Hong Kong Island became a British colony when it was ceded from China in 1842 under the Treaty of Nanking. In the 17th century, the island was a sparsely populated fishing community. The British used the ports on Hong Kong to export tea, silk, and porcelain to England. During this period, China accepted only silver bullion as payment for goods.

At the start of the 19th century, the British realized that they could purchase silks and teas in exchange for opium. China outlawed the drug, but many people were already addicted, which caused the economy of China to suffer. The Opium Wars began when China publicly destroyed a British ship that carried chests of opium. In January 1841, the British navy claimed Hong Kong Island. The Opium Wars finally ended in 1898, when Britain executed a 99-year lease of the New Territories.

Kowloon Peninsula was acquired by the convention of Peking (now called Beijing) in 1860. China has guaranteed to permit the existing capitalist economy and lifestyle to exist for 50 years. Hong Kong will retain a high degree of autonomy except for defense and foreign affairs.

The coming of the British marked Hong Kong's emergence in world affairs. In the early 19th Century British traders were making a fortune in the opium trade, exchanging the infamous commodity for China's silver, silk, tea and spices. Eventually the Chinese Imperial Government, worried about the drug's effects on its population, sought to ban the import of opium. Britain, however, wanted to strengthen its foothold with its own port, free of Imperial control. This led to the Opium Wars (1840-1842). Queen Victoria's gunboats prevailed, and Hong Kong Island was ceded to Britain in perpetuity under the Treaty of Nanking in 1842. Sir Henry Pottinger was its first governor.

Though the Chinese were trading actively in Hong Kong, intermittent hostilities broke out between the two nations. Britain's response was to take more territory for itself, to allow for better protection. The Kowloon Peninsula and Stonecutter's Island were handed over in 1860. In 1898 a 99-year lease on an area called the New Territories was granted.  

Hong Kong's cityscape soon reflected its status as an important trading port: the Peak Tram funicular railway was built in 1885, followed by a new tramway system in 1904 and a new railway to Canton six years later.

At the turn of the century around 11,000 ships berthed here each year. A decade later the number had doubled. New industries were founded as commerce grew. Though the founding of the Republic of China, the Sino-Japanese War, the Second World War, and the revolution of 1949 all rocked the territory, they also provided new vigor, in the form of refugees who joined Hong Kong's teaming workplace.