"One country, two systems" (一国两制) is an idea originally proposed by the leader of Communist Party of China, Deng Xiaoping for the unification of China. In 1984, Deng Xiaoping proposed to apply the principle to Hong Kong in the negotiation talks with Prime Minister of the United Kingdom Margaret Thatcher.
The principle is that while Mainland China practices socialism, Hong Kong and Macau, which were formerly colonies of United Kingdom and Portugal respectively, can continue to practice capitalism under a high degree of autonomy for fifty years after their reunification with Mainland China.
The establishment of these regions, called Special Administrative Regions (SARs), are authorized by Article V of the Constitution of the People's Republic of China. Hong Kong and Macau were handed over to the People's Republic of China on July 1, 1997 and December 20, 1999 respectively. In Hong Kong, the system has been implemented through the Basic Law of Hong Kong consistent with the Sino-British Joint Declaration. Similar arrangements are in place with Macau.
This system has also been proposed by the PRC government for Taiwan, but the Republic of China government has refused this offer. The concept of "One country, two systems" tends to be highly unpopular in Taiwan, with polls consistently showing 80% opposition and only about 10% support. All of the major parties in Taiwan, including those that lean toward Chinese reunification have come out strongly against "One country, two systems". One of the very few Taiwanese who have publicly supported "One country, two systems" is novelist Li Ao.
In the eyes of some Western observers and human rights organisations, whether the differences in freedom to express one's political opinions will also be maintained is an important question and one which currently has ambiguous answers, as exemplified by the debate around Article 23 of the Basic Law. On the other hand, the HKSAR Government considers that the principle has been sucessfully implemented, quoting official reports of both the United Kingdom and the US.
See also: List of Chinese numbered policies