Newspaper article The Christian Science Monitor

Hong Kong Reborn: Why Asia's Big Test Case Will Succeed

Newspaper article The Christian Science Monitor

Hong Kong Reborn: Why Asia's Big Test Case Will Succeed

Article excerpt

ON June 30, 1997, the sun will set on the last Asian colony of the British Empire. The Union Jack will be lowered from where it has flown atop the majestic Hong Kong Government House, and officials from the People's Republic of China (PRC) will raise a red flag bearing a tropical bauhinia blossom highlighted by five star-tipped stamens.

The conventional wisdom is that after July 1, 1997, Hong Kong's economy, and the rule of law and civil liberties associated with it, are sure to wither away under the new sovereign. The conventional wisdom is wrong. To paraphrase Mark Twain, reports of the end of Hong Kong's economic and political life are premature. In fact, the bauhinia flag will mark the reincarnation of the most dynamic capitalist economy in the world, Hong Kong, into the Hong Kong Special Administrative Region (HKSAR).

Three arguments support the forecast that the HKSAR will prosper under Chinese rule as its predecessor did under British rule: politics, economics, and law.


Political reality argues a bright future. Beijing needs to impress Taiwan. The PRC's highest reunification priority is Taiwan, not Hong Kong. Mao Zedong said that reunification with Taiwan would be addressed before Hong Kong. Deng Xiaoping's "one country, two systems" policy originally was devised for the Taiwan issue. It was hoped Taiwan would trade ultimate sovereignty for considerable administrative autonomy. As it turned out, Hong Kong had to be resolved first, before Britain's lease expired in 1997.

Reunification with Taiwan has become a more complex problem as the latter is now vastly more democratic and prosperous. But how China's rulers manage Hong Kong's reincarnation is the best available test case for how they would handle the reunification of Taiwan with the mainland. The PRC's ambition of "one China" is an important check on its behavior toward the HKSAR. The PRC is bound by the terms of the Sino-British Joint Declaration, signed in December 1984. It guarantees that the economic, social, and legal systems in Hong Kong will continue to function in substantially the same manner after 1997, for 50 years. If the PRC ignores these terms, ravages HKSAR's economy, and tramples civil and human rights, then it will be unable to entice Taiwan to reunify peacefully with the mainland. By applying the "one country, two systems" concept in the HKSAR, the PRC has a strategic opportunity to prove that this dualism works well in practice.

There is an important cultural dimension to this political reality. In the governance of Hong Kong after 1997, PRC leaders have put a great deal of their own "face" on the line. The concept of face is endemic in Chinese culture. To lose face is to be publicly embarrassed. The PRC is the acquirer in the most stunning friendly takeover in history: the acquisition of a free, capitalist society by a far larger, nondemocratic, haltingly capitalist country. To oversee the decline of HKSAR is to lose all face. Beijing can preserve face only by governing Hong Kong without destroying it.


Economic pragmatism also points to a successful reincarnation of Hong Kong in 1997. Hong Kong plays a vital economic role for China. Chinese leaders negotiated the terms of the Joint Declaration with Britain in part to safeguard Hong Kong as one of the main engines of China's growth. PRC officials like Chen Yuan, vice governor of the People's Bank of China, understand Hong Kong's importance as a financial gateway. At a recent conference on China-Hong Kong financial relations after the handover, Mr. Chen stated that the HKSAR will be China's international financial center, while Shanghai will be its domestic financial center. This statement does not bespeak a callous indifference to Hong Kong's future.

Since China's great economic reform started in 1979, Hong Kong has been a crucial source of capital, management talent, marketing expertise, worldwide networks, and technology. …

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