HONG KONG FACE-OFF

By SANDRA BURTON AND JOHANNA MCGEARY/HONG KONG

In Imperial China, the royal physician was forbidden to touch the Emperor directly. A princeling would attach a long red thread to the Emperor's wrist, and the physician would grasp the thread, feeling the Emperor's pulse at a respectful distance. Governing Hong Kong after it reverts to Chinese sovereignty at midnight on June 30 will require the same exquisitely sensitive touch: an ability to understand Beijing from a distance, to sense what its leaders want and what they will tolerate.

Officially, the physician's red thread has been given to Tung Chee-hwa, a Hong Kong multimillionaire who lived for nine years in the U.S. and was handpicked by the communist bosses in Beijing to carry out their promise of a "high degree of autonomy" for the capitalist enclave. Looking over his shoulder, however, is an ardent spokesman for those who insist that Hong Kong can rule itself. Martin Lee stakes his claim to leadership on the voter's mandate to make Beijing live up to democratic law.

Tung Chee-hwa vs. Martin Lee. As Hong Kong moves into an uncharted future under Chinese rule, all eyes will be on these two men with clashing visions, each seeking to shape the destiny of the dynamic territory and, by extension, the new China emerging on the international stage. Tung, an unassuming tycoon who is widely known to Westerners as C.H., has the credentials to reassure both investors and Beijing that the transition will be smooth and that Hong Kong will continue to prosper. Lee, the well-born and high-powered barrister, is speaking for those who fear China will strip away the political liberties Hong Kong has just begun to enjoy and destroy the rule of law on which its reputation as an international business center depends. Both say they want the same thing: a Hong Kong free to maintain its present way of life. But Tung's approach is to build bridges to Beijing to achieve a working relationship. Lee's is to build a wall in order to achieve complete autonomy. So which one really speaks for Hong Kong? And who will do a better job guiding the fortunes of this wealthy colony and its 6.4 million anxious residents?

For most of the 13 years since Britain agreed to return Hong Kong to Chinese control, a majority of the citizens stayed on the sidelines. Only after Beijing crushed the pro-democracy movement in 1989 did Hong Kong's ordinary folk begin to demand an active role. Without China's approval, British Governor Chris Patten altered a century and a half of colonial tradition by introducing a package of political reforms to make the local legislature more democratic. Enter Martin Lee, whose eloquent outrage over Tiananmen earned his Democratic Party and its allies 17 of the chamber's 20 directly elected seats in 1995 and authority today that flows from that mandate.

Beijing immediately declared the new legislature illegal and vowed to abolish it the moment China resumes sovereignty. Enter C.H. Tung. The territory's first homegrown leader was chosen by a 400-member selection committee that was itself picked by Beijing. The quietly effective power broker seemed uniquely qualified to bridge the gap between Hong Kong's promised autonomy and the new landlord's demand for control. For a time, Tung seemed to manage the delicate balancing act. He paid fealty to the "Chinese values" revered by his patrons even as he voiced confidence he could maintain Hong Kong's Western-style ways.

But he stumbled badly last month when he proposed new restrictions on political parties and public protests as soon as China assumes control. The proposals themselves were not severe: amending current statutes so that demonstrators would be required to seek advance permission for the street protests that have become a regular Hong Kong ritual and barring political parties from accepting foreign contributions, as in the U.S. But clumsy writing and ominous references to "national security" stoked widespread alarm that more draconian gags and shackles lay ahead.

Amid the barrage of domestic and international criticism, Tung was condemned as a puppet--or else as a high-handed authoritarian--ready to roll back democratic reforms at Beijing's command. "This is the first real test of what the 'one country, two systems' slogan means," says Michael DeGolyer, chairman of the poll-taking Hong Kong Transition Project. "People want to know whether Tung is Beijing's representative in Hong Kong or Hong Kong's representative in Beijing."

The furor played straight into Lee's vigorous campaign to warn the world of what he sees as dire threats emanating from Beijing. He is convinced the leadership intends to control Hong Kong so tightly that all its current economic and political freedoms will disappear. While Tung was struggling to defend his unpopular proposals, Lee enjoyed a triumphant tour of the U.S., including a symbolically important chat with President Clinton. Lee's Democrats threatened to mount protest marches on hand-over night in deliberate violation of the proposed restrictions and tie up the courts in a skein of lawsuits if Tung refuses to rewrite the offending amendments. A series of revisions announced by Tung's office in response to the outcry did little to mollify critics.

Behind the clamor lies a fundamental mystery: To what extent is Tung free to make decisions without Beijing's interference? As Tung prepares to govern, analysts feverishly search for clues as to where his true loyalties lie.

In an enclave where business interests hold the real power, Tung has the right pedigree. The 60-year-old son of a multimillionaire shipowner, educated in Britain, schooled in business in New York City, Tung is on a first-name basis with Asia's political and business leaders.

When his father, the flamboyant founder of the Orient Overseas shipping empire, died suddenly in 1982, he bequeathed his heirs a collapsing empire indebted to more than 200 banks for loans of $2.68 billion. For the next 17 months, C.H. Tung labored seven days a week to build a consensus among creditors to restructure the tangle of public and private companies. When he needed a large infusion of new capital, he turned to the Taipei government. The answer was no. Tung then approached mainland Chinese, and a local businessman with ties to Beijing kicked in the money. Only this year did Tung admit that the businessman's bailout funds came from the state-owned Bank of China.

In the aftermath of the Tiananmen debacle, the Chinese leadership turned to Tung to help repair the shattered relationship with its coveted city-state. When newly arrived Governor Patten consulted the communists for a pro-China figure on his Hong Kong Executive Council, Beijing nominated Tung. In 1995 China named him to the preparatory committee set up to manage the transition. So it hardly came as a surprise when Chinese President Jiang Zemin publicly shook Tung's hand at the inaugural meeting of the committee, thereby anointing him as Beijing's choice for chief executive.

The man himself defies easy categorization. The very model of a conservative Chinese patriarch, his personal style is highly Westernized. Until he acquired his new title last December, he welcomed visitors to his harbor-front office with a warm smile, a firm handshake and an invitation to "call me C.H." For years, he was on the list of virtually every important American who visited the territory, and he made frequent trips to the U.S. Tung blends his American know-how with Chinese social values. "Some of our traditional ideas are very precious," he says. "The way we respect older people, the way we value the order of a society, the way we give equal emphasis to obligations rather than rights." He often cites the social chaos he saw in the U.S. in the '60s as evidence of why private rights must be balanced by the need for public order.

That deeply conservative philosophy suits the money class that runs Hong Kong. Many of them agree when he says the territory has become too "politicized." By reputation he is no yes-man even if his traditional ideas often align with Beijing's. "Very often I find that C.H. seems to toe the official line, not because he feels obliged to do so or because he is Beijing's puppet," says Tsang Yok-sing, chairman of a pro-China party, "but because he naturally sees many things the way Beijing does."

But many among Hong Kong's worldly younger generation suspect Tung's rhetorical emphasis on Chinese values merely parrots Beijing's code for democratic retrenchment. His defense of the new laws has made a negative first impression among the anxious populace. His popularity, once rated at 66%, has slipped to 57%.

That, of course, has made him the perfect target for Martin Lee, whose mission in life is to fuel resistance to Beijing's attempts to rein in Hong Kong. Although Lee does not oppose the reassertion of Chinese sovereignty over Hong Kong's soil, friends and enemies alike believe he secretly yearns to be hailed as "the father of Chinese democracy." So he has spent the past 13 years educating citizens on how to exercise their personal and political rights and setting up a system of alarms to signal when those rights are in danger. He resolutely believes that China's communists will never live up to their promise of separate legal, political and economic systems for Hong Kong. Like that of many others in the territory, his impression of China, says Tsang, a political adversary and friend, "is very much as it was immediately after June 4, 1989. I have to say that Martin is rather out of touch with Chinese politics over the past eight years. He has not seen the profound changes taking place there."

The political education of Lee actually began long before that. His father was a general with the Kuomintang who grew disenchanted with the nationalists' greed during the civil war, refused to follow them to Taiwan and wound up penniless in Hong Kong. Every year Mao's men would dispatch an emissary to persuade General Li Yin-Wo to join their cause. Every year the general refused. The father's meager wages as a teacher of Chinese and his Roman Catholic connections earned Martin a Jesuit education, a diploma from the University of Hong Kong and a law degree in London. A formidable debater who hated desk work but loved the good life, he soon rose to the top of the Hong Kong bar as one of the colony's highest-paid barristers, known for his good guanxi (connections) on the mainland and his ice blue Jaguar.

Britain's decision to negotiate Hong Kong's return to China changed his life. "When I looked ahead," says Lee, "I asked myself what would be the most important thing Hong Kong must have when we became part of China. I soon found the answer: the rule of law, the one thing they don't have in China." His British accent, legalistic mind and prim, stilted manner belie a true believer's devotion to an uncompromising position. He became a politician, though, not a revolutionary, setting himself up as the by-the-book protector of human rights.

Everything that has happened since has only intensified his distrust for the men in Beijing. As a member of the committee appointed to draft Hong Kong's Basic Law, he recalls its first meeting with Deng Xiaoping. The architect of the one-country, two-systems policy spontaneously suggested that while the original agreement stipulated Hong Kong would keep its capitalist system for 50 years, that provision could be extended to 100 years. While others applauded, Lee registered a fuming dissent at the whimsical nature of policy decisions in a country governed by the rule of men.

His leadership of Hong Kong's democracy movement flowered during the spring of 1989. As the students took over Tiananmen Square, Lee joined the Hong Kong throngs marching in solidarity. When the bloody crackdown came, he resigned from the Basic Law committee and launched an organization aimed at overthrowing the communist regime. Beijing branded him a subversive and forbade travel to the mainland. Lee began mobilizing people to pursue the only peaceful alternative left: "to make sure there will be democracy in Hong Kong so that we ourselves will be running this place."

He came away from the British-sponsored elections with an international reputation as Hong Kong's No. 1 democrat. "He convinces people with his reasoning and his principles," says Andrew Cheng, a young Democratic Party legislator who accompanied Lee on his recent U.S. trip. "As a lawyer, he believes you don't need to shout loud when you are trying to change someone's mind. All you need is the evidence." He has been unsparing in his charge that the Provisional Legislature named by Beijing to replace the elected council is illegal, and is successfully portraying Tung's proposed limits on political activities as proof that freedom in Hong Kong is about to be stifled. While Lee has always operated rigorously within the law, the danger is that his passionate rhetoric will inspire younger supporters to acts that push Beijing's leaders beyond the limits of their patience.

The lives of Tung and Lee will continue to intersect as both seek to ensure that Hong Kong survives its historic transition intact. "Martin is so stubborn," Tung says of his rival. Tung prefers a get-along and go-along strategy that will build up trust in Beijing. "It's only in that way that they will keep hands off," says a friend and political ally. Lee thinks that will not work with communists. "C.H. is a good man who may be forced to do evil," he says. So Lee intends to keep confronting China in the law courts. In fact, Hong Kong needs them both--and each knows it.

It is, of course, easier to be the Emperor's conscience than to be the Emperor himself. Lee's challenge after the hand-over is to retain his moral authority yet not use it to provoke the very crackdown he decries. The challenge facing Tung is far tougher. He has the unenviable task of ruling with the mandate of a mistrusted regime and without the popular mandate of the people. He must ensure that Hong Kong will enjoy the "high degree of autonomy" China promised. And he must prove to Beijing that Hong Kong will not become a dangerous base for subversion. Lee is not the only man who thinks his friend Tung will be hard pressed to do both.

For a special report on Hong Kong, see our Website at time.com/hongkong