Hong Kong? Just watch China

National Review, March 10, 1989 by Brian Crozier

WHY DID Union Carbide move its Southeast Asian headquarters from Hong Kong to Singapore? Silly question. Answer: for the same reason that Jardine Matheson (the British conglomerate that used to be virtually synonymous with Hong Kong) moved to Bermuda in 1984. And why did Jardine Matheson, etc? Silly question: for the same reason that 130,000 inhabitants left their homes for the United States, Canada, and Australia from 1986 to 1988.

To be more precise, these moves, and many more on the way, are happening because of a gut feeling that, when the time comes, it will make no sense to entrust the fate of a major center of capitalism to the whims of a Communist government in Peking.

And yet, at the same time, foreign investment has been pouring into tbe British colony, which is due to come under the sovereignty of the Chinese People's Republic (PRC) when Britain pulls out in 1997. In the year ended last April, Japanese investment alone totaled $1.1 billion. Yet Japan's share of foreign investment in Hong Kong, at 21 per cent, is just over half the U.S. share, at 41 per cent. In contrast, the British percentage is only 15 and the PRC's a modest 6 per cent.

The above merely hints at the importance of Hong Kong as an economic and financial center, with its stock exchange, its banking services, its container port, and its airport. And yet none of the countries involved in, or dependent on, Hong Kong was consulted when the British government, in the early 1980s, decided it was time to negotiate with the PRC on the "return" of Hong Kong to China. For that matter, the 5.8 million people of Hong Kong (before the exodus began) were not consulted either.

Note the quotation marks. When the British, in the heyday of the empire, grabbed the island in 1841, its economic value was merely potential. True, smugglers and pirates who used it as a hiding place found it useful, but nobody consulted them either. And, to be fair, there were a few farmers and fishermen, eking out a living.

So one might say the Chinese Communists are getting a pretty good deal. The rocky, empty island of the 1840s now looks like Manhattan. When it came to the crunch of 1984, wher Margaret Thatcher and Geoffrey Howe signed their agreement in Peking the British side made no distinction between the actual island (the sovreignty of which had been "ceded" to Britain) and the "suburb" of Kowloon plus the New Territories, both on the mainland (which had been "leased" for 99 years, expiring in 1997).

Let us be fair. Bits of empire can be a problem. But comparisons do intrude. Seven years ago, Britain sent a fleet of one hundred vessels eight thousand miles south to defend two thousand settlers of British stock (and half a million sheep) against Galtieri's invaders. Gibraltar has thirty thousand inhabitants, neither British nor Spanish, and was ceded to England in 1713. But the British have said it, many times: they won't hand over the Rock unless the people of Gibraltar say this is what they want.

Well, of the 5.8 million unconsulted Hong Kongers, some three million have "British" passports for traveling purposes, but cannot live or work in Britain. Worse, of five hundred loyal civil servants in the Colony who applied for UK citizenship, only eight were successful. Worse still: in neighboring Macao, five thousand civil servants, plus thirty thousand ordinary folk, are to get Portuguese citizenship. Even worse: these 35,000 will be able to work in Britain under EC law, but not the three million Hong Kongers.

Faced with such data, Britain's Foreign Secretary, with the Whitehall mandarins solidly behind him, responds that- the 1984 deal was the best obtainable. Indeed, on paper, the PRC "guarantees" to preserve the social and economic system of Hong Kong and the existing human rights.

The question is whether the people of Hong Kong feel they can entrust their future to a regime committed to the destruction of capitalism.

But is it? After all, didn't the Great Helmsman himself call Deng Xiaoping a "capitalist roader"? And isn't that exactly what Deng has turned out to be since Mao Tse-tung died in 1976?

Yes, up to a point. Deng discovered, years before Gorbachev did, that Leninist "socialism" just doesn't work. But Deng and Gorbachev face the same dilemma: how can they discard the raison d'etre of their regimes?

Deng's reforms have brought fruit and vegetables into the markets, and he has created islands of capitalism in the ocean of socialism. One result is that inflation, non-existent in the bad old days of universal penury, now runs at 20 per cent.

Deng, however, is 83 and not immortal, and the "line" of the party can change any time. Two years ago, the reforming party boss, Hu Yaobang, was fired for his "bourgeois liberal" policy. His successor, Zhao Ziyang, has been saying there is no question of dropping socialism.

BUT THERE is no real guarantee. Even now, it is surely not too late to internationalize the issue. Foreign devils with interests in Hong Kong should gather in conference. This would be in Peking's interest as well, for if they want to inherit a going concern, not a barren bit of land, they will have to find out what the wealthmakers need.