Can Hong Kong hang on?

THE British have brought a certain grace to their negotiations with Peking over the future of Hong Kong, after the current lease on the adjacent New Territories region on the mainland runs out in 1997. In the main, they bargained well, agreeing to a 50-year period of ``autonomous'' administration that would preserve Hong Kong's free-enterprise marketing and manufacturing status, while acceding to central government authority of the People's Republic of China over foreign policy and security matters. Thorny issues like passport issuance have been worked out. But some remain: Most immediately, what kind of local voice in governing should be established in Hong Kong before the 1997 transfer of status from a British territory to an autonomous territory of China. Yesterday a set of options for direct or representative elections was issued. Some argue that the most direct form of decision should be sought, to present the China with as democratic a status quo as possible at transfer time. Others argue for greater caution, fearing that the central government may have a far different concept of ``autonomy'' than do the Hong Kongese. We trust the British, with Hong Kong's governor, Sir David Wilson, in the lead, will by early 1988 assess the degree of democratic latitude the market will bear.

The dispute over democratic administration of the territory underscores the great sensitivity about the future of the territory of some 5.5 million people. The Hong Kongese make a brave case that their capitalistic structure and bustling businesses will survive the transfer. China has never reneged on an international agreement, they say. At least 60 percent of the investment in mainland China goes through Hong Kong. While some 38 percent of the investment in Hong Kong comes from American sources, the mainland Chinese have greatly increased their own investment - to about half the US measure, and equal to the Japanese. Mainland operations are finding it helpful to locate in Hong Kong, because of red tape and currency-exchange restrictions on the mainland. If Peking wants to lure Taipei into a similar ``one-China, two-systems'' pact, it has to make the Hong Kong arrangement work.

Hong Kong is already a handy asset for Peking. The Taiwanese alone send some $3 billion a year in goods through Hong Kong to the mainland, whose government Taiwan does not ``recognize.''

Still, Hong Kong's prospects for autonomy look less optimistic from Peking, where the central government's propensity to interfere looms larger.

On Hong Kong, another element looks worrisome: an economic downturn in the United States, which absorbs 40 percent of Hong Kong's exports, followed by a general recession. Would Peking be as patient with the territory's insistence on self-rule and unbridled capitalism if Hong Kong came on hard times?

For now, the British and Hong Kongese must plan for success, not failure. The greater logic remains that it is in the mainland's interest to keep Hong Kong as vibrant and flexible an outpost in the Western World as possible.

Third in a series

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