The most impressive view of Hong Kong still bears the name of the British Empire. From atop Victoria Peak, under sunshine or night sky, Victoria Bay remains a feast for the visitor's eyes. In this former colony famed for speed and vitality, British governors, monarchs and casualties of war are still honored on the streets, in parks and on coins.

On the surface, one finds that not much has changed in the city. Just as Deng Xiaoping promised, "horse racing and dancing are still prominent fixtures in Hong Kong."  But one never steps into the same river twice. The Hong Kong of today cannot be the one from 10 years ago. Like the flowing river, the city must forever evolve. It changed overnight from a British colony to the Hong Kong Special Administrative Region (HKSAR) of China on July 1, 1997. After this milestone, the past decade witnessed several changes, apart from that of the Union Jack being replaced by the five-star red flag of China and the bauhinia one representing the HKSAR.

But something at the core of the city remains the same. It is these unchanged things that attracted Wong Yim Fat's friends back to Hong Kong. When they boarded Canadian or Australian airlines in 1997, convinced by media predictions that Hong Kong was doomed, they thought they had left for good.

Wong, 52, a fishery businessman, has a vivid memory of the historic moment, before and after. "Some of my friends were so scared and fled. Now some have come back and said they will never leave again," he said, evidently proud of his decision not to leave.

Since the day Hong Kong became a part of China's sovereignty, the world watched keenly. Would Hong Kong retain its role of free port? What did "one country, two systems" really mean? Those who predicted things would turn "ugly" had a louder voice, and some Hong Kongers even seriously thought about what books they should bring to read in prison.

Alive and kicking

Difficult times did come, but in unexpected ways. A financial crisis crept into Southeast Asia on only the second day of Hong Kong's return to China, and the city was soon preyed upon as an ATM machine by George Soros, a global financier. Property prices spiraled down by half and middle-class families panicked to find their assets turning into debts; severe acute respiratory syndrome (SARS) covered the whole city with surgical masks and bird flu emptied out local dinner tables where chickens were served everyday. There were moments of grief, pain, undermined confidence.
"My business was shrinking by 40 percent during the down period," said Wong. "All I had to do was to face it and work harder."

Hong Kongers did not fight alone. In March 1998, the then Chinese Premier Zhu Rongji promised that the Central Government would protect Hong Kong against the financial crisis "at all costs" if needed. It was reported that Soros dropped his teacup upon hearing of Zhu's statement. Even as Hong Kong crawled to a near standstill in the aftermath of SARS, the Central Government signed a Closer Economic Partnership Arrangement (CEPA) (see page 16) with Hong Kong to expand the market for the latter's products and services. Just as Rita Fan, President of Hong Kong's Legislative Council, had said, "Hong Kong's business opportunity is limited, while that on the Chinese mainland is limitless," so CEPA opened a huge market to Hong Kong.

The Individual Visit Scheme was then implemented to encourage individual tourists from mainland cities to tour Hong Kong; as a result, tourism started to boom in Hong Kong. Now for every two foreign tourists in Hong Kong, there is one from the Chinese mainland.

"[After SARS] nobody was in the mood to spend money. Only after mainlanders came to visit and consume, Hong Kong citizens gradually dare to buy things and dine at restaurants. CEPA and the Individual Visit Scheme saved Hong Kong," said Ian Fok Chun Wan, Chairman of the Chinese General Chamber of Commerce.

Closer cooperation between Hong Kong and the Chinese mainland not only boosted the former's economy, but also helped fuel the latter's dramatic economic growth. Both are still reaping the benefits. As the Chinese economy continues to develop and Chinese companies' thirst for global capital grows, Hong Kong can serve some demand well. Now the city ranks as the principal conduit to international financial markets and the natural destination of choice for Chinese companies to raise international funds. The Central Government also expanded renminbi (yuan) business to Hong Kong banks and encouraged enterprises from the mainland to seek IPO listing on the Hong Kong Stock Exchange. The year 2006 saw a succession of some of the largest IPOs in financial market history, including the biggest ever -the $21.9 billion offer by the Industrial and Commercial Bank of China.

Furthermore, Hong Kong has consolidated its position as a preeminent financial, trade and shipping center of the world. For the past 13 years, it has been dubbed the freest economy by the U.S.-based Heritage Foundation. The city is the 11th largest economy in the world. Hong Kong has surpassed New York to rank number 2 after London in terms of IPO listings. Its shipping volume has been listed as the highest in the world for 13 consecutive years. Its per-capita GDP in 2006 reached $27,100, creating a historic new high. The unemployment rate has dropped to 4.3 percent, its lowest level in five years. Hong Kong's Hang Seng Stock Index has soared from 15,200 in 1997 to 21,000.

Hong Kong has also been chosen to host the 2008 Olympic Equestrian Events. This is the first time the city will hold an Olympic event. This, together with Margaret Chan's election as WHO Secretary General, have further enhanced Hong Kong's image.

"The past 10 years saw some ups and downs, but in general, it was a decade of success. There are aspects that allow us to be proud," Donald Tsang, Chief Executive of the HKSAR Government, told Beijing Review. "Hong Kong is more consolidated, more mature than it was before 1997. It knows its way ahead more clearly."

The chief executive's words were echoed by Wong, the fish dealer. "I enjoy my life more than I did before 1997." He now spends a great deal of time on grassroots welfare, making proposals to the SAR administration to improve his neighborhood transportation facilities. Wong believes his efforts can make Hong Kong a better civil society to live in.

There are some who are seemingly even more optimistic. Jack Maisano, Chairman of the American Chamber of Commerce (AmCham) in Hong Kong, told that as many as 98 percent of AmCham members had expressed their satisfaction with the business environment of Hong Kong in general.

"For the past 18 years, we have been conducting a survey every year, to gauge our members' attitude on the overall business environment in Hong Kong. Over the past five years this survey has produced some of the most optimistic readings for the Hong Kong economic and business environment in the history of the survey," said Maisano.

The AmCham chairman attributed the key reasons for this optimism to the improving economic situation around the world, increasing economic progress in China, Hong Kong's economic integration with and proximity to the Chinese mainland, as well as the "support and help that China's mainland has given to Hong Kong."

"The fact that Hong Kong is part of China is exactly where the city's advantages lie," said Maisano. The economic development of the Chinese mainland has brought ongoing opportunities to Hong Kong, and the appeal of the city to international investors is unprecedented, said the AmCham chairman.

Keeping the faith

Confidence in a dynamic Hong Kong is a  direct result of the successful implementation of Deng's "one country, two systems" principle and the Basic Law of the Hong Kong Special Administration Region of the People's Republic of China, say experts analyzing the past decade. The "one country, two systems" principle was created by Deng to address the Hong Kong issue and others alike. The framework defines that within China, the mainland maintains the socialist system, while Hong Kong continues under the capitalist system. "Our policy toward Hong Kong will not change in the coming 50 years [after its return to China]. We will keep our promise," said Deng when addressing delegations from Hong Kong in 1984.

"The system is genius in two aspects. 'One country' recognizes the unique history that Hong Kong is part of China and had been under 150 years of British rule. 'Two systems' abides by both the Chinese mainland and Hong Kong," said Maisano. Hailing the practice a "big success," Maisano said he had heard businesspeople term what Hong Kongers are enjoying as "an ultra high level of autonomy."

"Comparing the present situation with that before 1997, we find the level of freedom is much higher," said Joseph C. K. Yam, Chief Executive of Hong Kong Monetary Authority. "Previously, if things happened, we had to call or send telegraphs to London. These practices stopped after 1997. Hong Kong people are ruling Hong Kong in its real sense."

"The Basic Law provides an unprecedented guarantee of basic human rights and freedom in Hong Kong," declared Wong Yan Lung, Secretary for Justice of the Department of Justice, the Government of the HKSAR. "The past 10 years have not only seen maintenance of the Basic Law but also development of the Law."

He further stated that since the Basic Law is in Chinese, local citizens understand it better. Before 1997, it was difficult for a citizen who could not speak English to file a lawsuit; he or she had to hire an English-speaking person to be an agent. Now it is much easier, as the Chinese language does the job.

"The implementation of 'one country, two systems,' as well as the principles enshrined in the Basic Law, are acknowledged by the local people and the world, including the British parliament and the U.S. Congress," Fan told Beijing Review. "The principle is just like a plant, which is rooted, though not deeply. The plant is now growing into a big tree."

The political development of Hong Kong, however, is still a process. Wong, the Secretary for Justice, admitted that there were some controversies surrounding the political development of Hong Kong. "Under new circumstances, there is space for problems to rise," he said. Hong Kong, with a new identity, has a long way to go with respect to political development.

Still evolving

Tsang listed Hong Kong's political development as one of the challenges of the future. He said the government has a concrete plan for dealing with this issue. "This summer we will issue a green paper on political development, to address the issue of universal suffrage."

The environment is also on his mind. "Raising the living standard of Hong Kongers, especially in terms of air quality, is a priority."

Recent polls show that the environment and pollution are a top concern among Hong Kong residents, including its temporary ones, and also among its elected heads, considering the fact that the government wants to attract skilled professionals to settle in Hong Kong over the long-term. For starters, Hong Kong has successfully implemented clean fuel programs, in which LPG-using vehicles have been exempted from fuel duty.

There are also voices that claim Hong Kong is in danger of being marginalized. As the economy of the Chinese mainland booms, some worry that Hong Kong's status as an international finance, shipping and trade hub will be threatened by cities such as Shanghai and Guangzhou.

Chief Executive Tsang dismissed this fear. "I see no aspect of Hong Kong being in malicious competition with cities on the Chinese mainland. What we have is favorable cooperation," Tsang told Beijing Review. He pointed out that Hong Kong can bring experience to mainland cities and the fast developing mainland cities provide support for Hong Kong. "The complementarity between them is strong, and Hong Kong has the right ingredients to be a dominant financial center."

Financial Secretary of the HKSAR Government Henry Tang said there were two principles in addressing these worries. Hong Kong should fortify its advantages in finance, services, shipping and tourism; meanwhile, the city should keep innovating.

Approximately 90 percent of employees in Hong Kong are in the service industry, the pride of the city. But some experts believe that the service industry alone cannot create fortune, and Hong Kong needs to perfect its economic structure and foster new economic growth points. "Hong Kong should have started its industrial upgrading as early as in the 1980s. But it lost its chance. Now Hong Kong must develop knowledge-based industry and science and technology," said Professor Wong Yuk Shan, Vice President of the Hong Kong University of Science and Technology.

However, science and technology need investment, and investment brings with it risks. Before 1997, government, business and industrial circles were not interested in investing in science and technology. "Sometimes, an 'active non-interference' policy can actually be an 'active non-support' one," said Professor Wong. According to him, the situation changed after 1997; if not for a series of unfortunate events, things would have been much better.

Nevertheless, some progress has been made under the support of the Innovation and Technology Commission of the HKSAR Government. So far, five new government-funded R&D centers have commenced operations to undertake industry-oriented research. The research is believed to be crucial for upgrading the industry base of Hong Kong in the Pearl River Delta, so that it moves up the value chain. Hong Kong cannot attain greater development without integrating with the Pearl River Delta and further. Professor Wong said, "The development prospects of Hong Kong rely on the whole region."

This is also true with another Wong, the fish dealer. "I do some business with the Chinese mainland, and now with my improving Mandarin level, I can do better," he said.

"I was a Hong Konger before 1997. Now I am a Chinese with Hong Kong citizenship. I know I can seek consulate protection from  Chinese embassies when traveling abroad," said Wong. "I am confident of the future of Hong Kong. So are my two sons." His sons are working in a consultation company and an advertising company respectively. Surely for the younger generation, the integration of Hong Kong with China's mainland will open up more opportunities.

Maisano has lived in Hong Kong for 25 years." The second time [you step into a river], it is already a different river. Hong Kong keeps changing and that's what makes it interesting all the time," he said.

More precisely, a changing Hong Kong with accompanying stability and predictability is perhaps what has kept him from leaving. At least here's one thing he can be sure about: that bay will always be called the Victoria Bay.

(Beijing Review June 2007)