that Beijing is eager to transform Hong Kong into “One Country, One System”, bearing in mind the economic benefits that only Hong Kong (so far) is able to China. Secondly, it is apparent that, after the handover, the precipitous economic integration between Hong Kong and mainland China has introduced constraints and limits to Hong Kong’s political environment, manifesting in particular in the form of curtailing its freedom of speech. When assessing the formula, I argue that the recent Anti-Extradition Bill Movement indeed presented a crisis for the formula of “One Country, Two Systems”. 

However, the increasingly intense conflicts under the principle does not justify a wholesale rebuking of the principle. Even though the framework has indeed failed to resolve the increasingly intense conflict within Hong Kong society, there is much work that remains to be done, that could hopefully be done. 

Footnotes

1. The Practice of the “One Country, Two Systems” Policy in Hong Kong Special Administrative Region, The State Council of the People’s Republic of China, June 2014, http://english.www.gov.cn/archive/white_paper/2014/08/23/content_281474982986578.htm.
2. Wang, Zhenmin. Relationship Between the Chinese Central Authorities and Regional Governments of Hong Kong and Macao: A Legal Perspective, (Springer, 2018), p111.
3. Lawrance, Alan. China since 1919: Revolution and reform: A sourcebook, (Psychology Press, 2004), p246.
4. ‘Hong Kong formally scraps extradition bill that sparked protests’, BBC, 23 October 2019, https://www.bbc.co.uk/news/world-asia-china-50150853. 
5. ‘Three Views of Local Consciousness in Hong Kong’, The Asia-Pacific Journal, 2 November 2014, https://apjjf.org/2014/12/44/Ho-fung-Hung/4207.html.
6. “Hong Kong protests fail to slow city’s role as foreign investment gateway to China, government data shows”, South China Morning Post, 17 September 2019, https://www.scmp.com/economy/china-economy/article/3027712/hong-kong-protests-fail-slow-citys-role-foreign-investment. 
7. ‘Dominant Gateway to China’, Hong Kong Monetary Authority, https://www.hkma.gov.hk/eng/key-functions/international-financial-centre/hong-kong-as-an-international-financial-centre/dominant-gateway-to-china/.
8. Yuen, Samson, and Edmund W. Cheng. “Between high autonomy and sovereign control in a subnational island jurisdiction: The paradox of Hong Kong under’One Country, Two Systems’.” Island Studies Journal 15, no. 1 (2020), p137.
9. Wong, Brian, ‘Does One Country Two Systems Need Hong Kong?’ [Yiguoliangzhi Hai Xuyao Xianggang Ma?], Hong Kong Economic Journal, 26 October 2020, https://www1.hkej.com/dailynews/commentary/article/2615923/%E4%B8%80%E5%9C%8B%E5%85%A9%E5%88%B6%E9%82%84%E9%9C%80%E8%A6%81%E9%A6%99%E6%B8%AF%E5%97%8E%3F.
10.  Ibid.
11. Yuen, Samson. “Under the Shadow of China.. Beijing’s policy towards Hong Kong and Taiwan in comparative perspective.” China Perspectives 2014, no. 2014/2 (2014).
12. Cabrillac, Bruno. “A bilateral trade agreement between Hong Kong and China: CEPA.” China Perspectives 2004, no. 54 (2004), P1. 
13. ‘After SARS,  the Number of People Who Visited Hong Kong Tripled’ [Shashihou Fanggang Lvke Yubiao Sanbei], HK01, 7 September 2019, https://www.hk01.com/%E5%B0%88%E9%A1%8C%E4%BA%BA%E8%A8%AA/372260/%E6%B2%99%E5%A3%AB%E5%BE%8C%E8%A8%AA%E6%B8%AF%E6%97%85%E5%AE%A2%E9%A3%86%E9%80%BE3%E5%80%8D-%E6%84%9B%E6%81%A8%E8%87%AA%E7%94%B1%E8%A1%8C-%E5%AD%B8%E8%80%85-%E9%9B%B6%E5%94%AE%E6%A5%AD%E5%9B%9E%E4%B8%8D%E4%BA%86%E9%A0%AD.
14. ‘Can Beijing and Hong Kong Rejuvenate ‘One Country, Two Systems’?’, The Diplomat, 18 October 2019, https://thediplomat.com/2019/10/can-beijing-and-hong-kong-rejuvenate-one-country-two-systems/.
15. Ibid.
16. Yuen, Samson, and Edmund W. Cheng. “Between high autonomy and sovereign control in a subnational island jurisdiction: The paradox of Hong Kong under’One Country, Two Systems’.” Island Studies Journal 15, no. 1 (2020), p135.
17. Lau, Patrick WC, Michael HS Lam, Beeto WC Leung, Choung-rak Choi, and Lynda B. Ransdell. “The longitudinal changes of national identity in mainland China, Hong Kong and Taiwan before, during and after the 2008 Beijing Olympics Games.” The International Journal of the History of Sport 29, no. 9 (2012): 1281-1294.
18. ‘People’s Confidence in “One Country, Two Systems(half-yearly average)’, Public Opinion Program of the University of Hong Kong, https://www.hkupop.hku.hk/english/popexpress/trust/conocts/halfyr/conocts_halfyr_chart.html.
19. ‘On the Whole, Do You Have Confidence in “One Country, Two Systems”? (half-yearly average)’, Hong Kong Public Opinion Research Institute, https://www.hkupop.hku.hk/pori_table_chart/Trust/K006_Conf_OCTS/K006_halfyr_chart.html.
20. ‘Public Opinion Poll: 11% of Hong Kong People Supports Hong Kong Indepence’ [Mindiao 11% Gangren Zancheng Duli], HK01, 30 October 2019, http://www.rfi.fr/tw/%E4%B8%AD%E5%9C%8B/20191030-%E6%B0%91%E8%AA%BF11%E6%B8%AF%E4%BA%BA%E8%B4%8A%E6%88%90%E7%8D%A8%E7%AB%8B-%E5%AD%B8%E8%80%85%E7%A8%B1%E6%98%AF%E5%9F%BA%E6%9C%AC%E7%9B%A4-%E7%B1%B2%E5%8C%97%E4%BA%AC%E5%8B%BF%E9%80%BC%E6%88%90%E4%B8%8D%E7%A9%A9%E5%AE%9A%E5%8A%9B%E9%87%8F.
21. ‘Reuters Entrusted Hong Kong Public Opinion Research Institute: the People Who Supported Hong Kong Independence is the Minority’, [Luroushe Weituo Xianggangminyandiaocha: Zhichi Gangdu JInshaoshu], HK01, 1 January, 2020, https://www.hk01.com/%E7%A4%BE%E6%9C%83%E6%96%B0%E8%81%9E/416257/%E8%B7%AF%E9%80%8F%E7%A4%BE%E5%A7%94%E8%A8%97%E9%A6%99%E6%B8%AF%E6%B0%91%E7%A0%94%E8%AA%BF%E6%9F%A5-74-%E8%A6%81%E6%B1%82%E7%8D%A8%E7%AB%8B%E8%AA%BF%E6%9F%A5-%E6%94%AF%E6%8C%81%E6%B8%AF%E7%8D%A8%E5%83%85%E5%B0%91%E6%95%B8. 
22. ‘Survey on Hong Kong people’s views regarding the Anti-Extradition Bill Movement (Round 4)’, Hong Kong Public Opinion Research Institute, https://static1.squarespace.com/static/5cfd1ba6a7117c000170d7aa/t/5f9f827041d2a92c7af745c9/1604289142682/reuters_anti_elab_round4_ENG_v1_pori.pdf.
23. Ibid.
24. ‘Xinhua Headlines-Xi Focus: 40 years on, Shenzhen leads China’s new journey toward socialist modernization’, Xinhuanet, 14 October 2020, http://www.xinhuanet.com/english/2020-10/14/c_139440265.htm.
25. ‘Does One Country Two Systems Need Hong Kong?’ [Yiguoliangzhi Hai Xuyao Xianggang Ma?], Hong Kong Economic Journal, 26 October 2020, https://www1.hkej.com/dailynews/commentary/article/2615923/%E4%B8%80%E5%9C%8B%E5%85%A9%E5%88%B6%E9%82%84%E9%9C%80%E8%A6%81%E9%A6%99%E6%B8%AF%E5%97%8E%3F
26. Ibid.

The author sincerely thanks Prof. William A Callahan at the London School of Economics and Political Science for his thoughtful comments on the earlier draft of this article.