Well, let's break it down here, but it all leads to gov't corruption...
-In China, there is a HUUUGE prostitution problem, yet porn is illegal. The reason: all of the "karaoke bars" or whorehouses make significant contributions to the Communist party so the military (police=military in china) looks the other way. also, as inhumane as it sounds, provides a lot of jobs. Everyone knows they're there and what they are doing, but noone really says anything because it is a big part of their economy. You can recognize ***** bars in China and HK so easily that its quite funny. In all honesty prostitution is everywhere, you just have to open your eyes and realize it. Most Joe E. Vacationer's dont notice because they arent used to it, but after living here you can just tell. You'll never see that in Japan.
In Japan, its a lot crazier, but oddly a lot more behind the scenes. I have witnessed occasions and talked with girls who can sell their used underwear to japanese men for upwards of US$500 each. Its like a black market for anything dirty and kinky over there... Add to the fact that the women are the most beauty oriented race on earth, and you get a very perverted situation. I read in a japanese magazine that almost 40% of all 18 year olds have had some form of cosmetic surgery. After 21, it goes to 55%. The society is almost dominated by looks and sex... wierd eh?
After the takeover, China tried stepping in and converting HK into itself, but they finally realized that:
A) free trade nation + communism= a really bad combination
B) Even when they tried winning popular vote in HK elections, the HK people really did want independence from them.
C) There is more $$ in the HK economy (HK is the size of Rhode Island) than China was worth in '97. Why screw that up???
Instead they just made HK into a "SAR"- Special Administrative Region. Basically, the country is run separately, has its own laws and orders, and just pays royalties to China. They pretty much stay out of our business because they realize that the location is an economical Mecca and brings a TREMENDOUS amount of wealth to China.