Deciding Hong Kong's future

MADE in Hong Kong. That phrase -- found on increasing numbers of consumer and electronic products during the past several decades -- underscores one of the economic success stories of post-World War II Asia. Hong Kong has become one of the key manufacturing, financial, and trading centers of the world.

Will that success continue into the years ahead, since China is due to take over the prosperous British crown colony after 1997? Britain's 99-year lease on most of the colony runs out that year.

Recent indications from both the British and Chinese sides suggest that Hong Kong's long-range prospects remain basically upbeat. That will become somewhat clearer when Sino-British negotiations resume later this week, on March 16 and 17. What would seem vital, at this point, is that the two sides take all the practical steps they can during this new round of negotiations to reassure the people of Hong Kong -- particularly the colony's local legislative council -- that whatever accord is eventually worked out will take as much account of the diverse interests of the people of Hong Kong as is possible. Not to do so -- not to reassure the citizens of Hong Kong -- could well trigger a flight of people and capital from the colony.

Indeed, the colony's local legislative council is considering legislation requiring that any final agreement would have to be reviewed by the local council itself.

Are the two sides actually getting close to some form of agreement? At the least, the two sides appear to have come to terms on a broad outline:

* China's sovereignty over Hong Kong would be recognized. China would thus handle defense and diplomatic activities for the colony.

* Hong Kong would become a special administrative zone of China. Its current free-market oriented economic and financial system would remain intact. That means that its stock and gold markets and its foreign currency exchange markets would continue. The present Hong Kong dollar would also continue.

The colony has had some difficulties. The export picture continues to look good. Investment monies continue to enter the colony. But there is still an understandable sense of uncertainty about the future. And the once vigorous building boom has abated.

Both Britain and China have much to gain from a mutual accord. China earns up to one-third of its hard currency through the colony. By showing that it could allow Hong Kong a wide latitude of autonomy, it hopes to attract Taiwan to consider a similar arrangement. And Britain would like to extricate itself from the colony with its honor intact.