HONG Kong's legal system for its international capital market is likely to develop in partnership with that of China beyond 1997, according to a Hong Kong-based law firm consultant. This would result in the two legal regimes - especially the capital financing, banking, company and commercial aspects - being brought closer together. ''The gap between the legal infrastructures in China and Hong Kong will become increasingly small,'' said George Yip, the China Trade Department consultant for law firm Robert W.H. Wang and Co. He said the move by China-based enterprises to corporatise would speed up the modernisation of the country's legal system. ''The process of corporatisation is expected to play a catalytic role in propelling the country's legal system into a modernised framework,'' Mr Yip said. He added that judging from the array of draft legislation in banking, securities, competition and consumer protection laws, the process of corporatisation would be crucial to the mainland's economic reforms. Before corporatisation could be implemented nationwide in China without disruption to the economy, he said a comprehensive legal framework would have to be installed. In adopting overseas legal know-how for its economic needs, China is taking a cautious but pragmatic approach by limiting the legal experiment to a restricted region before introducing a national law. In the case of securities reform, for example, the setting up of the securities industry was limited to Shenzhen and Shanghai, but the laws passed in the two cities became the forerunners of a refined National Securities Law.