From: XIAOJIAN@CCIT.ARIZONA.EDU
Subject:      A New York Times Article on Hong Kong (forwarded from csf)
Reply-To: XIAOJIAN@CCIT.ARIZONA.EDU
Organization: Indiana University
Date: Mon, 11 Jan 1993 19:56:11 GMT
Comments: To: china-nt@uga.cc.uga.edu

Hong Kong's Money War
by Criton M. Zoakos
New York Times, January 9, 1993.

Conventional wisdom holds that the spat between Britain and China
was triggered by Gov. Christopher Pattern's effort to expand
democratization before Hong Kong reverts to China in 1997. This
misconception ignores China's brisk match to capitalism and the
role of the colony's Chinese entrepreneurs in it.

While Beijing opposes the new Governor's late-hour effort to
expand the electoral base for the 1995 legislative Council
elections, the dispute is significantly fueled by competition
between Britain's waning commercial interests and China's surging
entrepreneurial capitalism.

It also stems from Beijing's contention that Mr. Pattern's action
violates the terms of the agreements under which the colony will
be turned back to China and thus affronts China's sovereignty.

From 1979 to 1992, the number of individually owned enterprises
in China grew 14 millions from zero. Private enterprises with
multiple ownership rose to six millions, foreign companies to
nearly 60,000.

Sixty percent of all foreign investments in China have been made
by Hong Kong's Chinese entrepreneurs, who in the 1970's supplanted
British tycoons as the colony's leading economic power. The
increasingly close tie between Beijing's reformers and Hong Kong's
billionaires have nurtured the mainland's flourishing economy. In all
this, major British interests such as Jardine Matheson and
Swire Pacific have been overshadowed.

Hong Kong is prospering largely because it is the catalyst of the
mainland's economic transformation. Eighty percent of Hong Kong's
manufacturing companies have branches in China, employing more
than three million workers. And 50,000 managers and other
professionals commute daily from Hong Kong to nearby Guangdong
Province.

Independent local newspapers have reported charges by U.S.
businessmen that American and Hong Kong Chinese companies have
been victimized by Pattern Government political decisions that
favor British interests at their expenses.

Of 48 consultancy contracts for Hong Kong's projected $22 billion
airport and container port, 35 have been awarded to British
companies; joint American and local Chinese firms won the balance.
The American Chamber of Commerce complains that U.S. engineering
companies have been excluded from airport construction contracts
despite superior expertise in the field.

With Hong Kong's cargo trade growing at 20 percent a year, contracts
for the construction and operation of port facilities are a major
prize. On Nov. 11, Governor Pattern's Government evidently showed
favoritism to Jardine Matheson at the expense of Li Ka-shing's
Cheung Kong and the late Sir Y.K. Pao's Wharf Holdings when it
awarded contracts for the construction and operation of a terminal.

Beijing infuriated, says that the Government violated a memorandum
of understanding on airport when, without any consultation, it
abandoned the traditional method of awarding contracts by opening
bidding and instead allowed the uncompetitive Jardine Matheson to
win part of the contract. This reduced the price paid for the
terminal land by $1 billion. Since half of the proceeds were to go
to China, it felt cheated out of half a billion dollars. Beijing
then announced that after 1997 it would not honor Hong Kong contracts
about which it was not consulted, thereby creating turmoil.

Britain has confused the issue by claiming that China took this step
because it disagreed with the democratization proposals. China insists,
perhaps disingenuously, that it has no intention of linking economic
issues with the colony's political evolution.

Many of Hong Kong's principal capitalists oppose Governor Pattern's
initiatives and have urged him to modify his course. Hong Kong's
businessmen and bureaucrats in China prefer prosperity to political
instability, which is bad for business.

In short, explaining the sparring as a read-guard clash between
liberal democracy and Communism is incomplete and misleading.
Questions of Beijing's sovereignty and pride aside, it's basically
a scrap over money.
Xref: sparky talk.politics.china:3623 soc.culture.china:34342