Hong Kong, 5 February 1997 (RFE/RL) -- A U.S. academic, Chalmers Johnson, once posed this question to Chinese Communist officials: Will Beijing kill the prosperity of Hong Kong, one of the world's most dynamic economies, after the British colony reverts to Chinese rule?
Johnson told the officials that, in his view, China is in danger of "killing the goose that laid the golden egg." The answer he received was disquieting. One Chinese official looked him straight in the eye, and replied: "China's history is littered with dead geese."
Johnson, president of the San Diego-based Japan Policy Research Institute and an authority on China, tells the story to illustrate his concern that Chinese Party bureaucrats may undermine Hong Kong when the British haul down the Union Jack on June 30.
"Pure economics are not as powerful as some theorists argue: the Chinese will not suddenly behave as though they are graduates of the Wharton Business School," he said.
China's paramount leader Deng Xiaoping has pledged to let this small territory on the coast of Southern China retain its capitalist system and freedoms for 50 years after the handover.
But many of Hong Kong's 6.4 million, mostly Cantonese, people are skeptical. Older people remember what happened to Shanghai after the communist victory in 1949, when Mao Zedong's promise that it would remain a free city lasted only three months.
But Chinese communism has mutated in recent years.
"Communism is finished, having been replaced by nationalism. High-speed economic growth is now the legitimating factor behind the government," said Johnson. He predicts China will emerge as the world's fastest growing economy, and, based on its present high growth rates, is set to surpass the United States by the year 2010.
Hong Kong has long been China's main window to the outside world and has provided an estimated two-thirds of its direct foreign investment ($195 billion) over the past two decades.
Much of this money has come from the 60 million overseas Chinese, some of the richest and most highly-educated people in the world, whose cash dominates the economies of the entire Southeast Asian region. By one estimate, the gross annual output of the Chinese in diaspora is $450 billion, a quarter bigger than China itself.
"Without them China will be not be able to develop," says Johnson.
Hong Kong's economy is inextricably linked with the mainland. There are 15,000 Mainland Chinese-owned firms in the colony. The People's Liberation Army has invested millions of dollars in Hong Kong real estate. The Bank of China is now the second biggest in Hong Kong.
The interdependence of the two economies is evident just across the Chinese frontier where one of China's Special Economic zones, Shenzhen, with its high-rise buildings and skyscraper with a revolving tower, now looks almost indistinguishable from Hong Kong itself.
Scores of Hong Kong firms have moved their plants to Shenzhen. Semi-capitalism reigns, wages are lower, and it is said to be a base for heroin smuggling, money laundering, and the distribution of "hot" cars stolen in Western cities and towed into Shenzhen by fishing boats in giant balloons floating just below the muddy surface of the sea.
So can Hong Kong count on continued prosperity? Some analysts are doubtful. They say the economic liberalization of China and the growing sophistication of neighboring southeast Asian countries is eroding the historically strategic role of Hong Kong. Foreign firms are finding it more advantageous to relocate to Beijing or Shanghai.
In addition, the high exchange rate of the Hong Kong dollar and the astronomic costs of Hong Kong's property are making it too expensive for many firms.
A typical 74-square-meter apartment in central Hong Kong now costs $564,000 to buy -- far higher than in London or Paris.
Moreover, China's capital needs are so enormous that only one financial market can satisfy them: not Hong Kong, but Wall Street.
In the 1930's and 1940's, Hong Kong was known as a sleepy British colonial outpost with more rickshaws than telephones. In those days, it was memorably described as "Asia's best-illuminated graveyard."
That was before the 1949 fall of Shanghai, which sent a huge influx of Shanghai brains and money into the colony, and before the Korean War, which halted Western trade with China and turned the free port into one of the world's most productive manufacturing and financial centers.
Some conclude that the main danger to Hong Kong -- notwithstanding the veiled threats of Communist officials -- are now economic factors, not political ones. They predict that it will remain an important southern Chinese city, but it will lose its long-time status as a window into China.