By Jill McGivering

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28 year old Penny has been battling for the right to live with her family since she was a little girl of 8. She's been separated from them by the border between mainland China and Hong Kong. Although her parents are Hong Kong permanent residents who live and work in the territory - and although four years ago, Penny married a Hong Kong-born man, her applications to come and join her family had been without success.

Penny, and thousands like her, thought the high profile change of sovereignty two years ago, when British colonial rule in Hong Kong ended and the territory returned to China, would bring the answer to her prayers. The new post-handover constitution seemed to pave the way for a more lenient approach.

In a landmark move earlier this year, Hong Kong's highest court ruled that Penny and an estimated 1.67 million people like her DID have the right to come and settle in Hong Kong. Without wasting a minute, Penny packed up her belongings in China, and travelled immediately to Hong Kong.

But just as she and her family were celebrating, their story took an unexpected turn. The Hong Kong government - alarmed by the prospect of so many new immigrants flooding across the border - asked the Central Government in Beijing to make its own interpretation on the issue.

The result? The Hong Kong court's decision was overruled. For Penny, the fight to be with her husband and family seems all but lost all over again, and now she must fight deportation.

The continuing row about the right of abode - and the impact on Hong Kong's legal system of its Government's unprecedented move - are the hottest topics of the day here.

Many Hong Kong familes are wary of immigrants from mainland China

Public opinion is divided. Hong Kong is struggling with the impact of a prolonged economic recession which has brought record unemployment and social hardship. Many local people were panicked by the thought of hundreds of thousands of mainlanders joining the already lengthy queue for jobs, housing and social services.

Some urban planners added their concerns. Hong Kong, desperately short of land, is already overstretched, they said. A sudden increase in population would push urban systems to the limits, and perhaps beyond. Pollution is already acute here - surely living conditions would only worsen with so many more people sharing such limited space? It all seemed a burden too great for Hong Kong to bear.

But Penny and those like her have local supporters too. Many in the legal community are alarmed by the government's move which, they say, has undermined the legal autonomy promised Hong Kong under the "one country, two systems" formula, the system under which it returned to China. If Beijing can intervene on this issue, they argue, what safeguards are there for other laws and freedoms here in the future? Wasn't this a dangerous precedent?

While the heated debate continues, the daily reality is that many Hong Kong Chinese are still forcibly divided from sons and daughters. Many relatives, here on temporary permits but fighting to stay in Hong Kong, are now under threat of deportation.

Hong Kong was built on the labour and ambition of mainlanders who sought refuge here as economic or political migrants in their thousands, especially at times of crisis or instability on the mainland. They were the industrious workforce who fuelled the rapid growth in the manufacturing sector in the 1960s and 1970s.

But since those days, the economy has shifted its emphasis away from manufacturing and towards hi-tech industries, financial services and tourism. The new more affluent and more international generation of Hong Kongers no longer identify with their mainland Chinese roots.

Andy Wong found it hard to fit in when he came to Hong Kong as a child

Penny is only one of many people frustrated and angered by the negative labels often attached to those living across the border. Andy Wong, a contemporary dancer who moved to the island from the mainland when he was twelve, told us that he had been constantly teased and mocked. He spent his teenage years trying to be as inconspicuous as possible.

Many Hong Kong people still see mainlanders as unsophisticated, lazy, even stupid. Penny angrily contests this stereotype. She's a University graduate, she says, with a perfectly good job in mainland China. She speaks several languages. She doesn't want to come to Hong Kong to be a burden to local people - she'd make a valuable contribution. All she wants is the chance to live a normal life with her husband and family. After all, she adds, isn't that a basic human right?

Also in this edition of Crossing Continents: we visit the city's latest hot spot, the Hello Kitty cafe, and take a trip across the water to Macau, the Portuguese-colonised island preparing for its own handover to Chinese rule.