Aftershocks in Hong Kong

CHINA's rulers are probably less concerned about how their handling of recent student protests plays in Peoria than in how it plays in Hong Kong. In 1997 that small but wealthy British colony - with 5 million Chinese - faces the uneasy prospect of unification with the People's Republic. The same Chinese rulers who negotiated the agreement with Britain have proved that they are unable to cope with calls for more democracy in their own society. They are the same ones who pledged that China would not interfere with the lives, laws, and business of Hong Kong for at least 50 years after 1997.

Even before the turmoil in China's major cities, many educated and skilled Hong Kong citizens showed their distrust of Chinese promises by emigrating to other countries. But until the student demonstrations, there has been a consensus, both at home and abroad, that the Hong Kong we know today would survive beyond the transfer of power to China.

After all, 30 percent of Hong Kong's manufacturing takes place in southern China, creating an estimated 2 million jobs there.

But the student protests have shown just how easily confidence in China's commitment to Hong Kong can be shaken. The Hong Kong stock index dropped 339 points in one day. Many residents are selling gold to buy dollars and getting ready to join their compatriots who have already jumped ship for a more secure locale.

Chinese leaders know it is in their interest to see Hong Kong's prosperity and world trading position continue unchanged. Much of China's recent developments are the result of Hong Kong investment, entrepreneurial skills, and facility as a trading outlet.

Hong Kong's students demonstrated in support of their Chinese counterparts. It was the colony's largest political march. This is ironic, since Hong Kong has rarely seen protests against Britain's rule. Even now, only limited self-rule exists in Hong Kong - with all effective executive authority resting in the British governor and other appointed officials. What local power exists is largely in the hands of a select group of businessmen who are more interested in retaining their influence than in broad-based democracy.

One key issue still not fully resolved is how fast and to what degree Hong Kong should obtain effective self-rule before 1997. Some argue that popular, free elections for a strong legislative body should take place as soon as possible. But the old oligarchy and Chinese government want to delay such elections.

The British, afraid of undoing the delicately balanced agreement for a peaceful transfer of Hong Kong to China, have tried to play down calls for effective local democracy before 1997. But the Chinese students on the streets of Beijing and Shanghai have cut through all the old assumptions about the nature and future of China, the reasonableness of its leaders, and the stability of its rulers, policies, and commitments. If they are coerced into submission, the hope that Hong Kong could continue its fairly open and laissez faire practices under China's rule would justly fade.

The consequences would be enormous, both for Hong Kong and for the large part of southern China dependent on Hong Kong's investment and trade. The pace of those leaving Hong Kong would accelerate dramatically. The value of property and businesses could greatly diminish. Boom could quickly turn to bust.

But if Chinese student demands for a more open society, greater individual freedom, less corruption, and participation in decisionmaking prevail, Hong Kong would benefit in the long run. As one member of the body drafting the basic laws for Hong Kong after 1997 said: ``...only when there is democracy in China will Hong Kong have a future.''

Beijing's leaders should weigh these factors when they decide not only the fate of the student movement but also who will lead China - and Hong Kong - into 1997.