A Ghost
Knocking at the
Door: Hong
Kong Returns
to China
Charles Horner
June 1997
H
ong Kong's 155 year life as a British colony drew to a close with a characteristic montage
of things East and West. The colony's governor, Christopher Patten, reportedly a devoted
fan of British rock singer Elton John, helped sign up the flamboyant performer for two
concert performances over the last weekend of British rule, and the promoters booked him into Hong
Kong stadium, capacity 40,000. The government of China, as if sensing the need for its
representatives to be equally cosmopolitan, then pushed up the date for the introduction of the
People's Liberation Army's spiffy new uniforms. The new uniforms, better fitted, and including
Western-style jackets and even berets as appropriate, are still not slated to appear in China's armed
forces at-large until 2000 or so, but the PLA vanguard that enters Hong Kong will don them three
years in advance. In turn, this concession to Hong Kong-chic is being met more than half way as
Hong Kong's new Chinese citizens abandon their identification with British symbols. Thus, the
"Royal" disappears from the stodgy Golf Club and the venerable Jockey Club, and Her Majesty's
visage no longer graces postage stamps and dollar bills. Instead, the famous Hong Kong skyline
provides the backdrop.
As the date for the colony's retrocession began to approach–and looking back over the two
years preceding–one could also gain insight into how the British Empire grew to its intimidating
heights in the first place. For whether by conscious bluff or mindless insouciance, the British had
managed to turn the event into an occasion of wholly unexpected international acclaim for the good
works of Western imperialism. The system the British established in Hong Kong was seen as
progressive and munificent, superior in every essential respect to the regime of the country which
was soon to supplant it. Even the Chinese themselves had seemed to acknowledge it, for they had
pledged to preserve its essential elements for at least another five decades after the handover.
Indeed, as much as the retrocession was the pretext for huge fireworks and staged
celebrations throughout the country–the better to mark the end of the century and a half of a
shameful occupation of a piece of the motherland–the Chinese also seemed surprisingly reticent (for
them,) and perhaps even a bit reluctant (for them), that the great event had to occur at all. On the face
of it, it was not the kind of "liberation" that any of the founding Chinese Communist leaders would
have imagined or desired, for Hong Kong's history and what it represented would not have been
afforded, even two decades ago, even this degree of deference and acquiescence.
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As long ago as 1945, at the end of World War II, the end of the British Empire in China
seemed at hand. Between l937 and l942, Japan had supplanted it as its armies advanced down the
China coast. (Hong Kong itself surrendered on Christmas Day, 1941.) The United States, China's
irrepressible advocate, had high expectations for the post-war Republic of Chiang Kai-shek,
expectations that were rooted in the "open door" policy of the turn of the century. During World War
II, America's most prominent Anglophile was, of course, Franklin Roosevelt, but even he was dead
set against the re-establishment of the pre-World War II British imperial arrangements in China.
Thus Chiang's Nationalist Chinese government was only barely thwarted in its efforts to take over
Hong Kong after Japan's surrender in 1945. By l950, Mao's Communist Chinese government was in
almost total control of the country, yet passed up the opportunity to overrun Britain's last toehold on
the China coast.
Later, at the height of the Great Proletarian Cultural Revolution in the late l960s, the
xenophobic outbursts of Mao's Red Guards seemed to presage the "liberation" of the colony once
again but, as in l950, Hong Kong dodged the bullet. (At one level, it is easy to understand why the
colony was spared rule by the People's Republic for almost fifty years; the need for a "window on the
world" and a way in and out of China to evade American-led isolation of the Chinese regime seemed
self-evident. Yet, during those same decades, China would more than once perplex those who
thought the Beijing regime acted in its own rational self-interest.)
Because history never reveals its alternatives, we cannot know how the rest of the world
would have reacted had the Chinese, Nationalist or Communist, merely annexed Hong Kong at any
point prior to l997. Most likely, there would have been resignation at best, for it is hard to believe
that, in any of these earlier periods, outsiders would even have imagined that they might have
prevailed on the Beijing regime to make any commitments about the colony's future. However, the
China of today, into which the colony now enters, seems more hospitable to Hong Kong than any
Chinese regime has ever been, and the world at-large has never been more interested in the fate of
Hong Kong than it has been these past months.
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The colony, from the date of its establishment back in 1842, has reflected the balance
between China, the West, and the rest of the world. Britain was able to gain and hold the settlement
because it forced the issue at a time when the old Chinese order was in deep crisis. Only a half
century earlier, the balance was such that Her Majesty's emissaries could be sent home in frustration
by the Chinese imperial court, but by the time of the infamous Opium War, Britain's fleet could
operate up and down the China coast with impunity. The cession of Hong Kong island in perpetuity
in 1842, another perpetual cession of the Kowloon territory on the mainland opposite in l860, and the
ninety-nine year leasehold on still a larger piece of adjacent territory concluded in l898 were
reminders of imperial China's still unsolved national security and foreign policy problems. The entire
parcel is but 414 square miles.
The internal development of the colony was a gauge, a reflection in reverse, of China's
problems both in industrial development per se, and in the creation of a stable political structure
suitable for governing the industrializing and modernizing society sought by most Chinese leaders.
Just as today's regime in Beijing likely fears the political contagion which Hong Kong carries, the old
Manchu court had comparable anxieties. Its overthrow was plotted there at the turn of the twentieth
century. Soon thereafter, supporters of the early Chinese republic, bewildered by the advent of
Soviet-style radicalism in China after the success of the Bolsheviks' coup d’état in Russia, saw in
Hong Kong as much a Communist base as an imperialist one. The great strike of Hong Kong seamen
in l925, for one example, acquired a mythical standing among Chinese political activists of all
stripes.
The commercial success of the colony would not become a conspicuous symbol of China's
economic backwardness until much later, not until well into the Communist period. In part, this
reflected the fact that Shanghai, not Hong Kong, was the traditional hub of Western economic
activity in China and by far its most important base. But, more important, the enormous discrepancy
between the capitalist and Maoist modes of production did not become nearly so vivid until China
itself began its proto-capitalist reforms in the late l970s.
It then became possible for Chinese to see things for themselves, and not only in Tokyo,
Chicago, and Frankfurt. They could see in Hong Kong (and in Singapore and Taipei) that Chinese
people were spectacularly adept at modern capitalism, not merely the commercial, trading capitalism
at which they had excelled for many centuries. In this, the uniquely British contribution could seem
far less determining than the Sino-Confucian ethic of the busy population. The Chinese government
may now be pledged to "one country-two systems," but as their own system -- which the late Deng
Xiaoping dubbed "socialism with Chinese characteristics" -- continues to thrive, the presumed
superiority of the Hong Kong system strikes them as exaggerated. Hence, the maintenance of the
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arrangements which the Chinese have promised Hong Kong, which we think the Chinese somehow
regard as an economic necessity, will reflect political and foreign policy calculations more than
commercial ones.
It is easy to see how we and the Chinese continue to confuse each other on this score. In
recent years Westerners, especially political conservatives among us, have come almost to
romanticize Hong Kong as a near-ideal type of laissez-faire capitalism whose efflorescence is the
result of the rule of the Common Law and the imposition of a low flat tax -- "the world's freest
economy." At the same time the West has also become ever-more fascinated by the business
practices of the Overseas Chinese, the descendants of emigrants from southeast China who came
centuries ago to the countries of Southeast Asia and who, though a tiny minority, now dominate trade
and industry in the region. Especially in the past fifteen years, we have learned about their vast
business enterprises, their enormous personal holdings, and their unique role in fueling mainland
China's economic boom through their investment of tens of billions of dollars. Interestingly, these
people have prospered mightily in settings which seem in almost every respect inhospitable to
capitalism of any kind. (In Indonesia, for example—home base of the now-famous Lippo Group—
hundreds of thousands of Chinese were massacred in l965, and the regime in power at present is not
especially Locke an in its orientation.)
The real point here is not actually why the Chinese have been succeeding, or whether they
can succeed at business in almost any setting, but how the government in Beijing is apt to assess the
need for one sort of business environment or another. Central to our understanding of how all of this
works is that the rise of capitalism leads to, even as it also derives from, the rule of law which, in
turn, leads to constraints on the arbitrary power of the state which, in turn, transforms subjects into
citizens. But central to their understanding are the centuries of Chinese history which suggest to the
government in Beijing that Chinese will work hard to amass wealth, that they will do so even in
insecure settings that have been deliberately contrived by the state, and that the behavior of rich
Chinese around the world in general and in Hong Kong in particular gives the new rulers there a
large margin for error.
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Fathoming the relationship between the goose and the golden egg is an old Chinese
preoccupation. More than forty years ago, one of our greatest scholars of Chinese history, Ho Ping-ti
(He Bingdi) Professor Emeritus at the University of Chicago, published a now-classic study of
probably the richest men in the eighteenth-century world, a group of Chinese salt traders. These
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"commercial capitalists" amassed stupendous fortunes. While we may speculate as to why
capitalism-as-we-know it did not arise in China as a result of their efforts, it is also interesting merely
to look in on how these merchant princes did their business in one kind of Chinese setting. They had
the honor of hosting the emperor and sending him birthday presents; they patronized the arts,
supported schools, financed local security forces and flood control projects, purchased various
honors for themselves, tried to infiltrate their smartest sons into the Emperor's mandarinate and even
their most beautiful daughters into the best-connected seraglios. To be sure, they were merely being
civic-minded in their fashion, but they had no theory of political liberalization either; in particular,
they did not believe that, over time, they would gain the upper hand over the state, or even that the
balance of power would shift very much in their direction.
A comparable pattern of accommodation has been built into Hong Kong from its beginning.
British rule provided opportunities, but there was nothing inevitable about them; there were many
routes to their subsequent exploitation. There have also been since 1842, many embodiments of
Chinese political expression in the vicinity—Manchu dynasts, Taiping rebels, local warlords,
followers of Sun Yat-sen both Communist and Nationalist, pro-Japanese collaborators. There were
always linkages, both open and furtive, both above ground and underground, which created the
system. Once again, the idea of "one country, two systems " confuses us for, seen on a larger scale,
there has always been but one system within which Hong Kong operated, the system shaped and
limited by whichever "China" the colony happened to abut at the moment. The bright line of
"sovereignty" has always been fixed, but the rest of it was ever-changing.
Accordingly, the re-establishment of Communist Chinese rule will certainly create novel
difficulties, but the residents of Hong Kong, and especially its rich residents, have been adapting to
those at least since the arrival of the authority of the People's Republic of China at Hong Kong's
doorstep. And, since 1950, the PRC's authority has been trickling into the colony. It is only since
l984, when formal retrocession was agreed upon, that this prior seepage became gradually more
visible, until becoming the conspicuous torrent of the past eighteen months. The option of how
much authority actually to exercise has always been the PRC's alone. It has chosen, for the past fortyseven years, a mixed arrangement, not disturbing British sovereignty, but arrogating to itself as much
influence it wanted. It has in particular built up enormous financial holdings in the colony, including
major interests in banking, insurance, transportation, telecommunications, electric power, and real
estate. These holdings, worth tens of billions at least, have been acquired over time at rather
advantageous prices, opportunities the old emperors and their officials would certainly have seized, if
only the joint stock company had existed in China in their day. Hong Kongers have deferred either to
His Imperial Majesty or to His Britannic Majesty as circumstances seemed to dictate. The next
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"sovereign," the PRC, is not apt to change the Chinese imperial style very much, especially since it
has long been able to do as much as it pleases in Hong Kong.
But how will Beijing decide how much it pleases to do, and why? In l984, Britain and China
issued a joint declaration spelling out the details of the Chinese regime that would come into being as
of July 1, 1997. China had been into its economy-transforming program only since l978, so the idea
that Deng's reforms that would continue for at least another dozen years was, in itself, an optimistic
prediction. But retrocession would have made no sense otherwise, for Hong Kong, even as a system
in its own right, could not have been survived inside the China of l977. Whatever becomes of
specific political arrangements, Hong Kong's economy, always much influenced by the vagaries of
China's abrupt shifts in economic policy since l950, will now become wholly dependent on China's
itself.
In retrospect, it seems that Hong Kong had been slated all along for a key role in the postl978 "reform and opening up." (Deng's original objective, we should remember, was a mere
quadrupling of per capita gross domestic product by the end of the century. The extraordinary
economic growth necessary to do that has been more than sustained.) Before the reforms, Hong
Kong was an important outlet for Chinese goods into the rest of the world, but the amounts were
minuscule as compared with today's. Similarly, Hong Kong's manufacturing output did not find
much of its market in China. Now, the "visible" trade between the two may be worth about US$130
billion. Hong Kong has already moved much of its manufacturing capability into "special economic
zones" in adjacent Guangdong province that China set up to attract foreign investment; Hong Kong
has put about US$80 billion into China in toto.
The mainland Chinese money which has moved into Hong Kong has played an economic
role commensurate with the "imperial" role we have already encountered, for China is now the
second-largest investor in Hong Kong, behind only Britain itself. Beyond that, much of the activity in
Hong Kong's financial markets is devoted to raising additional capital for China's use, whether
through direct lending, direct investment, or the listing of Chinese companies on the Hong Kong
stock exchange. China understands the value of all of these arrangements, but it attributes the great
Hong Kong boom of the past twenty years to the great China boom, of which the colony has been
but one inseparable part. Indeed, Asian entities of every ideological/sociological description have
profited from that same boom. Given the traditional Chinese view of what goes on in their part of the
world -- "middle kingdom- ism,” as sinologists like to tag it -- Beijing will continue to give itself the
lion's share of the credit. Still, whatever the deep differences between the "two systems," the gap
between them is certainly narrowing. Shanghai, for example, without the benefit of British rule, has
been reclaiming its historic place as a focus of the larger Chinese economy, and the Shanghai
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"system" has certainly been one powerful engine for China's take-off. (Besides, China's President
Jiang Zemin, his chief economic policymaker Zhu Rongji, and even Hong Kong's new chief
executive Tung Chee-hwa, are all Shanghai-ese, a breed that believes it has little to learn from
anyone else about business.)
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Perhaps this gives us some insight into the seemingly cavalier approach of Beijing to the
negotiations with Britain which produced the framework for the retrocession. The resultant Joint
Declaration of December 19, 1984, is noteworthy not only for its detail, but also for its
expansiveness. The details speak to the creation of the Hong Special Administrative Region which
supersedes the colonial government as of July 1, 1997. The Region then envisioned was, in effect,
akin to an old-fashioned protectorate, self-governing though not independent, but possessed of an
unprecedented novelty. The Region, which would continue going along more or less as it had been
going, its internal arrangements not merely different from those of its new countrymen, but in every
respect far more liberal and proto-democratic. One had heard of imperial powers like Britain once
was, behaving democratically at home yet non-democratically in its possessions, but political
scientists searched in vain for the precedent of an authoritarian dictatorship allowing one of its
dependencies self-rule. The new Region was even granted broad authority in the conduct of its own
foreign relations, especially as they related to finance, trade, and transport.
The expansiveness was displayed in Article XIII, which guaranteed the continuation of "the
rights and freedoms previously in force in Hong Kong, including freedom of the person, of speech,
of the press, of assembly, of association, to form and join trade unions, of correspondence, of travel,
of movement, of strike, of demonstration, of choice of occupation, of academic research, of belief, of
the home, the freedom to marry and the right to raise a family freely."
The Chinese agreed to at least three further provisions which had the effect of making the
Declaration more than a reshuffling of internal arrangements inside the People's Republic of China.
The first is recognition that China and the new Hong Kong government have inherited obligations
under the International Covenant of Civil and Political Rights and the International Covenant on
Economic, Social, and Cultural Rights. The second is the establishment of the Sino-British Joint
Liaison Group, to work on details of the transfer up until July 1, 1997, but to continue for three years
thereafter, giving Britain some involvement in post-retrocession affairs. Finally, the Joint Declaration
was subjected to ratification procedures as if it were a treaty between Britain and China. The actual
instruments of ratification were exchanged in Beijing in l995 and deposited with the United Nations.
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Thus, as much as there were criticisms of the British at the time for not being more insistent
on guarantees for Hong Kong, the agreement was made at a time when there was till Communism in
the world, and when it still seemed to matter. The Soviet satellite regimes in Central Europe did not
collapse until l989, the Soviet Union itself not until l99l. No one, in l984, expected that the ensuing
seven years would witness so great an expansion in the boundaries of the Free World. Nor,
conversely, was the world much anticipating the unexpectedly public massacre in Beijing of June,
1989. It was not that politically-directed atrocities were unknown in China or to China watchers
outside; far more horrible crimes had taken place, but always out of public view. Indeed, the death
toll of some previous episodes was totally unimaginable, so that the massacre of hundreds, or
thousands, in a public square was comprehendible in a way that the deaths of tens of millions during
previous political campaigns had never been. Yet, before l989, none of these had become any kind of
issue in international politics or in China's foreign relations. Undoubtedly, the Beijing regime
remains mystified as to why its former apologists now speak up for dissidents.
Given the recognition that, in the last analysis, the continuation of a civilized, though not
necessarily democratic, political system in Hong Kong depended on the course of politics in China
itself, the violent end to the students peaceful demonstrations was more than sobering. It had to be
taken personally. It was a rather frightening reminder of the Beijing's regime past history, and the
abrupt reversal of policy of which it now seemed capable once again.
Less than a year after the massacre, in April, 1990, PRC President Yang Shangkun
promulgated the Basic Law for Hong Kong which the National People's Congress was obligated to
enact under the l984 Joint Declaration. The Basic Law is Hong Kong's constitution and the document
clearly reflects the Beijing government's desire to be both reassuring and intimidating at one and the
same time. The Basic Law clearly gives to Beijing the right to veto laws enacted by the new Hong
Kong Region legislature. It also gives itself the power to declare a "state of emergency" in Hong
Kong, if the local authorities seem unable to maintain "national unity" or "security" in the face of
wide-spread disorder. (One wonders whether the march of one million Hong Kongers in support of
the students in Tiananmen would have qualified as such a "disorder.") Further more, the new Hong
Kong government is instructed that it "shall enact laws on its own to prohibit any act of treason,
secession, sedition, subversion against the Central People's Government, of theft of state secrets, to
prohibit foreign political organizations or bodies from conducting political activities in the Region,
and to prohibit political organizations or bodies of the Region from establishing ties with foreign
political organizations or bodies."
The British, for their part, sought further to institutionalize future self-government in Hong
Kong by creating, for the first time in the colony's century-and-a-half history, an elected legislature.
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The Chinese viewed this as a violation of the earlier Sino-British compact, but the British proceeded
nonetheless. In the l995 voting for the Legislative Council, the so-called "pro-Chinese" parties were
roundly defeated, whereas the "pro-democracy' forces fared surprisingly well, especially given
Beijing's rather blatant efforts to intimidate the electorate. As if to underscore its displeasure, and to
remind the citizenry of where power ultimately resides, Beijing has announced that it will dissolve
the Legislative Council and made a point of seating a sixty-member Provisional Legislature of its
own in adjacent Shenzhen, waiting to return to Hong Kong on July 1, to what will be a selfproclaimed, but otherwise unwelcome, triumph
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Just as internal repression inside China has become a potent political issue in the United
States only since l989, the fate of Hong Kong is an even more recent addition to our political debate.
It has become a symbol of America's new anxieties about the Sino-American relationship and the
occasion for intra-party and inter-party maneuvering. The practical aspects, to the extent that anyone
knows anything about them, are far in the background, for the issue here is not the $15 billion of
American investment at risk in the new Hong Kong. Thus, there has been discussion in the Congress
about linking the larger United States-China trade relationship to China's treatment of its new
citizens. Even the President of the United States, responding to public pressure, met with Martin Lee,
Hong Kong's best-known defender of democracy.
But even as we in the West have, for the moment, decided to view Hong Kong-China
relations as a part, somehow, of Sino-Western relations, and even of China-United States relations,
Hong Kong's future is far more important to the intricate and subtle relationships that exist within the
Sinic world. "Greater China" -- Hong Kong, Singapore, Taiwan, the Chinese diaspora in Southeast
Asia and elsewhere -- is very much a part of the whole world, but also a world of its own.
Developments in one part of it have always had, and will continue to have, powerful effects on the
other constituents. For centuries, China itself was at the core of Chinese life, the source of ideas and
influences which drove political, intellectual, and economic change inside China and throughout East
Asia. But with the infiltration of Western ideas and methods, beginning as far back as the late
sixteenth century and accelerating through the twentieth, once-peripheral Chinese life and experience
have gradually gained the upper hand over the center.
Chinese on the farthest maritime boundaries of the Pax Sinica were the first to assimilate
the meaning of the political and economic challenge of the West. The first Chinese revolution of this
century, the one that overthrew the Manchu dynasty in 1912, was financed and inspired by Chinese
outside the country. Their leader, Sun Yat-sen, who is honored both on the Communist Chinese
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mainland and on Nationalist Chinese Taiwan as the founder of modern China, was educated in
Honolulu and later in Hong Kong -- and was even a baptized Christian. Hong Kong and Singapore,
part of the British Empire, and Taiwan, a Japanese colony from l895 until l945, were clearly major
way stations for the introduction of higher forms of capitalism to ever-more adept Chinese
practitioners. This constituted a highly porous Sino-Western frontier. Yet, at the same time, even as
Chinese outside China funneled Western ideas into the motherland, they were also throughout out
the chaos of modern times life-saving custodians of China's traditions and, for a long time, the only
accessible, because safe, repositories of Chinese art and other cultural artifacts.
It is true that during the period of High Communism in China—from the founding of the
People's Republic in 1949 until the death of Mao Zedong in l976—Middle Kingdom-ism tried to
reassert itself in thee form of the attempted export of Maoist revolution through "wars of national
liberation." But either at home and abroad, this proved to be worse-than-useless models and, by the
time of Deng Xiaoping's recapture of authority in l978, China had no real option, except to look to
the experiences of Chinese beyond and the influences and capabilities they had absorbed and
Sinified.
In China itself, the post-l978 intellectual and cultural ferment was reminiscent of the 1920s
and 1930s, when there was an avidity for almost everything intellectual, whether Western or neoChinese Confucian. The preceding thirty years had been a vast wasteland and there was more than a
little pent up demand for such things. Taiwan, even during its authoritarian period after l949, had
always been far less constrained than the mainland; the post-1984 liberalization there, which has led
to today's democratic arrangements, has been that much more intellectually stimulating. And though
the Tiananmen massacre has clearly restricted the range of political discussion and action on the
mainland, the post-l989 Sinic world at-large was still alive with raucous discussion.
It had taken the Chinese at home decades to reach a dead end, but the time had been far
better spent by their compatriots nearby. Even with the dazzling quintupling of China's economy in
the last twenty years, the achievements of the brethren in Hong Kong, Singapore, and Taiwan cast it
into shadow. Taken together, these three places have a combined population of only about thirty-one
million—six-and-a-half in Hong Kong, three-and-a-half in Singapore, twenty-one in Taiwan—but in
the aggregate they generate a half trillion dollars of gross domestic product. Hong Kong and
Singapore, which grew up under the sway of the British, and Taiwan, which industrialized under the
more dirigiste tutelage of the Japanese, have taken their individual paths, each inspiring in some part
the "socialism with Chinese characteristics" that has taken hold on the Chinese mainland.
With the Hong Kong's recession back into China, the remaining independent Chinese
entities of Singapore and Taiwan became even more prominent as alternative examples of how
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Chinese people can live in the contemporary world. Unlike Hong Kong, each is for the foreseeable
future beyond the reach of direct mainland Chinese coercion, though the case of Taiwan is obviously
far more complicated. In the meantime, the connections that Hong Kong, Singapore, and Taiwan
have built up over the past twenty years with each other and with China to their own continued
prosperity and to China's economic growth as well.
The retrocession of Hong Kong scrambles the inner-relations of the Sinic world once again.
For example, the relationship between Hong Kong and Singapore, an interesting chapter in Britain's
intra-imperial history, has been both co-operative and competitive. An underappreciated aspect of
the British Empire as it functioned in Hong Kong was its contribution to re-energizing longestablished relationships among the traditional traders of East Asia, South Asia and Southeast Asia—
Chinese to the east, Parsees and others in India, Sephardi Jewish families in the Near East.
Singapore has seen opportunities for itself should Hong Kong's retrocession falter and lead to a loss
of confidence in Hong Kong as a financial, communications, and transportation center; it has been
happy to nominate itself as a worthy successor. On the other hand, it knows that Hong Kong is at the
core of, and is the main conduit to, China's most dynamic economic region, the southeast.
Accordingly, it has in recent years joined with Hong Kong in financing a large chunk of the reforms
there, and has further mortgaged its economic future to the success of many Chinese ventures.
Singapore is also a substantial investor in the northeast of the country, with large plans for the
creation of new industrial townships. It has made fifty-year agreements to modernize and operate
some important Chinese ports. Just as China's allure as a market has found its risk-takers in
Singapore, Singapore's prickly authoritarianism has also found its admirers in China, and the late
Deng Xiaoping once suggested that the tough regime of the city-state was worthy of emulation.
On the other hand, the emergence of a raucous democratic polity on Taiwan offers an
entirely different set of problems and possibilities. The still-unsettled Chinese civil war between the
Nationalists and the Communists, which has been going on in one form or another since l927, has
taken yet another bizarre turn in the past ten years. Competitive liberalization on the mainland and on
Taiwan has opened up a range of contacts between the two that would have seemed unimaginable
even in the mid-l980s. A multi-billion dollar trade has developed, and Taiwanese businesses have
invested on the order of $30 billion in mainland enterprises. Even as it has been promoting economic
interdependence, Taiwan has sought greater diplomatic independence, wanting additional
international recognition for itself and de facto acknowledgement of its separate standing.
Sometimes, the People's Republic reacts poorly to this, as happened in March, 1996, when its
military blandishments directed against Taiwan prompted the Unites States to send to aircraft carrier
battle groups to the Taiwan Strait.
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The coming together and the pulling apart of these two regimes on opposite sides of the
Taiwan straits, and the prospects for any resolution of their conflict over the longer term, are one of
the more interesting sub-themes of the Hong Kong retrocession. The establishment of PRC
sovereignty over Hong Kong raises a host of problems for Taiwan –real, symbolic, economic,
psychological. Since the Guomindang, the Nationalist party, set up shop on Taiwan in 1949, its ties
with Hong Kong have become ever-more intimate. It has billions of dollars invested, put there to
maintain the fiction that there has not been and is not now "direct" trade between Taiwan and the
mainland. It has, over the years, competed for the loyalty of Hong Kong Chinese, but now it must
acknowledge that the competition is over. It has had to scramble to insure that substantial assets
controlled by the Taiwanese government, as distinct form Taiwanese people, in Hong Kong are
moved or reassigned so as to avoid confiscation.
In its efforts to expand relations with the mainland, and in its use of Hong Kong to facilitate
that policy, Taipei has given many hostages to fortune to the former colony, and has now become
more vulnerable to Beijing in the bargain. Discussions about which documents to use, which
passports to carry, which flags to fly, what terms to include, which clauses to vitiate, which deeds to
recognize -- all these tedious topics can become either the occasion for unending harassment or
unhindered co-operation.
Beyond these questions of definition and legality, there remains in play the evolution of
China's society, polity, and economy. For just as Hong Kong disappears, formally, as an alternative
vision for China's life in the modern world, Taiwan becomes more visible, actually. The Beijing
government cannot be happy about this. The recovery of Hong Kong from the British imperialists
could be made to seem a litmus test for the patriotism of all Chinese, but the "liberation" of Taiwan,
if it means the end of a functioning Chinese democracy, is another matter for those same Chinese
patriots.
In the end, it is not so much Western occupation of a tiny piece of Chinese territory that the
retrocession of Hong Kong will bring to an end. What is ending, one may hope, is the century- and-ahalf of external and internal violence that began with the Opium War of 1840 and which may now be
coming to a close. The retrocession also comes at a time of slow convergence of views within the
Sinic world about the ramifications an old issue—how ancient Eastern traditions were to be
reconciled to modern Western intrusions. Chinese fought viciously among themselves, and with
Europeans and with the Japanese, about one form or another of this question. It appears now that an
accceptable resolution is nearer than it has ever been, and that the surprisingly peaceful transfer of
sovereignty over Hong Kong could well be remembered as one of the last steps toward it.
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