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Under the One Country Two Systems concept, China, keeping its socialist system (with Chinese characteristics), allows Hong Kong?s capitalistic system and way of life to continue. The Hong Kong Special Administrative Region (HKSAR) is to exercise a ?high degree of autonomy?, with ?fifty years no change?. Deng Xiaoping, China?s paramount leader, who heralded China?s opening to the world in 1979, held that this could be a model to resolve international relations problems left over by history. In early 2005, HK once again topped the Heritage Foundation?s annual index of economic freedom, for the eleventh year. Yet HKSAR has seen tensions, with mass demonstrations. The State Department?s Country Report on Human Rights Practices ? 2004 suggested it ?has been tested severely this year?. And Amnesty International?s 2005 Report noted ?a mainland ruling in April restricting Hong Kong?s freedom to push ahead with political reform heightened concerns about an erosion of human rights in Hong Kong.? Clearly the 1C2S concept as practised in HK is under challenge. It raises the question: has China managed HK?s return well or not? The nine years of experience offers a glimpse into China?s foreign policy and how HK fits into China?s scheme of things as a rising global power. Much as China guards jealously its sovereignty over HK and fears HK is being used as a base of subversion by foreign interests, notably the United States, HK is a matter of international concern. Since HK has been running an open economy, and as China is increasingly integrated into the international community, the interactions among the three levels ? the sub-state actor, the sovereign and the international community ? present opportunities as well as dilemmas. Specifically, the paper seeks to elucidate the origins of the 1C2S concept, to examine its application in HK thus far, and to identify the factors affecting its success (or failure). In fact, the 1C2S concept was designed in the first instance by China to re-unify the ?renegade? province of Taiwan. HK is supposed to demonstrate to Taiwan that all would be well under Chinese sovereignty. Yet, President Chen Siu-bian categorically stated that Taiwan is not HK. Beijing?s passage of the anti-succession law has rattled cross-straits relations, yet the visits by Lien and Soong, the opposition leaders, to the Mainland represented a class united front play of Beijing to isolate Chen and raised hope for some kind of accommodation between Taiwan and the Mainland. The paper will conclude with a discussion on the implications of the HK experience for Taiwan. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]