One Country, Two Systems – A synthesis of contrasting interests

By: Omkar Bhole;

After a humiliating defeat in the First Opium war (1839-1842) at the hands of Western powers, China was divided among the victors and Hong Kong was given to Britain for an indefinite period by the Treaty of Nanjing (1842). To protect Hong Kong from competing European powers, Britain signed the Peking Convention with China in 1898 which officially leased out Hong Kong and its surrounding territories to Britain for 99 years. As a result, negotiations for the peaceful transfer of Hong Kong began between Britain and People’s Republic of China (PRC) in 1982. Subsequently, the principle of ‘One Country, Two Systems’ (OCTS) became a key feature of the Sino-Britain joint declaration in 1984 which aimed to restore China’s sovereignty over Hong Kong. Beijing considered this principle as a basic state policy to achieve conflict-free “reunification” of Hong Kong and China.

China’s first President Mao Zedong first introduced the concept of OCTS in May 1960 with reference to Taiwan as an intermediate step in its reunification with the PRC. It assured Taiwan and later, Hong Kong and Macau that their administrative autonomy would be protected. Although Taiwan has consistently rejected this principle, Hong Kong and Macau have incorporated it, allowing them to maintain their unique socio-cultural and economic conditions under China’s sovereignty. Macau has proven to be a success story for China’s OCTS policy, whereas this policy has faced numerous challenges in Hong Kong especially in the last decade. 

What is OCTS?

According to this principle, Hong Kong Special Administrative Region (HKSAR) is created with a high degree of autonomy in its legislative, executive and judicial functions except for foreign affairs and defence. The Chinese government also promised not to implement prevalent socialist policies and allows Hong Kong to continue with a free-market capitalist system until 2047. In 1990, Basic Law was enacted by China’s National People’s Congress (NPC) which codified the OCTS principle. This law guaranteed many democratic and civil liberties to citizens of Hong Kong which were absent in China. According to Xie Feng, former Commissioner of PRC’s Foreign ministry in Hong Kong, this basic law is a ‘redline’ for Hong Kong within which all affairs are to be conducted. Under this law, executive powers are entrusted with the Chief Executive who was to be initially elected by a limited franchise of 1200 people with the ultimate aim of allowing universal franchise. 

Motivations behind OCTS

Hong Kong has played a crucial role in China’s integration with the global economy. By 1998, it was China’s largest investor accounting for more than half of inbound FDI into the mainland. Hence, disrupting Hong Kong’s attractive business environment after 1997 would have also harmed China’s economic prospects. Additionally, in the post-reform period, many Chinese companies were using Hong Kong as a platform for their global expansion.

On the other hand, the influence of Western values in Hong Kong due to 150 years of British rule meant any drastic systemic changes would send the wrong signal to business community as well as provoke people’s resentment. Further, the OCTS principle helped in preventing the ‘Taiwanization’ of Hong Kong which meant that anti-Beijing sentiments would have grown in Hong Kong if this principle did not exist. On the contrary, China has been trying to create a successful OCTS model which may convince Taiwan to consider peaceful reunification. However, Taiwan’s President Tsai-Ing Wen has clearly stated that Taiwan would never accept the OCTS principle. 

Chinese strategies in Hong Kong

The initial years of the OCTS principle in Hong Kong were quite successful as China adhered to its non-interventionist policy. Except for few instances like the 1998 Asian Financial crisis or the SARS outbreak in 2002-03, PRC allowed Hong Kong to be run autonomously in accordance with the basic law. A survey by Wong and Wan revealed that Hong Kong had a positive public opinion about the implementation of OCTS till 2003. However, turning point came when a pro-democracy movement erupted in 2003 against the National Security bill that saw almost 5 lakh people participate in the protest. It ultimately compelled the HKSAR government to withdraw the bill. The protest was unexpected for Beijing and seen as a challenge to its sovereign authority in Hong Kong. Hence, Beijing initiated a policy which Brian Fong calls assimilationist state-building nationalism. It aimed to incorporate Hong Kong into the PRC at political, economic and ideological levels. Article 158 of basic law, which grants the powers to interpret basic law solely to the Standing Committee of the NPC, proved very effective for this. It implies that the Hong Kong judiciary and legislature are subordinate to the NPC. It provides an opportunity for the PRC to misuse basic law, the bedrock of Hong Kong-PRC relations. For instance, basic law has promised universal suffrage for the election of Chief Executive but does not state any timeline. As a result, China amended the nomination process of candidates for the post of Chief Executive in such a way that anti-Beijing candidates could be filtered out of the process. This gave rise to the Umbrella movement in 2014 which lasted for 79 days before PRC-backed forces suppressed it. 

Such changes ensured that PRC loyalists occupy key positions in Hong Kong and continue to govern it according to Chinese interests. For instance, Beijing has often preferred to appoint businessmen over politicians to the key positions in Hong Kong considering Hong Kong’s business potential. Beijing has justified this system as it adheres to the principle of ‘patriots ruling Hong Kong’. A Hong Kong legal scholar Benny Tai rightly describes this system as having both ‘semi-democratic’ and ‘semi-authoritarian features.’ It also means that the PRC often focuses on fulfilling ‘procedure established by law’ while conveniently ignoring ‘due process of law’. The Extradition bill in 2019 and the most recent Nationals security law of 2020 which empowered Beijing to punish protestors and secessionist elements in Hong Kong, were introduced under the provisions prescribed in Basic law. Such laws, however, contradicted the promises given under the OCTS policy. 

China’s recent crackdown on tech giants like Alibaba or its policy regarding tutoring companies has also sparked uncertainty about the future of ‘free market economy’ in Hong Kong. This is complemented by the fact that Hong Kong has been removed from 2021 Economic Freedom Index, released by the USA-based Heritage Foundation. This is a significant development considering the fact that Hong Kong has topped this index for nearly 25 years till 2019. Hong Kong’s removal from the index took place in the wake of a new national security law that put many pro-democracy activists behind bars. Additionally, many foreign companies in Hong Kong, especially tech-based companies, have also started relocating to other Asian countries like Singapore due to concerns about data sharing and rule of law. Hence, forceful incorporation of the Chinese legal system in Hong Kong can discourage global investors and may affect Hong Kong’s global significance.

On the ideological front, China is effectively using the media and education systems as instruments to facilitate the integration of Hong Kong into the mainland. In 2012, the Moral and National Education (MNE) programme introduced by the HKSAR government aimed to consolidate PRC-promoted values in Hong Kong. However, this programme was soon terminated as the anti-MNE movement rapidly spread across Hong Kong and the programme was ridiculed as a propaganda tool of PRC. Such efforts to integrate Hong Kong into the PRC have failed and Hong Kong citizens, on the contrary, have actually begun to develop a separate identity which strongly supports democracy and a vibrant civil society. 

Response from Hong Kong citizens

Currently, Hong Kong citizens are divided into two camps: pro-establishment group which supports complete integration with China and pro-democracy group which feels the need to protect Hong Kong’s unique identity in the wake of Beijing’s assertion. Notably, the latter group acknowledges that the OCTS policy does not grant them the right to secede from China. Hence, even during the peak of protests against the draconian extradition bill in 2019, protestors mainly had 5 demands:- withdrawal of the extradition bill, inquiry into police misconduct, amnesty for arrested protestors, non-characterization of protests as riots and resumption of electoral reforms. Hong Kong citizens are also aware of their dependence on the mainland in spite of Hong Kong’s attractive business environment. Hong Kong’s economy is considered as ‘service economy’ since over 90% of GDP comes from the service sector. Hence, Hong Kong is heavily dependent on PRC for imports of all necessities. 

Hong Kong’s problems, however, begin when China oversteps its limits by interfering into domestic affairs of HKSAR and threaten its autonomy guaranteed under the Basic law. Similarly, China has weakened the political institutions in Hong Kong over the years which is resented by pro-democracy citizens. Despite these apprehensions, Hong Kong citizens understand that the OCTS policy is the best possible alternative considering China’s aggressive policies in Tibet and its attempts to unite Taiwan. Many Hong Kong activists pin their hopes on international pressure to compel China into conceding the promised autonomy for Hong Kong. However, given China’s current global footprint, it will be a delusion for Hong Kong to rely solely on this factor. Even the former Chinese Ambassador to UK Liu Xiaoming pointed out that ‘two systems’ is subordinate to ‘one country’ and the former exists only until Hong Kong accepts the latter. Hence, Hong Kong citizens should try to gain more concessions only within the ambit of OCTS.  


With mounting international pressure to introduce more democratic reforms in Hong Kong and given the need to maintain Hong Kong’s position in the global financial world, it would be unwise for China to further dilute the OCTS policy. China has to adhere to its promise of “upholding and improving the practice of ‘One Country, Two Systems”, made in the 2021 white paper. Accordingly, China must adopt conciliatory policies to enable greater participation of Hong Kong citizens in political processes. Protests are bound to arise time and again if China does not stop its assertive policies in Hong Kong and continue to treat every protest as a challenge to its sovereignty. China must adopt an accommodative approach within the boundaries of OCTS as it is the most feasible way to manage Hong Kong. Brian Fong, a political scientist in Hong Kong, describes Hong Kong as a stateless nation fighting for its autonomy. China should honour this desire for autonomy and fulfil promises made under the OCTS policy. Ultimately, successful implementation of OCTS in Hong Kong may also influence Taiwan to reconsider its stance on reunification. Hence, despite all tensions surrounding the OCTS principle, it is likely to continue until 2047 as it is the best possible alternative for both sides. However, China ought to be more careful in the interpretation of this principle and ensure that its policies do not contradict promises made to the citizens of Hong Kong.

Omkar Bhole after completing the Graduation in History from the University of Mumbai, Omkar is currently pursuing MA in China Studies at Somaiya University, Mumbai. He has also completed 4 levels (HSK4) of Mandarin language training. His key interests are in China’s policymaking processes, India-China relations, China’s global footprint, and the Chinese economy. 

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