Hong Kong entered its modern era when it became a British overseas territory in 1841. In its early years as a Crown Colony, it suffered from corruption and racial segregation but grew rapidly as a free port that supported trade with China. It took about two decades before Hong Kong established a genuinely independent judiciary and introduced the Cadet Scheme to select and train senior officials, which dramatically improved the quality of governance. Until the Pacific War (1941–1945), the colonial government focused its attention and resources on the small expatriate community and largely left the overwhelming majority of the population, the Chinese community, to manage themselves, through voluntary organizations such as the Tung Wah Group of Hospitals.
The 1940s was a watershed decade in Hong Kong’s history. The fall of Hong Kong and other European colonies to the Japanese at the start of the Pacific War shattered the myth of the superiority of white men and the invincibility of the British Empire. When the war ended the British realized that they could not restore the status quo ante. They thus put an end to racial segregation, removed the glass ceiling that prevented a Chinese person from becoming a Cadet or Administrative Officer or rising to become the Senior Member of the Legislative or the Executive Council, and looked into the possibility of introducing municipal self-government. The exploration into limited democratization ended as the second landmark event unfolded—the success of the Chinese Communist Party in taking control of China. This resulted in Hong Kong closing its borders with China on a long-term basis and the local Chinese population settling down in the colony, where it took on a direction of development distinctly different from that of mainland China.
The large influx of refugees to Hong Kong in the late 1940s was transformed by a pragmatic colonial administration into a demographic bonus, as all were allowed to work freely and become part of the community. Those refugees, particularly from Shanghai, who arrived with capital, management knowhow and skills gave some industries, such as textile and shipping, a big boost. With the entrepreneurial spirit of the Chinese community unleashed and the colonial administration now devoting most of its resources to support them, Hong Kong became an industrial colony and developed increasingly strong servicing sectors. By the 1980s, local entrepreneurs had become so successful that they took over some of the well-established major British companies that had been pillars of the local economy for a century. As Hong Kong developed, it looked to the wider world—something originally necessitated by the imposition of trade embargos on China by the United States and the United Nations after the start of the Korean War in 1950—and eventually transformed itself into a global metropolis. In this process, the younger generations who grew up after the Sino-British border was closed developed a common identity that made them proud citizens of Hong Kong, and they became agents of change in reshaping how their parents’ generation felt about Hong Kong and China.
The great transformation of postwar Hong Kong happened in the shadow of a dark cloud over its long-term future, which is a legacy from history. Hong Kong in fact consists of three parts: the island of Hong Kong, the tip of the Kowloon peninsula, and the New Territories, which amounts to 90 percent of the overall territory. The first two were ceded by China to Britain in perpetuity, but the New Territories was only leased in 1898 for a period of 99 years. As the three parts developed organically they could not be separated. During the Pacific War the nationalist government of China successfully secured an agreement from the British government that the future of the New Territories would be open to negotiation after the defeat of Japan. When victory came, the British recovered Hong Kong, and the Chinese government was distracted by the challenges posed by the Communist Party. After it won control of mainland China in 1949 the Communist government left Hong Kong alone, as it was a highly valuable opening for China to reach out beyond the Communist bloc during the Cold War.
In 1979 the British raised the issue of the New Territories lease, as the remainder of the lease was getting too short for comfort. Formal negotiations started in 1982, and it took two years for an agreement to be reached. The British government ultimately agreed to hand over the entirety of Hong Kong as a going concern to China, which undertook to maintain the system and way of life there unchanged for fifty years. The transitional period saw controversies over democratic developments in Hong Kong, which were limited at China’s insistence.
The formal handover went smoothly in 1997, and the colony became a Chinese Special Administrative Region. At first it appeared that Hong Kong enjoyed a high degree of autonomy, as promised by the Chinese government, but the scope for its autonomy was eroded gradually. The increase in interactions between the local people and the mainland Chinese, as well as the Chinese authorities’ refusal to let Hong Kong develop genuine democracy, nurtured a strong sense of Hong Kong identity, which started to transform into a kind of national identity that is different and distinct from that of China. By the mid-2010s this gave rise to a small but vocal movement that advocates independence.