One country, two systems, three decades

23 June 2017 By Katrina Hamlin Follow @KatrinaHamlin

China’s promise to uphold “one country, two systems” does not expire for three decades. Yet property owners and citizens have little idea of what comes next. Drastic changes to the legal system are unlikely. Still, there is ample room for a crisis of confidence long before 2047.

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Hong Kong and China’s “one country, two systems” arrangement is guaranteed until 2047, according to the Special Administrative Region’s Basic Law. The agreement allows the former British colony to operate under a different system to mainland China. The Basic Law, effective from 1997, states that “the socialist system and policies shall not be practiced in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.”

Hong Kong is the largest source of overseas direct investment into China. In 2016, 45.7 percent of overseas-funded projects approved in China were tied to Hong Kong interests, according to the Hong Kong Trade Development Council (HKTDC). China’s mainland accounted for $419 billion or 26.5 percent of total inward investment into Hong Kong at the end of 2015. The 1,000-plus Chinese companies that had listed in Hong Kong by December 2016 have raised over half a trillion dollars through stock offerings in the city, according to the HKTDC.

Under the Basic Law, Hong Kong’s government has the power to grant land leases with a term beyond June 30, 2047, according to the Lands Department. The department “does not have readily available information on all land leases expiring in 2047”, its website says. The department is working with the Land Registry to find the information, a spokeswoman told Reuters by email on June 20. The department also plans to release “reference materials” explaining procedures for the extension of leases, she told Reuters.

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