Bright Future for Hong Kong? Depends Who You Ask

So, what's going to happen?

That's the Big Question now that Hong Kong has officially become a Special Autonomous Region of the People's Republic of China.

Ask a businessman or an economist and you're likely to get a rosy answer. Many in the financial community say Hong Kong's reunification with China represents an opportunity, not a cause for concern.

"Hong Kong is the only city in China that has a free-market economy, a credible legal system, a well-developed market and a very well-established bridge between China and the outside world." says K.C. Kuok, chief economist at Standard Chartered Bank. "And therefore if China continues to develop, I think Hong Kong will benefit enormously."

"[China] wants Hong Kong to be a success, and I'm sure it will be a success," says Simon Murray, the CEO of Deutsche Banke Asia-Pacific.

Investors showed their optimism on June 27, the last day of trading under colonial rule, when they bid up the blue-chip Hang Seng Index to an all-time closing high. Leading the charge were "red chips," the local name for companies with close links to the Chinese government. The red-chip index soared 7 percent.

Outside of the business sector, some journalists and pro-democracy advocates are pessimistic about Hong Kong's future under Chinese rule.

"I'm really upset," says a journalist requesting anonymity. "I don't think there will be any free speech in the future. I don't believe China will keep its promises."

Journalists have reason to be cautious. Recently, a Hong Kong journalist was released from a Chinese jail after serving a three-year sentence for writing about Beijing's plans to sell gold. China accused him of revealing state secrets.

One type of free speech is illegal now: It is against the law to call for the independence of any region of China, including Tibet, Taiwan, or even Hong Kong.

Ask the average resident of this bustling metropolis what he or she thinks, and the answer is likely to reflect the opinions of both the optimists and pessimists.

Public opinion surveys confirm that Hong Kong citizens are worried about limitations on political freedoms, but confident the economy will prosper.

Chief Executive Tung Chee Hwa and his superiors in Beijing anticipate a smooth transfer of power. According to the two-system, one-country ideology introduced by former Chinese leader Deng Xiaoping, Hong Kong will remain largely unchanged.

The Basic Law, Hong Kong's post-colonial constitution, guarantees a high degree of autonomy, including fiscal and monetary independence.

China wants Hong Kong to succeed. Hong Kong is China's largest trade partner and its most important source of "foreign" revenue.

Hong Kong's continued success, though, will not come at Chinese expense.

On numerous occasions, Mr. Tung has said that Hong Kong needs to strike a better balance between individual rights and social responsibility.

He has also shown a distaste for large-scale public protests. He cited a demonstration in Taiwan as the sort of thing he wouldn't like to see in Hong Kong. In that rally, 50,000 people peacefully marched to protest against the government's crime policy.

Tung later disowned the comparison, but not before his press officer tried some spin control.

"He is a conservative, Chinese patriarch type if you like," said spokesman Bob Howlett, "and [he believes] people owe more to society than it does to them, and that people are not entitled whenever they feel like it to go out and clog up the streets for everybody else."

The answer to the Big Question may lie in the link between business and politics. Will an economy dependent upon the rule of law and the free flow of information prosper if political freedoms are curtailed?