The View | Different legal traditions keep Hong Kong and China apart

Discordance over “one-country two-systems” has been growing, with Beijing insisting on implementing “one-country” and Hong Kong persisting in defending “two-systems”. A central issue creating this divide is that China operates on a civil law system and Hong Kong the common law system.

Legal systems reflect different styles of control over economic and social activities. The common law strategy seeks to support private and market-originated initiatives, whereas civil law seeks state-desired outcomes.

Tensions and misunderstandings between these two systems have given rise to some of the incongruences we observe in political culture, social and lifestyles. Recognizing these deep differences could be a first step toward political dialogue that could lead to accommodation.

Civil law, which originated with the French, is “policy implementing” and embraces socially-conditioned private contracting, while common law, which originated in England, is “dispute resolving” and supports unconditioned private contracting.

The contrast between the two is most prominent in terms of their influence on financial market development. The fact that after two centuries of modernization, London is an international financial center but Paris is not, speaks volumes about the difference between British common law and French civil law, and the persistence of legal origins.

Those effects can also be seen when comparing Hong Kong and Singapore, which have common law traditions, with Taiwan and South Korea, which have civil law traditions. Taiwan and South Korea have functioning democratic political systems, but not Hong Kong and Singapore. Yet the most robust international financial centers are found in Hong Kong and Singapore.