In Hong Kong, A Cease Fire Between Britain And China

There is a silver lining for Hong Kong in the ongoing dispute between the U.S. and China over Taiwan President Lee Teng-hui's recent U.S. visit. While snarling at Washington and staging missile tests off Taiwan, Beijing seems to be trying to smooth its relations with Hong Kong and its lame duck British overlords. "China only likes to have one big argument at a time," says a senior Hong Kong government official. "And the U.S. has been identified as public enemy No.1."

British-Chinese relations had been in the deep freeze since Hong Kong's governor, Chris Patten, launched his democratization drive in 1992. But with the 1997 handover fast approaching, China seems to not only want to protect its diplomatic flanks but also to ease the jitters of local residents and international investors, who have made the territory such a key business center. The British also have an interest in easing tensions--if only to boost the chances of a dignified exit, which would help Patten's political career.

AIRPORT CONCORD. As a result, longstanding disputes are finally being resolved. In mid-June, the two sides came to a landmark agreement establishing a Court of Final Appeal in Hong Kong. The new court, based on British common law, will replace London's Privy Council as the territory's supreme court. There is still worry that China could interfere, but business groups think the new panel gives Hong Kong a good shot at maintaining judicial independence. The British and Chinese have also wrapped up their long, costly wrangle over funding the new $20 billion Hong Kong airport.

The most interesting development was a recent secret visit to China by Hong Kong's Chief Secretary, Anson Chan, an articulate career public servant who is the territory's second-highest ranking official. She met with China's Foreign Minister Qian Qichen and Lu Ping, director of China's Hong Kong and Macao Affairs Office. Senior Chinese officials had previously snubbed her. "I came away really feeling very encouraged about the prospect for more positive cooperation between the two sides," she said after her trip.

When Qian Qichen visits London in the fall there could be progress on the so-called rights of abode and other issues. The worry now is that China might refuse permanent resident status to Hong Kong citizens holding foreign passports. The Chinese have also hinted that they are looking for a face-saving way to go ahead with a new cargo-container terminal in Hong Kong. They had blocked the project after it was awarded to a consortium that included Jardine Matheson, a company Beijing associates with British imperialism.

This easing of tensions doesn't seem to have boosted the confidence of Hong Kong's own citizens. Property and stock prices are down, and unemployment, though still low at 3.1%, is on the rise. But some economists say things seem worse than they really are. "The fact is the economy is growing at 51/2% to 6%," says Ian Perkin, chief economist of the Hong Kong General Chamber of Commerce. He reports that the inflow of expatriates and Hong Kong emigres is higher than ever.

Hong Kong residents will receive an important clue in 1996 about how much they have to worry when Beijing will disclose its choice as the territory's chief executive once it takes over. Tapping Anson Chan or some other respected local figure would be reassuring. On the other hand, a Beijing puppet could trigger panic.

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