`Unpalatable truths' about the Hong Kong agreement

IT is now a year since Britain and China signed an agreement on Hong Kong's future, ending two years of unrelieved worry in the colony as the two sides negotiated its transfer to Chinese sovereignty by 1997. To the amazement of many in Hong Kong, Peking committed itself in December 1984 to a 50-year period during which Hong Kong would maintain its capitalist economy, its social and legal systems, and the rights and freedoms long enjoyed by the territory's residents.

When the agreement was signed in Peking Dec. 19, the reaction in the colony was euphoric. Seasoned China watchers, arguing that it was all too good to be true, were ignored. But how right they were.

Even before this first anniversary, China's interpretation of the agreement was widely at variance with the accepted norms of international diplomacy. This has cast serious doubt on Peking's reliability and the assurances to which it is formally committed.

In particular, Chinese officials have been dropping broad hints that they do not favor a series of political reforms -- now evolving in Hong Kong -- reforms the British Parliament regarded as a prerequisite for its approval of the pact.

Even during its negotiation, the Hong Kong agreement was viewed as a controversial precedent in British colonial policy. China's recent actions can only make it more so.

Throughout the postwar era of decolonization, Britain has invariably recognized the moral right of self-determination among colonial subjects; power has always been transferred only to freely elected governments.

China would countenance neither of these principles. But the inevitable return of Hong Kong to Chinese control was made more palatable by Peking's hints of substantial contracts for British firms in the course of the mainland's modernization.

Thus has Britain accepted the previously unacceptable: It transferred its moral responsibility for 5.6 million people -- half of whom hold British passports -- to a communist state.

Only with the promise of an elected government in Hong Kong has Britain avoided humiliating parallels in its diplomatic history -- the abandonment of the Czechs to Germany in 1938 and the forced repatriation of captured Russians between 1944 and 1947.

Parliament's support of the Sino-British agreement was based on the same promise. An accountable government is indeed the key to Hong Kong's future autonomy, but Peking has already shaken public confidence in China's willingness to accept an accountable government once Britain departs.

No one is certain why Peking's public stance has hardened. Its recent actions suggest that the mainland officials responsible for Hong Kong simply do not understand it. Beyond this, there apparently is concern that political reforms will produce a local government over which China will have little control.

But Peking must also balance its domestic political equation. And a successfully self-governing region under Chinese sovereignty would almost certainly spark demands for political autonomy elsewhere in China --just as China's special economic zones have provoked jealousy in other areas.

By declaring its hand so early in Hong Kong's transition period, Peking has again stunned the territory. Last September the territory held its first --and limited -- legislative elections. It now has an unexpected opportunity to test how effectively its new representatives will guard the interests of the Hong Kong community.

It is also time to gauge Britain's genuine attitude toward its agreement with China -- and how much support Hong Kong can expect as the pact is further interpreted and implemented.

Peking's response is now critical. So far it does not appear to appreciate the fact that attempts to interfere in Hong Kong's internal affairs will undermine the very prosperity that all sides wish to preserve.

But now it is China's turn to accept some unpalatable truths: that Hong Kong is made in the image of Adam Smith (not Confucius or Mencius or Mao) and that free markets can only thrive in an atmosphere of free thought and speech.

Peking seeks a sharp distinction between economic and political modernization. But unless China adopts a strictly hands-off policy toward Hong Kong, the territory's economic decline now looks as certain as the night that follows day.

John Walden was a senior civil servant in Hong Kong for 30 years and retired as director of home affairs in 1981.