Looking Ahead to 1997

By Spencer Davidson

Britain and China resume talks on the colony's future

Even the most senior foreign correspondents in Peking were hard pressed to recall any incident to match it. Emerging from two days of discussions with British diplomats last week over the future status of Hong Kong, Chinese Negotiator Yao Guang was besieged so vigorously by reporters from Hong Kong that he was almost knocked to the ground. The startled Yao retreated to the safety of a staircase. "All I can say," he volunteered, "is that the talks are useful and constructive, and we will resume our talks on the 25th of July." With that, the flabbergasted Yao fought his way to his car.

The encounter was appropriately symbolic. Just as the newsmen from Hong Kong pressed their Chinese hosts, so too in broader ways has the freewheeling British crown colony from which they came. But Britain's lease on most of Hong Kong's territory runs out in 1997, and the Chinese are determined to reimpose their sovereignty. That demand has turned Hong Kong into a city uncertain of its future and worried by the lack of progress in negotiations to resolve it. But now there is at least some cause for hope. After nine months of official silence, Britain and China are talking again.

At stake in the discussions is the future of 5.5 million people, most of whom are Chinese citizens. In the past four decades, Hong Kong has become the world's third most important financial capital, after New York and London, and a manufacturing center with exports greater than those of all mainland China. Britain has ruled the colony for 142 years under three treaties signed in the 19th century with imperial China's impotent Qing dynasty. One treaty grants Britain perpetual control over the island of Hong Kong and the tip of the Kowloon Peninsula. Two other pacts provide for British sovereignty over the outer "New Territories" until 1997.

China last year indicated its resolve to regain the land that was lost by what it called "unequal" treaties. The territory under negotiation represents 90% of the entire colony and includes both its busy international airport and its water supply. If that land is returned to Chinese control, the remaining 10% of the city could scarcely survive on its own.

Discussions between Britain and China were deadlocked last October, principally because Peking demanded that Britain recognize the Chinese claim of sovereignty over Hong Kong before talks could proceed. After that breakdown, the colony's economic indicators plummeted to historic lows. The news that Britain and China would resume their talks has produced a recovery. By last week shares on the Hong Kong Stock Exchange reached a nine-month high, and the slumping Hong Kong dollar had improved. Even so, many of the ethnic Chinese businessmen who dominate the colony's economy were still debating whether to invest in new undertakings or apply for mortgages.

For Britain, the question of sovereignty is moot, even though diplomats expect to be negotiating the issue for at least two more years. Britain privately admits that, because of the city's vulnerability, it makes no sense to try to retain the colony. The real issue to be negotiated, therefore, is the shape of a Hong Kong government under Peking's control.

Prime Minister Margaret Thatcher indicated as much in a letter last February to Chinese Premier Zhao Ziyang. The letter did not explicitly concede sovereignty, which London wants to hold as a bargaining chip, but it did, in the words of a Western diplomat, send the Chinese "a very broad signal." As the diplomat loosely paraphrased it, the letter said: "We know you will gain sovereignty, but before we put things down in black and white let's see what you have in mind for administering Hong Kong."

So far, Peking's plans are more cloudy than black and white. The Chinese insist, for instance, that the current talks concern only Peking and London. When Hong Kong's Governor, Sir Edward Youde, announced that he would attend the discussions as a representative of the colony's citizens, he was quickly upbraided. "Mr. Youde," said a Chinese statement, "can only represent the British government in the talks."

Yet while denying Hong Kong's residents any official role in the discussions, China has been inviting delegations from factory owners to farmers to Peking for discussions. Most of those talks have centered on China's intention to make Hong Kong a "special administrative region" under the terms of an amendment to the Chinese constitution that was formally approved last year. So far, however, that special region has not been precisely defined. Peking has merely hinted to visiting delegations that Chinese and Hong Kong flags would fly together, that the Hong Kong dollar would remain an international currency, and that the corps of civil servants who administer the city would be retained. In the course of the informal talks, China has even indicated that Hong Kong's Royal Jockey Club could continue its horse races, although "Royal" would of course have to be dropped from the club's title in a socialist society. Chinese Leader Deng Xiaoping promised last month that "no official will be sent from Peking to supervise or administer Hong Kong."

Such promises, however, do not satisfy all of Hong Kong's residents. In a paper presented during a trip to Peking in mid-May, twelve leading young professionals and businessmen insisted that "the suggested self-administration solution cannot achieve the avowed object of maintaining Hong Kong's prosperity and stability. There is no such precedent that we know of where a dependent territory of a socialist country has practiced capitalism in isolation and managed to retain its prosperity."

Paradoxically, Hong Kong's unique status has been good not only for the colony's residents but also for China. Peking earns more than $10 billion annually, or 40% of its foreign exchange, from selling goods to and through Hong Kong. Most businessmen in Hong Kong believe that their city will survive and prosper only if Peking agrees to some form of continued British presence. So far, however, Chinese officials have not convinced either Britain or the colony's residents that Peking also realizes how much it has at stake in Hong Kong's future.

--BySpencer Davidson.

Reported by David Aikman/Peking and Sandra Burton/Hong Kong

With reporting by DAVID AIKMAN, Sandra Burton This file is automatically generated by a robot program, so viewer discretion is required.