They say that history repeats, first time as tragedy and the second time as farce. I think with HK, the situation is reverse. It was farce in 1996 and tragedy today.<p>Just before the handover, when there was a buzz of discussion around the relationship between Hong Kong and China, one of the common talking points in the West was that legally China may be absorbing HK, but economically HK would absorb China. The party line was that<p>1. China needed more foreign capital inflows, and so HK would be a model of open capital markets. (see this Rockefeller report:<p>"One important component of this trade, and a major engine of Chinese economic growth, has been the freer flow of foreign capital into the Chinese economy. Foreign- funded enterprises — the majority of which are supported by overseas Chinese based in Hong Kong, Taiwan, and other countries in Southeast Asia — account for more than one-third of Chinese exports." <a href="https://www.rbf.org/sites/default/files/attachments/china_confronts_the_challenge_of_globalization.pdf" rel="nofollow">https://www.rbf.org/sites/default/files/attachments/china_co...</a><p>2. China would need to democratize more to overcome problems with CCP rule.<p>3. China's economy was reaching diminishing returns in the current system.<p>I recommend reading the summaries of that Rockefeller paper, starting on page 4.<p>HK was so much wealthier and advanced whereas China was considered backwards, and so it was just assumed that China would be copying HK as much as they can.<p>The reality proved..different. China became an industrial powerhouse (something HK never was) much more dependent on capital outflows than inflows. It increased centralization, reversing Deng's reforms. It did not suffer any diminished capacity to either act internationally (see Belt and Road) or to increase industrialization. There was no devolution, no reform, no democratization, and no financialization or internationalization of the economic decision making process. Even culturally, HK had a movie industry in the 90s that was completely eclipsed by mainland China. Same for fine arts, classical music, everything. There is no area, either cultural or economic, where HK has a leadership role now.<p>And the position of HK as a crucial financial gateway to China that allowed China to access western capital began to fade, as did the wealth discrepancy between top tier cities in China and HK. At this point, HK's economy is underperforming mainland China and most mainland Chinese don't view it as having any kind of leadership role, either as demonstrating a system to be emulated and admired or even as demonstrating a possible path forward for China, which is deep into nationalism and xenophobia.<p>So today, given the huge reversal of importance of HK and China, to be bringing out this old line -- it seems crazy.