The Dragon Enters Hong Kong

An emaciated empire bowed out of its colony July 1. And an emerging empire strutted in.

Britain and China, with a handshake between Prince Charles and President Jiang Zemin, executed a peaceful handover of one of the world's richest enclaves.

At the stroke of midnight, a 156-year-old colony with 6.3 million Chinese became a "special administrative region" ruled indirectly by Communists in Beijing.

Chinese troops rolled in as the royal yacht Britannia, carrying dignitaries, steamed out. The Union Jack was lowered, and both China's Red Star flag and Hong Kong's new bauhinia-flower flag were raised.

In Beijing, an all-night show trumpeted the return with love-of-the-motherland nationalism. In Hong Kong, some partied, others fretted. Some tried to test China's promises with protests.

"While some people welcome the end of British colonialism, others have deep fears of life under Chinese rule," says a student at Hong Kong University. "Outside we are celebrating," he says, "but inside is a jumble of emotions that only time will sort out."

In his first day as chief executive, former tycoon Tung Chee Hwa outlined his plans for the city. He pledged to increase housing supply, curb real estate speculation, improve the quality of education, look after the elderly, and encourage investment in information technology. He promised elections next May.

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