It's China in '97, but anxiety rules Hong Kong for now

THE BALTIMORE SUN

HONG KONG -- At Wong Tai Sin's temple, set among Hong Kong's rugged mountains and shabby housing blocks, the worried come for advice. Have they made a good choice in marriage? Why has father gone blind? What will happen to them after China takes over the British colony in just 30 months?

The last question has become a popular one, say the soothsayers who work the temple grounds. Communicating through divination sticks, Wong Tai Sin -- Hong Kong's most popular god -- gave his answer:

Make your money now, and when you end up in someone else's domain, lie low and keep your mouth shut.

A political scientist couldn't have put it better.

With China's takeover of Hong Kong just more than 900 days BTC away, the colony is undergoing its most serious crisis of confidence in years. A series of recent developments suggests that its promised autonomy after 1997 will be illusory -- for China is leaving few doubts that it will run the boisterous metropolis as it sees fit.

This doesn't rule out prosperity, but it suggests that Hong Kong may have to tread carefully in the coming years.

Pillars of Hong Kong's success that once seemed likely to remain in their present form after 1997 -- especially the legal system and the civil service -- are to be restructured after the handover, China has recently announced. And the colony's legislature, most members of which will be democratically elected next year, will be dissolved and a Chinese legislative body set up in its place.

"The presumption used to be that things would remain basically the same," said Anna Wu, an elected member of Hong Kong's Legislative Council.

"Now it's a complete reversal. Everything seems like it will change unless it's specifically approved" by China, she said.

This growing concern is reflected in opinion surveys that track public confidence in Hong Kong's future. As the approach of July 1, 1997, becomes more tangible, people have grown warier. Polls commissioned by the government and the local press find people less confident about the future than at any time since pro-democracy protesters were killed in Beijing in 1989.

But analysts warn against writing the colony off. Hong Kong has not only thrived since Britain agreed in 1984 to hand it back, but could continue to do so. China, they say, needs Hong Kong too much -- for capital, for its efficiency -- to allow it to slide into second-class status. Hong Kong has been the locomotive for China's booming coastal region for too long to make any sudden change affordable to Beijing.

"People have said again and again that this is it, that Hong Kong will decline into another big Chinese city," said John Ashton, political adviser to Hong Kong Gov. Chris Patten. "But Hong Kong has always defied those predictions. No one has ever made any money betting against Hong Kong."

China, Ms. Wu noted, benefits greatly from Hong Kong. With just 6 million residents, the territory has nevertheless exported 3 million jobs across the border and is the single largest foreign investor in China -- larger than Taiwan, Japan or the United States. Fully integrating Hong Kong's international business savvy into China's reforming socialist economy may be a key to China's future economic success.

Chinese officials say they are keen to make a success of Hong Kong. This month, China has been celebrating the 10th anniversary of Britain's agreement to hand back Hong Kong in 1997 after 156 years of colonial rule, and officials have repeatedly said that Hong Kong will flourish under Chinese rule.

World's costliest office rents

One indication of Hong Kong's continuing lure is the rising cost of office space. Property consultants Jones Lang Wootton released a survey showing that Hong Kong office rents have overtaken Tokyo's to become the world's costliest.

Yet senior government officials and community leaders have been rattled by recent statements by China's leaders.

For example, Mr. Patten and legislators have been trying to pass a bill that would set up a court of final appeals in Hong Kong. The court will be needed after 1997 because all final appeals now go to London's Privy Council.

The idea was to establish a court that China could find acceptable, and also one that would not compromise Hong Kong's relatively high standards of justice. Local residents would thus be reassured that at least the justice system would remain basically unchanged after the handover.

Bombshell from Beijing

Then came China's bombshell: Forget haggling over how to organize your courts. We will appoint all the judges after 1997.

The announcement shocked Hong Kong's legal and political community, which viewed the announcement as an admission of what they had feared all along -- that China has no intention of allowing the colony its promised autonomy.

Another example: the colony's container port. For more than two years, Hong Kong has asked China to approve a deal put together by Hong Kong's civil service for a new container terminal, to be built by a consortium chosen by the government.

China responded this fall that it would not approve the project. The reason was that one member of the consortium is Jardine Fleming, a company closely tied to Mr. Patten. China implied that Jardine had been invited into the consortium because the company supported Mr. Patten's plan to introduce more democracy into Hong Kong -- a plan China has stoutly resisted.

In the meantime, Hong Kong's port is at capacity, said Tony Clark, secretary of the Port Development Board.

"Having put together a business deal in a perfectly honorable way, there is no way we can stop it and retain any sense of confidence or credibility," Mr. Clark said.

Hong Kong's civil service is worried by more than the political interference in the port deal. Until now, China has refused to specify how it will treat senior civil servants, especially the two dozen top officials who run the colony.

The recent developments have all but scuttled original plans for Britain and China to agree on a "through train" -- a system for running Hong Kong that would carry on past the handover date of midnight, June 30, 1997.

China has already set up a shadow parliament and is grooming administrators to take over when the Union Jack is lowered. Few people talk of Hong Kong's continued autonomy, which was supposed to guarantee the territory's capitalist system for 50 years beyond 1997.

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