I think that the Hong Kong SAR government will have the freedom to govern Hong Kong as it feels fit, provided it operates within certain policy guidelines dictated by the Chinese government. 

The economy will do as well if not better than the last few years. Trade and investment between China and HK is increasing, and the handover will assist this process. Businesses, however, will need to become more competitive as other parts of Asia become more formidable economic foes.

Both. First, Hong Kong will continue its trade relations with other countries mainly because it is a conduit of transportation and trade for a large part of the world. (Hong Kong is the world's fifth largest trading economy.) This will be maintained if not increased. The government is building the largest airport in the world, and also upgrading Hong Kong's port capacitiy. Second, Hong Kong will also work closely with China since it plays a key role in that country's development.

Yes, absolutely. It is unlikely that the Chinese government would tamper much with the economic mechanism that has made Hong Kong successful. Such tampering would not be in China's best interests. In addition, China wants Taiwan back under its wing in the long run. Taiwan would never agree to this is they saw China interfering with Hong Kong's free market economy.

There will be subtle cultural changes over time as China has more influence and the influence of Britian wears off. There is also a danger of corruption flowing over from China. In the medium term Hong Kong will become less expensive to live in as demand for real estate declines and real estate prices cool. In the long term it will lose part, but not all, of its international prestige (15 - 20 years say) as cities like Shanghai grow and become more vital economic centres. In the long run, however, Hong Kong will continue to play an important role in international business and economy. I just cannot foresee the same immediate "doom & gloom" scenarios that others predict. (For example, some friends of mine on June 30th, 1997, called me from North America... they were concerned that the next day the PLA would march in and put us all under house arrest.)

It is often said, that China views Hong Kong as "China territory unlawfully occupied by Britain," contrasted with their perspective of Macau, which is "China territory administered by Portugal on behalf of China." Very distinct perspectives, indeed. Therefore, one of the advantages for China is the national moral that will accompany having the Hong Kong territory "returned to the motherland," as the handover is often refered to as a symbol of being. This could go a long way to develop national spirit for China.

Properly orchestrated, the handover could also lead to a reunion of Taiwan and China in the medium term, which would also benefit China. In the same vein, properly orchestrated the handover will have China "gain face" in the international arena since so many people unnecessarily lack confidence in China's ability to have Hong Kong prosper under its sovereignty.

From an economic perspective there are the following benefits:

     Improved access to technological expertise 

     Improved access to business expertise 

     Access to wealth 

     Increased foreign investment 

     Freer trade with the rest of the world 

Yes and no. First, I think in reality the mainland Chinese will see that Hong Kong really is like a separate country, and this will keep them less jealous than one might expect if they looked out their kitchen windows and saw the affluence across the street! Second, for many Chinese, if the future looks better than the past they are happy. As it is now, in general, they see their prosperity, wealth and standard of living increasing and therefore believe that they can attain a better life where they are. If the Chinese government fails to deliver on the promise of a better future, they will have REAL problems on their hands. That is when the people will decide to deliver on the promise themselves and we know what THAT will lead to! 

I also recognize that not all people in China see the future as bright and there is also a large - 100 million? - floating unemployment population that I dont think is too happy with life as it is. These issues obviously contradict what I have written above, but I dont think these people will be jealous of Hong Kong. The people in Hong Kong work hard for what they achieve, and I think mainland Chinese will recognize this for the most part.

By having two totally different geographical locations, and plenty of justification for not being able to introduce the same rules to everyone in both locations. That would just not work. For example, it could result in similar chaos and problems as we have seen in Russia since it attempted to become a free economy system.

No. Movement of mainlanders from China to Hong Kong will be restricted for many reasons. First of all, Hong Kong is full and would be unable to support a large inflow of people. Eventually though, maybe five to ten years from now, people will be able to visit Hong Kong more easily from China.

Yes, that is correct the HK Police regularly conduct spot checks. However, this is no different than you find in other parts of the world when the police check for people who may be illegal immigrants, or check individuals that fit the description of suspects or criminals wanted by the police. The way Hong Kong Police go about this process may appear different since most of them walk their beat as opposed to driving. Therefore, it is not uncommon to see police stopping people on the streets. I would also like to point out though, that the Hong Kong Police Force is an impressive group. The officers are extremely polite and well trained. I have been in Hong Kong for five years and have been stopped once - the officer approached me and said, "You look a bit lost. May I help you find your way?" 

NEITHER! I am the Director of Human Resources for Rockwell Automation Asia Pacific.  I am Canadian (originally from Toronto) and did the Asia Pacific Management Co-Op Program (APMCP) in Vancouver in 1995/96. The APMCP is a graduate business program, similar to an MBA with an Asia Pacific focus. I was recruited from there to work in Hong Kong in June 1996.