Anson Chan, The Best Bellwether In Hong Kong?

The civil service chief's moves could signal the territory's fate

It was an embarrassing situation. In late January, Hong Kong Chief Secretary Anson Chan was in the U.S. on a serious mission: to tell influential Americans they should be optimistic about Hong Kong's future. Yet even while she was pursuing her task, officials back home preparing for the July handover suggested they would scrap laws guaranteeing freedoms. That triggered an angry backlash in the U.S. More surprising, the move to dilute civil liberties disappointed Chan herself. "I have to confess that the latest development has made my job rather more difficult," she told reporters on her return.

Chan is in the spotlight at a critical moment. As second in command to Governor Chris Patten, the 57-year-old Chan has staunchly defended Hong Kong's freedoms. Yet she has also accepted Hong Kong Chief Executive-designate C.H. Tung's invitation to stay on as head of the civil service. Now, Tung and other members of the Preparatory Committee, which is overseeing the transition, are moving to roll back some of Patten's key reforms. Many are wondering if the integrity of the service will suffer after the hand-over. If Chan stays on in her job, it will be a clear sign she believes in the new order's ability to preserve Hong Kong's autonomy. But if Chan feels she must resign, many senior staff would follow, rocking the system. "We're all watching to see how she manages to balance the situation," says one civil servant.

KEY ALLY. Tung, for his part, publicly supports Chan. In a December interview, he called her a "loyal civil servant." The two worked closely together when Tung was a member of the governor's executive council, and Tung considers her a personal friend. Chan even christened one of his ships when it was launched in 1995. It's clear how disruptive her departure from government would be. "Nothing would work without her," says a British-born civil servant. "Tung needs her more than she needs him." Chan declined to comment for this story.

But if Tung needs Chan, Chan needs to build a good relationship with Beijing. Chinese officials still treat her with deep suspicion: She represents the colonial government. Despite her persistent attempts to break the ice, the Chinese have for the most part politely rebuffed her. "[The Chinese] blow hot and cold over her," says Michael Yahuda, a China watcher and professor at the London School of Economics.

If Beijing policymakers end up alienating Chan, they would lose an important ally in the effort to achieve a smooth transition. Chan's importance lies not just in her position but also in her forceful personality, her integrity, and her deft touch in public relations.

When Patten named her as chief secretary in 1992, Chan redefined the job. She was the first Chinese (and the first woman) to hold the post. "Because she's Chinese, she can relate so much better," says Vincent Cheng, executive director of HongKong & Shanghai Banking Corp. Chan has opened Victoria House, her official residence, to numerous charity functions--and for the first time in history Victoria House has routinely served Chinese food. Chan's winning smile has won her the nickname "Say Man"--after a mah-jongg tile whose markings resemble a big grin.

BATTLES. Chan was born into a Shanghai dynasty accustomed to prominence. Her grandfather was a Kuomintang general who fought against the Japanese occupation. Her uncle, Harry Fang, is a well-known Hong Kong doctor who helped treat Deng Xiaoping's eldest son Pufang, crippled during the Cultural Revolution. Chan's father was a textile manufacturer, while her mother, who is still alive, is a well-known painter. Her brother David runs the Hong Kong Academy of Medicine.

Anticipating a communist victory in the civil war, Chan's father moved the family to Hong Kong in 1948. In 1962, Anson Chan joined the civil service, where she demonstrated a readiness to take on vested interests. As Secretary for Economic Services from 1987 to 1993, she decided early on that the telecom sector should be opened for competition, despite fierce opposition from Britain's Cable & Wireless, which had a monopoly through its Hong Kong Telecom affiliate.

Chan battled with British aviation authorities and British Airways PLC to win a fair share of the London-Hong Kong traffic for the territory's big carrier, Cathay Pacific Airways. "She was very tough in dealing with the U.K.," recalls Airport Authority Director Elizabeth M. Bosher. Chan has also sparred with Cathay Pacific, which resisted giving routes to a fledgling carrier, Air Hong Kong. In addition, she opened up development of container ports to new players. That effort gave her the chance to hobnob with key business leaders, including property tycoon Li Ka-shing.

PAYBACK TIME. Along the way, Chan kept pushing women's rights. In 1976, she and other women officials established the Association of Female Senior Government Officers. At that time, men employees received housing perks, medical benefits, and education allowances amounting to as much as 66% of their take-home pay. Women got only a salary. Chan chaired the group from 1978 to 1981--and in her cool but determined style successfully lobbied top policymakers to back parity.

A high priority for Chan is to keep corruption from seeping into Hong Kong. Many Chinese officials owe favors to Hong Kong tycoons, who have lavished gifts and money on their mainland contacts. Now, she fears, this may be payback time. "I think this really depresses her," says one civil servant. "She does not want the culture of clean government to change."

One measure of Chan's influence in the new government may come soon, when Tung announces other members of his civil-service team. Many are eager to see if he will keep people close to Chan, especially Donald Tsang, the financial secretary. Tsang has publicly attacked plans to dilute Hong Kong's civil liberties and has questioned the wisdom of Tung's call for an active industrial policy. "This [appointment] will be the first concrete indicator of how much [Tung] will tolerate a variety of voices," says a U.S. official in Hong Kong.

If Tsang is not appointed, it could be another sign that the civil service is destined to evolve into something quite different under the new regime. If that's the case, Anson Chan has some difficult decisions to make. For Chan, the handover is turning out to be the greatest challenge of an illustrious career.

Before it's here, it's on the Bloomberg Terminal.