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The Hong Kong Special Administrative Region

Political System A democratic political system is practiced in the HKSAR. Its major organs of power are the Chief Executive, the Government, the Legislative Council and the Court of Final Appeal. In addition, there is the Executive Council, a body which assists the Chief Executive in decision-making, and the Commission Against Corruption and the Audit Commission, which function independently and are accountable to the Chief Executive. Under the Government, the executive power organ of the HKSAR, there are the Department of Administration, the Department of Finance, the Department of Justice, and various bureaus, divisions and commissions. In the conditions and following the procedures prescribed by law, the Chief Executive shall have the power to dismiss the legislative organs; the legislative organs shall have the power to impeach the Chief Executive; the administrative organs shall be accountable to the legislative organs; the Chief Executive, administrative and legislative organs shall supervise and cooperate with each other.

The Chief Executive of the HKSAR shall be the head of the HKSAR, as well as the head of the HKSAR government. His or her dual status gives him or her extensive functions and powers. The Chief Executive shall be selected from among residents of the HKSAR by election or through consultations held locally, and be appointed by the Central Government. The term of office of the Chief Executive shall be five years. He or she may serve for not more than two consecutive terms. Tung Chee Hwa was elected the first Chief Executive of the HKSAR.

Economic System A free economic system is practiced in the HKSAR. The operation mechanisms of this economic system are mainly manifested in the fields of finance, banking, trade, industry and commerce, real estate, shipping and civil aviation. For instance, in accordance with the law, the HKSAR shall protect the property rights of individuals, and shall have independent finances, using its financial revenues exclusively for its own purposes. The financial revenues shall not be handed over to the Central Government. The Central Government shall not levy taxes in the HKSAR; the HKSAR shall practice an independent taxation system and a low-tax policy, and shall enact laws on its own concerning types of taxes, tax rates, tax reductions, allowances and exemptions, and other matters of taxation. The HKSAR shall maintain its status as an international financial center, work out its monetary and financial policies on its own, and safeguard the free operation of financial business and the financial market. No foreign exchange control shall be applied in the HKSAR. The Hong Kong dollar shall continue to be freely convertible. Markets for foreign exchange, gold, securities, futures and the like shall continue to operate. The HKSAR government shall safeguard the free flow of capital within, into and out of the Region. The HKSAR shall maintain its status as a free port, adopt the policy of free trade, and safeguard the free movement of goods, intangible assets and capital. The HKSAR shall maintain its status as an international shipping center and may, on its own, stipulate the concrete functions and responsibilities in this field. The HKSAR shall maintain its status as an international and regional aviation center, and shall be responsible for the daily work and technological management of civil aviation.

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