Editor's note: Timothy Kerswell is a research fellow at the Chinese University of Hong Kong (Shenzhen). He lived in Macao for seven years, working as an assistant professor at the University of Macao. The article reflects the author's opinions and not necessarily the views of CGTN.

It's been 40 years since late Chinese leader Deng Xiaoping proposed the "One Country, Two Systems" principle. "One Country, Two Systems" was a hallmark proposal and one that paved the way for the Hong Kong Special Administrative Region (SAR) and Macao SAR to be reintegrated into Chinese sovereignty after long periods of imperialist rule. The basis of each of these agreements was a pledge by China's central government to not rapidly alter the basic social and political system which imperialist rule had left behind (two systems), but for the local administration and its people to recognize and not undermine the sovereignty of China (one country). As a foreigner, I'm still struck by the patience China displays as it recovers its own territory, even when doing so from a position of strength.

Has the principle of "One Country, Two Systems" been generally successful? Hong Kong's geographic location and status as a free port and financial hub meant that as China's economy expanded, Hong Kong grew with it. Hong Kong's economy more than doubled in size from 1997 until now. Unprecedented levels of tourism especially from Chinese mainland also helped drive Hong Kong's prosperity and growth.

Hong Kong is often incorrectly referred to as an example of laissez-faire capitalism, especially in contrast with the socialist system of the mainland. In reality, Hong Kong has high public expenditure and government involvement in areas like education, public works, healthcare and social services spending.

Macao rapidly transformed from being a somewhat lawless space dominated by criminal gangs to a space of calm prosperity. Liberalization of the casino sector in 2002 led to an influx of investment and a surge in tourist arrivals, mostly from the Chinese mainland. Notably, the Macao SAR government captured a significant portion of this revenue and redirected it to public spending, ensuring some balance in the distribution of Macao's economic gains.

When I lived in Macao, it sometimes felt like almost everything was subsidized. For example, the Portuguese left Macao having never created a public education system, but I'd taught over 1,000 local Macao residents by the time I left.

Many of my students were the first in their family to attend university, something only possible due to the economic development of Macao and the subsidization of education. From 1999 until 2020, Macao experienced explosive and uninterrupted growth, and prosperity halted only by the COVID-19 pandemic.

It was difficult to foresee the outbreak of COVID-19 in 2020, which significantly impacted both Hong Kong and Macao. However, most astute observers predicted that the current development models in both Hong Kong and Macao were reaching their limits several years before the pandemic struck.

While it is the curse of my generation in most countries to struggle with housing affordability, Hong Kong's housing had become the most unaffordable in the world, and its subsidy framework could not keep up with spiralling living costs. These economic grievances were compounded by significant chaos, obstructing Hong Kong's economic development and blocking its political system from responding to these problems.

Tiny as Macao is, the limit to its growth model was always going to be that it would run out of land. One of the more humorous quirks of telling people about Macao involved a policy response to this problem. Macao grew from 27 square km when I first arrived in 2013 to a little over 30 square km when I left in 2020. However, there's no way that Macao can sustain its economic expansion on the basis of reclaimed land.

While the expansion into the Hengqin Zone in southern Guangdong Province was a great and creative application of "One Country, Two Systems," further growth must come from innovation, rather than expansion.

A history of success makes reinventing yourself that much harder. Somewhat understandably, the pragmatists of the world argue that if something isn't broken, you shouldn't try to fix it. But the world we live in is far too dynamic for this kind of old wisdom. Some serious questions are being faced in both Hong Kong and Macao.

Hong Kong has now elected its first patriotic legislature, meaning there are no excuses for the government to not rise to the challenges facing Hong Kong. Hong Kong needs to be more than just a financial hub, and requires an alternative way of financing public spending as its housing situation is unsustainable.

Hong Kong's neighboring economic zone of Qianhai in Shenzhen is an excellent example of a new paradigm for Hong Kong which focuses on innovation and technology. Similarly, Macao needs to reinvent itself as more than just a large casino. The expansion of the Hengqin Cooperation Zone is a promising sign of Macao's diversification into higher education, scientific research and new forms of tourism.

On the 40th anniversary of Deng's announcement of "One Country, Two Systems," it's important to remember the ultimate goal of this principle. Deng's brilliance was to find a way to harmonize the different trajectories of the Chinese mainland, Hong Kong and Macao and through the "One Country, Two Systems" framework to help steer these relics of imperialism in Asia back towards a common Chinese destiny. The solutions to Hong Kong and Macao's current policy challenges require a new wave of innovation, but the goal of one prosperous China remains the same.

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