Hong Kong has many natural harbors, that of Victoria (c.17 sq mi/44 sq km) being one of the finest in the world. The colony grew around this beautiful, sheltered, deepwater port, and today an estimated 75% of the population are concentrated there. Victoria lies at the foot of Victoria Peak (1,805 ft/550 m), the center of an extensively quarried granite range covering much of Hong Kong island. As the city has grown, large sections of Victoria Harbor have been filled in to provide space for office buildings, a convention center, and highways.

About 95% of the people are ethnic Chinese, some 2% are Filipino, and there are substantial British and American communities. Cantonese and English are official languages, and other Chinese dialects are spoken. About 90% of the population practice traditional Chinese religions, and some 10% are Christian. Hong Kong's educational institutions include the Univ. of Hong Kong and Chinese Univ.

Hong Kong is governed under the Basic Law as approved in 1990 by the National People's Congress of China. The head of state is the president of China. The government is headed by the chief executive, who is elected by the 800-member electoral committee for a five-year term. The legislature consists of the 60-seat Legislative Council, half of whose members are directly elected, and half indirectly, for four-year terms. Changes adopted in 2010 increased the number of directly elected seats to 40, but required that 5 of the new members be chosen from among district members; the electoral committee was expanded to 1,200 members. The main parties are the prodemocracy Democratic party, the probusiness Liberal Party, and the Beijing-oriented Democratic Alliance for the Betterment of Hong Kong.

Hong Kong is a free port, a bustling trade center, and a shopping and banking emporium—one of the greatest trading and transshipment centers in East Asia. After 1950, when much of its entrepôt trade with China was halted because of UN and U.S. embargoes, Hong Kong began to industrialize. Overcoming such handicaps as a scarcity of minerals, power sources, usable land, and freshwater, and utilizing its abundant supply of cheap labor, Hong Kong has become a leading light-manufacturing center.

The textile and garment industry is the colony's largest manufacturing sector. Other industries include the manufacture of electrical and electronic equipment, plastics, toys, watches and clocks, appliances, metal and rubber products, chemicals, and jewelry. The majority of goods are exported. Shipbuilding, machine tooling, and other heavy industries are also important, although most raw materials, capital goods, and fuel must be imported. China is by far the main trading partner, followed by the United States and Japan. Tourism is a major source of revenue, in addition to motion-picture production, finance and insurance, and publishing.

Because of the mountainous and rocky terrain, only about 5% of the land is arable; farming is carried on principally in the New Territories; the Yuanlong valley has the best farmland. Rice and a variety of vegetables are grown, but most food is imported from mainland China. Fishing is a common occupation, and chickens and pigs are raised.

Hong Kong's rail link with the mainland is by the Kowloon-Guangzhou Railway. Kowloon is connected with Hong Kong island, 1 mi (1.6 km) away, by ferry and by a vehicular tunnel. Hong Kong has shipping connections with all major world ports and is an international air hub; the airport at Kai Tak (opened 1958) was built on land reclaimed from Kowloon Bay. A new airport, on landfill extending from Chek Lap Kok island, opened in 1998; highways and a high-speed rail system connect Victoria to the airport.

The region of Hong Kong, which had long been barren, rocky, and sparsely settled—its many islands and inlets a haven for coastal pirates—was occupied by the British during the Opium War (1839-42). The colony prospered as an east-west trading center, the commercial gateway to, and distribution center for, S China. It was efficiently governed, and its banking, insurance, and shipping services quickly became known as the most reliable in SE Asia. In 1921 the British agreed to limit the fortifications of the colony, and this contributed to its easy conquest (Dec. 25, 1941) by the Japanese. It was reoccupied by the British on Sept. 16, 1945.

After 1949, when the Communists took control of mainland China, hundreds of thousands of refugees crossed the border, making Hong Kong's urban areas some of the most densely populated in the world. Problems of housing, health, drug addiction, and crime were the target of aggressive governmental programs, and Hong Kong's long-standing water problem was eased by the construction of an elaborate system of giant reservoirs and the piping in of water from China.

In May, 1967, Hong Kong was struck by a wave of riots and strikes inspired by China's Cultural Revolution. The government reacted firmly, and, although the Chinese retaliated by briefly stopping the piping of water and by attacking British representatives in Beijing, relations between Hong Kong and China soon resumed the surface harmony that had existed since the late 1950s.

After several years of negotiations, on Dec. 19, 1984, Britain and the People's Republic of China agreed that Hong Kong (comprising Hong Kong Island, Kowloon, and the New Territories) would become a special administrative region of China as of July 1, 1997, when Britain's lease expired. Declaring a policy of "One Country, Two Systems," China agreed to give Hong Kong considerable autonomy, allowing its existing social and economic systems to remain unchanged for a period of 50 years.

The crackdown in 1989 at Tiananmen Square in Beijing inspired fears that China would not respect Hong Kong's autonomy, and in the next few years many business people left, affecting Hong Kong's economy. In 1991, Hong Kong's first direct legislative elections (which accounted for about 30% of the seats) were won almost entirely by liberal, prodemocracy candidates, and no pro-China candidates were elected.

In 1992, Britain introduced a number of democratic measures, which were denounced by China. Talks between the two countries proved fruitless, and in 1994 Hong Kong's legislature approved further democratic reforms in the colony in defiance of strong Chinese objections. In the subsequent elections (1995) prodemocracy candidates received about 60% of the popular vote. Upon Hong's return to China, Beijing abolished the legislature set up by the British and established a provisional legislature; a chief executive, Tung Chee-hwa, was also appointed. Elections were held in 1998, with prodemocracy parties taking 16 of the 20 directly elected seats (the rest of the 60 seats were mostly chosen by professional constituencies).

Hong Kong was affected by the Asian financial crisis of 1997-98, but its economy began to rebound in 1999. A setback to Hong Kong's independent judicial system occurred in 1999, when Beijing overturned a Hong Kong court ruling that had granted residency to children born in mainland China who had at least one parent living in Hong Kong. In the Sept., 2000, legislative council elections, prodemocracy parties won 15 of the 24 directly elected seats.

Tung was reelected as chief executive in 2002. Although not popular, he was supported by the Chinese government, and no other candidate was nominated by the electoral committee responsible for electing the executive. In 2003, Hong Kong's economy was hurt by measures undertaken to control an outbreak of SARS (severe acute respiratory syndrome), which spread there from China. A trade agreeement was signed with China in June; the pact gave Hong Kong businesses greater access to Chinese markets. Proposed new antisubversion laws led to significant antigovernment demonstrations the following month, and Tung subsequently withdrew the legislation.

In Apr., 2004, the Chinese government ruled that Hong Kong would have to petition China in order to make any changes in its electoral laws, including increasing the number of legislators chosen by direct election. In 2004 half the legislators were directly elected, but prodemocracy forces won a total of only 26 seats in the election, which was fiercely contested and marked by heavy-handed Chinese tactics. Tung resigned in Mar., 2005, and was replaced as chief executive by Donald Tsang, who had been chief secretary.

Tsang subsequently resigned to campaign for election to the post, which he secured in June. Two governmental reform proposals failed to pass in late 2005 when prodemocracy legislators rejected them as constituting minor tinkering with the laws governing the election of the chief executive and the size of the legislature. Tsang was reelected chief executive in Mar., 2007. Later in the year the Chinese government indicated that it would consider allowing the direct election of the chief executive beginning in 2017. Elections in 2008 resulted in pro-democracy candidates winning 24 legislative seats.

In 2010 legislators passed a compromise bill that increased the size of the electoral council and expanded the size of the legislature; the changes were supported by pro-Beijing and some prodemocracy legislators. Leung Chun-ying, a business executive and former senior government adviser with close ties to China, was elected chief executive in Mar., 2012. Prodemocracy candidates won 27 legislative seats in Sept., 2012, a result that represented a slight decrease percentagewise in the enlarged legislature.