Province Urges Merger with Hong Kong Guangdong Province ON THE FAST TRACK Series: POINTS OF THE COMPASS. Second of Three Articles Appearing Today

Article excerpt

A BUS packed with Chinese rattles toward the southern frontier town of Shatoujiao, its passengers peering out at watchtowers that dot the lush, green hills dividing China and the British colony of Hong Kong.

The bus lurches to a halt at Shatoujiao's crowded depot. Clutching special police permits, people clamber out with empty bags and rush to the heavily guarded entrance of Zhong-Ying (China-Britain) Street, a bustling, duty-free shopping strip that straddles the border.

Every day, tens of thousands of Chinese flood the narrow street to snap up imported commodities from Hong Kong ranging from gold jewelry and French satin to instant noodles and chopsticks.

"Foreign products are better," says a Cantonese woman leaving the street with several packages of Hong Kong noodles. For the shopping spree, she took a two-hour train ride from Guangzhou and waited overnight for the $2 permit to Zhong-Ying Street.

The popularity of the market street symbolizes Guangdong's unbridled enthusiasm for absorbing the lifestyle, know-how, and wealth of the capitalist enclave next door.

In one of their boldest proposals yet, Guangdong's leaders have called for merging the economies of Hong Kong and Guangdong into a single economic entity, further reducing the province's dependence on China's inland.

Provincial officials and Hong Kong analysts say the plan makes good economic sense.

Already, Hong Kong provides about 90 percent of the foreign investment in Guangdong, making the province the source of more than half of China's total overseas investment.

In turn, Hong Kong has found a "colossal asset" in the cheap land, labor, and other resources of Guangdong, says British Governor Sir David Wilson.

An estimated 1.5 million to 2 million Chinese in Guangdong are producing for Hong Kong firms at only a tenth of the colony's wages.

As part of the merger plan, Guangdong leader Ye Xuanping is lobbying for Beijing's approval to open wide the province's 15-mile-long border with Hong Kong to trade, while leaving immigration controls intact. …