One country, two systems

The principle is that while mainland China is practicing socialism, Hong Kong and Macau can practice capitalism for a long period of time.

These areas, which are called the Special administrative region (SAR) can be ruled by the people in these regions. This principle has been implemented to Hong Kong and Macau after their handover to the People's Republic of China by the United Kingdom (July 1, 1997) and Portugal (December 20, 1999) respectively.

This system has also been proposed by the PRC government for Taiwan, but the Republic of China government has refused this offer.

Whilst Hong Kong and Macau have largely maintained their free market economies, in practice, much of the surrounding regions of China are becoming similarly free market economies. Whether the differences in freedom to express one's political opinions will also be maintained is, in the eyes of Western observers and human rights organisations, an important question and one which currently has ambiguous answers, as examplified by the debate around Hong Kong Basic Law Article 23.