For all the hand-wringing, Hong Kongs identity is safe. Not only because it furnishes 58 per cent of Chinas investment and 40 per cent of its trade, but because it also absorbs the mainlands benami funds and black money. More than 10,000 representative offices of various Chinese provinces and ministries define Chinas first Special Administrative Region as a blend of offshore facility and Swiss Bank. Hong Kongs $20 billion in extra-budgetary funds a euphemism for hard currency that provinces and ministries hold without Beijings permission in 1992 was about the same as Chinas official foreign exchange reserves at the time.
Another example of the triumph of pragmatism over principles was available before the dust had settled on a handing-over-spectacular that may have earned as much as $205 million. Britain and the United States, which had both vowed to boycott the swearing in of the Beijing-nominated provisional legislature that will be in power until next years elections, ate humble pie and sent diplomats to witness the ceremony. Again, the economic stake is too big to be ignored.
No doubt, London and Washington will console themselves by saying that Tony Blair and Madeleine Albright packed their bags and left immediately after the handover. But Beijing can counter that the level of representation mattered less than the fact that there was no boycott. Another bonus was the presence of Canadian foreign minister, Lloyd Axworthy. Reports that the Chinese had injected $1.2 billion into the Hong Kong stock exchange so that it was booming on the eve of the transfer, even though opinion surveys indicated wariness outside, reflect the importance they attached to face at this critical juncture.
Britain, of course, ringingly defended Hong Kongs right to political and economic freedom, and to a separate administration in terms of the 1984 joint declaration and the basic law that is supposed to be the SARs constitution. Prince Charles farewell speech at a hauntingly sentimental rite of passage seemed to warn the Chinese to be good boys, otherwise the prefect would be back to teach them a lesson. Britain was not saying good-bye; Britain would keep a watchful eye on Hong Kongs progress. But even the SARs pro-democracy leaders admitted that a promise made just before the Britannia sailed away into the pre-dawn darkness sounded a little hollow.
Perhaps Bill Clintons sanctimonious argument that the right way to encourage further progress in China is not to cut China off but to draw China in was more honest. It acknowledged the limit of American leverage; it also implied the extent of American interest. By renewing Chinas Most Favoured Nation status on the eve of the transfer, the US had already handed a diplomatic victory to the Chinese and ensured the continuation of its own relationship.
He is less accommodating with Myanmar which has similarly earned displeasure for its human rights abuses, but Myanmar matters far less to American trade and investment. As William Schultz, director of Amnesty Internationals American office, put it when presenting his annual report to members of Congress, The president is tough on human rights when it wont cost us money. Trade trumps torture every time. Nicholas Burns, the US state department spokesman, acknowledged as much when he listed his countrys stake in Hong Kong: 40,000 American citizens; $14 billion in investment; trade worth $40 billion, and 65 ship visits. What he did not say is that with its tremendous economic interest in China, present and potential, the US feels obliged to be more placatory than it sounds over a Hong Kong that is now part of a China that treats it as the touchstone of friendship.
None of this is to question the withdrawal of empire. It can be said, of course, that unfairly though the British acquired Hong Kong island, Kowloon peninsula and the New Territories, it was they who shaped these rocks, sands and fishing villages into the worlds seventh largest trading entity with reserves of about $84 billion. It can also be argued that Hong Kongs six million Chinese are there only because they wanted to escape China. But this unfashionable quibbling does not alter the fact that Britain was right to leave. The question is whether Britain should have handed over Hong Kong to Beijing, or paid some heed to local democrats like Martin Lee and Emily Lau who staged a protest during the June 30-July 1 ceremonies, and complained bitterly that Margaret Thatchers 1984 deal with Deng Xiaoping rode roughshod over the wishes of Hong Kongers.
They clutch at the straw of the reforms that the last governor, Chris Patten, whom China calls gian gu zui ren or Villain of a Thousand Generations, initiated. The increase in the number of directly elected seats in the legislature though that legislature has already been abolished reminded Beijing, they say, that Hongkongers do have rights and aspirations. They welcomed the ensuing controversy to affirm that argument is integral to democracy. Any other course would have amounted to appeasement.
Perhaps, China still can and will do as it pleases, especially if there is a way of delinking economic and political rights. Thousands of elite Chinese troops poured into Hong Kong even as the speeches flowed, and the new legislature has lost no time in enacting a raft of 13 retroactive laws restricting political activity and freedom of expression. But Beijing will not tamper with Hong Kong so long as Chinas new rich, Peoples Liberation Army dignitaries, and princelings, or children of important party leaders, need a facility. By the time they do not, China is expected to be as open as the SAR.
