HONGKONG; A "free lunch" that works

Laissez faire theorists such as economist Milton Friedman refer to Hong Kong as an economic success par excellence. Multinational industrialists and financiers flock to the colony. They take advantage of a variety of opportunities, ranging from real estate and construction to syndicated loans.

But excitement is perhaps best reflected in the stock market. In recent years it has fluctuated between 160 and 1,780 points.

Meanwhile, "old-timers" -- including professional China-watchers, tourists, shoppers for duty-free goods, urban sociologists, rural anthropologists, and drug traffickers alike -- have faithfully retained their traditional fervent interest in this "pearl of the East."

Historically Hong Kong is known as a haven for refugees from China during periods of turmoil. Recently the tiny, crowded colony has distinguished itself by opening its humanitarian door to refugees from Indochina.

As if prosperity knew no limits, Hong Kong has also presented itself as a possible hinterland base for joint Chinese and foreign oil exploration activities in the South China Sea.

But beyond all this, Hong Kong should be of interest to anyone concerned with general human and political development -- even though it has a population of only 5 million.

The colony's continued existence is an anomaly and an irony. It raises broader questions that have often been neglected by social scientists, theorists , and other observers who are sometimes preoccupied with larger societies.

What seems puzzling is the harmonious coexistence in China's backyard of 19 th-century British colonialism (almost extinct elsewhere) and one of the most revolutionary forms of 20th-century socialism and nationalism.

Even more puzzling, 81.6 percent of Hong Kong's population is satisfied with colonial status (according to a recent poll) -- despite worldwide movements for decolonization and demands for self-determination and human rights.

This reality of Hong Kong should prompt serious consideration of some widespread assumptions about political life.

The story of Hong Kong began with British imperialism in the 19th century. After China's defeat in the Opium War of 1839-42, Hong Kong was ceded to Britain by treaties signed in 1842, 1860, and 1898. The 1898 treaty dealt with the lease of the New Territories, which has since become an integral part of Hong Kong.

That lease, however, will expire in 1997. For environmental and economic reasons alone, it is inconceivable that Hong Kong proper could survive as an independent entity without the New Territories as its hinterland. Therefore, the lease issue is organically tied to the issue of the continued existence of Hong Kong as a British colony.

The official Chinese position has been clear and consistent. The present government of China does not recognize those "unequal treaties" signed by the Quing government in the 19th century under foreign pressure. Therefore, to the Chinese, Hong Kong is but a part of China forcefully occupied by Britain. This is an issue "left over from history" and will be resolved "in an appropriate way whe conditions are ripe," Chinese statements have said.

Meanwhile, the Chinese hold that "pending a settlement, the status quo should be maintained."

It is not difficult to understand why China is in favor of maintaining the status quo.Economics alone offers a sufficient explanation. For instance, it is estimated that in 1980 China gained $7 billion in foreign exchange via Hong Kong. This amounted to one-third of China's total foreign exchange that year.

for Britain, also, maintaining the status quo of Hong Kong is a profitable proposition. It is estimated that Hong Kong's surplus in 1981-82 will amount to are known to be promptly deposited in the Bank of England.

It is thus clear that the economic utility of Hong Kong serves a mutual interest between British colonialism and Chinese socialism. However, if Milton Friedman is right in saying that there is no such thing as a "fee lunch" and if both the British and the Chinese governments benefit from Hong Kong, who pays?

Hong Kong is hardly democratic. Under what is still a 19th-century type of colonialism -- institutionalized as the Letter Patent, the Royal Instructions, and the Colonial Regulations -- Hong Kong has no representative government. All high officials are directly appointed by the British government in London. Elections are confined to such powerless places as the Urban Council.

Despite efforts by the government in recent years to improve social welfare, Hong Kong still has substandard labor laws, soaring crime rates, inadequate mass housing amid population explosion, not to mention problems related to drugs, pollution, and corruption.

However, such physical discomforts are bearable when compared with the psychological burden that people of Hong Kong have to live with: The political future of Hong Kong is uncertain.

The British have already shown signs of a readiness to withdraw, should circumstances so dictate. Outflow of British capital is evident; a prime example is the recent acquisition of 50 percent of the shares of the Marine Midland Bank by the Hong Kong & Shanghai Bank. The tug of war between the Shanghai Bank and the Standard Chartered Bank over acquisition of the Royal Bank of Scotland is another current example.

The new British Nationality Law, passed in June 1981, makes it that much more difficult for people of Hong Kong who are British subjects to migrate to Britain. As 1997 draws nearer, the cloud of uncertainty looms larger.

It is generally agreed that investors need some concrete assurance from the Chinese government in the near future if they are to continue to feel comfortable with their investments in Hong Kong. The Chinese government has been reluctant to give any specific public assurance about the colony's future. Moreover, given China's past record of political turmoil, no Chinese leader can be sure of China's own future, let alone Hong Kong's.

Until a concrete settlement is forthcoming, Hong Kong remains exploited by both Britain and China, yet not fully wanted by either.

British and Chinese motives are understandable. If one can still assume that man is a politically purposeful animal, however, why is a majority of the Hong Kong population so content with living on borrowed time in a borrowed place? Why is there so little demand for colonial status to be quickly ended in favor of political self-determination?

China has made it clear that any form of political independence for Hong Kong is unacceptable. Chinese national pride is at stake here, especially since the colony of Hong Kong was established as a result of China's humiliating defeat by Great Britain in the Opium War.

Very few people in Hong Kong have voiced any objection to this Chinese claim. Despite their possible fear of communist rule, most people in Hong Kong are conditioned by traditional values, reinforced by colonial education, to be apolotical and submissive to authority.

This unusual attitude is also based on nationalism and realism. Most of the people in Hong Kong are, after all, ethnically and culturally Chinese. Unlike Singapore, Hong Kong is geographically extremely close to China and extremely dependent on Chinese supplies of such essentials as water and foodstuffs. It simply could not survive without friendly Chinese support.

The Hong Kong experience thus suggests that a colonized population will likely assert itself politically only when it feels deprived of a national identity. As many cases of decolonization have demonstrated, people are known to have given up even better material conditions of existence under colonial rule in order to search for emotional fulfillment by acquiring political independence.

In the Hong Kong case, with an ultimate national identity with China already superimposed upon them, people of Hong Kong find no casue for political movement. Given ultimate certainty, immediate uncertainty seems to be tolerable.

Current contentment with the status quo can also be attributed to the comparative nature of political and economic life. If a comparison is made with industrialized, developed, and democratic countries, Britain included, then Hong Kong's conditions may indeed be substandard.

But since many of the less-privileged residents of Hong Kong were once themselves refugees, they may consider Hong Kong quite bearable, compared with countries such as China and Vietnam which they have left. In this sense, everyone benefits from Hong Kong. A "free" lunch is possible because price itself is relative.

The criteria used to measure the quality of political and economic life are relative. The high ideals and standards of British liberalism and Chinese socialism, respectively, are relative. Only survival is absolute.

Whether Hong Kong will exist in its present form beyond 1997 is irrelevant. What matters is whether the spirit behind its current existence will survive. That spirit is worth anybody's investment.