Hong Kong is a cosmopolitan city with a very flexible and well-educated workforce, another vital asset of its economy. Furthermore, Hong Kong has one of the most exciting and high-potential locations in the world: a SAR in the world's fastest-growing economy (Bond, 2001).
While China's own globalization and economic expansion is proceeding rapidly, Hong Kong remains a premier gateway for trade and investment moving into and out of the Chinese mainland. Hong Kong is also increasingly a source of expertise and funding for China's efforts to modernize its economy. Hong Kong continues to handle half of all exports to mainland China, and accounts for half of foreign direct investment in China. The Mainland is also a major investor in Hong Kong's economy; it is Hong Kong's third-largest source of direct foreign investment (Roberts et al, 1999). The U.S. is also a significant market and trade partner for Hong Kong; as a whole, it is the second-largest trading partner, second-largest market, and the fourth-largest source of imports (Anson Chan, 2001). .
Prior to the hand-over, economic development of Hong Kong was "an unqualified success" with one of the highest GDPs in the world (Hung, 2000). However, it initiated an economic downhill and reduced competitiveness after the hand-over (Hung, 2000). Although many might think that China is to "blame" for Hong Kong's downturn in the years following 1997, it can be said that China was actually a support to Hong Kong and its recovery. The causes behind the crisis are complex and had been "fermenting" for several years, much before the handover. In addition, China avoided direct intervention in Hong Kong's economic affairs, thus, keeping its "hands-off", "laissez-faire", policy adopted with the "one country, two systems" approach and allowing Hong Kong to manage the crisis (Hung, 2000). Furthermore, China was amongst the less affected countries by the financial crisis", hence, serving as a "cushion" for Hong Kong's economy during this period.