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Show t JFhy China's YV chatted impending takeover is important in Hong Kong's Stat- - ue Square with an old friend, a businessman originally from Shanghai. Though Mr. Wang has not grown wealthy in Hong Kong as many of his fellow refugees have done he has managed to maintain a decent standard of ife and . ike so many A. to YOU 1 refugees, to send his children to U.S. universities. Normally a modestly contented man. he was deeply worried. Behind us stretched Fragrant Harbor, while beyond the hills of Kowloon and the New Territories lay the People's Republic of China. Having fled that rigorously authoritarian regime in his youth. Mr. Wang now feels it reaching out to snatch him back. The Communists will resume sovereignty over the British Crown Colony in 1997, and the inevitability of that transition is already causing major and potentially disastrous tremors in his life, as it is in the lives of all of the Colonys 6 million inhabitants. Despite Communist promises of special status" for Hong Kong, the certainty of its incorporation into the People's Republic has savagely eroded confidence in the future of this territory' that has transformed itself from a colonial backwater into one of the world's most dyeconomies. namic Hong Kong has always been dependent on the People's Republic, but it has prospered flamboyantly because of its intimate relationship with another great power. The American approach to life and business, as well as U.S. technology, investment and the U.S. market were the prime forces in the growth of a major industrial and commercial entity in a cramped territory possessing no natural resources whatsoever not even sufficient water except for the talent and industry of its inhabitants. Those millions. 98 percent Chinese, built a comfortable home and a spectacular economy that is distinctly American in flavor. Communist China has invested heavily in Hong Kong through normal commercial channels. Including the new headquarters of the Bank of China, the Chinese stake in Hong Kong is now' more than S3 billion in real estate alone, against a U.S. investment of at least $2 billion in manufacturing. (All such figures are estimates, undoubtedly low. ) Peking also gamers some S8 billion in foreign exchange from the Colony each year. Logically, the Communists should be content with their economic advantages. and no major political decision is taken without their acquiescence. But national pride has impelled them to demand that all Hong Kong be returned in 13 years. London will do no more than seek good conditions for the people of Hong Kong Britain's legal posi- - From barren rock to a flourishing free-enterpri- se economy at least for the time being. tion is untenable, and Britains military position is impossible. The situation briefly: In 1898. the New Territories, 366 square miles that make up 90 percent of Hong Kong, were leased to Britain for 99 years under duress by a weak Chinese Empire. Earlier in the 19th century. Kowloon (3Va square miles) and Hong Kong Island (29 square miles) were ceded in perpetuity after two Chinese defeats. The Communists do not recognize the earlier treaties because they were signed at gunpoint, and they insist upon "resuming sovereignty over the entire territory in 1997, when the New Territories lease expires. Hong Kong's people fear they will lose their freedom and be dragged down to China's subsistence level. Peking has promised to preserve the Colonys present prosperity and even its government, courts and commercial institutions for at least 50 vears after the BY ROBERT reversion. It has further pledged that "Hong Kong people will rule Hong Kong." The People's Republic defines a Hong Kong person as one who has lived in the Colony for seven years." which means that incumbent civil servants. British as well as Hong Kong Chinese, might administer the territory d under a governor, perelect their own legislators. even haps The seven-yea- r rule, however, would also naturalize the swollen staff of the New China News Agency, actually as much a government-in-waitin- g as it is a direcThe organization. tor. Hsu Chia-tuwas formerly first secretary of the Communist Party's Committee for Kiangsu Province, one ol China's richest, with Shanghai its crow n jewel. His staff includes so many senior indiv iduals that one and w China-watchobserved. "Hong Kong has a stronger Communist Party Com Peking-appointe- news-gatheri- mittee than most provinces of China." Most of Hong Kong's people are either refugees from China or the children of refugees. Most flatly do not believe in Peking'ssincerity or its ability to honor its promises. They charge that Communist rule is arbitrary, tickle and often irrational. Because of that skepticism, acute ten- sion menaces the economic activity that is crucial to Hong Kong's existence. During 1983, panic knocked 40 percent oft the value of the Hong Kong dollar, while frantic crowds stormed shops, buying up every thmg trom nee to toilet paper. The United States, which holds 47 percent of all direct foreign investment in Hong Kong manufacturing, has a greater stake in Hong Kong than another country. But Washington can only speak softly and hope the Chinese will keep Hong Kong as an open door be- tween their reeimented societv and the ELEGANT PAGE 8 JULY IS, 1984 PARADE MAGAZINE If |