Hong Kong has been experiencing a rash of retrospection lately. Perhaps as a result of entering the 10th year after its return to Chinese rule in July or a recent visit by its last colonial governor, locals and outside observers have been taking stock of the last decade.
And what they have found is that things have turned out far better than almost anyone had originally expected.
Since the Asian financial crisis that immediately followed the British handover, the SARS scare in 2003 and through the demise last year of unpopular Chief Executive Tung Chee-hwa, Hong Kong's economy has snapped back into shape. Growth for this year is projected at about 6.3%, and unemployment hovers around 5%, the lowest level in recent memory.
And, as the most special of China's special administrative regions (SARs), Hong Kong will continue to benefit from its increasingly close links with China's soaring economy – particularly in the Pearl River Delta – for the foreseeable future.
While the other so-called "Asian Tiger" economies – South Korea, Taiwan and Singapore – have evolved toward a high-tech focus, Hong Kong has become almost exclusively a service center, and one whose services are in high demand.
"China seems to need Hong Kong for exactly those things that Hong Kong is best at," said Jack Maisano, who serves as president of the the American Chamber of Commerce in the territory.
Ten years ago, the mood in colonial Hong Kong was characterized by apprehension about what would happen under the "high degree of autonomy" that it was supposed to enjoy for 50 years under Chinese sovereignty. Authorities in Beijing reportedly worried about how Hong Kong's people would react to reunification.
But China earned Hong Kong's trust by keeping largely out of its business.
"There have not been any of the ruffles that China expected, and we have also not seen any of the heavy-handedness from China that people in and outside of Hong Kong expected," said Maisano. "The two, in a sense, have been model citizens."
Also assisting the transition were the close cultural ties between the two sides. Hong Kong people have long been jugglers of many identities – current Chief Executive Donald Tsang, who was educated in the US, made a Knight of the British Empire and is viewed positively by Hong Kong natives and the Beijing government alike, is a prime example. The departure of the British has arguably simplified people's identities, as they never viewed themselves as ceasing to be Chinese.
The Closer Economic Partnership Agreement (CEPA) between Hong Kong and the mainland has, as its name suggests, brought the two closer together since its 2003 signing. Essentially a free-trade agreement that allows Hong Kong companies to import services to China tariff-free, CEPA gives SAR businesses access to mainland markets from a sub-WTO base.
Maisano believes the main effect of CEPA has been psychological – a gesture of the mainland's support for Hong Kong.
Other arenas of China's preferential treatment of the SAR include allowing tourists from some 200 mainland cities to visit (most come to tour and shop), approving its biggest companies to list on the Hong Kong Stock Exchange and allowing Hong Kong to operate in renminbi.
More recent fears that economic liberalization in the mainland would see Shanghai supplant Hong Kong as the country's principal financial center have been put out of most people's minds by record-breaking IPOs from China Construction Bank last October and then Bank of China in June.
Hong Kong should also not fear losing its role as a gateway for foreign businesses wanting to invest in China, according to Fabrice Turries of French law firm Gide Loyrette Nouel. "On the contrary, it will become more and more popular," he said.
Gide is an example. One of the first foreign law firms to set up shop in the mainland in the 1980s, it opened its first Hong Kong office only this year. In addition to French clients, it caters to a growing number of Chinese companies that come to Hong Kong to sign contracts, tap international funds and engage in M&A activity.
Rather than being a gateway for foreign companies into the mainland, the territory has become a two-way revolving door.
Hong Kong's rule of law, low taxes and the ease of setting up holding companies are clear advantages that no mainland city can claim. In this respect, it is an example for the Beijing leadership to follow in its quest for a "rule-of-law society" in China.
"China is effectively telling the country to look to Hong Kong as a model for being more international by granting all these special privileges to it," said Maisano.
While rule of law is one of many freedoms enjoyed in the SAR and not across the border, suffrage remains a theoretical right. Direct election of the chief executive may be a provision of the Basic Law, Hong Kong's mini-constitution, but next year's chief executive will be determined by the Legislative Council, only 24 of whose 60 members are directly elected.
No agreement – or timetable for an agreement – has been reached with Beijing on direct elections for the top post, which means it can't happen before 2012.
"Hong Kong is the only example that I can think of, of a society which is free but not democratic," said Chris Patten, its last colonial governor. Patten, now Lord Patten of Barnes, and until last year an EU Commissioner, believes democratic reforms are inevitable in Hong Kong.
"It hasn't got very far, but Hong Kong is an example of how you can be a bit more experimental, a bit more open-minded without risking upheaval. The paradox is that Hong Kong is more stable the more democratic it becomes. It could be a very easy process but that depends on the wisdom of Beijing."
For better or for worse, it looks certain that Hong Kong's fate will be closely linked to decisions made on the mainland. Turries believes it will have "no choice" but to follow China, emphasizing that where that will lead is an unknown.
Patten's view is more optimistic. "The worst that can happen in Hong Kong is that it simply becomes the richest city in China, which isn't exactly a disaster scenario. At its best, Hong Kong will remain a rather special conduit between China and the rest of the world, which will be a very Chinese community but with some of the Western characteristics that reassure investors."