British troops returned to the city on August 30, 1945, and civil government was reestablished in May 1946. Meanwhile, hundreds of thousands of Chinese and foreigners returned, and they were soon joined by economic and political refugees from China, who were fleeing the civil war between the Nationalist and communist armies.

The United Nations embargo in 1951 on trade with China and North Korea during the Korean War seriously curtailed the entrepôt trade, the lifeline of the colony, and for several years conditions were depressed. Hong Kong began its revival on the basis of light industries such as textiles, which were set up by immigrant capitalists and provided needed employment. These soon assumed their importance in the economy, providing as well the basis for further industrialization. But it was because much of the development depended on cheap labor, which toiled under extremely poor working conditions, that labor disputes and social discontent began to spread in the early 1960s. Severe riots broke out in Hong Kong and Kowloon in May 1967 following a labor dispute in a plastic-flower factory. The economic and social unrest was immediately turned into violent political demonstrations, largely inspired by followers of the Cultural Revolution (1966–76) in China. When the situation stabilized toward the end of the 1960s, general working and living conditions were notably improved by labor legislation, large government housing projects, and extensive public works programs. Simultaneously, high-technology industries such as electronics were developed, and the property and financial markets prospered until early 1973, when the stock market collapsed as billions of dollars were drained out of Hong Kong. From the mid-1970s the economy resumed its upward trend as relations with China improved.

Return to Chinese sovereignty

In the late 1970s, concern about the future of Hong Kong began to loom large, as British jurisdiction over the leased areas of the New Territories neared the 1997 expiration date. Although the lease applied only to the New Territories, the Chinese government had consistently maintained that the whole of Hong Kong was Chinese territory and considered that the question of the earlier Hong Kong–British agreements came under the category of unequal treaties and also required resolution. Initial contacts between the two governments on the matter were made from March 1979, but formal negotiations did not start until after the visit of the British prime minister to Beijing in September 1982. Negotiations continued for two years. Finally, the Chinese-British joint declaration on the question of Hong Kong was formally signed by the heads of the two governments in Beijing on December 19, 1984. The agreement stipulated that Hong Kong (including Hong Kong Island, Kowloon, and the New Territories) would be recovered by China from July 1, 1997. There ensued a period of often difficult negotiations between Hong Kong and Beijing on the final wording of the document by which Hong Kong would be governed under Chinese sovereignty. Despite some reservations from Hong Kong, the National People’s Congress formally ratified the Basic Law on April 4, 1990, which took effect on July 1, 1997, and established the Hong Kong Special Administrative Region directly under the Chinese central government.

The years after reunification generally were prosperous, as Hong Kong’s economy experienced steady growth, despite its heavy dependence on global economic conditions. The already significant economic ties with the mainland increased even more dramatically than before reunification. In addition, major resources were devoted to improving the region’s transportation infrastructure, which included new bridges and roadways in addition to the new airport. Politically, there were sustained calls for democratic reforms to the Basic Law that, at times, included large demonstrations and pressure from opposition-party members in the Legislative Council (LegCo). By the 2004 legislative elections, Beijing was allowing half of the LegCo seats to be directly elected from geographic constituencies, with the other half selected from business and professional groups known as “functional constituencies.”

Hong Kong was hit hard by an outbreak of severe acute respiratory syndrome (SARS) in 2003, which killed some 300 people there and 350 more on the mainland and, for a time, significantly reduced tourism in the region. However, the crisis soon passed, and tourism rebounded. Hong Kong was the venue for the equestrian events during the 2008 Olympic Games, and it hosted the 2009 East Asian Games.

Political unrest

Hong Kong has periodically experienced political unrest when its citizens pursued democratic reform or when they felt that their autonomy was being threatened, such as in 2019, when a proposed bill was introduced that would permit the extradition of Hong Kong citizens to mainland China (and other places with which it did not already have an extradition treaty). The bill, which many feared would be used to intimidate those who were critical of the mainland government, prompted months of rallies and marches, with demonstrators calling for it to be killed. Initially peaceful, the nature of the demonstrations became violent as police and protestors clashed. Although the bill was formally withdrawn in October, by that time protestors had expanded their demands to include an independent investigation of police brutality experienced in the months of demonstrations, amnesty for those demonstrators who had been arrested while protesting against the bill, and universal suffrage, which was provided for by Hong Kong’s Basic Law but had yet to be implemented. Their remaining demands went unmet.

Protests ramped up again in May 2020 when the government of mainland China proposed a security law for Hong Kong that would bypass Hong Kong’s LegCo and be imposed in the region. Under Hong Kong’s Basic Law, the region was supposed to have adopted its own security law but had yet to do so after an attempt in 2003 had resulted in mass protests. The draft law proposed, and then later passed, by China’s National People’s Congress in May was not final, but it appeared that it would criminalize acts such as sedition, secession, and subversion—all of which, people feared, could be broadly interpreted by authorities and be used to quell dissent against the Chinese government and reduce Hong Kong’s autonomy. It also appeared that the draft law would permit mainland government security agencies to operate in Hong Kong. A final version of the draft was made law and implemented on June 30, 2020. The complete text of the new security law, made available only after it had been enacted, included the aforementioned provisions, and it was met with widespread international condemnation and criticism that it effectively ended the “one country, two systems” guiding principle of Hong Kong’s Basic Law.