Nine years into the tumultuous life of Hong Kong as a special Administrative Region of the People’s Republic of China, it has become clearer what role Hong Kong plays in China’s modernization. This paper argues that Hong Kong’s role is that of a transforming catalyst. In dealing with the affairs of this city, Beijing from time to time has to put aside its normal instincts. This creates opportunities with potentially far-reaching consequences for the nation as a whole even though questions (...) have often been raised as to whether “two systems” will survive as Hong Kong becomes more integrated into “one China.” Hong Kong’s plight is difficult and there are constant risks of being overwhelmed by the much larger mainland system. Nevertheless, just looking at what may be seen as Hong Kong’s losses in the process of integration will prevent a deeper examination of how the mainland has been affected at the same time. Hong Kong presents Beijing with many challenging issues as well that go to the core of party ideology and practices. This is not to say that Beijing intends Hong Kong to be a pacesetter for political reform on the mainland, but at least in one corner of the country where debates are in the open and where the people’s behavior is different, the result is that Hong Kong has a gradual transforming effect on China’s modernization by forcing deliberation, debate, and possibly even behavioral change on some of the most sensitive issues to the Chinese leadership. (shrink)