Hong Kong: Great Britain returns the last jewel of its empire to China Anticipation, fears on eve of handover; Countdown: Hong Kong is decked out for the reunion. But worries persist TC about how the wealthy cousin will fare in a Chinese house.

THE BALTIMORE SUN

HONG KONG -- From his wood-paneled office on the 64th floor of the Hopewell Centre, billionaire Sir Gordon Wu looks out over the gleaming urban canyons of Hong Kong and sees a city awash in wealth.

Young, well-dressed Chinese professionals dash about chatting on cellular phones. Lexus cars, BMWs, Mercedes and Rolls-Royces fill the streets while merchant ships traverse the roiling, turquoise waters of Victoria Harbor. Shoppers browse in stores with names such as Tiffany, Gucci and Vuitton. The Hong Kong stock market is soaring. Housing prices are staggering.

Wu, a 61-year-old Princeton-trained engineer, complains that his property mid-way up the slopes of Victoria Peak is now probably worth more than $25 million. "If I were to buy it today, I couldn't afford it," he says.

This is the state of affairs in one of the world's most dynamic centers of capitalism with just a day left before it returns to the original owners. At midnight tomorrow, the British Crown Colony of Hong Kong will become the Special Administrative Region of the People's Republic of China.

And despite all the signs of prosperity and confidence on the eve of the handover, there is some underlying uncertainty and a little fear in this bustling city of 6.3 million people.

Wu believes the transition will go smoothly, but he worries that democratic activists could provoke a crackdown and everything could change overnight.

"I believe the most dangerous moment for Hong Kong is the evening of June 30th," Wu says. "I don't think it's going to happen, but there are hotheads on both sides. "

Wu's anxieties mirror those of many in this British colony. While most say they are optimistic, no one quite knows what life will be like under China's red flag.

After the British lower the Union Jack on the harbor's banks just before midnight tomorrow and a military band strikes up "God Save the Queen" for the last time, Hong Kong will embark on one of the most unusual political experiments in recent history. Heading in the opposite direction of the end-of-century trend, a fledgling democracy will peacefully move into the grasp of a repressive dictatorship.

How this will work is anyone's guess.

What will the notoriously sensitive Chinese government do if Hong Kongers take to the streets to criticize its policies?

Can Hong Kong maintain its rule of law and freedom of information -- the keys to its modern economic success -- or will it be swamped by the mainland's culture of corruption?

The Chinese say yes to the first; they promise no to the second. The surging value of investments into Hong Kong and through Hong Kong to China seems to reflect confidence that the rules of business here will stay the same.

The principle behind this attempt at peaceful co-existence is called "One Country, Two Systems."

Leaders in China have promised Hong Kong "a high degree of autonomy" for 50 years.

They are replacing the territory's recently-elected legislature with one anointed by Beijing. The British have complained loudly about the dismantling of democratic institutions, but elections were only a recent development under British rule.

Many other things will not change. Except at the top, the bureaucrats on June 30 will be the same on July 1. Hong Kong policemen will walk the same beats with different badges.

Nor will the currency change. On Tuesday morning, two Hong Kong dollars and 20 cents will still buy you a seat on the upper deck of the Star Ferry.

English will remain an official language of the Special Administrative Region.

" 'One Country, Two Systems' is a totally new thing," says Rita Fan, head of the Beijing-backed legislature which has been meeting across the Chinese border in Shenzhen. "What is happening here has never happened before."

With Hong Kong's taste for excess, the handover is bound to be one of the more extravagant parties Asia has ever seen. The $13 million celebration will include a laser light show and a fireworks display over the harbor, as well as a two-mile-long neon dragon and a mass karaoke sing along.

Many Chinese here are happy to see Hong Kong returning to China after more than 150 years under British rule. Yet, each day's events underscore that this is no ordinary celebration.

Last week, the Royal Yacht Britannia cruised into the harbor on what will be its last major voyage. After the handover, Prince Charles, the heir to the British throne, and Hong Kong Gov. Chris Patten will board the ship and sail away.

On the same day Britannia arrived, the Chinese government announced it would send about 500 People's Liberation Army (PLA) troops across the border three hours before the handover. After midnight, they will be armed with rifles, sidearms and nearly 70,000 rounds of ammunition.

This is the same PLA that many Hong Kongers will not forgive for shooting students and workers during the Tiananmen Square uprising eight years ago. While the troops are said to be coming early to protect Chinese President Jiang Zemin and Premier Li Peng, everyone in Hong Kong knows whom the bullets could be for.

And, over British protests, China said Friday it will ferry 4,000 troops into Hong Kong six hours after regaining sovereignty.

Pro-democracy leaders here said last week that they would demonstrate during tomorrow's festivities on behalf of dissidents still held in Chinese jails.

However, some say they will choose their words carefully. Szeto Wah, the leader of the Alliance in Support of Patriotic Democratic Movements of China, said his demonstrators would not chant "Down with Li Peng."

The handover has attracted so much attention and generated so much concern because of Hong Kong's unique role in history and in this part of the world.

When the royal yacht leaves with the Prince of Wales and his governor aboard, Great Britain will have given up the last significant colony of its once-grand empire. At the same time, China will have regained the territory whose loss marked the beginning of a century of humiliation at the hands of foreign powers.

Covering little more than 400 square miles, Hong Kong stands as the financial center of Southeast Asia and the gateway for investing in China, the world's largest country.

A tropical blend of British colonialism, Chinese culture and extraordinary opportunity, Hong Kong has relied on low taxes, limited government, open trade and sound currency to help make its economic system arguably the freest in the world.

Skyscrapers rise off the water to form a shimmering forest of glass and steel in the city's Central business district. Dotted with palm trees and double-decker buses, Hong Kong is Wall Street by the South China Sea.

But it is a city of contrasts as well.

Hong Kong boasts the highest per capita ownership of Rolls-Royces in the world, yet thousands live in wretched conditions. Land is so precious that some people still live on the water in small neighborhoods of tethered sampans. Others, the so-called 'cage men,' sleep in fenced-in, bunk beds where they lock their belongings during the day.

Rich or poor, they have all lived in this borrowed place on borrowed time, as the author Han Suyin has called Hong Kong.

More than a century and a half ago, Lord Palmerston, the British Foreign Secretary, described Hong Kong as 'a barren island with hardly a house on it.' It was 1841 and Britain had seized Hong Kong during the First Opium War, one of the dark episodes in its colonial history.

British adventurers had smuggled opium into China since the 1700s and brought tea back to England. By the late 1830s, the volume of opium trade had become so great and the effects on the Chinese people so devastating that the Qing government cracked down.

High Commissioner Lin Zexu blockaded the mouth of the Pearl River in 1839, seized 2.6 million pounds of opium and burned it. British frigates easily defeated Chinese junks in the ensuing battles.

In the 1842 Treaty of Nanking, China not only paid for the burned opium, but also gave Britain control of Hong Kong. Later, Britain obtained leases to the Kowloon Peninsula and a large swath of land known as the New Territories, which borders China's Guangdong Province.

The chief beneficiaries of this arrangement were the Scottish-born opium traders, William Jardine and James Matheson, founders of the great Hong Kong trading house of the same names. Jardine Matheson is still one of the largest conglomerates working in Hong Kong and China.

For the next century and a half, the mostly British-born Taipans of Jardines and the other trading houses ran Hong Kong. London appointed the government and its chief administrators, the police and the judiciary, but often only after consultation with the taipans -- Chinese for "big bosses." The Chinese were treated as a lower class.

During the 20th Century, Hong Kong evolved from a trading port into a manufacturing hub and finally a financial and service center. With the lease for the New Territories due to expire in 1997, China and Britain negotiated an agreement whereby Hong Kong would return to China, but maintain its economic, legal and social system for 50 years.

Only after 1984, when the deal to give back Hong Kong was signed, did the British hold legislative elections. Beijing became furious and relations have been sour ever since.

But, while July 1 marks the end of British rule, Hong Kong's transition from British colony to Chinese-run city has been going on for years.

When Tony Miller, Hong Kong's director of housing, arrived here in 1972, there was only one high-ranking Chinese in the civil service. After 1984, though, the law required that Chinese fill all top 27 spots. Today, nearly all of Hong Kong's 186,000 civil servants are ethnic Chinese.

"In some ways, the expatriate civil servant is a dinosaur," says Miller, 47, who plans to continue in his job after the handover.

Chinese have also become a dominant economic force here. The opening of the stock market in 1972 gave Chinese companies access to investment. Many of today's taipans are Chinese.

A symbolic turning point came in 1979 when billionaire Li Ka-shing, who began his career selling plastic flowers, took control of the old British trading firm, Hutchison Whampoa.

For decades, Chinese were prohibited from living on Victoria Peak, the city's most prestigious address. Now, they share it with wealthy expatriates.

As local Chinese influence has grown in Hong Kong, so have ties to the Mainland. Although Hong Kong has been the gateway to China for years, their economies became completely intertwined after Deng Xiaoping instituted free-market reforms in 1978.

Hong Kong lost its near-exclusive access to the mainland, but transferred most of its manufacturing there.

Today, Hong Kong is China's biggest overseas investor and second-largest trading partner. Everyday, tens of thousands of trucks go back and forth across the border, carrying food and raw materials.

The increased ties have made some here feel closer to China, which at times has been viewed as an unpredictable behemoth. When Wong Wai-kwong, an orthopedic surgeon, was growing up here, he felt no connection to the Mainland or its rich history.

"I had no sense of country," says Wong, a soft-spoken 40-year-old who works in Kowloon. But on a recent visit to Beijing, "I had a feeling: 'This is the capital of my country.' I hope people can feel this way."

Han Dongfang, a well-known labor activist from the Tiananmen movement, wants to be a part of China, too. But the leaders of the People's Republic would prefer he weren't.

Han was jailed in 1989 following the crackdown. After 22 months, he was released for medical treatment to the United States. When he tried to return to China in 1993, he was told his passport had been canceled.

While most dissidents have already fled Hong Kong, Han is staying. Tomorrow, China comes to him.

Now 34, he publishes a monthly labor bulletin that focuses on workers' rights in China. He could be a prime candidate for jail or deportation.

Han seems unconcerned about his fate and confident in Hong Kong's. He thinks Beijing will not be able to turn back the clock on democracy and free speech here. If China asks to have him thrown out, he says he believes that Tung Chee-hwa, the Beijing-approved new Chief Executive for Hong Kong, will protect his rights.

"I trust him," Han says of Tung, a former shipping magnate. "He's not going to destroy the rule of law in Hong Kong."

While some think the greatest threats to Hong Kong's future are mainland sharks eyeing its $54 billion in currency reserves or nervous Communist Party leaders in Beijing itching to clamp down on free speech, Christine Loh's biggest fear rests with the people of Hong Kong.

Loh, a member of the current elected legislature, will be out of a job on July 1. She hopes to run again in 1998 when new elections have been promised.

She is worried, though, that Hong Kongers may not fight for the rights they have enjoyed in the final years of British rule.

"My greatest anxiety is that we give up," says Loh, a 41-year-old former commodities trader. "It's very easy to say, 'Well, Beijing won't let us.' But what are we prepared to do?"

John Lloyd is a British military physician. Instead of heading back to England, he swapped his government job two months ago for a private practice in the city's Wanchai district. In a pragmatic city focused on business, he also wonders how far Hong Kongers will go to defend free speech.

"Ninety-nine percent of the people don't want any trouble," says Lloyd. "Although human rights is an important issue in many minds, it may take a back seat to making a fast buck."

Back atop the Hopewell Centre, Gordon Wu is mapping out his theory of peaceful evolution on a piece of paper while classical music plays in the background. Wu, who has years of experience in China building a superhighway from Shenzhen to Guangzhou, thinks time and history are on Hong Kong's side.

With Deng Xiaoping and the other fathers of the revolution essentially gone, and the Soviet-trained leaders like Jiang Zemin in their 70s, younger, western-educated Chinese will eventually take the helm in Beijing. As has happened in South Korea and Taiwan, China, too, will slowly edge toward democracy, he predicts.

"They will use Hong Kong as a guiding light," says Wu. "It's a methodical, careful approach."

Pub Date: 6/29/97

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