Hong Kong, democracy, and the Chinese learning process

FOR 150 years, the British showed little interest in initiating Hong Kong into the mysteries of democracy. But unease began to grow as the transfer of control of the colony from London to Peking loomed closer. It seemed a good idea to establish strong precedent for democratic governance before the turnover to Chinese rule in 1997, rather than wait till afterward and hope for the best. A handful of voters went to the polls in 1985 for the first time to elect - indirectly - a small minority of the colony's weak legislature. But even this was enough to arouse strong Chinese protests that the British were changing the Hong Kong rules.

After a series of loaded opinion polls late in 1987, the British concluded that public support for early direct elections this year was ambiguous, and these were deferred until 1991. The decision to avoid a confrontation with Peking was probably politically wise, if somewhat craven. It created an atmosphere in which compromise by China on other constitutional questions became easier but aroused bitter criticism from many vocal Hong Kong Chinese intellectuals.

The key issue now is drafting the Basic Law, which will become the Chinese ``constitution'' for Hong Kong once it is reintegrated into the People's Republic as an ``autonomous region'' on July 1, 1997. There are many complaints about the version the Chinese put up for comment in Hong Kong in April this year. It is too specific about economic policy and too vague on human rights; legal appeals and jurisdictions - not China's strong suit - are left dangerously fuzzy, and political transition arrangements for 1997 offend virtually everyone. Nevertheless, Peking has privately offered assurances at very high levels that it is willing to make numerous if unspecified changes in the draft, and most British officials and Hong Kong Chinese are willing to give these assurances credence for the time being.

By common agreement, the Chinese are learning and adapting. The process of understanding how to run a free, capitalist, open society is an intriguing one for Peking, and it will probably have significant impact on mainland policy as well. Local Chinese communist officials privately say that private familiarization visits by senior People's Republic of China Cabinet members, which began this spring, are invaluable in creating ``sensitivity'' and ``balance'' about the complexities of Hong Kong society, particularly on the delicate issue of preserving foreign and local business confidence.

The governor, Sir David Wilson, and other senior Hong Kong government officials privately share this assessment and stress Peking's flexibility, at least up to this point. Thus far not a single Hong Kong government proposal in confidential expert-level meetings for separate Hong Kong membership in specialized international organizations after 1997 has been rejected. The Chinese recently even agreed to let Hong Kong conclude its own extradition agreements, a startling step, since Peking has refused to negotiate such agreements on its own behalf.

Senior United States, Japanese, and British businessmen agree that the Chinese seem determined to preserve Hong Kong's position as a preeminent international business center. Rising land prices, huge construction projects, increasing foreign investments, and strong GNP growth this year reflect this confidence, which is marred only by inflationary pressures generated by an extraordinarily tight labor market. Still, everyone knows that post-1997 is a gamble.

It is thus no surprise that increasing numbers of Chinese in their late 20s and 30s, looking for long-term stability for their children and in their professional lives, are moving out. The increase in the last three years is striking: 1986 - 18,000; 1987 - 28,000; 1988 - an estimated 38,000.

In part, these figures reflect sharp increases in worldwide demand for immigrants by Australia and Canada, as well as an increase last year from 500 to 5,000 in the US quota numbers for Hong Kong. Many of those emigrating are taking advantage of opportunities before fickle immigration quotas close down. And uncertainty about the Basic Law is probably influencing others. But the overwhelming majority of Hong Kong citizens have nowhere to go, and many of these would in any event choose to stay in their prosperous territory after 1997.

One Chinese official told a recent visitor that in the long run, China is more concerned about the outflow of people from Hong Kong than capital flight, and that those involved in the process of revising the Basic Law draft are eager to make sure that Hong Kong's vital ``worker capital'' remains.

Thus far most members of the business community see the outflow as a nuisance but not a serious obstacle to Hong Kong's business vitality, although it is contributing to rising wage levels. More worrisome are increasing numbers of early retirements and resignations from the civil service, particularly police, firemen, nurses, and doctors, who are difficult to replace and whose loss could undermine basic services in the colony.

Confidence in Hong Kong's future is almost certain to be shaky at times in the years ahead. Recent signs of Peking's policy uncertainty about the pace of economic reform, inflation, and unemployment may increase Hong Kong's nervousness in coming months. Both British and Chinese officials frankly acknowledge this, but they hope to limit the damage. The revised version of the Basic Law that will be issued early next year will certainly not satisfy every concern and hesitation that has been expressed.

Less than a fifth of Hong Kong Chinese in a recent poll still wanted to be part of China. But that option is not open. The Basic Law will be improved; guarantees for the security, freedoms, and self-governance of the colony will be strengthened; the Chinese are learning more about how democracy really works; and vocal expressions of complaint by Hong Kong citizens and from foreign business groups are continuing to be essential elements in the process.

Paul Kreisberg is a senior associate at the Carnegie Endowment for International Peace.