Economy may eclipse Hong Kong, China showdown

December 01, 1993|By Robert Benjamin | Robert Benjamin,Beijing Bureau

BEIJING -- The year-long Sino-British row over proposed political reforms in Hong Kong finally appears to be coming to a head.

But by now, some analysts believe, the protracted flap over expanding democracy in the British a colony before its 1997 takeover by China no longer matters very much to many in Hong Kong.

"When the history of this is written, both sides are going to look really stupid," says a Western diplomat in Beijing. "What they're arguing about is not that significant anymore. The whole thing is just a power game."

Reports from Hong Kong yesterday indicated that Gov. Chris Patten will defy China by asking the colony's legislature to approve mild political reforms opposed by Beijing.

This could happen as early as next week, and the colonial legislature is expected to go along with the governor -- at least on these limited reforms.

The British move follows 17 rounds of fruitless talks with China since April over Mr. Patten's proposals, proposals China has opposed vehemently since he first brought them up more than a year ago.

At the end of the last round of talks last weekend, the two sides remained far apart and appeared to be preparing for a confrontation.

China has repeatedly threatened a strong reaction if the British take unilateral action. China's official news agency warned darkly yesterday that "the British side will have to bear all the consequences" if it forges ahead with any of Mr. Patten's proposals.

Hong Kong's booming stock market -- often viewed as the most reliable barometer of confidence in the colony -- plunged 2.8 percent Monday on fears of a coming political crisis.

But yesterday the market showed that the colony may have grown somewhat resilient to the whole dispute when it rose 1.25 percent on buying by bargain hunters.

The buying took place even as Governor Patten's Cabinet met in private to approve going ahead with plans to present to legislators some reforms to the colony's election system. They would go into effect in district elections next year.

These limited reforms involve lowering the voting age from 21 to 18, abolishing appointed seats on various municipal and district boards and abolishing multi-seat constituencies.

These are considered the least controversial of Mr. Patten's reforms when compared to his plans to expand the number of elected seats in the 1995 legislative elections.

Eighteen of the 60 legislators currently are elected. Twenty are to be elected in 1995 but Mr. Patten essentially wants to expand that to 39 -- a proposal viewed by China as a breach of an earlier agreement. China wants only 30 elected legislators by 2003.

The 1995 legislature is to serve until 1999, two years into Chinese rule. But China has already threatened that it may not allow certain elected legislators it deems anti-Beijing to serve out their terms.

Britain apparently wants to continue talking with China about the 1995 legislative elections, but a breakdown in the talks is the most likely outcome of going ahead with the limited reforms now.

Another, perhaps more serious outcome is a continued absence of needed Chinese cooperation in letting long-term contracts for two key Hong Kong projects: its new airport and new container terminals in the port.

As a result, both projects face delays that ultimately will cost the Hong Kong economy billions of dollars.

Aside from these projects, however, the political tug-of-war has become increasingly irrelevant to the prime concern here, the overall state of Hong Kong's economy, some analysts say.

"The economy of China and the economy of the U.S. are far more important fundamentally to the Hong Kong stock market than this dispute," says Pauline Loong, chief China analyst for Jardine Fleming, the Hong Kong brokerage firm.

Adds Robert Broadfoot, a Hong Kong-based, political-risk consultant: "Everyone's bored stiff with this thing. It's becoming increasingly remote for most people. They're much more interested in what's happening in Beijing, the inflation rate in China and other matters that impact the business environment in Hong Kong than in the future of political development here."

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