Hong Kong, officially known as Hong Kong Special Administrative Region of the People's Republic of China, is a city on the southern coast of China at the Pearl River Estuary and the South China Sea. Hong Kong is well known for its expansive skyline, deep natural harbour and extreme population density (some seven million inhabitants over a land mass of 1,104 km2 (426 sq mi)). The current population of Hong Kong comprises 93.6% ethnic Chinese. A major part of Hong Kong's Cantonese-speaking majority originated from the neighbouring Canton province (now Guangdong), from where skilled labour fled after the communist government took over China in 1949 and subsequently purged its population during the 1960s.
After China's defeat in the First Opium War (1839–42) against the British Empire, Hong Kong became a British colony with the perpetual cession of Hong Kong Island, followed by Kowloon Peninsula in 1860 and a 99-year lease of the New Territories in 1898. After it was occupied by Japan during the Second World War (1941–45), the British resumed control until 30 June 1997. As a result of the negotiations between China and Britain, Hong Kong was transferred to the People's Republic of China under the 1984 Sino-British Joint Declaration. The city became China's first Special Administrative Region on 1 July 1997 under the principle of «one country, two systems».
Towards the late 1970s, Hong Kong became established as a major entrepôt between the world and China. The city has developed into a major global trade hub and financial centre, and is regarded as a world city and one of the eight Alpha+ cities. It ranked fifth on the 2014 Global Cities Index after New York City, London, Tokyo and Paris. The city has one of the highest per capita incomes in the world, and the most severe income inequality among the advanced economies. It has a high Human Development Index and is ranked highly in the Global Competitiveness Report. Hong Kong is the third most important financial centre after New York and London. The service economy, characterised by low taxation and free trade, has been regarded as one of the world's most laissez-faire economic policies, and the currency, the Hong Kong dollar, is the 13th most traded currency in the world.
Limited flat land created a necessity for dense infrastructure, and the city became a centre of modern architecture, earning Hong Kong the title as one of the world's most vertical cities.[dead link] Hong Kong has a highly developed public transportation network covering 90 percent of the population, the highest rate in the world, and it relies on mass transit by road or rail. Air pollution remains a serious problem. Loose emissions standards have resulted in a high level of atmospheric particulates.