'Two Systems' gives strength

Closer links with the mainland have created destination of choice

In the last 15 years ties between Hong Kong and the Chinese mainland have flourished and the mainland is now an integral part of Hong Kong's economic development.

There have been several theories on what has really contributed to Hong Kong's success over the past few years. Though some experts feel that it was the return to China, in reality it has been the implementation of the principle of "One Country, Two Systems" and "Hong Kong people governing Hong Kong".

According to government statistics, the per capita gross domestic product of Hong Kong has risen from $27,000 in 1997 to about $35,000 now. In the eight years from 2004 to 2011, Hong Kong's GDP increased by an average of 5 percent, twice the rate of other developed economies during the same period.

As a developing international financial center, Hong Kong has also seen the value of its securities market surging from HK$4.35 trillion ($560 billion) in June 1997 to HK$20.23 trillion in April 2012. The total value of initial public offerings in Hong Kong was the highest in each of the last three years. Hong Kong has also been the only stock market other than New York to get a consistent "top five" ranking in the past decade.

From "the British governing Hong Kong" to "Hong Kong people governing Hong Kong", the transition itself qualifies as a great democratic step forward, and Hong Kong people are now better off being the masters of their city.

Hong Kong residents continue to enjoy a wide range of freedom and human rights, which have in fact become richer and more inclusive than before the return; the provisions in the international conventions applicable in Hong Kong remain valid and effective through Hong Kong's law, and local residents who are Chinese citizens have the right to participate in the management of state affairs according to relevant laws.

Hong Kong's economic environment was laden with potential dangers before the return. In the early 1990s, high land prices, high inflation and high labor costs turned Hong Kong's economy into an unsustainable bubble that could have burst anytime during economic crises. An example can be found in the Asian financial storm around the time the Hong Kong SAR came into being, when numerous businesses went under. Before the dotcom crash of 2000 many locals believed dotcom stocks were a good solution to economic problems that would offer Hong Kong a way out.

Unfortunately such stocks became virtual assets that were synonymous with financial bubbles and caused another round of bankruptcies in the city when they burst.

The SARS epidemic of 2003, the global financial crisis of 2008 and the current eurozone debt crisis also affected or are still affecting Hong Kong's economy today.

Despite the heavy impact from these adversities, Hong Kong has been able to avoid doom thanks to timely support and generous help from the motherland, such as the Closer Economic Partnership Arrangement signed between Hong Kong and the mainland in the wake of the devastating SARS epidemic in 2003 and the Individual Travel Scheme, which allows mainland residents to visit Hong Kong on their own. Both measures brought much needed vibrancy to Hong Kong's economy.

Hong Kong investors have been responsible for 45.2 percent of all investments in the mainland from overseas since the reform began. Mainland enterprises have obtained more than HK$3 trillion by getting listed on the Hong Kong stock market since 1993.

The author is a Hong Kong member of the CPPCC Standing Committee. The views do not necessarily reflect those of China Daily.