Let Hong Kong flourish

quasi-autonomous territory, without bloodshed, is an event for which

historians struggle to find any precedent, and there are enormous

cultural and political differences between the two systems and

traditions. Mr Patten went there with two debts to discharge. First, he

had to bring to consummation in 1997 the agreements with the Chinese

Government enshrined in the Joint Declaration and the principles

subsequently codified, if vaguely, by the Chinese in the Basic Law.

Secondly he had to fulfil the promises to the people of Hong Kong about

their rights and freedoms made by successive British politicians. These

promises were strengthened after the Tiananmen Square massacre of 1989.

This was a true watershed in the Hong Kong negotiation, for thereafter

the Chinese line became harder and less pragmatic just as Britain became

more concerned about Hong Kong's civil rights after 1997.

Mr Patten's appointment per se annoyed the Chinese Government. For a

start, they thought him close to Jardine Matheson, the trading house

they apparently detest. Here, too, was a governor who was not a remote

and beplumed figure content to pursue the discreet diplomacy of the

''old China hands'' in the Foreign Office. Mr Patten was a politician, a

gifted one at that, capable of responding in public to Chinese jibes

with a wit that, together with his determination to defend their

interests, has won him the affection of many ordinary people in Hong

Kong.

His discharge of his duty to them offers only modest electoral reforms

in a territory where the lack of a fully democratic system seemed for so

long of scant importance since it operated under the umbrella of the

Westminster Parliament. Hong Kong, apart from its economic dynamism and

growing prosperity, enjoys a fecund and varied free press. The people

have freedom of movement and their laws are administered by an

independent judiciary.

Yet they are pragmatic too. With notable exceptions they mostly

believe Mr Patten has delivered as much as he feasibly can, and even

then he has incurred the wrath of the Chinese Government. Its spokesmen

have denounced him in language unacceptable in the discourse between

civilised states, and have said that the Legislative Council elected by

the Patten method will end its life in 1997, when it will be replaced in

a manner not yet clear. In July of that year Mr Patten will be replaced

by a Chief Executive Officer of the Special Administrative Region, the

mechanism by which Chinese will run Hong Kong under the doctrine of

''one nation, two systems'' enunciated by the ageing, and possibly

dying, Chinese leader, Deng Xiaoping.

The evidence is that the first phase of Mr Patten's governorship is

now over. The electoral reforms are in place and China can either tear

them up in 1997 or live with them should next year's elections throw up

a result acceptable to them (that, after all, is the version of

democracy practised in the People's Republic). Their earlier onslaught

of insults was probably designed to have Mr Patten replaced. They must

now recognise that he will serve out his term with public support. Mr

Patten has in the past few weeks adopted a more emollient line. He is

signalling the urgency of settling many matters, many of them technical,

which have to be resolved by 1997. His chief objective is that Hong Kong

should continue to offer a level playing field, within the rule of law,

to investors and businessmen.

Three issues are causing particular concern. First, the Chinese

negotiators have not responded to many detailed proposals for the

localisation and adaptation of many laws hitherto covered by Westminster

instruments and British treaties. Secondly, the Chinese Government has

withheld approval for the financial structuring of the new airport, an

extraordinary feat of civil engineering emerging from the sea at Chep

Lap Kok, so far funded entirely out of the budget surplus. Without

Beijing's formal endorsement the necessary loan finance will not be

forthcoming.

Thirdly, they seem to be squeezing out Jardine Matheson, the old

trading house which is a dominant economic force and a major employer.

China carries a great deal of hostile political baggage about it from

the old colonial days and Jardine Matheson has bitter memories of its

own expulsion without compensation from Shanghai in 1947. It has, with

questionable judgment, moved its corporate headquarters to Bermuda and

de-listed on the Hong Kong Stock Exchange. Refusal of Chinese consent

for a new container port terminal, urgently needed to meet growing

demand, may be because the consortium includes Jardine Matheson, and

anecdotal evidence suggests that the company may be excluded from future

deals by fellow businessmen anxious to keep the Chinese sweet.

It is sad, but true, that Mr Patten has been able to rely for moral

support on only a few of the businessmen trading in Hong Kong and China,

to which it is the gateway and for whose economy it is the locomotive.

This is largely a pragmatic rather than a principled view, though a few

express the most illiberal of sentiments about democratic rights and

''welfarism''. On such points they are at one with the Chinese, who

express great alarm at Mr Patten's proposal to introduce a long-overdue

old age pension which, if Hong Kong goes on prospering, it will be well

able to afford. It is odd to hear a Marxist political tradition denounce

the principle of welfare payments, but this probably is to be understood

as part of a general Chinese fear that Britain will empty Hong Kong's

coffers before it departs.

As for the businessmen, as Mr Patten noted in his interview with The

Herald, those who are most pragmatic have foreign passports in their

bottom drawer. The rest of the people are going to have to live there

after 1997 and the businessmen's pragmatism is something of a luxury at

their expense. Mr Patten has little obvious points of leverage. The

strongest may be the amazing success of Hong Kong itself. Without an

equitable legal system, without an honest administration, it cannot go

on prospering and growing. That is why the case of Jardine Matheson is

being watched so keenly by others. It would be no triumph for the

Chinese system if the Hong Kong economy were to be crushed through

incomprehension or misunderstanding or because of a historical enmity.

That is the underlying reality on which Mr Patten is banking. He is

getting the support of most of the Hong Kong citizens and he deserves

ours. Hong Kong has flourished under Britain. Can it flourish under

China too?