In 1997, the status of Hong Kong changed. Hong Kong had been one of two Chinese areas -- the other being Macao -- under the control of foreign powers. The Chinese see these as "problems left over from history," and they were the result of imperialist aggression and incompetence on the part of Chinese rulers in the nineteenth century. Hong Kong has been under British control as the result of three treaties with the Chinese from the last century, but in the mid-1980s China concluded formal agreements with Britain for the return of Hong Kong in 1997. The Hong Kong area, fearful of being returned to Red Chinese dominion, has been given a high degree of autonomy in the agreement with Britain, and it will be considered a "special administrative region" of China. The banking industry is certain to be affected by these changes, as will every other industry in Hong Kong, and the shift will further affect the many foreign investors with money tied up in the Hong Kong economy. A comparison of the commercial banking industry in Hong Kong with such an operation in the United States shows the sort of institution that the Hong Kong bank is today, and may point to what it will become in the future.
Hong Kong had considerable success in exporting manufactures to Europe and North American, and this attracted substantial investment by American and Japanese firms beginning in the 1950s. Leading exports today include textiles and clothing, electronics, clocks and watches, domestic appliances, and plastics. In recent years many production processes have been relocated to China to take advantage of cheaper labor there, so that Hong Kong firms today employ more than twice as many people in China as in Hong Kong. The colony has become the largest banking center in the Pacific region, after Tokyo, and financial services now generate 19 percent of the gross domestic product (GDP), almost as much as manufacturing. Agriculture and fishing account f...