One year countdown to HK's return to China

By Jonathan Power

LONDON (JP): Exactly one year to go. On June 30 next year, the fateful day dawns when at midnight the union jack is hauled down over the Government House in Hong Kong and the yellow star of China is hoisted in its stead. Communism will have triumphed over democracy, probably without a shot being fired and Britain's empire will finally and irrevocably enter the history books.

Will China take in democracy's wooden horse nonchalantly and confidently? Or will it quickly move to dismantle all vestiges of law, parliamentary participation and free speech, prepared to provoke and then squelch another Tiananman Square?

Optimists will point to Li Ruihuan's poetic speech last year. A member of China's inner seven-man standing committee of the politburo, he likened the Chinese takeover (as recounted by Michael Yahuda in his forthcoming book Hong Kong--China's challenge to the case of a lady who had agreed to sell a hundred- year-old Yi Xiang teapot that was famous for the taste of the tea it poured. Unbeknown to her, its quality derived from the residue that had accumulated on the inside of the pot. In her eagerness to prepare the pot for sale she cleaned and polished it. When the purchaser came to try using the pot, the tea was dreadful and angrily he demanded his money back.

In this way Li Ruihuan made his point that the Chinese leaders don't have a proper understanding of what are the important factors that enable Hong Kong to be such a successful commercial center.

The question is who else in the politburo sees it so clearly? Do party general-secretary Jiang Zemin or premier Li Peng? Everything suggests they don't. Leave well alone has not been their guiding principle, if one judges it by their fights with Governor Chris Patten over his democracy reforms. Yet the Joint Declaration between London and Beijing signed in 1984 agreed on "one country, two systems," guaranteeing that Hong Kong could keep its way of life for at least 50 years. But China, as the negotiations over the handover have proceeded, has made more than clear its visceral hatred of all things democratic, complemented by a paranoia over British intentions. "Watch the British," Deng Xiaoping, China's former paramount leader, told his negotiators, "lest they abscond with the capital."

Yet deep within the Chinese political psyche I suspect there is an appreciation that to tamper with Hong Kong could be very counter-productive. Li Ruihuan's speech is one sign of that, but it goes right back to the time of Mao Zedong when the victorious Communist armies stopped at the Hong Kong border in October, 1949. Stalin was pressing Mao to advance but Mao refused, convinced that Hong Kong would be useful to China as a base for foreign trade and as a political bridge to the West.

Then Hong Kong was still second to Shanghai in commercial significance. But since 1978 more than 75 percent of the direct foreign investment in China has come through or from Hong Kong.

Do the Chinese want to precipitate a flight of capital, a collapse of the property market and a large exodus of the professionals and the elite? Are they so worried about being contaminated by western-style mores that they are prepared to pull the house down around them?

I think that once the British actually are gone and the Chinese see that they haven't taken the silver with them they'll accept that they got a pretty good deal--the eighth largest trading nation in the world and the third most important financial center after London and New York, all in perfect working order.

In fact, despite the sordidness of the original reasons for Britain wresting Hong Kong from China--so as to make it easier to sell opium--in recent years under Governor Patten the main British interest has been essentially altruistic, mainly motivated by a mixture of guilt and embarrassment at handing Hong Kong over to the dictatorship that presided over the killings of Tiananman Square.

Perspective is also necessary. China is no longer a monolithic authoritarian state. There are many private personal freedoms allowed in modern China. Small-scale democracy is being tried in some of the rural areas. Meaningful votes are now held on some issues in the National People's Congress. Limited democracy is not totally alien to China--and in Hong Kong, after all, the appointed governor still holds most of the cards.

I think Beijing can probably swallow this--as long as Hong Kong's democrats play their cards well, which means being tough on essentials and accommodating on everything else.