July 1, 1997, a significant date for all people in Hong Kong and much of the Asian community.
Hong Kong will be reverted to a powerful communist nation. Ironically, many of the world's communist
countries are reverting to democratic governments. What will this date mean for, not only Southeast Asia,
but for the rest of the world economic community, primarily the United States? Will Hong Kong still
function, economically, as it does now or will power from People's Republic of China (China) quickly
impose itself like the daunting memories of Tien Amen Square? How will the economic system of Hong
Kong respond to the political changes? These and other questions will be answered to explore the events
leading to this date, and an analysis of future events.
Overview
Hong Kong, a 413 sq. mi. area, British colony SE of China. Its capital called Victoria, also known
as Hong Kong City or ‘New Japan.' It is a world financial center, whose stock market has four exchanges,
and it is a large manufacturer of consumer goods. It has a population of 5,431,000 inhabitants of which
57% are Hong Kong Chinese, the rest are refugees from China's Communist regime. Who have for
decades imposed fear and intimidation to its own people in order for them to accept the new government.
The official language is English and Cantonese. Hong Kong has the most free press in Asia but its
freedoms are not enshrined in law. Hong Kong has the busiest container port since regaining it in 1987.
Thus, it has limited national resources, it depends on imports for virtually all of its economic requirements,
including raw materials, food, fuel and other consumer goods.
After a 99-year lease from China since 1898, Britain and China enacted negotiations in 1982
towards the fate of Hong Kong. An agreement was signed in 1984 in which Britain agreed to transfer full
sovereignty of Hong Kong to China in 1997. In return, China assured Britain that Hong Kong's social and
economic freedom and capitalist lifestyle would be preserved for at least 50 years thereafter, except in
defense and foreign affairs. Since the agreements, tensions have grown between the two countries for fear
that China would exert more control than agreed upon. Part of the agreements included a ‘one country, two
systems' form of government. Hong Kong would have control over its affairs and would be able to bind
into international trade and economic agreements. It would retain its own laws, currency, budget, tax
system and free-port status. In essence, Hong Kong's system would be left intact, since its prosperity has
been primarily derived from location, a laissez-faire ec!
onomic system and plenty of Chinese immigrants who provide cheap labor and merchant class expertise.
Britain further angered China when they enacted many democratic reforms that would exist well
after the hand-over. Some included elections to local lower-tier councils. Also, many local proposals for
greater democracy supported by Hong Kong's legislative council were criticized by the Chinese
government. Many of the proposals thereafter, some of which were in defiance of mainland China, has
vowed the Chinese government to disband all elected bodies when it takes control in 1997.
The United States is in a very peculiar situation, militarily, it can stop most Chinese aggressions
throughout the world, if China decided to expand its influence, but the fact that it is a nuclear power, any
hostility must be carefully planned out. Economically, the U.S., who has become the largest economically
developed nation in the world, is also strong to impose many favorable and not so favorable trade and
economic restrictions, but it has a disadvantage in doing so. Even though China is the world's
underdeveloped nation, the Chinese government under Deng Xiaoping, due to his market and economic
reforms, helped make China one of America's creditors. In financial terms, in the last 9 months, China has
bought $12.1 billion in U.S. notes and bonds, more than $1 billion than Japan. In total, China owns more
than $43 billion of U.S. debt and going up. China, in essence, is keeping American interest rates low. This
makes China capable of twisting America's arm in most !
situations that may not be so favorable. In addition, as Don Lawson noted, ‘the U.S. continues to supply
modern military arms