Where the Money Is Made

June 02, 1994|By RICHARD REEVES

HONG KONG — Hong Kong. -- The last time I saw Hong Kong, which was six years ago, people of means in the crown colony were getting ready to move to Canada or Australia, maybe Singapore -- or anyplace else that would have them when the British turned the colony over to China in 1997. Now they talk about moving to Shanghai.

''Get out when you can, before it's too late!'' was the word in 1988. Now the same folks say: ''We've all persuaded ourselves that it will be all right; after all, the Chinese aren't really communists anymore, are they?''

It seems that 1997 is already here. Translated, the optimistic political talk means, ''My God, maybe we can make more money in China than we have here.'' The industries that made Hong Kong a rock of envy and greed -- toys, textiles and clothing -- have already moved north into China, to Shenzen, Guangzhou and Shanghai. Can the deal makers and factors and investors be far behind?

There is convergence somewhere out there. The ''mainland'' Chinese, who still insist on being called communists, are dealing, lending, borrowing, skimming, buying low and selling high with the best of the Hong Kong capitalists in these heady days of expensive real estate and cheap labor.

A sign of the times is that the rent for a two-bedroom apartment in Portman Center in Shanghai (that's John Portman from Atlanta) is just about $9,000 a month. In Hong Kong, the same place, fitted for the managerial classes, now costs close to $20,000 a month. Yes, Hong Kong prices are still double, but only a few years ago there was no rent and no renting in most of China. Now, the Sunday magazine of the Hong Kong Standard runs a page of ''society'' photos under the title ''Beijing Weekend.''

So, it looks as if Hong Kong will be something like it has always been since the Royal Navy forced the Chinese to give them the island in 1841. It was just a big rock then, but the British (and Americans, too) needed a harbor to bring the Chinese such necessities as opium grown in India. That's how colonialism worked.

But now the British have to go home in 1997 because they only had a 99-year lease on Kowloon and the New Territories across the harbor on the mainland -- which is where Hong Kong gets water and electricity.

The Chinese line on what they will do with Hong Kong was articulated last month by Lu Ping, the official designated by the People's Republic of China to handle the transfer of power:

''Cities like Shanghai can never take the place of Hong Kong, because no matter how developed Shanghai becomes, it will remain socialist,'' he said. ''Shanghai will serve the country as a socialist metropolis, while Hong Kong will play a different role as a capitalist Special Administrative Region.''

Leaving aside the question of whether China can still call itself socialist, the British (and the 26,000 Americans living here) hope to have some influence on whatever system is finally used to govern the 6 million people of Hong Kong. The royal governor, Christopher Patten, has been trying to have democratic systems, including a 1995 election, firmly in place before the Chinese reclaim their territory. Of course, Her Majesty's Government never bothered to discuss voting and such during their 150 years on top.

But the Chinese government is sending the message that the British are wasting their time now. No multiparty elections. No consulting with the old colonial masters. Lu Ping was in Hong Kong for nine days last month and pointedly refused to meet with Mr. Patten.

The snub was noted, then dismissed as just politics by the island's go-getters. Commerce is their game, and many, after their trips to Shanghai and Shenzen, have concluded that it is money, not Marx or Mao, that is on the minds of the new masters. There is evidence around that some of Hong Kong's real-estate and entrepreneur boom has to do with Chinese generals and other influentials secretly buying houses and investing in companies that they themselves will later deal with in official communist capacities. In other words, a lot of the ''communists'' are crooks.

That said, there is a possibility that the Chinese are just biding their time for a couple more years or, more likely, that they don't know what they want (beyond cash) or what they are doing. But competent or not, the Chinese certainly plan to politically integrate island and mainland. One of the first steps will be the end of using textbooks extolling British rule. ''Students will learn that China is the motherland,'' said a Beijing education official.

The big Chinese problem with Hong Kong is that the powers that be in Beijing think it is possible to have economic freedom and political control at the same time. But things will work out. The Hong Kong and Shanghai Bank let it be known last week that it would like to buy back and renovate its old Shanghai headquarters, which was taken by the communists in 1955. After all, a huge proportion of the people in Hong Kong trace their ancestry back to Shanghai; half that city fled south when the communists came.

Everyone's related around here. And whatever else proves to be true about Chinese capitalism, nepotism will be the heart of it. In these parts, blood is thicker than contract law.

Richard Reeves is a syndicated columnist.

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