TITLE : FALL OF HONG KONG: CHINA'S TRIUMPH AND BRITAIN'S BETRAYAL, THE.

PREFACE

AT MIDNIGHT on June 30, 1997, British officials will pull down the Union Jack from the flagpole outside Government House for the last time. Cadres from Beijing will run up the Chinese five-starred red flag. With that simple act, Britain will erase a legacy of injustice-and create a new one. For London is not just handing back the tiny outcropping of land on the South China Coast that she took during the last century. She is also handing over her six million Chinese subjects living there.

Britain is stripping the people of Hong Kong of the protection of British democracy and forcing them to live under a communist dictatorship. Britain and China have told them they will be allowed to maintain their way of life, capitalist economy, and legal system for fifty years after 1997. The two governments have promised them that they will manage their own affairs, enjoy a high degree of autonomy, and exercise the same rights and freedoms they had under British rule.

But these promises already seem hollow. Beijing has ensured that it will control every facet of Hong Kong's affairs through a hand-picked governor. It will be able to interfere in court cases because China's rubber stamp legislature-not local judges-will interpret the post-1997 constitution. The legislature will be only partially elected and will have little power to check abuses by the executive branch of government. Moreover, the people of Hong Kong do not know who will be running China in 1997, what his policies will be, if he will uphold the right of private ownership in Hong Kong, and whether he will respect human rights and the rule of law or will resort to the gun to implement his will. They await the transfer of sover- eignty in dread.

Britain did not want to return the last jewel in her imperial crown, but was forced to sign away her last important colony because of an accident of history. In the mid-1800s, she fought two wars with China. Opium was the excuse, but trade was the real issue. At the time, China considered herself to be superior to all nations. She refused to establish relations with any European nation and restricted trade to the southern port of Guangzhou (Canton). British merchants deemed it their god-given right to do business in China. They wanted the whole country opened to trade and encouraged London to use the Royal Navy to do it.

Despise the Celestial Emperor's delusions of superiority, China was an empire itch decline. The mandarin bureaucracy had become bloated, inefficient, and corrupt. Scientific advancement had fallen behind the West and most of the population lived in appalling poverty. Britain, on the other hand, was a rising power. Her armed frigates easily defeated China's sluggish junks, and she forced Beijing to sign two humiliating treaties under which Hong Kong Island and theme of the Kowloon Peninsula across the harbor were ceded to Britain "in perpetuity."

China's defeat showed how weak and vulnerable she really was. In 1895, Japan routed China in the first Sino-Japanese war and grabbed the Liaotung Peninsula, which controlled the strategic opening to Beijing. That sent the European powers scrambling for China's territory: Germany seized Kiao-chow across from the Korean Peninsula; Russia occupied Lushun in northern China and renamed it Port Arthur; and France grabbed Kwangchow Wan, 210 miles southwest of Hong Kong. Officials in the British colony feared that the French might also try to seize Hong Kong. Moreover, if the Chinese ever summoned the courage to take back the ceded territories by force, they controlled both entrances to Hong Kong Harbor and could shell the heart of the city from their own territory. London was encouraged to secure the land between the Kowloon hills and the Shenzhen River to provide some protection.

The decrepit Manchu dynasty was powerless to stop the Europeans from taking what they wanted, but tried to avoid losing land permanently. It agreed to lease to Britain the area south of the Shenzhen River and 235 islands scattered off the coast for ninety-nine years. It must have seemed like virtual annexation to the British negotiators who accepted the deal, but in leasing the New Territories, as the new land was called, they destroyed Hong Kong's territorial integrity and assured that China would one day recover the whole colony.

Hong Kong became a borrowed land living on borrowed time. No one seemed to mind as long as 1997 was far in the future. After World War II, businesspeople invested heavily in plants and machinery, and the colony's economy took off. By the late 1970s, Hong Kong had been transformed from a barren rock into a major commercial center and economic powerhouse. Though just 412 square miles-about one-third the size of Rhode Island-it exported more toys, watches, and radios than any country in the world. It was the second largest exporter of clothing and ranked twenty-first in world trade (by 1993, it would be tenth). But the New Territories accounted for over ninety percent of Hong Kong's land area. Much of its manufacturing, a third of its population, and all of its local water supply was situated there. The colony could not survive without it.

In 1978, it became clear to the governor of Hong Kong that something had to be done to resolve the question of Hong Kong's future or business confidence would gradually erode as 1997 grew closer. Britain wanted to maintain control of her colony, and in September 1982, Prime Minister Margaret Thatcher went to Beijing to initiate negotiations with that aim. Beijing refused to accept any form of British presence in Hong Kong after 1997. China experts in the British Foreign Office wanted to negotiate a deal and be done with Hong Kong, but an adviser to the governor named S.Y. Chung, and his colleagues in Hong Kong's Executive Council, pushed the diplomats relentlessly to get the best agreement for the colony, one that would guarantee that local residents could continue to live as they always had.

Under the Joint Declaration, an agreement signed by the British and Chinese in 1984, Britain agreed to return Hong Kong to China, and China spelled out the liberal promises of freedom and autonomy. The accord was widely hailed the world over as a shining example of how two countries can work out their differences peacefully. The Hong Kong people, however, were given a stark choice: to be returned to China under an internationally binding agreement with liberal provisions-which Britain conceded it could not enforce-or to be returned without any guarantees.

They accepted the agreement reluctantly. Many doubted China's willingness to stick to the terms. Britain encouraged the people of Hong Kong to believe that they would run their own government after 1997, which would protect them from interference and abuses by Beijing. But when the Hong Kong government took steps to replace the colonial system (under which the governor was a virtual dictator) with armore democratic system, Beijing opposed the changes. It said it would determine the future political structure of Hong Kong through a hand-picked committee codifying the terms of the Joint Declaration into the Basic Law, a mini-constitution under which the colony would exist after 1997.

The Basic Law Drafting Committee was made up of Hong Kong and mainland drafters. The Hong Kong contingent was stacked with conservative businesspeople who were opposed to democratic reforms. They arrogantly asserted that they had made Hong Kong successful and therefore should be allowed to run the colony after 1997. Beijing, eager to ensure its control over Hong Kong and to keep the tycoons from emigrating, agreed.

The "unholy alliance" of capitalists and Communists would have had its way without fuss had it not been for one man: Martin Lee, a British-educated lawyer who was appointed to the Basic Law Drafting Committee. Lee felt that an independent judiciary and an elected government that could stand up to meddling by Beijing was vital for Hong Kong's future. He took to the streets and existed the support of butchers and bus drivers, seamstresses and students to force two faraway governments to stick to their word.

In the end, Britain's resolve to do right by her colony wavered, and Lee and his followers did not have enough leverage to influence Beijing. When the Basic Law was promulgated in April 1990, it called for only a third of the legislators to be elected in 1997 and only half by 2003. Many people now fear Hong Kong will never have a democratic government or guaranteed human rights. They are leaving in record numbers to live in freedom elsewhere.

I ARRIVED IN Hong Kong in 1984, eager to study Asia. As a journalist for The Executive, a regional business magazine, I watched the confidence created by the Joint Declaration slowly erode as China reneged on her promises and Britain caved in to maintain cordial relations with Beijing. In the summer of 1987, while covering the fierce debate over democratic elections for Asiaweek (a weekly news magazine owned by Time Inc.) I first considered writing a book on the secret history of the transfer of Hong Kong's sovereignty. I here were many questions central to the debate and critical to Hong Kong's future that could not be answered by someone working with a weekly deadline. What did China mean when she said in the Joint Declaration that the Hong Kong legislature would be "constituted by elections" and that the executive would be "accountable" to it? Why weren't these terms spelled out? What secret agreements, if any, did Britain make about democracy? No one knew. The negotiations between Britain and China were strictly confidential. Even the British Parliament was not privy to the details of the talks. Under Britain's Official Secrets Act, records are not released for at least thirty years.

The drafting of the Basic Law was conducted more openly than the Sino-British negotiations. Reporters were briefed on the progress of each meeting. But the sessions were conducted behind closed doors, and all members agreed not to discuss the positions of individual drafters, which, in the case of the mainland members, meant the Chinese government.

Academics trying to analyze what happened and why had to guess at what went on behind the scenes. But how the political and economic framework was constructed was as important as what it was made of if China negotiated the Joint Declaration and the Basic Law openly, democratically, and with the best interests of Hong Kong at heart, people would have faith in them and make them work if Beijing bullied Britain and Hong Kong, gave concessions reluctantly, and reinterpreted the provisions in a way that served its own interests, people would consider them worthless scraps of paper, no matter what they contained. Therefore, it was important to get behind the official statements, the disinformation, and the contradictory press reports to unciver the real story of Hong Kong's transition to Chinese rule.

I took as my starting point articles published in the two daily English newspapers in Hong Kong (the South China Morning Post and the Hong Kong Standard), and then referred extensively to the two regional weekly news magazines (the Far Eastern Economic Review and Asiaweek) and other local magazines (e.g., Hong Kong, Inc.). Background information on the major players, datesind economic data contained in this book come primarily from these sours Based on the published reports, I drew up a list of over 200 people to interview: all of the British, Hong Kong, and Chinese officials involved with the, Sino-British negotiations; all of the Hong Kong Basic Law drafters; foreign diplomats; pro-China journalists and business people; members of Parliament; and members of Hong Kong's Executive and Legislative Councils.

Penetrating the veil of secrecy surrounding the negotiations was a daunting task. All of those on the British side, including the Executive Councilors in Hong Kong, signed an oath of secrecy. Basic Law drafters agreed not tip reveal the positions of their colleagues during the closed-door meetings. Anyone who did so could be the target of reprisals by the Chinese government after 1997. The only way to shed light on the subject was to conduct the interviews "on background" that is, use the information, but not identify the source.

I worked full time for more than two years, interviewing 142 people in Hong Kong, London, and Beijing. I saw almost all of the major players, including former British Foreign Secretary Geoffrey Howe and Shao Tianren, a legal adviser to the Chinese Foreign Ministry, both of whom dealt with Hong Kong at the highest level. About a third of my sources were interviewed more than once and some ss many as eight times. I would like to publish a list of the people interviewed, but many requested that their name not be connected with the book in any way. It would be misleading to publish a partial list.

There has been a great deal of misinformation and disinformation about the exchange of sovereignty over Hong Kong. Press reports attributed to anonymous sources that could not be confirmed have not been used. In most cases where private conversations are quoted, two or more people present were interviewed and only the corroborated portions used. Where exact words could not be recalled, quotes have been omitted. Thoughts, beliefs, and attitudes attributed to the participants were either told to me directly by the person involved, or related by someone close to that person.

In addition to the interviews, I filed over a hundred Freedom of Information Act requests with the United States government. The State Department was briefed by the British and Chinese governments during Hong Kong's transitional Chinese rule. All of the documents obtained under the act, as well as those passed to me by sources in the Hong Kong government and on the Basic Drafting Committee, have been donated to the Hoover Institution at Stanford University and will be made available to other researchers.

What emerged from my research was not just startling information that disproves some of the most commonly believed information about the handover (such as that Mrs.Thatcher went to Beijing in 1982 and insisted the nineteenth-century treaties were valid), but a human drama. This book is the story of a handful of people who fought doggedly for Hong Kong's interests: of S.Y. Chung and the Executive Councilors battling Foreign Office diplomats who put Britain's interests ahead of those of her colony; of Martin Lee and his supporters campaigning tirelessly to convince Britain and China to give Hong Kong the vote at the risk of their careers and their future in the colony.

This book is not a history of Hong Kong. It does not deal with its colonial beginnings or its development into an economic powerhouse. Other books have done that well. This book is the story of a diplomatic takeover. It covers the first half of the transition back to Chinese rule from 1978-when the Hong Kong and British governments first confronted the problem of the expiration of the New Territories lease-to 1990-when China promulgated the Basic Law for Hong Kong. During this critical period, the legal, constitutional, and economic framework for post-1997 Hong Kong was completed. For better or worse, Hong Kong will have to live with this charter until 2047.

A Note about Style

I have used the pinyin version of mainland Chinese names and places, except in historical contexts, where the reader will be more familiar with the Wade Giles rendition. It may seem awkward to refer to Beijing and Guangzhou in the nineteenth century instead of Peking and Canton. But the pinyin spellings have been accepted by most newspapers as the standard.

I have used English given names whenever possible for Hong Kong Chinese. These will be easier to remember for English readers unfamiliar with the people in this book. Chinese names consist of a surname followed by two characters that make one given name. For example: Chung Sze-yuen. In many cases Hong Kong Chinese without given English names use the initials of their given Chinese name. Thus, Chung Sze-yuen is known as S.Y. Chung. I have used this rendition for those who have adopted it themselves. For all other Chinese I have adopted a uniform style. Hong Kong given names are hyphenated, while mainland Chinese names are not. Not all people write their names this way, but it is a useful practice to avoid confusion.

All figures are in U.S. dollars unless otherwise stated.