THE British and Chinese governments have been putting the last touches on an agreement that will turn Hong Kong over to China in 1997. Twelve years is a long time in freewheeling Hong Kong, where businessmen like to recover their investment capital in four years, operating in a colony dedicated to free trade, low taxes, and a government that keeps its hands off business.
Nevertheless, there are ripples of anxiety as Hong Kong's 5 million Chinese residents, many of them refugees from the communist system, ponder the prospect of China's red flag flying over their island home perched on China's rim.
Hong Kong is an anomaly today, a holdover from an era when European powers cruised the world and put down stakes wherever they felt like it.
The few last scraps of territory colored British colonial red on the world's maps are on their way out, and Hong Kong's ultimate handover has been inevitable. Indeed, most of the colony has been leased from China and the Chinese are legally justified in demanding its return. Aside from the political and legal imperatives, British resistance by force is unthinkable; Hong Kong gets food and water from China and survives at China's whim.
And yet, despite all this logic to the handover, it would be a tragedy if the vibrancy of Hong Kong, the prosperity that brings its people an annual per capita income almost 20 times that of the annual earnings in mainland China, should be lost and submerged under a drab communist shroud.
The optimists argue that it will not be. The United States has deliberately kept hands off the negotiations between Britain and China, expressing the hope that the arrangement worked out will preserve Hong Kong's dynamism even under Peking's rule. The deal, in essence, is that China gets Hong Kong in 1997 but agrees to preserve its capitalist economic system and life style for another 50 years.
Many Chinese residents of Hong Kong are not so sure about all this and have carefully laid their escape routes to condominiums in San Diego, real estate investments in Vancouver, and holdings in the New York Stock Exchange.
Hong Kong itself has a breathtakingly beautiful natural harbor but no natural resources. It has to import almost everything it needs. Its sole resource is its people -- and their genius -- who have turned Hong Kong into a world-class manufacturing and trading country. To its success, the Chinese have contributed their industry, the British a sense of order.
The key to Hong Kong's future lies in Peking, and the man who holds it in his hand is Deng Xiaoping. China's rulers protest that Peking is not forsaking communism, but Mr. Deng, who got severely buffeted around in the Cultural Revolution and sees the idiocy of some of China's economic programs, has introduced some reforms that nod in the direction of individual enterprise. Mr. Deng is elderly, and the question is whether the course he has set China upon will be sustained when he is no longer on the scene. Are his successors firmly in place? Can they survive and pursue present policies?
China is a country where, in the past, millions have shifted political and economic direction swiftly at the behest of changed leadership.
Drastic change after Deng could mean the end of all the promises to Hong Kong and the end of Hong Kong as we know it.
One positive is the tide of rising expectation inside China. When I first went to China in 1972, people told me they aspired in life to a bicycle, a radio, a sewing machine. Things have moved fast, and now fashion shows and color television sets are not untoward in Peking.
This may give pause to any Chinese leader contemplating plunging either China or Hong Kong back into the gloom of Marxist austerity.
John Hughes, who won the 1967 Pulitzer Prize for international reporting, was US assistant secretary of state for public affairs from 1982 to 1984.