Countdown to 1997: the people of Hong Kong worry about what lies in store for them as China takes over the British colony.

Fortune Magazine is an influential business journal. In 1994, it said that Hong Kong was one of the best places in the world to do business. Eight months later, the editors at Fortune changed their minds; Hong Kong, they said, is in danger of becoming an economic backwater. Why the switch? The signals coming out of Beijing have thrown doubt on the colony's future.

First, let's back up a century and a half. This was a time when the British had state-of-the-art warships sailing on all the world's oceans. These warships protected Britain's colonies and traders and allowed the British government to throw its weight about pretty much as it wanted.

British merchants had set up a very profitable business on China's coast. They brought large quantities of opium from India and sold it to the Chinese. With the money raised through this illegal trade they bought tea for sale back in Britain. In the late 1830s, the British were selling opium the rate of 2.5 million kilos a year. This fed the addiction of tens of thousands of Chinese.

The Chinese Emperor tried to stop the t r a d e that was destroying the lives of so many Chinese. This didn't go down well with the British who sent their fleet to teach the emperor a lesson about who had in the world who didn't. The Emperor was a quick learn and, in 1842, China signed the humiliating Treaty of Nanjing, part of which handed Hong Kong over to the British.

Created a Crown Colony, Hong Kong became a monument to capitalism. It grew rapidly and more land was leased from China in 1898. That lease was for 99 years so, in 1997, the land reverts to China. With the expiry of the lease approaching, Britain and China sat down to negotiate a future for Hong Kong.

Under a 1983 agreement, all of Hong Kong reverts to Chinese control at the end of June 1997. In return for the British pull-out, China promised to leave the current economic system untouched for 50 years. Beijing also promised to respect existing freedoms of speech, press, assembly, association travel, right to strike, a religious belief.

However, economics is what drives Hong Kong, and most observers thought China wouldn't try to change a system that provided an ideal gateway to the rest of the world. Most observers have now changed their minds. As China embraces free enterprise it no longer needs the introduction to capitalism that Hong Kong would have given it. Norman Miners is a senior lecturer in political science at Hong Kong University. He sums up the Chinese attitude bluntly: "China will do what it wants with Hong Kong, and damn the consequences."

With the 1983 agreement signed, Britain began dismantling its colonial rule. In 1992, Christopher Patten arrived as Governor. It was his j ob to oversee an orderly and peaceful transfer of power. Mr. Patten proved to be no bureaucratic paper-shuffler. He had some ideas of his own he thought worth a try; such as planting the seeds of democracy before the takeover.

As a colony, Hong Kong has never been bothered much by the sometimes messy business of democracy. Most power resided in the hands of the Governor. Mr. Patten set up a Legislative Counci (Legco) and gave it some powers. In September 1995, there was an election -- Hong Kong's first -- and a million voters turned out. The people voted heavily in favour of parties calling for increased democracy; they all-but ignored the pro-China party. Its secretary-general was bitter in defeat: "Hong Kong people have to pay for it," he said. "They should have considered the consequences of voting for the democrats."

Remarks like that cause the people of Honk Kong to develop a serious case of the jitters. Few Hong Kongers believe China will honour its pledge to leave the system untouched for half a century. Indeed, Beijing says one of the first things it will do in 1997 is disband Legco. The seeds of democracy, it seems, will not be given a chance to grow and blossom. The guarantees for a free press and an independent high court look like they may have a short lifespan too.

Nervousness about China's plans is one of the reasons Fortune Magazine suddenly became cautious about advising people to invest in what has been one of the world's economic powerhouses.

SUGGESTED ACTIVITY:

Britain's Home Secretary is responsible for the administration of passports and British citizenship. There are 3.3 million people in Hong Kong who hold British passports. In 1990, the government decided that only 50,000 heads of household and their dependents would be allowed to take up permanent residence in Britain. On the other hand, the Governor of Hongkong believes Britain has a moral duty to take in as many o Hhongkong British passport holders as want to settle there. Have students role-play the two officials in a debate over the issue. (A leader in the 30 September 1995 issue of The Economist summarizes many of the arguments).