All through Hong Kong's 1980s investment blitz in southern China, the late shipping magnate Y. K. Pao held on to his wallet. Like many of Hong Kong's tycoons, bitter over losing their fortunes in the communist revolution, mainland-born Pao limited his spending in China to charity. But now, under the helm of son-in-law Peter Woo Kwong-ching, Pao's Wharf (Holdings) Ltd. is joining other Hong Kong companies on the investment bandwagon. Among Wharf's bigger schemes: to help develop the inland industrial city of Wuhan into the "Chicago of China" over two decades.

The second wave of Hong Kong investment is under way. In the first, thousands of small makers of electronics, garments, and toys poured some $10 billion into factories in nearby Guangdong Province to tap its cheap labor. As prices rise in Guangdong and free-market reforms spread beyond the coastal cities, cash-rich Hong Kong investors are moving inland, gearing up projects that will change the face of major cities such as Beijing, Shanghai, Tianjin, and Wuhan.

In recent weeks, the colony's biggest property developers, including billionaires Li Ka-shing, Robert Kuok, and Cheng Yu-tung, have unveiled a host of megadeals--from skyscrapers and shopping malls to entire American-style suburbs. The new influx is certain to boost Hong Kong's importance to the mainland after they are united in 1997.

`GREEN LIGHT.' Although ambitious projects have been on the drawing boards for years, the big catalyst was Deng Xiaoping's trip through the booming Pearl River Delta earlier this year. Deng endorsed Guangdong's embrace of free-market reforms and foreign investment and began a campaign to topple party hard-liners. "That was the green light for the gung-ho approach," says Stanley Hoon, a China consultant for Stelux Holdings, the Hong Kong investment arm of Thai property giant Bangkok Land. And the overseas response has been huge: Foreign investment commitments in China for the first six months of 1992 tripled, to a record $14.7 billion, one-third of it from Hong Kong.

Guangdong still gets most of the attention. Next year, developer Gordon Y. S. Wu of Hopewell Holdings expects to complete his $1 billion six-lane superhighway, the first part of his plan to build roads, bridges, and tunnels throughout the Pearl River delta. Stelux Holdings plans to create a $4 billion suburb outside Guangzhou for China's growing middle class. And Cheung Kong (Holdings) Ltd., the flagship of billionaire Li Ka-shing, is looking to build a huge amusement park.

But now, Hong Kong developers are eyeing northern Chinese cities. Leading the pack are Li Ka-shing and billionaire Robert Kuok. In one week in June, Li and Kuok teamed up to sign three major deals, including a shopping center in Beijing and a $130 million complex near Shanghai's main rail station.

Indeed, Shanghai is starting to appeal to many Hong Kong investors. Property giants New World Development, Sun Hung Kai Properties, and Henderson Land Development are building Culture Square, a $450 million downtown complex. Pacific Concord Holdings has launched a $300 million joint venture to build an 88-story office tower that would be Asia's tallest.

But none of the plans is quite as fanciful as Wharf's scheme to develop Wuhan. Right now, Wuhan, in central China, is a drab industrial city of 7 million whose Marxist government is just beginning to implement reform. But Wharf executives think it has a dynamic future, given its low labor costs and its rail and river connection to China's biggest cities. Even before it has rounded up other investors, Wharf is talking about sinking up to 20% of its own assets, now about $1 billion, into the city. Its first project: a cargo rail terminal.

CASH APLENTY. Whether developers can raise the funds to achieve all their dreams for China is another question. Skeptics wonder if Hong Kong investors are going overboard. Hongkong & Shanghai Banking Corp., already stung by the likes of Australia's high-flying Alan Bond and the Reichmanns, is cautious about lending in China because it fears the property rush is driven more by speculation than need.

But big players such as Cheung Kong and Sun Hung Kai can afford the risk. After two years of soaring Hong Kong property prices, developers have billions in cash. In cities such as Beijing and Shanghai, prime sites are incredibly cheap. "Guangdong already is looking a little too much like Hong Kong in terms of price," says Richard W. Mounce, general manager of Chase Manhattan Bank's Hong Kong office. "The developers need to move on." China may take control of Hong Kong in 1997, but old-timers like Y. K. Pao probably never dreamed that Hong Kong money could end up colonizing the mainland.

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