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The chief executive is the head of government and serves for a maximum of two five-year terms. The State Council (led by the Premier of China) appoints the chief executive after nomination by the Election Committee, which is composed of 1,200 business, community, and government leaders.

The Legislative Council has 70 members, each serving a four-year term. Thirty-five are directly elected from geographical constituencies, and thirty-five represent functional constituencies (FC). Thirty FC councilors are selected from limited electorates representing sectors of the economy or special interest groups, and the remaining five members are nominated from sitting district council members and selected in region-wide double direct elections. All popularly elected members are chosen by proportional representation. The 30 limited electorate functional constituencies fill their seats using first-past-the-post or instant-runoff voting.

Twenty-two political parties had representatives elected to the Legislative Council in the 2016 election. These parties have aligned themselves into three ideological groups: the pro-Beijing camp (the current government), the pro-democracy camp, and localist groups. The Chinese Communist Party does not have an official political presence in Hong Kong, and its members do not run in local elections. Hong Kong is represented in the National People's Congress by 36 deputies chosen through an electoral college and 203 delegates in the Chinese People's Political Consultative Conference appointed by the central government.

Chinese national law does not generally apply in the region, and Hong Kong is treated as a separate jurisdiction. Its judicial system is based on common law, continuing the legal tradition established during British rule. Local courts may refer to precedents set in English law and overseas jurisprudence. However, mainland criminal procedure law applies to cases investigated by the Office for Safeguarding National Security of the CPG in the HKSAR. Interpretative and amending power over the Basic Law and jurisdiction over acts of the state lies with the central authority, making regional courts ultimately subordinate to the mainland's socialist civil law system. Decisions made by the Standing Committee of the National People's Congress override any territorial judicial process. Furthermore, in circumstances where the Standing Committee declares a state of emergency in Hong Kong, the State Council may enforce national law in the region.

The territory's jurisdictional independence is most apparent in its immigration and taxation policies. The Immigration Department issues passports for permanent residents, which differ from those of the mainland or Macau, and the region maintains a regulated border with the rest of the country. All travelling between Hong Kong and China and Macau must pass through border controls, regardless of nationality. Mainland Chinese citizens do not have the right of abode in Hong Kong and are subject to immigration controls. Public finances are handled separately from the national government; taxes levied in Hong Kong do not fund the central authority.

The Hong Kong Garrison of the People's Liberation Army is responsible for the region's defense. Although the Chairman of the Central Military Commission is the supreme commander of the armed forces, the regional government may request assistance from the garrison. Hong Kong residents are not required to perform military service, and the current law has no provision for local enlistment, so its defense is composed entirely of non-Hongkongers.

The central government and Ministry of Foreign Affairs handle diplomatic matters, but Hong Kong retains the ability to maintain separate economic and cultural relations with foreign nations. The territory actively participates in the World Trade Organization, the Asia-Pacific Economic Cooperation forum, the International Olympic Committee, and many United Nations agencies. The regional government maintains trade offices in Greater China and other nations.

The imposition of Hong Kong’s national security law by the central government in Beijing in June 2020 resulted in the suspension of bilateral extradition treaties by the United Kingdom, Canada, Australia, New Zealand, Finland, and Ireland. The United States ended its preferential economic and trade treatment of Hong Kong in July 2020 because it was no longer able to distinguish Hong Kong as a separate entity from the People's Republic of China.

Economy

Hong Kong has a capitalist mixed service economy, characterized by low taxation, minimal government market intervention, and an established international financial market. It is the world's 35th-largest economy, with a nominal GDP of approximately US$373 billion. Hong Kong's economy has ranked at the top of the Heritage Foundation's economic freedom index since 1995. The Hong Kong Stock Exchange is the seventh-largest in the world, with a market capitalization of HK$30.4 trillion (US$3.87 trillion) as of December 2018.

Hong Kong is the tenth-largest trading entity in exports and imports (2017), trading more goods in value than its gross domestic product. Over half of its cargo throughput consists of transshipments (goods traveling through Hong Kong). Products from mainland China account for about 40% of that traffic. The city's location allowed it to establish a transportation and logistics infrastructure which includes the world's seventh-busiest container port and the busiest airport for international cargo. The territory's largest export markets are mainland China and the United States. Hong Kong is part of the Maritime Silk Road that runs from the Chinese coast via the Suez Canal to the Mediterranean, there to the Upper Adriatic region of Trieste with its rail connections to Central and Eastern Europe. It has little arable land and few natural resources, importing most of its food and raw materials. More than 90% of Hong Kong's food is imported, including nearly all of its meat and rice. Agricultural activity is 0.1% of GDP and consists of growing premium food and flower varieties.

Although the territory had one of Asia's largest manufacturing economies during the latter half of the colonial era, Hong Kong's economy is now dominated by the service sector. The sector generates 92.7% of economic output, with the public sector accounting for about 10%. Between 1961 and 1997 Hong Kong's gross domestic product increased by a factor of 180, and per capita GDP increased by a factor of 87. The territory's GDP relative to mainland China's peaked at 27% in 1993; it fell to less than 3% in 2017, as the mainland developed and liberalized its economy. Economic and infrastructure integration with China has increased significantly since the 1978 start of market liberalization on the mainland. Since the resumption of cross-boundary train service in 1979, many rail and road links have been improved and constructed, facilitating trade between regions. The Closer Economic Partnership Arrangement formalized a policy of free trade between the two areas, with each jurisdiction pledging to remove remaining obstacles to trade and cross-boundary investment. A similar economic partnership with Macau details the liberalization of trade between the special administrative regions. Chinese companies have expanded their economic presence in the territory since the transfer of sovereignty. Mainland firms represent over half of the Hang Seng Index value, up from 5% in 1997.

As the mainland liberalized its economy, Hong Kong's shipping industry faced intense competition from other Chinese ports. Half of China's trade goods were routed through Hong Kong in 1997, dropping to about 13% by 2015. The territory's minimal taxation, common law system, and civil service attract overseas corporations wishing to establish a presence in Asia. The city has the second-highest number of corporate headquarters in the Asia-Pacific region. Hong Kong is a gateway for foreign direct investment in China, giving investors open access to mainland Chinese markets through direct links with the Shanghai and Shenzhen stock exchanges. The territory was the first market outside mainland China for Renminbi-denominated bonds and is one of the largest hubs for offshore Renminbi trading. In November 2020, Hong Kong's Financial Services and the Treasury, Bureau proposed a new law that will restrict cryptocurrency trading to professional investors only, leaving amateur traders (93% of Hong Kong's trading population) out of the market.

The government has had a passive role in the economy. Colonial governments had little industrial policy and implemented almost no trade controls. Under the doctrine of "positive non-interventionism", post-war administrations deliberately avoided the direct allocation of resources; active intervention was considered detrimental to economic growth. While the economy transitioned to a service basis during the 1980s, late colonial governments introduced interventionist policies. Post-handover administrations continued and expanded these programs, including export-credit guarantees, a compulsory pension scheme, a minimum wage, anti-discrimination laws, and a state mortgage backer.

Tourism is a major part of the economy, accounting for 5% of GDP. In 2016, 26.6 million visitors contributed HK$258 billion (US$32.9 billion) to the territory, making Hong Kong the 14th most popular destination for international tourists. It is the most popular Chinese city for tourists, receiving over 70% more visitors than its closest competitor (Macau). The city is ranked as one of the most expensive cities for expatriates.

Culture

Hong Kong is characterized as a hybrid of East and West. Traditional Chinese values emphasizing family and education blend with Western ideals, including economic liberty and the rule of law. Although the vast majority of the population is ethnically Chinese, Hong Kong has developed a distinct identity. The territory diverged from the mainland through its long period of colonial administration and a different pace of economic, social, and cultural development. Mainstream culture is derived from immigrants originating from various parts of China. This was influenced by British-style education, a separate political system, and the territory's rapid development during the late 20th century. Most migrants of that era fled poverty and war, reflected in the prevailing attitude toward wealth; Hongkongers tend to link self-image and decision-making to material benefits. Residents' sense of local identity has markedly increased post-handover: The majority of the population (52%) identifies as "Hongkongers", while 11% describe themselves as "Chinese". The remaining population purports mixed identities, 23% as "Hongkonger in China" and 12% as "Chinese in Hong Kong".

Traditional Chinese family values, including family honor, filial piety, and a preference for sons, are prevalent. Nuclear families are the most common households, although multi-generational and extended families are not unusual. Spiritual concepts such as Feng Shui are observed; large-scale construction projects often hire consultants to ensure proper building positioning and layout. The degree of its adherence to Feng Shui is believed to determine the success of a business. Bagua mirrors are regularly used to deflect evil spirits, and buildings often lack floor numbers with a 4; the number has a similar sound to the word for "die" in Cantonese.