A battle of banter between Hong Kong's top judges and their new Communist Chinese masters has cast a cloud over the first experiment with allowing capitalist and socialist legal systems to coexist within one nation.
Although China initiated the conflict by launching a series of attacks on Hong Kong's highest court, the Communist giant is now stepping back from the fray with the tiny enclave.
Beijing regained control over Hong Kong in July 1997 by promising the former British colony wide autonomy over its legal and social systems.
Yet six weeks ago, the Communist government here started skirmishing with Hong Kong over a ruling by the territory's Court of Final Appeal that it could declare Chinese legislation unconstitutional within Hong Kong.
Now, however, Beijing's leadership has decided to stop contesting the decision, says Xiang Chunyi, a senior Chinese lawmaker.
The truce is likely to ease fears among Hong Kong's 6 million residents that their courts could follow their legislature and administration in coming under Beijing's dominance. "Hong Kong's Basic Law [constitution] guarantees the region a high degree of autonomy, and we don't want to shake confidence in that provision," says Mr. Xiang, who heads the Basic Law Committee of the Chinese National People's Congress.
The Chinese Congress is now meeting in Beijing, and a handful of delegates have called for the legislature to use its power to weaken Hong Kong's judiciary by reining in the region's top court.
But Xiang said in an interview that the congressional leadership in Beijing wants to avoid further confrontation with Hong Kong's judges and legal scholars, and therefore will allow the controversial ruling to stand.
Billions of dollars in foreign investment are funneled into China through Hong Kong each year owing in part to the reliability of the enclave's Anglo-Saxon legal system. Beijing now apparently realizes that sabotage of Hong Kong's courts could set off a tidal wave of capital flight out of the region.
China's pullback in the conflict is important because Hong Kong's courts are the territory's last shield against the human rights abuses that are common throughout the rest of China.
After China recovered sovereignty over Hong Kong from Britain, the Communist authorities here disbanded the region's democratically elected legislature and handpicked a chief executive.
Those moves left only the judicial branch of Hong Kong's government relatively free from Beijing's political maneuvering and best able to protect the "special administrative region's" British-inspired legal system.
The current clash erupted when the new Court of Final Appeal ruled that some children of Hong Kong residents had been unconstitutionally blocked from crossing mainland China's border with the territory.
The new court said part of its power was to strike down within Hong Kong "any legislative acts of the National People's Congress ... [not] consistent with the Basic Law." The decision marked the first time in 50 years of Communist rule in China that any court had questioned the validity of the central government's rules. It also underscored the stark contrast between Hong Kong, where laws are subject to judicial review, and the Chinese mainland, where judges are not checks on, but tools of, Communist power.
Following the January ruling, China's leadership and state-run press sharply criticized the court, met with Hong Kong's Secretary for Justice Elsie Leung, and demanded the judgment be changed.
Some legislators in Hong Kong regarded Ms. Leung's trip to Beijing as an attempt to appease China. Yesterday, she survived a Legislative Council no-confidence vote, one sign of the anger in Hong Kong over the row.
"Beijing's response to the ruling ... created a crisis of confidence" in Hong Kong, says Mike Jendrzejczyk, who heads the Washington, D.C.-based office of Human Rights Watch, Asia. The conflict has been "the most crucial test of the independence of the Hong Kong courts since the handover," he adds.
Meanwhile, instead of changing its original ruling, the Hong Kong court merely issued a "clarification." The explanation simply reworded the point that the Chinese Congress had to abide by Hong Kong's constitution in making any laws there, says Martin Lee, head of the Democratic Party and one of the original members of the Chinese-Hong Kong group that drafted the territory's Basic Law a decade ago.
China-appointed delegates from Hong Kong to an ongoing session of the National People's Congress have told the Hong Kong press they would ask Beijing to invalidate the court's ruling.
But Xiang says the issue will not be put to a vote.
Under the Basic Law, the Chinese Congress could effectively reverse the court's ruling by either reinterpreting or amending Hong Kong's constitution. Xiang says "the National People's Congress does not intend to issue a new explanation of the Basic Law or amend it."
Mr. Lee, along with many other legal scholars in Hong Kong, says Xiang's statement is a good sign that the current constitutional conflict has ended. But he adds that "much damage has already been done to the rule of law in Hong Kong." The Chinese-orchestrated attacks on the top court has "injected political pressure into the judicial system," says Lee. "From now on, every judge in Hong Kong is going to be looking over his shoulder when he issues a ruling."