5 / 10
5
AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2017
Political system
The Hong Kong Special Administrative Region (HKSAR) is currently ruled by China’s Basic
Law – the constitution adopted by the National People’s Congress of the PRC on April 4, 1990.
HKSAR was established on July 1, 1997, after Great Britain returned Hong Kong to the People’s
Republic of China (PRC).
Under the Basic Law, Hong Kong is allowed to retain the social, economic and legal systems
present at the time of the handover for a 50 year period under the principle of “One Country,
Two Systems.” Additionally, the Basic Law designates a system of governance led by the Chief
Executive, who is the head of the HKSAR, and the Executive Council, which assists the Chief
Executive in policy-making issues.
Legal system
Due to its previous status as a British colony, Hong Kong’s legal system is largely influenced by
English common law. The constitutional framework for Hong Kong’s legal system is provided by
the Basic Law approved by the National People’s Congress, which supplements the common
law. The independent judiciary under the Basic Law ensures that Hong Kong remains within the
common law system. The Court of Final Appeal is the highest court in HKSAR and is headed
by the Chief Justice. Furthermore, reflecting its status as a Special Administrative Region, the
HKSAR legal system is separate from the one governing the PRC under the principle of “One
Country, Two Systems.”
Economic system
Hong Kong’s economic system is defined as a free market economy and characterized by
minimum intervention from the government. HKSAR is service oriented, and especially strong
in the financial services, international trade, and tourism sectors. Additionally, it has strong
economic links to mainland China and other major economies in the Asia Pacific region.
The lack of tariff and non-tariff barriers to trade has made Hong Kong an attractive destination
for investors. HKSAR has no tariffs on imported goods, no import quotas, and applies excise
duties to only four commodities. Furthermore, Hong Kong has no taxes on dividends generated
from doing business in the region. Free trade and low taxation has helped Hong Kong to be
ranked as the world’s freest economy for 22 years in a row.
A Brief Overview of Hong Kong