Recent History
Pursuant to an agreement known as the Sino-British Joint Declaration, signed by the People's Republic of China and the United Kingdom on 19 December 1984, the whole territory of Hong Kong under British colonial rule became the Hong Kong Special Administrative Region of the PRC on 1 July 1997. In the Joint Declaration, the PRC promised that under the "One Country, Two Systems" policy proposed by Deng Xiaoping, the socialist economic system in mainland China would not be practised in Hong Kong, and Hong Kong's previous capitalist system and life-style would remain unchanged for at least 50 years, or until 2047. Hong Kong would enjoy a high degree of autonomy in all matters except diplomatic affairs and national defence. Hong Kong was transferred to the PRC at the stroke of midnight on 1 July 1997, with the last governor, Chris Patten leaving on the royal yacht. Soon after the handover in July, land values in Hong Kong collapsed substantially and expedited the burst of the bubble economy, as part of the Asian financial crisis. This was exacerbated by Tung Chee Hwa's unsubstantiated pledge to supply 85,000 new flats annually which essentially manipulated the region's real estate prices. In some areas, land values fell by over half; and the Hang Seng Index fell by over 1,500 points on 28 October, losing 22.8% of its value in a week. Exacerbating the region's economic problems, Hong Kong was hit badly by the SARS virus beginning in mid-March through the summer of 2003, especially in the effect that it had on travel to and from Hong Kong.
Longer Historical Perspective
Though Hong Kong has been inhabited since the Palaeolithic Age, the area now known as Hong Kong was an important trading region, and also a significant strategic location for the Chinese mainland during the Tang and Song dynasties and the subsequent Mongol invasion. After that, the prominence of Hong Kong fell, and only began to attract the attention of China again and the rest of the world in the 19th century when it was ceded to Britain after the Opium Wars. Hong Kong was first visited by a European in 1513, the Portuguese mariner Jorge Álvares. Álvares began trading with the Chinese, and the Portuguese continued to make periodic trade stops at various locations up and down the coast. Tea, silk, and other Asian luxury goods were introduced in Europe by the Portuguese, and by the mid-18th century, these items were in high demand, particularly tea. The British, challenging China's near monopoly on the tea industry, invaded China, winning the First Opium War in 1841. During the war, Hong Kong Island was first occupied by the British, and was formally ceded by the Qing Dynasty of China in 1842 under the Treaty of Nanking.
