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HONG KONG: One Country, Two Systems, but Will It Be
Free? | FUTURE

'A Rolex Watch Being Taken Over by a Garage Mechanic'

In a constantly changing city, residents are doing mental gymnastics trying to calculate what will happen after control returns to Beijing. For better or worse, Hong Kong's fate hinges on what China will become.

June 15, 1997|MAGGIE FARLEY | Times Staff Writer

HONG KONG — If this city were a person, its fortune would be impossible to tell because its defining lines are constantly changing, according to Hau Yat-keung, a palm reader. Even as this seer speaks, his words are interrupted by jackhammers and pile drivers remaking the urban skyline on the newly narrowed banks of Hong Kong Harbor.

But there are other things here immutable and unchanging: The location of this tiny island off the looming mainland mass and China's upcoming takeover of the colony from Britain.

While Beijing has promised Hong Kong that its political and economic freedoms will remain untouched for 50 years, for better or worse, Hong Kong's fate hinges on what China will become.

And as residents here are counting down to the hand-over of Hong Kong--known for its shimmering skyscrapers and humming harbor that mark it as an international deal-making center and a city where money and family ties define life and leisure--they are performing a kind of mental calculus. They are asking: What's to be lost? What's to be gained? What does the future hold?

The views are vivid and varied about the central issues of liberty and economics, of what made this place great and what will ensure its prospects and prosperity. For investment banker Vivian Cheung, the chance to share in China's prospects is enough to bring her home from England. To industrialist Raymond Chien Kuo-fung, Hong

Kong's biggest challenge is not keeping apart from China, but keeping ahead of it. One dissident is also trying to stay ahead of

China--she will be leaving Hong Kong before the new rulers arrive. Democrat Martin Lee is working to ensure that Hong Kong retains its political freedoms so people won't have to look over their shoulders. Retired clerk Wong Su-ming hopes the booming city's new rulers will share more of the wealth.

Cheung, 29, an investment banker who was living in England, chose to return before the hand-over, partly to keep her Hong Kong citizenship and partly because of the booming economy--she can make more money here than in Britain.

But mostly she came back because Hong Kong is her home.

"There are more opportunities here," she said after unpacking cardboard boxes, "and my family is here too."

Hundreds of thousands of Hong Kong citizens who left the territory after the 1989 Tiananmen crackdown in Beijing are now returning after securing second passports or the right to live in another country as a safeguard should conditions worsen under Chinese rule.

In Cheung's lifetime, the average Hong Kong citizen's production power has tripled. Their per capita gross domestic product surpassed that of their British colonial masters' average nearly a decade ago and is now nearly $25,000 a year.

Though the economy is maturing, opportunities are better in Hong Kong--and across Asia--than in most other places in the world. For those who don't fear it, the motherland may hold the mother lode.

"China is unpredictable," Cheung says. But piggybacking on its growth is undeniably profitable, and her British passport is in her back pocket if things go wrong.

The greatest threat to Hong Kong comes not from China, says Chien. It is the threat within.

Hong Kong's greatest value to China is its economic success. But with rents among the highest in the world, inflation at 6.5% and expensive labor, economists say Hong Kong could be losing its edge.

With up-and-coming regional rivals such as Singapore, Taipei and Shanghai competing in financial services, shipping and manufacturing, Hong Kong can't be complacent.

"It's not enough for Hong Kong to be as open as other places," says Michael Enright, co-author of "The Hong Kong Advantage," an economic analysis of the territory. "It's got to be more open. The question is, do Hong Kong companies understand what they need to do?"

Enright's prescription is for Hong Kong to focus on innovation as much as adaptation of foreign products; to specialize in unique services and value-added elements in the manufacturing chain; and to remain an oasis of free-flowing information and finance. And on the drawing board for the incoming government, which is flirting with industrial policy: a government-funded science park to encourage new technology; a revamp of the education system to generate more bilingual professionals; and creation of a venture-capital fund.

The key to Hong Kong's survival is to remain a catalyst for China's development without losing sight of its international role.

"If China does poorly, Hong Kong will suffer," says Chien, a Cabinet member in the British-administered government who will stay on to advise the new regime on industrial competitiveness. "If China does well, it could quickly do better than Hong Kong."

Indeed, China is leaving behind its stodgy Communist ways of doing business. But there is still much to learn.

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