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History

two years of negotiations between the British and Chinese governments, culminating in the signing of the Sino-British Joint Declaration on the Question of Hong Kong on 19 December 1984. The Joint Declaration set out the basic policies of the People's Republic of China (PRC) regarding Hong Kong, including the PRC's decision to establish a Hong Kong Special Administrative Region (HKSAR).

On 1 July 1997, the HKSAR was established and the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (Basic Law), the HKSAR's constitutional document, came into effect. The Basic Law prescribes the systems to be practised in the HKSAR and enshrines, in the form of law, the important principles of 'one country, two systems, 'Hong Kong people administering Hong Kong' and 'a high degree of autonomy Reflecting those principles, the Basic Law provides that the socialist system and policies shall not be practised in the HKSAR, and the previous capitalist system and way of life shall remain unchanged for 50

years.

Changes in Hong Kong were not only political. Over the years, the manufacturing sector gradually moved from one concentrating on simple, labour-intensive products to one focusing on sophisticated, high value-added products. Taking advantage of the abundant supply of land and labour in the Pearl River Delta, industrialists expanded their production bases across the boundary while retaining their headquarters in Hong Kong. This mode of operation has contributed to economic development in the region and facilitated the transformation of Hong Kong into an increasingly service-based economy, with domestic merchandise exports accounting for less than 2 per cent of the city's total exports by 2012.

To keep pace with the development, the government improved and expanded the infrastructure. As a result, Hong Kong was transformed into a modern city with efficient road and rail links, and first-class port and airport facilities. New highways opened up previously remote areas, the railway networks were expanded, and Hong Kong International Airport at Chek Lap Kok was opened in 1998.

The development of Hong Kong's economic base has enabled the government to increase spending on education, social welfare, health and other needs - from $247.4 billion in 2003-04 to an estimated $440 billion in 2013-14.

Free primary and junior secondary education has been provided to every student attending public sector schools since 1978. Senior secondary education and full-time courses offered by the Vocational Training Council for secondary three school leavers also became free in September 2008. Post-secondary education remains heavily subsidised. It is the government's policy that no student is deprived of education for lack of financial means.

Over the years, the scope and delivery of welfare services have evolved to become more holistic, integrated and accessible. In the past decade, total government spending on social welfare has increased by over 80 per cent, from $33.3 billion in 2003-04 to an estimated $61.2 billion in 2013-14.

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