|Hong Kong, officially the Hong Kong Special Administrative Region, is a largely self-governing territory of the People's Republic of China, facing Guangdong to the north and the South China Sea to the east, west and south. Hong Kong is a global metropolitan and international financial centre, and has a highly developed capitalist economy.
Beginning as a trading port, Hong Kong became a crown colony of the United Kingdom in 1842, reclassified as a British dependent territory in 1983, and remained so until the transfer of its sovereignty to the People's Republic of China in 1997. Under the "one country, two systems" policy, Hong Kong enjoys a high degree of autonomy in all areas with the exception of foreign affairs and defence, which are the responsibility of the PRC Government. As part of this arrangement, Hong Kong continues to maintain its own currency, legal system, political system, immigration control, rule of the road and other aspects that concern its way of life, many of which are distinct from those of mainland China.
Renowned for its expansive skyline and natural setting, its identity as a cosmopolitan centre where the East meets the West is reflected in its cuisine, cinema, music and traditions. The city's population is 95% Chinese and 5% people of other ethnicities. With a population of 7 million people but land area of 1,108 km2 (428 sq mi), Hong Kong is one of the most densely populated areas in the world.
Human settlement in the area now known as Hong Kong dates back to the late Paleolithic and early Neolithic era, but the name Hong Kong did not appear on written record until the Treaty of Nanking of 1842. The area's earliest recorded European visitor was Jorge Álvares, a Portuguese mariner who arrived in 1513.
In 1839 the refusal by Qing Dynasty authorities to import opium resulted in the First Opium War between China and Britain. Hong Kong Island became occupied by British forces in 1841, and was formally ceded to Britain under the Treaty of Nanking at the end of the war. The British established a Crown Colony with the founding of Victoria City the following year. In 1860, after China's defeat in the Second Opium War, Kowloon Peninsula south of Boundary Street and Stonecutter's Island were ceded to Britain under the Convention of Peking. In 1898 Britain obtained a 99-year lease of Lantau Island and the adjacent northern lands, which became known as the New Territories.
During the first half of the 20th century, Hong Kong was a free port, serving as an entrepôt of the British Empire. The British introduced an education system based on their own model, while the local Chinese population had little contact with the European community of wealthy tai-pans settled near Victoria Peak.
In conjunction with its military campaign in World War II, the Empire of Japan invaded Hong Kong on 8 December 1941. The Battle of Hong Kong ended with British and Canadian defenders surrendering control of the colony to Japan on 25 December. During the Japanese occupation, civilians suffered widespread food shortages, rationing, and hyper-inflation due to forced exchange of currency for military notes. Hong Kong lost more than half of its population in the period between the invasion and Japan's surrender in 1945, when the United Kingdom resumed control of the colony.
Hong Kong's population recovered quickly as a wave of mainland migrants arrived for refuge from the ongoing Chinese Civil War. With the proclamation of the People's Republic of China in 1949, more migrants fled to Hong Kong in fear of persecution by the Communist Party. Many corporations in Shanghai and Guangzhou also shifted their operations to Hong Kong. The colony became the sole place of contact between mainland China and the Western world, as the Chinese communist government increasingly isolated itself from outside influence.
As textile and manufacturing industries grew with the help of population growth and low cost of labour, Hong Kong rapidly industrialised, with its economy becoming driven by exports, and living standards rising steadily. The construction of Shek Kip Mei Estate in 1953 marked the beginning of the public housing estate program, designed to cope with the huge influx of immigrants. Trade in Hong Kong accelerated even further when Shenzhen, immediately north of Hong Kong, became a Special Economic Zone of the PRC, and established Hong Kong as the main source of foreign investment to the mainland. The later decades of the 20th century saw the economy shift from textiles and manufacturing to mainly services-based, as the financial and banking sectors became increasingly dominant.
With the lease of the New Territories due to expire within two decades the governments of the United Kingdom and the People's Republic of China discussed the issue of Hong Kong's sovereignty in the 1980s. In 1984 the two countries signed the Sino-British Joint Declaration, agreeing to transfer sovereignty to the People's Republic of China in 1997, and stipulating that Hong Kong would be governed as a special administrative region, retaining its laws and a high degree of autonomy for at least fifty years after the transfer. The Hong Kong Basic Law, which would serve as the constitutional document after the transfer, was ratified in 1990, and the transfer of sovereignty occurred at midnight on 1 July 1997, marked by a handover ceremony at the Hong Kong Convention and Exhibition Centre.
Hong Kong's economy was affected by the Asian financial crisis of 1997 that hit many East Asian markets, and the lethal H5N1 avian influenza also surfaced that year. After a gradual recovery, Hong Kong suffered again due to an outbreak of SARS in 2003. Today, Hong Kong continues to serve as an important global financial centre, but faces uncertainty over its future role with a growing mainland China economy, and its relationship with the PRC government in areas such as democratic reform and universal suffrage.