![[CRS Issue Brief for Congress]](iblogo.gif)
A number of key indicators -- developments to watch over the next eighteen months in gauging trends in Hong Kong -- can assist U.S. observers in analyzing prospects for the future and making decisions about U.S. policy. Continuity in Hong Kong's civil service and China's attitude toward civil service issues are noteworthy indicators. Others include: the working relationship between the Hong Kong Government and China's Preparatory Committee on Hong Kong; China's willingness to moderate or withdraw its objections to the contract award for ship container terminal #9; and China's choice, due by the end of 1996, for Hong Kong's future Chief Executive. How these matters evolve will offer key information for U.S. policymakers.
A close look at current developments and attitudes in the territory reveals a curious blend of optimism and pessimism that exists in Hong Kong and flavors the debate on major questions. Optimists tend to believe that the change from British to Chinese rule will make little difference, and that Hong Kong will continue to have strong economic growth, foster a friendly and supportive business environment, and provide an atmosphere allowing significant scope for individual freedom. They cite recent Sino-British agreements on financing for Hong Kong's huge New Airport and Port Construction Project, and on establishing a Hong Kong-based Court of Final Appeal, as proof that China will be accommodating of Hong Kong's concerns.
But many pessimists in Hong Kong have never been confident that Chinese leaders understand or accept what has made Hong Kong successful. They believe China's promise to dissolve Hong Kong's legislative bodies in 1997 is a better indication of Beijing's likely future approach. They believe the Court of Final Appeal agreement contains significant loopholes China will exploit; they question Beijing's understanding of the rule of law or Hong Kong's British common law tradition; and they doubt China will tolerate a free press. In the coming months, all parties are likely to put increasing pressure on U.S. policymakers to adopt certain policies. Some groups in Hong Kong favor greater U.S. involvement and activism; many in the business community argue for a more calibrated and targeted approach; and China objects strenuously to any increase in U.S. involvement in Hong Kong. American policymakers will have to balance these competing perspectives with U.S. national interests in making policy decisions affecting both Hong Kong and China.
In the months approaching China's resumption of sovereignty over Hong Kong on July 1, 1997, policy analysts are spending much effort assessing how the territory will fare under Chinese rule. The answer is important to U.S. interests for several reasons: first, because of the enormous U.S. economic presence in Hong Kong; second, because any adverse developments in Hong Kong are likely to affect U.S.-China relations; and third, because China's promise to give Hong Kong a high degree of autonomy under the "one-China, two-systems" policy has political implications for Taiwan.
A confident assessment of Hong Kong's future remains elusive. On the one hand, Hong Kong's economy, increasingly tied to the vibrantly expanding Chinese mainland economy, continues to grow. Annual growth in the past few years has been 5-6%. Over the last decade, Hong Kong has risen from the 15th to the 8th largest trader in the world, and its per capita GDP has climbed from $6,000 to $23,800. With a population of only 6 million, Hong Kong's economy now equals one fifth the GDP of mainland China and its 1.2 billion people. Along with this extraordinary economic track record, Hong Kong plays an increasingly vital role as a conduit and financial center for U.S., Chinese, and international economic and business interests. Under these circumstances, some believe that the change from British to Chinese sovereignty will make little difference, and that Hong Kong will continue to demonstrate strong economic growth, foster a friendly and supportive business environment, and provide an overall atmosphere that allows significant scope for individual freedom.
But Hong Kong's political future and the political rights of its citizens appear more tenuous. Britain and China at times have argued acrimoniously over political reforms, new governmental institutions, and other arrangements surrounding the colony's transition to Chinese rule. Recently, China has accused Britain of using its last years of rule over the colony to establish new democratic institutions where none existed before, and has said these will hamper China's own ability to rule Hong Kong. As a result, China has threatened to undo many of the political reforms being enacted now under Hong Kong's British Governor, Christopher Patten. Chinese leaders have held up some business contracts and other economic arrangements in Hong Kong because of Beijing's political concerns. Some observers believe such actions demonstrate that China is likely to politicize economic and other decisions in Hong Kong after 1997. They believe Chinese leaders are willing to tolerate economic decline in Hong Kong when issues of sovereignty and Chinese governance are involved.
In the past decade, the United States has taken a fairly low profile on matters involving Hong Kong. In part this is because no country -- not Britain, and not the United States -- questions China's sovereign rights over Hong Kong beginning July 1, 1997. But as the British presence in the colony wanes and 1997 approaches, interested parties in both Hong Kong and China are likely to put increasing pressure on U.S. policymakers to follow certain policies. In this growing lobbying effort, the options that most in Hong Kong suggest are in direct contrast to those Beijing supports; moreover, there is divided opinion within Hong Kong itself. Chinese leaders already have objected to what they call the "gradual insistence" by some U.S. policymakers on "inserting the United States" into the affairs of Hong Kong, and there is every sign that they will continue to do so. More liberal-minded activists in Hong Kong wish for a broader and more visible U.S. presence and, in particular, for more vocal U.S. support for democratic principles and institutions. The U.S. and international business community in Hong Kong, also receptive to a more visible U.S. presence, nevertheless argues for an involvement that remains cognizant of Beijing's interests and targets more specific issues, often economic ones. All these groups are likely to become more vocal in making their cases before American officials.
Hong Kong has long been a point of U.S. economic, political, and other interests in Asia. Each of these interests brings its own set of advocates, both domestic and international, who add their contributions to the U.S. policy process.
Economic: Hong Kong is the largest base of American economic operations in Asia. At present, 31,000 Americans live and work in Hong Kong; approximately 1,000 U.S. firms have corporate offices there, most of which function as financial and marketing bases for substantial manufacturing facilities in mainland China and as headquarters for business activities throughout Asia. By 1995, U.S. investments in Hong Kong totaled $10.5 billion. According to the U.S. Consul General in Hong Kong, U.S. exports to the territory in 1994 amounted to $11 billion, while U.S. imports were about $9 billion. Hong Kong is the major transshipment point for Chinese products exported to the United States, which were valued at over $20 billion in 1993.
Human Rights/Democracy: Since the 1989 Tiananmen Massacre in Beijing, U.S. leaders, especially Members of Congress, have paid closer attention to the prospects for human rights in Hong Kong. They have been generally supportive of Governor Patten's modest measures to increase the level of democracy in the territory prior to its reversion to China. Some have been critical of China's pressure tactics and opposition to those moves toward democracy. U.S. officials and Members of Congress also have been outspoken in opposition to Chinese statements that Beijing will dissolve Hong Kong's Legislative Council in 1997 because of changes in electoral laws proposed and implemented by the Governor.
Taiwan: U.S. leaders sometimes view Beijing's handling of the Hong Kong transition as a method of forecasting the way Beijing would likely handle reunification with Taiwan. Chinese authorities have reinforced this by frequent statements that Deng Xiaoping's "one country-two systems" policy approach is what China will follow for both territories. A smooth transition in Hong Kong would presumably buttress the arguments of those who assert that American interests in Taiwan would not suffer from reunification. A rocky transition would support the arguments of those who press for strong U.S. support for Taiwan's separate status from the mainland.
MFN, other aspects of China policy: Hong Kong has been an important element in the U.S. debate over China policy since the Tiananmen crackdown, especially in the debate over whether or not the United States should approve Most Favored Nation (MFN) tariff treatment for Chinese exports to the United States. Critics of China argued in the past that MFN -- the tariff treatment the United States extends to almost all of its trading partners -- should be withheld from China unless Beijing met certain conditions, including a more accommodating Chinese stance on democracy and human rights in Hong Kong. An important counterargument held that cutting off MFN would have a disastrous economic and perhaps negative political impact on Hong Kong, especially as the bulk of Chinese exports to the United States pass through the colony.
Congress has focused more on Hong Kong in recent years. So far, the main thrust of legislation has been to provide for continuity in U.S. relations with Hong Kong after it reverts to Chinese control.
The Hong Kong Policy Act (P.L. 102-383) Congress' major legislative action on Hong Kong so far occurred in 1992. Senator Mitch McConnell, concerned over what he described as the complete lack of any U.S. policy for dealing with impending Chinese rule over Hong Kong, introduced legislation which set forth prescriptions for how the United States should conduct bilateral relations with Hong Kong as a non-sovereign entity. His bill (S. 1731), enacted as P. L. 102-383, does the following:
Past legislation on visas: In the 103rd Congress, Senator Connie Mack and Representative John Porter, were concerned about possible Chinese reprisals against journalists for their reporting. They each introduced legislation (S. 665 and H.R. 1265) that would have provided a certain number of deferred visas to Hong Kong journalists and their families. Late in the session, on October 5, 1994, the Senate also passed S.Res. 265, commending the recent district board elections in Hong Kong. The 101st Congress enacted the Immigration Act of 1990, which establishes a separate immigrant visa quota for Hong Kong and offers a deferred visa to Hong Kong residents, thereby providing a possible future refuge without provoking an immediate exodus.
Hong Kong's current situation has its roots in the terms under which the British originally acquired the territory -- through a combination of wartime concessions and a 99-year lease, the latter negotiated and signed with China in 1898. In 1982, approaching the end of its lease, the British Government began a series of difficult bilateral negotiations with China about Hong Kong's future. These ultimately led to the Sino-British Joint Declaration of 1984, which provided for returning all of Hong Kong to Chinese rule on July 1, 1997.
Lacking power and basis for opposition, and faced with the strong Chinese insistence on regaining sovereignty over the territory, Britain had felt compelled to give ground repeatedly in the course of the negotiations. China made compromises as well -- most notably its pledge to leave Hong Kong's socioeconomic system virtually unchanged for 50 years after 1997, and its promise to approach rule of Hong Kong under the general guidelines of "one country-two systems." In its final form, the Joint Declaration set out the basic criteria for Hong Kong's future, as agreed upon by the British and Chinese Governments. Further details of Hong Kong's future governance were provided in a second document enacted by the Chinese Government -- the Basic Law -- that will serve as Hong Kong's de-facto constitution after 1997. Subsequently, British officials reportedly considered initiating political reforms that would grant the people of Hong Kong greater autonomy in the period leading to 1997. But London moved cautiously, in part out of concern over the Chinese government's staunch objections to granting the Hong Kong government a distinct political status separate from PRC control after 1997.
Between 1984 and 1989, the British and Chinese settled into a pattern of frank but generally cooperative interaction and negotiation over Hong Kong. Negotiations over plans for the Basic Law were prolonged. Britain, responsible for administering Hong Kong through June 1997, generally tried to push for as much autonomy as possible for the territory. Among other things, British negotiators proposed instituting direct elections for Hong Kong's legislature, the Legislative Council (Legco). China opposed these efforts, saying they were attempts to interfere with China's ability to administer Hong Kong after 1997.
A Basic Law was finally adopted on April 4, 1990. But many of its provisions were vague, leaving room for continuing controversy, mostly on political matters. For instance, with few further details, the Basic Law provided only that the Hong Kong Legislative Council "shall be constituted by election." The elections were to be implemented "with gradual and orderly progress," and with "the ultimate aim the election of all the members of the Legislative Council by universal suffrage."
In a second prescription for controversy, the conclusion of the Basic Law negotiations coincided with China's June 1989 crackdown in Tiananmen Square. In the weeks after Tiananmen, over one million Hong Kong citizens demonstrated against the Chinese government's action. People in Hong Kong also were influential in supporting dissidents in China and in smuggling out political critics and information that proved to be damaging to the Beijing regime's standing at home and abroad. Tiananmen and its aftermath changed British and Chinese attitudes toward Hong Kong in several ways.
For the British, the Chinese people in Hong Kong, long considered politically apathetic, were suddenly showing keen interest in politics. Many in Hong Kong pressed for more support from London to establish better safeguards against possibly capricious Chinese government action toward Hong Kong after 1997. A number of Hong Kong's increasingly important middle class of professionals and business people advocated strengthening and expanding the colony's institutions of representative government. For China, Hong Kong's reaction to Tiananmen raised a major security concern. It heightened China's sensitivities over any action by the British or others that could be seen fostering political or other conditions in Hong Kong that were at odds with Beijing's concepts of stability. Consequently, when China's National People's Congress promulgated the Basic Law in April of 1990, it strengthened wording concerning subversion.
British Actions: To reassure those in Hong Kong and avoid unduly antagonizing Beijing, British authorities took several steps. Among other things, the Government: passed a Bill of Rights for Hong Kong citizens in 1991; granted an additional 50,000 Hong Kong heads of families with close ties to Great Britain the option to emigrate there; and encouraged the United States, France, and others to grant more generous immigration options to Hong Kong employees of American, French, and other institutions and businesses in Hong Kong.
The British also reaffirmed their support for Hong Kong in two other ways. First, they proceeded with plans to build a large, complicated, and expensive airport project; second, they obtained Chinese approval that those Hong Kong legislators elected before 1997 would be allowed to serve out their terms after China took over in July 1997 (the latter concept is referred to as the "through train"). Almost from the outset, the airport plan and the "through train" for certain Legco members (e.g., vocal critic of the PRC, Martin Lee) met with serious Chinese objections. Chinese leaders were able to effectively freeze international financial support for the airport by asserting that they had not been adequately consulted on the project and that its financing might have to be reviewed after 1997.
In an effort to cut through the difficulties over the airport and the "through train" and to get these programs back on track, Prime Minister John Major in September 1991 became the first Western head of government to travel to Beijing after the Tiananmen incident. He signed a memorandum of understanding with Beijing over the airport. Subsequently, however, Chinese officials continued to voice reservations that made it difficult to move ahead with the project.
Under the circumstances, Britain decided to shift the style if not the substance of its policy toward Hong Kong. The more cautious policy of the recent past -- solicitous of PRC concerns and fearful of antagonizing China -- was put aside in favor of a more direct approach under the leadership of a new Hong Kong Governor, Chris Patten. Shortly after assuming office in the Fall of 1992, Governor Patten precipitated a protracted political confrontation with Beijing when he proposed to broaden the political representation of legislative institutions in Hong Kong. By Western standards, the proposals seemed mild. Patten did not propose increasing the number of directly elected seats in Legco -- a figure upon which China and Britain had already agreed -- but instead opted for a series of steps to institutionalize procedures on which the Joint Declaration and the Basic Law were silent.
China's Reaction: Beijing was suspicious of the trends in British policy, particularly after the Tiananmen crackdown. Although often speaking out in opposition to British actions in Hong Kong, Chinese leaders particularly objected to Hong Kong's New Airport and Port Construction Project. The huge project came with a price tag in excess of $20 billion (U.S.), and involved numerous multinational contracts to construct terminals and runways, highways and railroad lines, bridges, and a tunnel crossing Hong Kong Harbor. The project's great size and expense raised Chinese suspicions that Britain would attempt to drain Hong Kong's substantial treasury surplus prior to 1997. Furthermore, Beijing felt Britain's handling of the airport proposal ignored China's insistence that it be sufficiently consulted by Britain on all major issues affecting Hong Kong after 1997, since China would ultimately inherit the consequences of those decisions.
But China's greatest objections to British actions came with Governor Patten's political reforms. Beijing swiftly and vigorously denounced both the Governor and his reforms, saying that the reforms contravened the Joint Declaration and the Basic Law and were nothing short of an attempt to create new democratic institutions in Hong Kong where none had existed before. Chinese leaders maintained that Patten's changes would complicate Chinese reassertion of sovereignty in 1997; make more difficult the delicate task Beijing faces in trying to run the territory effectively after 1997; and in the meantime divide political opinion and reduce business confidence in the territory. In response to Patten's initiatives, Beijing announced it would set up its own advisory body for Hong Kong, now known as the "Preparatory Committee." In February 1994, China pledged to end the "through train" it had previously agreed to, and vowed to dismantle the current legislative structure of Hong Kong, including Legco.
Chinese officials have tried to isolate Governor Patten, refusing to meet with him or invite him to important events they hold in Hong Kong. They also continue to object to the political reforms, and to assert that they will dissolve Hong Kong's legislative institutions in 1997, replacing them with interim legislative bodies. Despite these continuing problems, the crisis atmosphere that Governor Patten's reforms engendered has faded, and the overall political environment in Hong Kong has improved. Although not willing to speak with Governor Patten, Beijing has been willing to resume its dialogue with Britain. From October 2 - 4, 1995, China's Foreign Minister, Qian Qichen, met in London with British Foreign Secretary Malcolm Rifkind. The meeting appeared both cordial and productive.
A close look at developments and attitudes in Hong Kong reveals a curious blend of optimism and pessimism that coexists in Hong Kong today and flavors the debate on major questions. Even the elite in Hong Kong blend confidence with uncertainty in their own assessments of Hong Kong's future.
In dozens of rounds of negotiations over the past decade, the British and Chinese governments have developed an intricate network of working committees, liaison groups, and personal connections that have continued to function more or less productively despite the ups and downs in Sino-British relations. At these less visible levels, it has been possible to get work done, to reach agreement, to solve problems -- albeit sometimes painfully and usually slowly. As a result, many Hong Kong residents, both within and outside of government service, seem confident in their continued ability to close business deals or craft political accommodations with China. They see this continuing after 1997, envisioning a Hong Kong that will function along the same pragmatic lines with largely the same key players as is the case today.
Many elite observers in the colony base their confidence on two developments in June 1995, each viewed as crucial for Hong Kong's future. First, after years of rancorous negotiations, Britain and China reached agreement on the detailed Financial Support Agreements for the new Chek Lap Kok airport project and the airport railway, construction of which was already substantially underway. In the absence of China's agreement on financing, it would have been difficult to move the project forward.
Second, on June 9, 1995, Britain and China reached agreement on establishing a Hong Kong-based Court of Final Appeal (CFA) -- provision for which was made in both the Joint Declaration and the Basic Law. Under British rule, Hong Kong's citizens and business community have been able to appeal any decision by a Hong Kong court of law directly to the British Privy Council in London -- a situation that obviously will change in 1997. Upon China's takeover, the Hong Kong Government wanted to have in place a permanent appeals court that would be located in Hong Kong (not in Beijing), with the power to make final and binding decisions. After years of drawn-out discussions about the Court, both sides compromised. China's basic concession was to give up its demand for a "post-verdict remedial mechanism" -- a demand the Court's supporters had argued was totally inconsistent with the "finality" inherent in the concept of a Court of Final Appeal. For its part, Britain conceded on its demand that the Court be in place and operational prior to China's takeover. Some in Hong Kong also saw as a concession Britain's willingness to limit to one the number of overseas judges on the five-member Court. Under the agreement, the Court will be established and staffed prior to China's takeover, but will not actually begin operations until July 1, 1997.
The international business community in Hong Kong considered the establishment of a Court of Final Appeal to be crucial for Hong Kong, and in fact it appears that members of the business community were influential interlocutors in gaining China's agreement on the Court. Many of those in the Hong Kong government and business communities consider the final agreement to be a major concession by China and a major achievement for Hong Kong.
But confidence is difficult to measure, and it may be increasingly tenuous as the comfort of British presence and influence in the colony ebbs over the next 14 months. A sizeable group in Hong Kong -- including many in Legco and in the press -- have never been confident that Chinese leaders understand or accept what has made Hong Kong successful, and they deeply believe that China's definition of the "autonomy" promised Hong Kong differs considerably from the definition understood by the British, the Hong Kong Government, or the international community. They note the geopolitical reality that China has the power to deal with Hong Kong however it wishes after mid-1997, with little concern for international objections. As a result, many in this group discount the significance of recent political achievements in Hong Kong, and they point to a number of developments they consider to be grounds for pessimism.
Among other things, a number of legislators and businessmen are concerned about the future of rule of law in Hong Kong, which up to now has enjoyed decades of consistency and predictability under British common law. They point to horror stories that companies and individuals in China are subject to arbitrary rules changes, lack of transparency of laws, and unenforceable contracts. They fear this will become the case in Hong Kong under Chinese rule.
Concern about the rule of law has surfaced even over the agreement on the Court of Final Appeal -- illustrating the duality of views coexisting in Hong Kong. In the midst of the general accolades about the CFA agreement, the more pessimistic in Hong Kong nevertheless judge the agreement to be deeply flawed, with most of the concessions on the British side. These observers, including some prominent independent-minded leaders in Legco such as Martin Lee, find great fault with the "acts of state" provision in the CFA agreement. They point to it as the kind of loophole that will give Beijing an excuse to maintain significantly greater control over Hong Kong's affairs than many hope for. Under the CFA agreement, "acts of state" constitute exclusions of the Court's jurisdiction. Some in Hong Kong argue that in the past, Beijing has had "exaggerated perceptions of sovereignty requirements" (as one Hong Kong observer put it), and Chinese leaders therefore are likely to interpret "acts of state" so broadly as to seriously limit the kinds of cases that can be appealed to the Court. The CFA's detractors are also concerned that only one overseas judge will sit on the Court; they believe the Court's impartiality will be seriously compromised by having four local judges who are likely to be more subject to Beijing's influence and even control.
Disbanding Legco. In addition to the CFA agreement, pessimists find grounds for concern in Beijing's repeated pledges to dissolve Hong Kong's Legislative Council 1997 and replace it with a provisional legislature whose selection and makeup are yet to be determined. These pledges have been further reinforced by the Preparatory Committee's nearly unanimous vote on March 24, 1996, in favor of the proposal.
A provisional legislature is not called for in any Sino-British agreement about Hong Kong's future; nevertheless, China has defended its decision by saying that political reforms instituted by Hong Kong's current Governor, Christopher Patten, have breached Sino-British agreements. Beijing has carefully referred to the proposed body as a "provisional" legislature, and has indicated it will have a temporary (one year) tenure. To do otherwise would be a clear violation of China's own official commitment to constitute the first official Legislative Council of a document adopted on April 4, 1990, by China's Seventh National People's Congress, entitled the Decision of the National People's Congress on the Method for the Formation of the First Government and the First Legislative Council of the Hong Kong Special Administration Region (SAR). Paragraph 6 of this document states:
The first Legislative Council of the Hong Kong SAR shall be composed of 60 members, with 20 members returned by geographical constituencies through direct elections, 10 members returned by an election committee, and 30 members returned by functional constituencies. If the composition of the last Hong Kong Legislative Council before the establishment of the Hong Kong SAR is in conformity with the relevant provisions of this Decision and the Basic Law of the Hong Kong SAR, those of its members who uphold the Basic Law of the Hong Kong SAR of the People's Republic of China (PRC) and pledge allegiance to the Hong Kong SAR of the PRC, and who meet the requirements set forth in the Basic Law of the Region may, upon confirmation by the Preparatory Committee, become members of the first Legislative Council of the Region." As it is, Beijing can claim that the "provisional" legislature will be only a transitional body and not the "first" Hong Kong SAR legislature.The more hopeful in Hong Kong believe that Chinese leaders at some point will rethink their decision because of the negative international repercussions of such a move. In that case, having made such public statements on the issue, Beijing may eventually settle for what a Hong Kong official once referred to as "a smaller fig leaf" on the matter. Presumably, such a figleaf could include formally dissolving Legco and replacing it with an interim institutional body with largely the same membership as Legco; then holding new, scaled-back elections in 1999, their regularly scheduled time. The less hopeful in Hong Kong are suspicious that in dismantling Legco, Beijing will take the opportunity to permanently disqualify a number of democratic-minded Legco members (such as Martin Lee) from serving on the interim legislative body, and to redefine or reduce the legislature's functions. They also fear that China will use the tenure of the interim body as an excuse to roll back all of Governor Patten's political reforms, then promulgate qualifications and restrictions for future Legco candidacy so as to assure that only pro-Beijing candidates qualify. Finally, some also believe that Beijing may exploit the interim legislative body, extending its tenure to beyond the current one-year term that Beijing authorities have mentioned.
A number of key indicators -- developments to watch over the coming months in gauging trends in Hong Kong -- can assist U.S. observers in analyzing prospects for the future and making decisions about U.S. policy. In this list of indicators, issues involving Hong Kong's civil service are generally considered crucial.
Hong Kong's efficient and highly skilled civil service has been a crucial element in the effective running of Hong Kong. Thus, a prevailing view in Hong Kong is that both continuity in the civil service and China's approach to civil service issues will be key indicators to watch over the near term. Although the Sino-British Joint Declaration on Hong Kong guarantees that Hong Kong's civil servants will be able to continue at their jobs with full pay and benefits, some in Hong Kong's government are concerned about the attrition rate in the civil service, particularly among professionals. Some civil servants appear to be leaving their jobs prematurely, either by moving to the private sector or taking early retirement. As of late 1995, the vacancy rate within the service was said to be below 4%, with any gaps filled by hiring consultants or contractors. But of the estimated 1,400 civil servants who are considered "key" in running Hong Kong efficiently, approximately 20% are eligible for early retirement in 1996 or early 1997, prior to China's takeover. If those eligible for early retirement decide to elect it, government services could suffer significantly, resulting in a sharp erosion of overall confidence about Hong Kong's future that, in turn, could have collateral effects. Of particular concern is the retention rate within Hong Kong's police force and judiciary -- two institutions essential for a stable Hong Kong and for continuing the rule of law that the territory has enjoyed under British rule.
While formerly considered to be an extension of British government, Hong Kong civil servants now seem to be distancing themselves from London. They appear less apparently "British" than in the past; most senior-level positions in the government are now held by Hong Kong Chinese. Moreover, continuing Sino-British rancor has placed Hong Kong's civil servants in a difficult position. On the one hand, they must tend to the interests of Hong Kong and of their own departments, while at the same time trying to strike a balance between British and Chinese government expectations and demands. On the other, they are continually reminded of their own vulnerability to dramatic and unforeseen career changes once Hong Kong's new Chief Executive is named and the transition to Chinese sovereignty is complete. One example of this was a recent statement by a Chinese official to the effect that civil servants unwilling to work with the provisional legislature prior to the 1997 transition should be barred from government service. (The Chinese government since then has backed off from this statement.) These and other Beijing statements that appear to question the loyalty of Hong Kong's government employees are continuing matters of concern.
China established the Preparatory Committee in January 1996 to assume responsibility for working out further details surrounding Hong Kong's transition to Chinese rule. Such a Committee was specifically provided for in the Basic Law, along with the configuration of its membership and the scope of its duties.
A number of concerns have been raised about the Preparatory Committee and its functions. Organizationally, the Committee creates a difficult situation for the Hong Kong government, which will have to try to sustain its own power and legitimacy while dealing not only with the British government in London and the Chinese government in Beijing, but now with a third authoritative body in Hong Kong. Although the Preparatory Committee is not an official Hong Kong government organization, statements and actions by Committee members are given enormous significance by the Hong Kong press, and are often taken as reflective of Beijing's views. In addition, there is concern over the political views of the Committee's members. Even though a majority of the members are from Hong Kong (93 out of 150), none is a member of Hong Kong's Democratic Party, the largest political party in Legco and a party that has widespread support in Hong Kong. Many observers question whether the Committee members themselves present Beijing with an accurate picture of views from Hong Kong.
Another key factor will be Hong Kong's selection of C.H. Tung as the new Chief Executive who will function in place of the British Governor after July 1, 1997. Mr. Tung, a wealthy Hong Kong shipping magnate and former member of the Governor's Executive Council, is widely regarded as Beijing's preferred choice for the post. Mr. Tung was selected by a special 400-member Selection Committee according to procedures and requirements set out in the Basic Law. According to those procedures, Hong Kong's Chief Executive must be a Chinese citizen at least 40 years old who has lived in Hong Kong for at least 20 years and who holds no citizenship or right of abode elsewhere. Purportedly, Mr. Tung fills these qualifications. Mr. Tung visited the United States in 1996, meeting with Members of Congress and speaking with policymakers about Hong Kong's political and economic future.
In addition to the dissolution of Legco, the extent to which China allows freedom of expression -- including freedom of the press and freedom of assembly -- is another key factor to watch in Hong Kong's transition to Chinese rule. Under Hong Kong's Basic Law -- which will serve as the territory's de-facto constitution after July 1, 1997 -- China has accepted a number of provisions with regard to Hong Kong's political and economic future. Among these legal guarantees is one contained in Article 27 of the Basic Law, which declares:
Hong Kong residents shall have freedom of speech, of the press and of publication; freedom of association, of assembly, of procession and of demonstration; and the right and freedom to form and join trade unions, and to strike.Despite the apparent clarity of such language, Chinese officials routinely make statements that suggest either a more restrictive approach or total disregard of these provisions will prevail after the transition to Chinese rule. Earlier this month, for example, Chinese Foreign Minister Qian Qichen (who is also chairman of the Preparatory Committee), was quoted in the Asian Wall Street Journal as saying that Hong Kong's annual Victoria Park commemoration of the 1989 Tiananmen Square crackdown will be prohibited after July 1, 1997. Speaking about the media in the same October 16 interview, Foreign Minister Qian said that journalists would be able to publish criticism, "but not rumours or lies" or personal attacks on Chinese leaders. Apart from the dissolution of Legco, how Beijing handles the issue of personal freedoms in Hong Kong could be the most potentially explosive issue surrounding the transition.
The ability of the United States to directly affect the course of events in the run-up to the 1997 transition seems marginal unless it decides to confront Beijing more directly over the Hong Kong issue. Developments in U.S.-China relations in 1994-1995 suggest that the U.S. might be hesitant to do so. President Clinton's decision in May 1994 not to link China's MFN tariff treatment to other issues in U.S.-China relations was endorsed by the House of Representatives in a vote on August 9, 1994. In effect, this suggested that the United States will be more reluctant now than it was in the immediate post-Tiananmen period to consider using access to MFN as a means to pressure China on Hong Kong or other issues. Over the next 18 months, any number of groups -- both within China and Hong Kong and within the United States -- will be anxious to present their own policy alternatives to U.S. policymakers.
Some in Hong Kong and the United States who strongly support Governor Patten argue for a U.S. policy that is more assertive and that focuses more on preserving and expanding political rights in Hong Kong. They urge the United States to use provisions in the Hong Kong Policy Act (P.L. 102-383) that allow the United States to suspend legal and other benefits for Hong Kong after 1997 if the PRC does not allow sufficient autonomy there. These benefits range from textile quotas to immigration quotas and technology transfer restrictions. Their loss to Hong Kong would have a strong negative impact on China and presumably could be used to dissuade the PRC authorities from infringing too much on Hong Kong autonomy. Those supporting a more assertive U.S. policy argue that the benefits of such an approach, followed vigorously, outweigh the disruptions it is likely to cause in U.S.-China relations.
Others, also generally positive about U.S. involvement in Hong Kong, argue for a more modulated and calibrated U.S. policy approach. Many in Hong Kong in particular say that U.S. congressional interest in the territory is beneficial for Hong Kong; one Hong Kong official has gone so far as to say that such interest is "extremely welcome." At bottom, many of these observers want the United States and others to show Beijing that they are keenly interested in the outcome in Hong Kong and that any heavy-handed Chinese pressure would be viewed negatively by them. They have encouraged more U.S. congressional hearings on Hong Kong, more contact between U.S. and Hong Kong officials, and in particular, more contacts between Members of the U.S. Congress and members of Legco.
These positive Hong Kong views are in direct contrast to current Chinese views on the same subject. The week before the U.S.-China summit in New York (on October 24, 1995), officials in Beijing were warning against greater U.S. involvement in Hong Kong. They aver that Chinese sensitivity on this question is very high and that U.S. "meddling" would pose unpredictable consequences. They have offered little critical comment on U.S. statements and policy up to this point, but they indicate that stronger statements of support or an outpouring of high-level U.S. sympathy for Patten could harden Chinese policy toward Hong Kong and could seriously escalate the confrontation over the colony. For the PRC, it would also call into question U.S. motives in dealing with China and reinforce the notion prevalent among some in China that the United States was working closely with Great Britain and others in the West to use various sources of leverage to weaken and ultimately bring down the Chinese communist system.
Others have suggested that better relations between the United States and China -- the two largest economic players in Hong Kong -- will be a key component in Hong Kong's future. Hong Kong could easily become a collateral casualty of poor U.S.-China relations. So, many observers with policy suggestions to offer the United States include among them the holding of regular high-level U.S.-China dialogues, greater U.S.-China economic exchanges, and a minimization of actions that seem to challenge China's sovereignty or authority over Hong Kong. By the same token, better U.S.-China relations could facilitate a more visible U.S. presence in Hong Kong, even in the face of objections from Beijing. Such an enhanced presence could include expanded direct U.S. contacts with Hong Kong and a continued U.S. insistence that China honor the terms of the Sino-British Joint Declaration.
Ultimately, over the next few years, the U.S. Administration and Members of Congress are likely to be in the difficult position of having to try to balance a number of competing U.S. policy goals. They will have to make difficult choices between the U.S. economic, political, and security goals in China on the one hand, and U.S. economic and political imperatives in Hong Kong on the other.
P.L. 104-107, H.R. 1868
Foreign Operations Appropriations, 1996. Contains a provision expressing committee
concern over human rights, democracy, and the rule of law in Hong Kong; requires
more detailed reporting under Section 301 of the U.S.-Hong Kong Policy Act (22 USC
5731), including on the Basic Law; fairness of Legco elections; fairness of the Chief
Executive selection; treatment of political parties; independence of the judiciary; and
status of the Bill of Rights. Reported by House Appropriations Committee, June 15,
1995. Passed House July 11, 1995. Passed Senate, amended, September 21, 1995 (91-9).
Conferees agreed to report a consensus bill on October 31, 1995. House agreed to
Conference Report on October 31, 1995 (351-71), with one amendment in disagreement.
Senate agreed to Conference Report on November 1, 1995 (90-6), with an amendment
to the amendment in disagreement. After a 3-month impasse on family planning
assistance policy, the bill was enacted by reference when conferees attached compromise
language and the Foreign Operations bill (H.R. 1868) to the Continuing Resolution
(H.R. 3019), which the President then signed on January 26, 1996. H.R. 1868 was later
enacted in its own right as P.L. 104-107 on February 12, 1996.
H.R. 1561 (Gilman, NJ)
Authorized appropriations for Department of State. The House International Relations
Committee reported the bill on May 19, 1995 (H. Rept. 104-128, Part 1); the House
passed it June 8, 1995, 222-192. On December 14, 1995, the Senate passed it (in lieu
of S. 908), 82-16. The Conference Report was made available on Friday, March 8, 1996
(H.Rept. 104-478). The House passed it on March 12, 1996 (226-172) and the Senate
on March 28, 1996 (52-44). It was vetoed by the President on April 12, 1996. A veto
override in the House on April 30, 1996, failed to achieve the necessary two-thirds vote
(234-188).
12/11/96 --C.H. Tung, a wealthy Hong Kong shipping magnate, was selected to be Hong Kong's first Chief Executive beginning in July 1997. Mr. Tung was widely regarded as Beijing's preferred choice for the position.
05/06/96 --Hong Kong's Governor, Chris Patten, arrived in Washington to defend granting MFN status to China.
04/30/96 --By a vote of 234-188, the House failed to override the President's April 12, 1996, veto of H.R. 1561, the Foreign Relations Auth. Act.
03/08/96 --The Conference Report on H.R. 1561, the Foreign Relations Authorization Act, was reported with language requiring more extensive reporting requirements on developments in Hong Kong. It was later passed by the House on March 12 (226-172) and the Senate on March 28, 1996 (52-44).
03/04/96 ---British Prime Minister John Major promised: that Britain would work to ensure China's compliance with the Sino-British Joint Declaration; and that Hong Kong's ethnic minorities (Indians and Pakistanis) would be guaranteed the right to live in Britain if pressured to leave Hong Kong.
02/12/96 ---The President signed H.R. 1868 (P.L. 104-107), which contained language expanding the State Department's reporting requirements on Hong Kong.
10/02/95 ---British Foreign Secretary Malcolm Rifkind and China's Foreign Minister Qian Qichen began two days of meetings in London and issued a four-point statement intended to improve bilateral relations.
09/17/95 ---Hong Kong held Legislative Council (Legco) elections which for the first time returned a wholly elected body: 20 members from geographical (direct) constituencies; 30 from functional constituencies; and 10 from an Election Committee constituency -- for a total of 60 members.
06/29/95 ---China and Britain reached agreement on the Financial Support Agreements for the new airport and the airport railway.
06/09/95 ---Britain and China reached agreement on Hong Kong's future Court of Final Appeal.
03/31/95 ---A mandated U.S. State Department report of March 31, 1995, warned of potential uncertainties in Hong Kong's legal and political systems unless greater progress were made prior to 1997; urged the two parties to agree on allowing Legco to continue in office after 1997.
03/05/95 ---Municipal elections were held in Hong Kong.
02/16/95 ---Some press reports in Hong Kong were critical of Beijing's recent request for the confidential personnel files of senior Hong Kong civil servants, arguing that such a request violates Beijing's repeated promises to grant a "high degree of autonomy" to the Hong Kong government.
06/29/94 ---Legco passed Governor Patten's reform bill.
---Britain and China agreed on use of military sites in Hong Kong.
02/24/94 ---China first announced it would dissolve Legco and Hong Kong's Municipal Councils and District Boards in 1997.
11/30/92 ---Chinese officials stated that all contracts, leases, and agreements signed or certified by the Hong Kong government without Beijing's approval would be invalid after 1997.
11/11/92 ---Legco voted 32-21 to support Patten's reform proposals in general and promote further democracy in Hong Kong.
10/07/92 ---Patten unveiled his plan for democracy in his inaugural annual Policy Address in Hong Kong.
07/10/92 ---Christopher Patten became the 28th Governor of Hong Kong.
09/91 ---Prime Minister John Major became the first Western leader to visit Beijing after Tiananmen Square. He made the trip to sign the Memorandum of Understanding on the Airport Project.
Kraar, Louis. "The Death of Hong Kong," Fortune, June 26, 1995. p. 118-139.
Overholt, William. The Rise of China. New York, 1993. 431 p.
Rafferty, Kevin. City on the Rocks: Hong Kong's Uncertain Future. London, 1991. 565p.
Segal, Gerald. The Fate of Hong Kong. New York, 1993. 234 p.
Tucker, Nancy Bernkopf. Taiwan, Hong Kong and the United States, 1945-1992. New York, 1994. 335 p.
CRS Reports
CRS Report 95-743. Hong Kong's Transition to Chinese Rule: Issues, U.S. Interests, U.S. Options, by Robert Sutter and Shahid Khan.
CRS Report 95-891. Vietnam Repatriation Debate, by Lois McHugh and Joyce Vialet.