Businesss Plays Peacemaker In Hong Kong

In early April, a group of Hong Kong tycoons, including billionaires Li Ka-Shing and Cheng Yu-Tung, flew to Beijing for consultations. Along with the usual pleasantries, these "advisers" delivered a pointed message to the Chinese leadership: Don't let your feud with Hong Kong Governor Chris Patten interfere with important economic matters.

Indeed, as the dispute over Patten's attempt to introduce an element of democracy to Hong Kong drags on, the colony's business community is telling both sides to wise up. It worries that the fight is jeopardizing major infrastructure projects, such as the $21 billion new airport and related public works and the $1 billion Kwun Tong port expansion that Hong Kong needs to compete with such ambitious neighbors as Taiwan and Singapore.

Because China is scheduled to take over in 1997, lenders won't advance money for Hong Kong projects without Beijing's blessing. "Once you fall behind in infrastructure, it's really hard to catch up," says Stephen Clark, director of the Hong Kong-based Anglo Chinese Investment Co.

Whether the message is getting through will be seen when the harried Patten returns to Hong Kong after two weeks of powwows in London. Hoping to engage Beijing in talks, Patten is waiting until after Easter to formally present his controversial plan for broadening voter participation in choosing legislators. Those elections are scheduled for 1995. Patten's proposals were wildly popular when he first made them in October, but now support is slipping as fear of the consequences of Beijing's anger sets in.

On his London trip Patten has been trying to boost his sagging image in Britain with speeches explaining his policies. His supporters have moved to squelch rumors that he may be replaced. "There will be no changing of governors," says David Howell, chairman of the House of Commons Select Committee on Foreign Affairs. "The Chinese can't have their way on everything."

Indeed, Beijing may have overplayed its hand in its all-out bid to oust Patten, whom it has insulted as everything from a "criminal" to a "prostitute." Chinese leaders are making some conciliatory gestures. As Hong Kong's business leaders have advised, China is backing away from its earlier threats to set up a shadow government and to abrogate its international agreements on Hong Kong's autonomy after 1997.

A new awareness may just be dawning in Beijing that if business confidence in Hong Kong is damaged, it will be China's interests--not Britain's--that suffer most. After all, as a trade and financial hub, Hong Kong is critical to sustaining China's economic boom, and mainland companies are now the colony's biggest foreign investors.

In that spirit, Hong Kong business leaders are pushing Beijing to at least resume talks so that China can sign off on urgent projects. Many are also hoping for a scenario in which Patten submits his proposals and the legislature, which includes China supporters, works out a compromise acceptable to Beijing. Patten, though wounded, would be able to declare that democracy had been served.

But even if London and Beijing can somehow find a way to break the deadlock on the immediate issues, one wonders whether Patten will be able to overcome Beijing's scorn. As 1997 nears, the business of transition will only get stickier. If Patten stays and Beijing refuses to deal with him, "the only choice will be for us to take a minimalist approach to planning," says a Hong Kong official. In a highly competitive region, not spending the money to stay at the cutting edge could be a huge setback for Hong Kong.