Hong Kong's 1997 handover: A turning point in the city’s modern history

The trajectory of Hong Kong serves as a reminder that politics and economics are inseparable.

Roh Jung-tae

The author is a writer and a senior fellow at the Institute for Social and Economic Research.

At midnight on July 1, 1997, the Chinese flag was raised over the Hong Kong Convention and Exhibition Centre. The red banner with five yellow stars replaced the British Union Jack, marking the official end of British colonial rule and the return of Hong Kong to Chinese sovereignty.

The Hong Kong handover ceremony on July 1, 1997, attended by leaders from China and the United Kingdom [JOONGANG ILBO]

Hong Kong had long been a remnant of 19th-century imperialism lingering into the 20th century. In 1842, the Treaty of Nanking ceded Hong Kong Island to Britain following the First Opium War. The 1860 Convention of Peking granted Britain permanent control over the southern part of the Kowloon Peninsula. Then, in 1898, the Second Convention of Peking leased the remainder of Kowloon and the surrounding New Territories to Britain for 99 years. British officials at the time described the lease as “as good as forever,” a phrase that reflected imperial overconfidence.

But empires do not last forever. The once-mighty British Empire, stretched thin by two world wars, could no longer sustain its global dominance. As China emerged as a major power, it insisted on reclaiming Hong Kong. Britain, lacking the leverage to resist, acquiesced. The viability of the colony had also diminished; Hong Kong Island and Kowloon were reliant on the New Territories for water, electricity and food. Without access to those resources, continued British governance was untenable.

On July 1, 1997, Hong Kong transitioned from a British overseas territory to a Special Administrative Region of China. Under the “one country, two systems” framework, Beijing pledged to preserve Hong Kong’s capitalist economy and social freedoms for 50 years.

In the immediate aftermath, Hong Kong remained one of the world’s leading financial hubs, rivaling New York and London. At the time of the handover, the city contributed nearly 20 percent of China’s GDP. Today, that figure has dwindled to just 2 to 3 percent. Shenzhen, a city bordering Hong Kong, has surpassed it economically.

Supporters of the League of Social Democrats, a pro-democracy group, play with a balloon during a campaign rally in Hong Kong on September 9, 2008. [REUTERS/YONHAP]

The once-vibrant atmosphere — renowned for its openness — has also changed. Two major waves of pro-democracy protests and the political crackdowns that followed have eroded many of the freedoms that once distinguished the city.

The trajectory of Hong Kong serves as a reminder that politics and economics are inseparable. Like the wheels of a cart, when one falters, the other struggles to move forward. As Hong Kong lives through its postcolonial era under a 50-year experiment, its story continues to offer complex lessons about sovereignty, autonomy and change.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.