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Hong Kong and Taiwan along with Portuguese Macau were the two areas of China not taken over by the Communists in the Civil War (1948). As a result, there were test cases in the developing Cold War. In these areas, especially Hong Kong and Taiwan, officials pursued capitalist free market principles while Mao pursued a radical Communist program of collectivization and nationlization. The result was not just economic stagnation, but the most terrible famine in human history. Few countries perhaps with the exception of North Korea and Cambodia have a worst economic performance. In comparison Hong Kong and Taiwan (the areas of China not under Communist control) which not only retained capitalism and market forces, but made these principles the cornerstone of the economic system. Hong Kong became one of many plaves where people voted with threir feet against Communism and Socialism and for Capitalism. The result was stunning successes. They became two of the phenomely successful Asian Tigers with their vibrant economies, in large part because they were some of the world's freest economies. Hong Kong's rise began as a service economy offering low-priced, but high-qualiyty goods because of low wages. On this base, Hong Kong created a modern prosperous economy which now offers its people European level affluence. Shanghai had been China's financial center. Hong Kong had also been important, but after the Comminist victory, Hong Kong became a leading international financial center with a strong service-based economy. Hong Kong offered low taxes, the rule of law, virtually free port trade, a trusted international financial market, and a first class education system. And it did all this without any natural resource--except the drive and hard work of its people. The Chinese Communists as they took over Hong Kong pledged to retain the character of this vibrant capitalist enclave (1997). Hong Kong is to continue to be a free port and allow its laws to remain unchanged for 50 years. Its first chief executive, Tung Chee-hwa, announced a policy agenda based on the concept of 'one country, two systems'. A now often repeated formulation. The stated idea was to preserve Hong Kong's economic independence.
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