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NATHAN  FENBY 

DEALING 

WITH  THE 

DRAGON 

A  YEAR  IN  THE 
NEW  HONG  KONG 


Also  by  Jonathan  Fenby 

ON  THE  BRINK:  THE  TROUBLE  WITH  FRANCE 

THE  INTERNATIONAL  NEWS  SERVICES 

PIRACY  AND  THE  PUBLIC 

THE  FALL  OF  THE  HOUSE  OF  BEAVERBROOK 


DEALING 

WITH  THE 

DRAGON 

A  Year  in  the 
New  Hong  Kong 


JONATHAN  FENBY 


-Ho 

1  Spadina  Crescent,  Rm.  Ill*  Ibronto,  Canada  •  M5S  1A1 


LlTTLE,  Brown  and  Company 


A  Little,  Brown  Book 

First  published  in  Great  Britain  in  2000 
by  Little,  Brown  &  Company 

Copyright  ©  2000  by  Jonathan  Fenby 

PICTURE  CREDITS 

1:  Ming/ South  China  Morning  Post; 

2,  6,  7,  8,  9,  12,  14,  15:  Popperfoto/Reuters; 

3,  4,  5,  10,  11,  16:  AFP;  17:  SCMP 

The  moral  right  of  the  author  has  been  asserted. 

All  rights  reserved. 
No  part  of  this  publication  may  be  reproduced, 

stored  in  a  retrieval  system,  or  transmitted, 

in  any  form  or  by  any  means,  without  the  prior 

permission  in  writing  of  the  publisher,  nor  be 

otherwise  circulated  in  any  form  of  binding  or  cover 

other  than  that  in  which  it  is  published  and  without 

a  similar  condition  including  this  condition  being 

imposed  on  the  subsequent  purchaser. 

A  CIP  catalogue  record  for  this  book 
is  available  from  the  British  Library. 

ISBN:  0  316  85415  8 

Maps  by  Neil  Hyslop 

Typeset  in  Bembo  by  M  Rules 

Printed  and  bound  in  Great  Britain  by 

Clays  Ltd,  St  Ives  pic 


Little,  Brown  &  Company  (UK) 
Brettenham  House 

Lancaster  Place 
London  WC2E  7EN 


To  Renee 


Digitized  by  the  Internet  Archive 

in  2010  with  funding  from 

Multicultural  Canada;  University  of  Toronto  Libraries 


http://www.archive.org/details/dealingwithdragoOOfenb 


GuewqzJiou 


'Macau  HohSKom9 

South  China  Sea 


Note 

At  the  time  of  writing,  currency  conversion  rates  were  as  follows: 

£i  =  HK$i2.50 

US$i  =  HK$7.78 


Hong  Kong 


T 


his  is  the  story  of  a  year  in  the  life  of  a  unique  place,  long  known 
for  its  material  superlatives  but  now  also  the  scene  of  an  unparal- 
leled political  experiment.  It  also  happens  to  be  the  last  year  of  a 
century  in  which  Hong  Kong  grew  from  being  a  small,  unconsidered 
fragment  of  the  predominant  empire  on  the  planet  to  a  treasure  house 
whose  wealth  was  proportionately  greater  than  that  of  the  colonial 
master  on  the  other  side  of  the  globe.  More  recently,  it  has  undergone 
a  unique  passage  from  being  the  final  major  possession  of  a  liberal 
democracy  to  becoming  the  freest  city  in  the  last  major  power  ruled  by 
a  Communist  party.  A  meeting  place  of  East  and  West  at  the  crossroads 
of  the  twenty-first  century,  this  territory  of  only  a  thousand  square 
kilometres  and  6.8  million  people  has  a  gross  domestic  product  of 
US$175  billion  and  the  world's  fourth  largest  foreign  exchange  reserves. 
An  accident  of  history  and  geography,  it  has  become  a  theatre  for 
major  questions  of  our  times,  not  in  theory  but  in  everyday  life. 

Since  British  rule  ceased  at  midnight  on  30  June  1997,  the  Hong 
Kong  Special  Administrative  Region  (SAR)  of  the  Peoples  Republic  of 
China  has  been  the  most  advanced  and  richest  city  in  the  biggest  devel- 
oping nation  on  earth.  As  it  boomed  in  the  1980s  and  1990s  on  the 
back  of  the  opening-up  of  mainland  China,  what  had  once  been  dis- 
missed as  a  rocky  outcrop  of  little  interest  to  Victorian  empire-builders 
attracted  international  companies  in  their  thousands  to  make  it  one  of 


2  Dealing  Wiih  the  Dragon 

the  great  cosmopolitan  metropolises.  Apart  from  its  95  per  cent  Chinese 
population  and  its  own  dealings  with  the  mainland,  it  has  long  been  the 
unofficial  capital  of  the  diaspora  of  100  million  overseas  Chinese,  who 
see  Hong  Kong  as  a  safe  haven  for  their  money  and  as  a  gateway  to  the 
mother  country.  Going  in  the  other  direction,  it  has  been  the  main 
conduit  for  funds  coming  out  of  China,  legally  or  illegally,  some 
destined  for  licit  investment,  others  moving  through  clandestine  chan- 
nels; and  for  spectacular  criminals  moving  to  and  from  the  mainland. 

Coming  out  of  a  long  and  deep  slump,  the  SAR  still  has  more  bil- 
lionaires than  its  former  sovereign.  Even  in  the  depths  of  recession, 
the  best-known  tycoon,  Li  Ka-shing,  whose  empire  stretches  from 
property  and  container  ports  to  supermarkets  and  mobile  telephones, 
took  tenth  place  in  the  listing  of  the  world's  mega-rich  by  Forbes 
magazine.  Income  tax  is  a  flat  15  per  cent,  and  only  a  quarter  of  the 
population  pays  it.  The  wealthy  are  further  comforted  by  the  absence 
of  tax  on  dividends  or  capital  gains.  'Here,  the  money  we  make,  we 
keep,'  as  the  owner  of  a  big  Chinese  herbal  pill  business  puts  it. 
When  it  changed  sovereign  powers  in  1997,  Hong  Kong  made  up  20 
per  cent  of  China's  wealth,  with  0.5  per  cent  of  the  mainland's  pop- 
ulation. The  head  of  its  government  earns  HK$287,i4i  (-£23,000)  a 
month  -  more  than  his  counterparts  in  the  US,  Britain  or  Japan.  His 
number  two,  the  Chief  Secretary  for  Administration,  who  heads  the 
civil  service,  is  paid  HK$229,7i3  a  month,  and  the  Financial 
Secretary,  the  equivalent  of  the  Chancellor  of  the  Exchequer, 
HK$2i7,i49.  Dwarfing  their  pay,  the  golf-champion  boss  of  the  cen- 
tral bank  gets  eight  times  as  much  as  the  chairman  of  the  US  Federal 
Reserve  Board.  Leading  barristers  can  pull  in  45  per  cent  more  than 
their  London  counterparts.  In  the  1997  bull  market,  the  stock 
exchange  was  the  sixth  biggest  in  the  world,  and  membership  deben- 
tures at  the  main  golf  club  cost  £1  million. 

Despite  a  poor  construction  safety  record,  pollution,  and  bureau- 
cratic blunders  such  as  paying  China  the  equivalent  of  £130  million  a 
year  for  water  which  overflows  into  the  sea,  Hong  Kong  is  generally 
a  model  of  urban  development.  It  has  a  superb  infrastructure  and  a 
spectacular  new  airport,  reached  over  the  world's  longest  two-level 
suspension  bridge  to  the  mountainous  island  of  Lantau.  The  harbour, 


Hong   Kong    .   .   .  3 

which  has  ranked  as  the  world's  most  used  container  terminal  in  all 
but  three  of  the  last  twelve  years,  is  a  constantly  shifting  pattern  of 
slow  ferries  and  fast  ferries,  jet  foils,  tugs  and  container  barges,  cargo 
ships,  rusting  liners  that  ply  up  the  China  coast,  sampans,  powerboats 
and  yachts,  cruise  liners,  corporate  entertainment  launches,  visiting 
warships,  a  big  brightly-lit  blue  and  white  gambling  craft  which  takes 
punters  on  trips  out  of  Hong  Kong  waters,  and  the  emblematic  green 
and  white  Star  Ferry  shuttling  endlessly  between  Hong  Kong  Island 
and  the  Kowloon  peninsula. 

The  local  anthem  is  the  sound  of  the  pneumatic  drill;  the  national 
bird  should  be  the  crane.  Sheer  walls  of  apartment  blocks  perch  on  the 
edge  of  steep  slopes.  Plans  for  new  buildings  rise  a  hundred  floors  up 
into  the  sky.  Though  too  many  developments  are  unimaginative  con- 
crete, glass  and  steel  towers  designed  to  make  the  most  money  from 
the  allotted  plot  ratio,  there  is  no  finer  office  building  in  the  world 
than  the  triangular  masterpiece  designed  by  I.  M.  Pei  for  the  Bank  of 
China  which  dominates  the  Hong  Kong  skyline.  If  road  traffic  is 
increasingly  caught  in  gridlock  in  busy  areas,  the  territory's  transport 
network  encompasses  an  underground  system  to  put  most  others  to 
shame,  along  with  surface  trains,  trams,  minibuses,  double-deckers, 
shuttles,  ferries,  taxis,  three  cross-harbour  tunnels,  three  tunnels 
through  the  mountains,  plus  the  funicular  railway  up  the  Peak  tower- 
ing over  Hong  Kong  Island.  Carrying  half  the  territory's  population 
each  day,  the  underground  Mass  Transit  Railway  (MTR)  is  the  world's 
most  heavily  used  people-carrier,  and  probably  the  most  efficient.  As 
for  other  means  of  getting  around,  taxis  are  cheap,  the  flat  fare  on  the 
tram  is  16  pence,  and  you  can  cross  the  harbour  on  the  upper  deck  of 
the  ferry  for  only  a  penny  more. 

Above  ground  is  an  amazing  array  of  road  bridges,  overhead 
pedestrian  walkways  and  an  800-metre-long  escalator  system  up  the 
slopes  above  the  main  business  district.  The  sprawling  squatter  camps 
without  electricity  or  running  water  that  once  housed  refugees  and 
were  the  scene  of  massive  fires  and  landslip  disasters  have  long  gone. 
But  there  are  still  indigent  'street  sleepers'  and  'cage  homes'  occupied 
by  unmarried,  unemployed,  unskilled  men  who  live  in  railed-off 
bunk  spaces.  The  early  housing  estates  with  their  shared  toilets  and 


4  Dealing  With  the  Dragon 

communal  cooking  facilities  belong  to  history.  Still,  space  is  often 
woefully  inadequate,  with  an  average  of  under  500  square  feet  per 
home.  More  than  100,000  people  live  in  temporary  accommodation. 
But  the  vast  blocks  of  public  flats  built  on  what  were  once  rice  pad- 
dies or  virgin  land  have  made  Hong  Kong  -  for  its  size  -  the  site  of 
one  of  the  world's  major  urban  housing  developments. 

Though  the  potential  for  fast  or  long  driving  is  severely  limited  by 
the  small  size  and  steep  geography  of  the  place,  there  are  more  luxury 
limousines  per  head  of  population  here  than  anywhere  else  on  earth. 
The  owners  of  the  flat  on  top  of  the  apartment  block  my  wife  and  I 
lived  in  kept  a  black  stretch  limousine  waiting  permanently  downstairs 
but  never  seemed  to  use  it.  The  son  of  the  house  switched  between 
Porsches  and  Ferraris  with  the  occasional  Maserati  thrown  in.  The  last 
time  we  visited  the  home  of  the  leader  of  one  major  political  group, 
he  had  a  large  Mercedes,  a  Porsche  and  a  Ferrari  in  the  driveway,  and 
a  Rolls  inside  the  garage. 

Real-estate  and  textile  barons  rendezvous  in  secluded  coves  in  the 
South  China  Sea  on  Sunday  afternoons  aboard  huge,  personally 
designed  luxury  boats  made  in  Italy,  with  resident  chefs  and  dining 
rooms  as  big  as  the  average  flat:  one  can  seat  eighteen.  Although  the 
boats  could  sail  the  globe,  they  generally  don't  venture  far  for  fear  of 
pirates,  and  watchful  crew  members  keep  their  eyes  open  for  kidnap- 
pers. One  younger  socialite  doesn't  go  anywhere  at  all.  He  keeps  his 
yacht  permanently  moored  in  a  bay  on  the  south  side  of  the  island  to 
be  used  as  a  floating  dining  room:  the  champagne  is  Dom  Perignon 
and  the  cheese  is  flown  in  from  France  to  order. 

Hong  Kong  is  home  to  more  luxury  hotels  than  any  other  place  o£ 
its  size,  and  almost  certainly  holds  the  record  for  atrium  space.  With 
one  eating  establishment  for  every  650  inhabitants,  it  may  well  also 
have  the  highest  restaurant  penetration,  including  five  of  the  ten 
busiest  McDonald's  outlets.  Times  Square  in  the  Causeway  Bay  dis- 
trict of  Hong  Kong  Island  is  one  of  the  world's  two  busiest  shopping 
centres,  and  few  other  cities  have  such  a  concentration  of  retail  out- 
lets -  from  the  luxury  stores  of  the  Central  District  and  the  jostling 
shops  of  Tsim  Sha  Tsui  across  the  harbour  to  the  streets  round  the 
Wanchai  market  with  their  stalls  selling  meat,  vegetables,  fruit,  dried 


Hong   Kong...  5 

fish,  shoes,  women's  panties,  videos,  watches,  nuts,  flowers,  towels  and 
food  from  all  over  South-East  Asia. 

The  streets  are  alive  not  only  with  the  sound  of  people,  but  with 
signs  jutting  out  overhead:  in  the  first  hundred  yards  of  Mody  Road 
in  Tsim  Sha  Tsui,  you  walk  under  signs  for  Baron  King's  Tailor,  Rio 
Pearl,  Nikon,  Surge  Restaurant,  Hong  Kong  Fur,  Spring  Deer 
Restaurant,  Kam  Chien  Shoe  Store,  Tourist  House,  Maclary  Fashions, 
Holdrich  Guest  House,  Laser  People,  Club  38,  Sandalwood  Club, 
Fantastic  Beauty  and  Image,  Home  Town  Guest  House  and  the  Choy 
Kee  Cleaning  Service. 

While  under  British  rule,  Hong  Kong  created  templates  for  popu- 
lar culture  -  Cantopop  and  kung  fu  —  that  had  absolutely  nothing  to 
do  with  the  colonisers,  even  if  some  of  the  stars  took  names  like 
Bruce,  Aaron  and  Lionel.  The  territory's  take-no-prisoners  crime 
epics  made  directors  like  John  Woo  into  post-modernist  icons. 
Though  the  film  output  is  only  a  quarter  of  what  it  was  in  the  early 
1990s,  the  major  attraction,  Jackie  Chan,  is  one  of  the  most  popular 
stars  in  the  world.  Chow  Yun-fat,  who  was  voted  Premiere  magazine's 
'sexiest  action  star  of  1999'  before  becoming  the  King  of  Siam  to  Jodie 
Foster's  Anna,  was  striking  serious  attitudes  with  a  matchstick  in  the 
side  of  his  mouth  well  before  Quentin  Tarantino  drew  his  inspiration 
for  Reservoir  Dogs  from  Hong  Kong  gangster  flicks. 

This  is  media  city  incarnate.  With  a  population  equivalent  to  that 
of  London,  it  supports  no  fewer  than  fifteen  newspapers.  In  the  go-go 
years  around  1997,  the  dominant  English-language  daily  made  a  pre- 
tax profit  equivalent  to  £60  million.  Hong  Kong  is  awash  with 
magazines,  and  the  air  buzzes  with  in-your-ears  radio:  one  leading 
talkshow  host  so  offended  somebody  that  he  was  the  target  of  a  severe 
attack  with  a  chopper  that  left  him  badly  maimed.  As  for  television,  an 
executive  reckons  Hong  Kong's  programmes  are  watched  by  16  mil- 
lion people  across  the  border. 

Business  rules,  and  its  practitioners  are  lords  of  the  universe.  There 
is  nothing  new  about  this:  the  only  public  statue  in  the  Central 
District  is  of  a  Victorian  general  manager  of  the  Hong  Kong  Bank. 
Names  of  firms  and  buildings  translated  from  Chinese  reflect  the  as- 
pirations and  preoccupations  of  owners  and  inhabitants  -  Brilliant 


6  Dealing  With  the  Dragon 

Trading,  Joyful  Construction,  Good  Luck  Corrugated  Carton,  or 
Tycoon  Court,  Wealthy  Heights,  Good  Results,  Prosperity  Centre 
and  Everprofit. 

A  ranking  of  top  wealth  creators  in  Asia  at  the  end  of  1999  placed 
seven  Hong  Kong  firms  in  the  top  ten.  Business  figures  regularly  lead 
polls  of  the  territory's  most  admired  people,  and  their  interests  stretch 
across  the  globe.  Apart  from  major  investments  on  the  mainland  of 
China,  they  own  real  estate  by  the  Thames,  the  Hudson  and  the 
Pacific  coast  of  North  America,  luxury  hotels  from  Tokyo  to 
Knightsbridge,  textile  works  in  Cambodia  and  Pringle  knitwear  in 
Scotland,  the  Harvey  Nichols  store  in  London,  sheep  farms  and  elec- 
tric power  stations  in  Australia,  palm  oil  plantations  in  Indonesia  and 
container  ports  in  Felixstowe  and  the  Panama  Canal.  Hong  Kong 
entrepreneurs  turn  out  goods  for  top  American  brand  names,  operate 
casinos  in  North  Korea  and  ski  resorts  in  Canada,  and  bankrolled 
Donald  Trump's  latest  development  on  the  West  Side  of  Manhattan. 

They  are  renowned  as  flexible,  on-the-ball  traders.  Few  restrict 
themselves  to  a  single  line  of  activity.  Property,  garments,  shipping,  the 
Internet,  mobile  phones,  retailing,  the  stock  market  and  mainland 
China:  mix  and  match  to  maximise  profits.  As  middlemen,  they  set  up 
deals  around  the  globe  at  the  drop  of  a  fax,  an  e-mail  or  a  telephone 
call.  They  employ  millions  of  people  at  factories  in  China  turning  out 
export  goods  that  have  fuelled  the  mainland's  economic  rise.  Costs  at 
home  are  too  high  to  allow  Hong  Kong  to  compete.  So  what  was 
once  a  low-cost  centre  turning  out  cheap  clothes,  toys,  watches,  wigs 
and  a  hundred  other  products  has  seen  its  manufacturing  shrink  dra- 
matically, leaving  a  pool  of  middle-aged  and  elderly  men  and  women 
without  work  or  a  future. 

The  destiny  of  the  once  mighty  textile  industry  stands  as  a  measure 
of  the  changes  in  the  last  two  decades,  and  of  the  flexibility  of  Hong 
Kong's  business  culture.  In  1980  textiles  accounted  for  23  per  cent  of 
the  economy;  now  this  is  down  to  6.5  per  cent.  The  industry's  work- 
force of  93,000  in  1995  was  58,000  two  years  later.  Holding  a  quota 
licence  to  export  textile  goods  to  the  West  remains  a  ticket  to  riches, 
but  the  sweaters  and  jeans  and  T-shirts  do  not  have  to  be  made  in 
Hong  Kong.  So  the  quota-holders  either  moved  their  factories  to 


Hong   Kong...  7 

southern  China  where  wages  were  far  lower,  or  subcontracted  pro- 
duction to  others  and  pulled  down  their  factories  to  make  way  for 
real-estate  developments. 

From  the  heights  of  the  Peak  to  people  scrabbling  with  bank  over- 
drafts to  get  on  the  escalator  to  wealth,  property  dominates.  Go  out  to 
a  friendly  dinner,  and  the  prices  of  flats  -  there  are  few  houses  here  - 
will  inevitably  come  up  at  some  point.  Property  tycoons  are  the  mas- 
ters of  the  city.  Li  Ka-shing  is  known  simply  as  'Superman'.  Lee 
Shau-kee  of  Henderson  Land  earned  a  cool  US$1.1  billion  from  divi- 
dends alone  in  1997.  A  real-estate  heiress,  Nina  Wang,  was  listed  as  the 
richest  working  woman  on  earth  with  US$7  billion  to  her  name. 
Property  companies  constitute  30  per  cent  of  stock  market  capitalis- 
ation. Solicitors  become  multi-millionaires  on  conveyancing  fees.  Ask 
many  a  Rolls-Royce  or  Mercedes  owner  where  his  money  comes 
from:  he  will  name  his  business,  but  then  add,  'Of  course,  the  real 
money's  from  property.'  The  Mass  Transit  Railway  system  is  building 
massive  office  and  apartment  blocks  on  top  of  its  stations;  the  latest 
project  is  for  a  102-storey  office  tower  in  Kowloon.  After  the  territory's 
leading  gangster  was  caught  in  1998,  he  was  found  to  own  thirty-one 
pieces  of  real  estate.  At  the  other  end  of  the  scale,  tenants  of  public 
housing  are  being  urged  to  get  into  the  game  by  buying  leases  on  their 
homes.  In  any  case,  demand  usually  exceeds  supply.  Apart  from  the 
Anglican  cathedral,  all  land  belongs  to  the  government,  and  it  parcels 
it  out  carefully  at  land  auctions,  drawing  40  per  cent  of  its  revenue  from 
sales  of  leases,  redevelopment  fees  and  stamp  duty. 

The  result  is  both  some  of  the  highest  prices  in  the  world  and  great 
population  density.  The  Kwun  Tong  area  of  Kowloon  has  54,000 
people  per  square  kilometre.  Such  is  the  pressure  on  space  that  Hong 
Kong  is  riddled  with  6,000  illegal  structures.  The  soaring  property 
prices  and  the  government's  income  from  them  are  the  territory's 
hidden  tax.  It  is  not  just  a  matter  of  housing:  real-estate  inflation 
constitutes  a  major  element  in  the  high  cost  of  shopping,  eating  out 
or  doing  business. 

Speculation  is  not  confined  to  the  rich.  Visiting  flats  is  a  local  pas- 
time. Foreign  property  is  snapped  up  sight  unseen  at  exhibitions  in 
plush  hotels.  A  software  salesman  and  his  secretary  wife  I  know  had 


8  Dealing  With  the   Dracon 

three  flats  in  Hong  Kong  during  the  mid-1990s  bubble,  plus  a  house 
in  Beijing.  They  also  bought  a  one-bedroom  flat  in  the  former 
County  Hall  in  London  at  a  property  road  show  in  Hong  Kong,  but 
soon  sold  it,  never  having  set  eyes  on  their  place  by  the  Thames.  Li 
Ka-shing  tells  of  being  approached  during  an  early  morning  golf 
round  by  a  greens  sweeper  wearing  the  traditional  wide-brimmed  hat 
of  the  original  inhabitants  of  Hong  Kong,  the  Hakkas.  She  said  the 
flats  she  had  bought  from  his  company  had  been  hit  by  the  slump,  and 
asked  him  not  to  sue  her  if  she  fell  behind  with  the  payments.  How 
many  flats  had  this  woman  bought?  Four.  'I  bluntly  told  her  that  she 
should  not  do  that  with  her  income  level,'  Li  concluded.  'And  I  asked 
her  not  to  disturb  my  golf  game.' 

Between  1984,  when  an  agreement  between  Britain  and  China 
removed  uncertainty  about  Hong  Kong's  future,  and  the  great  Asian 
crash  of  1997,  property  values  rose  by  2,000  per  cent,  with  the  aver- 
age price  of  luxury  accommodation  hitting  £1,500  a  square  foot. 
High  inflation  meant  low,  or  even  negative,  real  interest  rates.  The 
currency  was  rock  solid,  pegged  to  the  US  dollar.  Demand  was 
booming.  No  wonder  that  this  small  parcel  of  land  bereft  of  natural 
resources  and  without  enough  food  or  water  to  sustain  itself  came  to 
outstrip  its  colonial  sovereign  in  the  wealth  stakes. 

Geography  has  always  been  a  key  to  success  here.  As  the  estate 
agents  say,  what  counts  is  location,  location  and  location.  Perched  on 
the  flank  of  the  great  dragon  of  China,  Hong  Kong  has  been  perfectly 
placed  as  an  entrepot  city,  a  channel  for  goods,  people  and  services.  As 
an  outpost  of  "Western  good  practices,  with  a  clean  civil  service  and  a 
reliable  legal  system,  it  has  benefited  from  a  trust  that  the  West  is  still 
hesitant  about  extending  to  the  mainland.  Hence  its  eminence  as  a 
container  port,  and  its  position  as  the  centre  for  financial,  legal  and 
managerial  services  for  companies  operating  in  China.  If  Hong  Kong 
became  part  of  the  People's  Republic  in  1997,  geography  still  gives  it 
the  destiny  of  being  a  bridge  between  the  mainland  and  the  rest  of  the 
world.  But  that  location  also  makes  Hong  Kong  much  more  fragile 
than  such  a  rich  and  successful  place  should  be.  It  is  at  the  mercy  of 
events  it  cannot  influence,  far  away  in  America,  nearer  at  hand  in 
Tokyo,  or  across  the  border  in  the  rest  of  China. 


Hong   Kong...  9 

The  currency  link  to  the  US  dollar  means  that  monetary  policy  is 
made  by  the  Federal  Reserve  in  Washington.  Changes  in  US  policy 
towards  Beijing  have  major  consequences  for  Hong  Kong.  Japan's 
enormous  weight  in  the  Asian  economy  cannot  be  escaped.  Most 
of  all,  there  is  the  China  factor:  increasingly,  it  cuts  both  ways.  If 
mainland  economic  development  stalls,  Hong  Kong  will  feel  the 
repercussions  first.  If  Beijing  devalues  its  currency,  could  the  Hong 
Kong  dollar  resist  the  pressure  to  foDow  suit?  If,  on  the  other  hand, 
the  looming  superpower-in-the-making  relates  to  the  world  and 
ploughs  its  own  furrow  in  the  international  economy,  there  will  be 
much  less  need  for  the  Hong  Kong  bridge. 

If  that  happens,  how  many  firms  will  follow  the  example  of  the 
French  communications  company  Alcatel,  which  has  made  Shanghai 
its  regional  headquarters,  or  the  electronics  division  of  Philips,  which 
has  moved  its  top  management  executives  to  the  mainland?  If 
Shanghai  can  reinvent  itself  as  a  great  world  centre,  with  double  the 
population  and  the  huge  backdrop  of  the  Yangtze  basin,  who  needs 
this  pimple  on  the  backside  of  the  dragon  to  the  north?  If  container 
ports  in  southern  China  can  undercut  Hong  Kong,  why  transport 
goods  through  the  SAR?  An  artificial  place,  created  by  refugees  and 
colonialists,  Hong  Kong  could  then  move  to  the  wings  of  China's 
evolution.  An  early  beneficiary  of  globalisation,  it  could  be  margin- 
alised by  the  biggest  global  link-up  of  all  between  1.2  billion 
consumers  and  the  rest  of  the  planet. 


Like  any  people  living  on  the  edge,  the  inhabitants  of  Hong  Kong 
have  more  than  their  share  of  contradictions.  They  are  famed  for 
their  entrepreneurial  spirit,  but  local  Chinese  firms  are  run  on  a  strict 
top-down  basis.  Bosses  command  huge  deference,  and  do  not  expect 
to  be  argued  with.  Delegation  is  seen  as  a  potential  source  of  weak- 
ness. The  result  can  be  a  stultifying  absence  of  initiative  as 
decision-making  is  referred  upwards  and  executives  avoid  taking 
responsibility  for  fear  of  incorrectly  anticipating  the  wishes  of  the 
man  on  high.  Within  companies,  'little  potato'  employees  know  their 
place,  though  the  more  adventurous  waste  no  time  in  striking  out  on 


io  Dealing  With  the   Dragon 

their  own  to  fuel  the  constant  flow  of  new  businesses  which  give 
Hong  Kong  its  special  dynamic. 

However  sophisticated  the  city  may  be,  it  is  still  subject  to  old 
superstitions  and  new  scares.  Women  with  big  mouths  are  considered 
bad  news  because  they  'eat'  the  family's  luck  and  money.  Various 
foods  are  imbued  with  special  powers.  Eat  lotus  seeds  to  have  a  child 
within  the  year;  water  chestnuts  promise  good  fortune;  candied 
coconut  stores  up  family  togetherness  down  the  generations;  peach 
blossoms  denote  longevity,  jonquils  prosperity,  and  camellias  rebirth. 

A  massive  apartment  block  on  the  south  side  of  Hong  Kong  Island 
has  a  large  hole  in  the  middle  to  allow  evil  spirits  to  pass  through 
without  causing  any  damage.  An  executive  of  a  start-up  software  firm 
pointed  down  from  his  twenty-sixth-floor  office  at  the  traffic  coming 
and  going  on  an  expressway  below  as  a  sign  that  if  money  flowed  out 
it  would  certainly  return.  In  1997,  Hong  Kong's  Chief  Executive 
used  the  supposed  bad  feng  shui  of  the  residence  of  the  former  col- 
onial governors  -  which  has  the  sharp  edge  of  the  Bank  of  China 
building  pointing  directly  at  it  -  as  an  excuse  for  not  moving  in. 
Asked  by  the  South  China  Morning  Post,  the  main  English-language 
newspaper,  to  rate  major  buildings  in  the  middle  of  Hong  Kong,  an 
expert  who  says  he  advises  film  stars,  banks  and  the  Hong  Kong 
Futures  Exchange  found  that  the  Hong  Kong  Shanghai  Bank  would 
benefit  from  the  air  passing  beneath  Sir  Norman  Foster's  build  for  its 
headquarters  in  Central,  which  has  the  additional  safeguard  of  escala- 
tors running  diagonally  to  the  sea  so  that  the  money  will  not  go  out 
to  the  water. 

The  tradition  of  lucky  and  unlucky  numbers  is  alive  and  well. 
Eight  is  prized  because  it  sounds  like  'wealth'  in  Cantonese,  and  9  is 
good  too  because  it  sounds  like  the  word  for  'long-lasting'.  But  4  is  to 
be  avoided  at  all  costs  since  it  sounds  like  death.  The  lease  of  our  flat  - 
number  4B  -  said  it  was  also  known  as  3F,  which  does  not  exist.  An 
apartment  block  opposite  has  an  Upper  3  floor,  Upper  13  and  Upper 
23  -  anything  to  avoid  the  dreaded  4. 

There  have  been  times  in  the  past  few  years  when  Hong  Kong  has 
needed  all  the  good  feng  shui  it  could  get.  The  handover  year  of  1997 
saw  a  mysterious  outbreak  of  a  lethal  virus  called  bird  flu,  carried  by 


Hong   Kong    ...  n 

poultry:  all  the  chickens  were  slaughtered  to  stop  the  spread  of  the  dis- 
ease. 'Red  tides'  swept  down  the  Pearl  River  from  China  from  time 
to  time  and  killed  the  fish.  In  1999,  three  people  died  from  virulent 
bacteria  called  Staphylococcus  aureus,  for  which  there  is  no  known 
treatment. 

As  befits  a  place  that  fancies  itself  to  be  at  the  cutting  edge  o£ 
modernity,  Hong  Kong  puts  a  premium  on  smartness,  not  only 
among  the  middle  and  upper  classes  who  throng  the  charity  galas  and 
fashion  shows  but  also  among  office  workers  who  preen  themselves  in 
their  frequently  fake  designer  labels.  Mingle  with  the  lunchtime 
crowd  in  Central  and  you  will  not  see  a  hair  out  of  place  or  a  shoe 
unshined.  'I  can't  imagine  anybody  getting  married  at  this  time  of 
year,'  says  a  young  woman  before  going  to  a  wedding  in  hot  and 
humid  June.  'Their  make-up  just  has  to  run.' 

The  mood-swings  from  depression  to  optimism  are  extreme  -  and 
extremely  swift.  Launch  a  new  cake  or  a  fresh  brand  of  sunglasses  and 
the  queues  will  form.  Nobody  wants  to  miss  out  anything,  from  the 
crowds  which  besieged  McDonald's  to  buy  cut-price  Snoopy  dolls,  to 
the  property  companies  that  rushed  pell-mell  into  Internet  offerings 
and  the  sober-suited  bankers  who  lined  up  to  lend  money  to  less  than 
transparent  mainland  enterprises.  When  would-be  immigrants  from 
the  mainland  formed  a  long  line  outside  a  government  office  in  1999 
seeking  authorisation  to  stay  in  Hong  Kong,  several  locals  joined  the 
queue  in  case  something  was  being  given  away. 

The  essential  attribute  of  the  modern  Hong  Konger  is,  of  course, 
possession  of  a  mobile  phone.  Only  the  Nokiaworld  of  Finland  has 
more  per  head  of  population.  Hong  Kong  people  simply  cannot  live 
without  them.  The  outcry  when  mobile  phone  companies  owned  by 
some  of  the  city's  biggest  tycoons  tried  to  raise  rates  at  the  beginning 
of  2000  was  such  that  even  they  had  to  retreat.  Ringing  so  disrupted 
the  opening  night  of  Othello  by  the  Royal  Shakespeare  Company  in 
1997  that  the  actors  threatened  to  walk  off  if  there  was  a  repetition 
during  the  second  performance.  A  hospital  surgeon  was  suspended 
after  being  accused  of  discussing  the  purchase  of  a  silver  BMW  with 
another  doctor  over  his  mobile  while  operating  on  a  patient's  polyp; 
distracted,  he  allegedly  pierced  the  man's  colon. 


12 


Dlai.ing  Wrin  THE   Dragon 


Not  all  the  smart  objects  are  genuine:  this  is  a  mecca  for  counter- 
feit watches  and  imitation  fashion  goods,  run  up  for  a  fraction  of  the 
price  of  the  real  thing  here  or  over  the  border  in  China.  Half  the 
people  of  Hong  Kong  admit  to  buying  fake  goods.  Forty  per  cent  of 
home  videos  sold  in  the  SAR  are  rip-offs:  in  one  raid  police  made 
what  they  called  the  world's  biggest  seizure,  of  22  million  pirate  video 
compact  discs.  Some  eighty  factories  churn  out  counterfeit  music, 
videos  and  software.  In  1999,  copies  of  the  new  Star  Wars  epic  were 
on  sale  within  a  day  of  the  film's  release  in  the  USA. 

In  a  different  domain,  it  is  increasingly  hard  not  to  see  democracy 
in  Hong  Kong  as  something  of  a  counterfeit,  too.  At  the  apex  of  the 
extraordinary  political  system  under  which  Hong  Kong  has  lived 
since  1997  stands  the  Chief  Executive,  chosen  by  a  carefully  consti- 
tuted and  Beijing-friendly  committee.  He  is  advised  by  a  secretive 
Executive  Council  whose  membership  is  for  him  to  determine.  Then 
there  is  a  raft  of  senior  civil  servants  running  government  departments. 
That  may  seem  a  quite  straightforward  example  of  an  executive-led 
government,  perpetuating  the  old  colonial  system  for  the  benefit  of 
Beijing  rather  than  London.  But  then  there  is  the  legislature,  which  is 
meant  to  represent  the  democratic  element  in  the  way  Hong  Kong  is 
run. 

The  Joint  Declaration  on  Hong  Kong's  future  signed  by  Margaret 
Thatcher  in  Beijing  in  1984  after  tortuous  negotiations  said  that  the 
Legislative  Council  (LegCo)  was  to  be  'constituted  by  election'.  That 
formulation  was  acceptable  precisely  because  it  could  be  interpreted 
differently  by  each  of  the  consenting  parties.  When  the  agreement  was 
presented  to  the  House  of  Commons,  the  British  government  could 
allow  MPs  to  imagine  that  'election'  meant  Westminster-style  polls. 
The  Chinese,  for  their  part,  could  be  reassured  by  the  fact  that  in  their 
many  elections  since  1949  no  Communist  candidate  had  tailed  to  be 
returned.  As  one  former  senior  colonial  official  noted,  the  Chinese 
didn't  mind  elections  but  they  rather  liked  to  know  the  result  in 
advance. 

The  pressure  to  introduce  democracy  became  overwhelming  in 
Hong  Kong  in  the  late  1980s,  particularly  under  the  impact  of  the 
massacre  of  demonstrators  in  Beijing's  Tiananmen  Square  on  4  June 


Hong   Kong...  13 

1989.  There  was  a  timid  move  to  bring  some  independent  voices 
into  the  Legislative  Council,  which  was  appointed  by  the  Governor 
and  used  to  sit  in  a  government  building.  Then  the  last  British 
Governor,  Chris  Patten,  delighted  local  democrats  and  horrified 
Beijing  by  introducing  genuine  democracy  at  elections  in  1995,  which 
produced  a  triumph  for  pro-democracy  parties  critical  of  China.  It 
was  a  key  sign  of  how  Hong  Kong  was  growing  up  politically,  of  how 
it  was  no  longer  simply  an  economic  city,  but  was  able  to  embrace 
modern  accountability,  even  if  the  administration  continued  to  keep 
a  careful  check  on  the  powers  of  the  legislature. 

But  the  looming  date  of  the  handover  meant  that  Patten's  exper- 
iment was  bound  to  be  short-lived,  a  bouncing  baby  condemned  to 
death  by  its  morally  laudable  but  practically  untenable  conception.  In 
the  early  hours  of  1  July  1997,  the  elected  legislature  was  dissolved  and 
replaced  by  a  body  with  no  popular  legitimacy  picked  by  a  Beijing- 
approved  committee.  Ten  months  later,  in  May  1998,  a  degree  of 
democracy  crept  back  with  a  newly  constituted  legislature  of  sixty 
members.  But  only  twenty  were  elected  by  popular  vote,  the  others 
representing  professional  groups  (known  as  functional  constituencies) 
or  picked  by  yet  another  committee  of  friends  of  Beijing  and  the  local 
administration. 

To  limit  the  chances  of  its  pro-democracy  opponents  in  1998,  the 
government  introduced  proportional  representation  and  large  con- 
stituencies designed  to  handicap  them.  In  most  of  the  functional 
constituencies,  voting  was  handed  back  to  professional  organisations 
rather  than  following  the  one-person-one-vote  arrangement  brought 
in  by  Patten.  All  the  same,  and  despite  a  tropical  downpour, 
Democrats  took  70  per  cent  of  the  poll.  But  the  system  meant  that, 
for  all  their  votes,  they  made  up  only  a  minority  in  the  chamber  and, 
even  then,  were  hamstrung  by  procedural  rules  which  gave  the  func- 
tional constituencies  effective  veto  power. 

Thus  Hong  Kong  finds  itself  with  a  system  in  which  candidates 
who  got  nearly  three-quarters  of  the  popular  vote  are  consigned  to 
opposition.  At  the  same  time,  though  the  administration  can  count 
on  general  support  from  a  pro-Beijing  group  and  many  functional 
constituency  representatives,  there  is  no  government  party  as  such. 


14  Dealing  With  the   Dragon 

LegCo  members  have  the  power  to  summon  officials  and  to  quiz 
them,  but  nobody  expects  anything  to  result.  Legislators  may  censure 
handling  of  the  opening  of  the  new  airport  or  the  health  scares  or  the 
lack  of  information  supplied  by  the  administration  on  major  projects, 
but  the  top  civil  servants  who  were  responsible  never  resign.  The 
largely  toothless  body  that  resulted  from  the  carefully  undefined  elec- 
tions promised  in  1984  is  not  quite  an  empty  vessel  full  of  sound  and 
fury  and  little  else,  but  it  comes  pretty  close.  At  the  time  of  the  1998 
election,  I  asked  Martin  Lee  Chu-ming,  leader  of  the  main  democ- 
ratic party,  what  he  would  do  with  a  majority  of  the  votes  but  no 
power.  'Make  noise,'  he  replied.  No  wonder  that  some  of  Hong 
Kong's  brightest  pro-democracy  politicians  are  turning  against  run- 
ning for  re-election,  preferring  to  pursue  their  goals  outside  the 
legislature  -  and  that  the  countervailing  powers  of  the  judiciary  came 
to  be  seen  as  the  bulwark  of  the  high  degree  of  autonomy  promised 
at  the  handover. 

The  SAR's  constitution,  the  Basic  Law,  lays  down  a  ten-year  road 
from  1997  to  the  prospect  of  the  popular  election  of  a  chief  executive 
and  the  legislature.  Even  that  timetable  may  be  delayed,  and,  as  we 
will  see  in  this  book,  the  tide  since  the  handover  has  flowed  towards 
the  strengthening  of  executive  power  and  the  marginalisation  of  any- 
thing which  might  stand  in  its  way.  At  the  forefront  of  this  process  is 
the  Chief  Executive,  a  shipping  magnate  called  Tung  Chee-hwa, 
selected  at  the  end  of  1996  by  a  400-strong  committee  approved  by 
Beijing.  An  avuncular  figure  with  brush-cut  hair  who  was  formerly 
the  honorary  consul  for  Monaco  in  Hong  Kong,  Tung  studied  at 
Liverpool  University,  and  supports  both  that  city's  football  team  and 
the  San  Francisco  49ers.  His  father  set  up  a  firm  called  Orient 
Overseas  which  made  the  family  extremely  wealthy,  with  assets  of 
US$i  billion.  Among  his  other  business  ventures,  the  elder  Tung 
bought  the  Queen  Elizabeth  liner,  intending  to  convert  it  into  a  float- 
ing university,  but  the  ship  sank  in  unexplained  circumstances  in  1971. 
He  died  of  a  heart  attack  in  1982  while  hosting  a  visit  to  Hong  Kong 
by  Princess  Grace  of  Monaco. 

Three  years  later,  the  company  nearly  capsized  in  the  deep 
waters  of  a  shipping  recession.  Some  pin  the  blame  on  the  father's 


Hong   Kong    ...  15 

over-expansion;  others  say  his  sons  bought  too  many  ships  before  the 
market  peaked.  Wherever  the  responsibility  lay,  the  firm  had  to  be 
bailed  out  with  a  loan  from  China  organised  by  a  long-time  friend  of 
Beijing  called  Henry  Fok  Ying-tung.  It  was  one  of  the  biggest  cor- 
porate restructuring  rescues  seen  up  to  that  time,  and  inevitably  raises 
the  question  of  whether  Beijing  thought  it  had  Tung  in  its  debt  as  a 
result,  making  him  an  even  safer  choice  to  run  Hong  Kong. 

There  is  a  duality  about  the  tycoon  chosen  to  run  the  SAR.  He 
celebrates  two  birthdays  each  year,  on  27  May  according  to  the 
Chinese  calendar  and  then  again  on  7  July  according  to  the  Western 
calendar  used  in  Hong  Kong.  Asked  how  his  family  described  the 
Communist  entry  into  Shanghai  in  1949  which  sent  them  fleeing  to 
Hong  Kong,  Tung  says  that  they  called  it  both  'liberation'  and  'fall'  - 
'it  depended  on  whom  we  were  talking  to'.  He  has  strong  links  in  the 
West,  and  the  family  firm  used  to  be  close  to  Taiwan.  But  he  exhorts 
Hong  Kong  to  be  'more  Chinese',  which  gave  a  special  edge  to  a 
remark  by  Bill  Clinton  at  a  dinner  party  in  1998  about  how  pleased  he 
was  that  all  the  Chief  Executive's  children  were  US  citizens. 

Tung  believes  in  running  things  the  old  way  according  to  'good  tra- 
ditional Chinese  values'.  One  of  his  officials  describes  him  as  a 
'righteous'  man  in  the  Confucian  tradition.  More  to  the  point,  per- 
haps, is  that  he  was  brought  up  in  a  prosperous  family  firm,  assured  of 
wealth,  a  man  who  ran  a  company  which  would  wait  upon  his  de- 
cisions, and  who  moved  in  a  small  and  cosy  circle  where  favours 
were  exchanged  and  the  mutual  well-being  of  the  plutocracy  was 
paramount.  In  keeping  with  that  background,  he  came  to  office  on 
the  basis  of  a  public  handshake  from  Chinese  President  Jiang  Zemin 
and  the  support  of  a  section  of  the  business  community  led  by  Li  Ka- 
shing,  who  had  taken  Tung's  family  firm  as  his  partner  in  the 
Felixstowe  container  port  -  a  connection  which  worried  those  who 
thought  that  Hong  Kong's  'Superman'  already  had  quite  enough 
influence. 

Nobody  knows  how  much  Hong  Kong's  leader  consults  the 
mainland.  Some  stories  say  his  telephone  line  only  connects  him 
with  middle-ranking  functionaries  in  the  central  capital;  but  others 
say  he  has  the  rank  of  a  provincial  governor.  Senior  members  of  his 


16  Dealing  With  the  Dragon 

administration  insist  that  they  rarely  contact  their  colleagues  in  Beijing. 
They  contrast  the  old  colonial  days,  when  the  telegrams  came  in  from 
Whitehall  in  the  morning  and  had  to  be  answered  by  the  evening,  with 
the  new  situation  in  which,  they  say,  they  never  hear  from  the  new 
sovereign  power.  But  would  they  really  act  off  their  own  bat  in  ways 
that  would  annoy  the  central  government?  Not  if  one  is  to  go  by 
examples  that  arose  during  the  year  described  in  this  book. 

The  duality  persists  in  the  public  and  private  faces  of  the  man  in 
charge  of  the  SAR.  Tung  works  long  hours,  earning  the  nickname  of 
'Mr  Seven-Eleven',  and  listens  politely  to  whoever  is  talking  to  him. 
But  he  seems  to  find  it  hard  to  make  decisions,  and  reserves  the  right 
to  take  no  notice.  If  he  cannot  make  up  his  mind,  nobody  else  in 
Hong  Kong  can  decide  for  him.  When  he  seeks  counsel  or  support, 
it  is  from  a  small,  select  circle  drawn  from  the  business  establishment 
and  made  up  of  people  trusted  by  Beijing,  or  international  business 
magnates.  The  awkwardness  and  irritations  and  demagogy  of  democ- 
racy are  not  for  him.  Nor  is  the  assertion  that  ordinary  people  have  as 
much  right  to  determine  their  futures  as  does  the  elite.  He  has  a 
talent  for  sounding  the  wrong  note,  as  when  he  says  the  Tiananmen 
massacre  belongs  to  the  'baggage'  of  history.  Too  often,  his  reactions 
to  events  are  slow,  evasive  or  formulaic.  Popular  leadership  is  not  his 
forte.  Tung  is  a  patriarch,  and  patriarchs  are  there  to  be  respected:  the 
people  should  acquiesce  or,  as  the  Cantonese  put  it,  shoe-shine,  as  an 
increasing  number  of  civil  servants  do  with  growing  acumen. 

This  paternalistic  style  does  strike  a  chord  with  one  strand  of  Hong 
Kong's  mentality.  Though  they  are  cosmopolitan  and  international, 
people  here  keep  up  traditions  of  deference  and  strong  family  loyalties 
from  the  bottom  of  the  social  scale  to  the  boardroom  of  one  of  the 
biggest  property  firms,  where  the  chairman's  brother,  sister,  daughter, 
two  sons  and  son-in-law  sit  as  directors.  The  elderly  get  respect,  and 
children  are  treated  with  a  pride  and  affection  that  has  grown  rare  in 
the  West.  'Uncle  Tung'  fits  neatly  into  this  pattern,  the  Chief 
Executive  who  is  also  chief  executive  officer  of  Hong  Kong  Inc.  and 
aspires  to  be  head  of  its  six-million-strong  family. 

But  that  chord  is  becoming  increasingly  outdated.  The  family 
structure  is  fraying  and  the  social  environment  changing.  The  number 


Hong   Kong    ...  17 

of  child  abuse  cases  recorded  by  the  Welfare  Department  virtually 
doubled  between  1996  and  1999.  Half  of  them  involve  physical  abuse, 
and  a  third  sexual  abuse.  Officials  put  the  blame  on  the  strains  of  mar- 
ital life  and  the  emotional  problems  of  parents.  Though  Hong  Kong 
feels  a  safe  place  in  which  to  live,  the  crime  rate  rose  by  4  per  cent  in 
1999.  There  were  kidnappings,  including  a  spate  of  child  abductions, 
and  domestic  murders  of  horrifying  violence.  The  city  is  a  centre  for 
some  fifty  Triad  gangs,  operating  in  legitimate  business  as  well  as  the 
traditional  pastures  of  extortion,  prostitution,  illegal  gambling  and 
drugs  -  and  with  links  across  the  globe.  In  1999,  police  busted  a  pro- 
tection racket  run  in  school  playgrounds  by  apprentice  Triads  as 
young  as  twelve.  There  are  court  cases  that  come  straight  out  of  1920s 
Chicago:  in  one,  a  string  of  key  prosecution  witnesses  suddenly  all  lost 
their  memories  as  they  went  into  the  box,  and  the  accused  business- 
man drove  away  in  his  gold  Rolls-Royce  with  a  starlet  girlfriend. 
Lower  down  the  scale,  local  government  workers  have  been  found 
stealing  valuables  from  coffins,  and  a  conman  bamboozled  three 
women  to  pay  him  HK$66o,ooo  for  pills  he  said  would  protect  them 
from  the  Y2K  bug. 

Violent,  pornographic  Japanese  comics  are  sold  freely.  Chinese 
dailies  print  pictures  of  dismembered  bodies  or  corpses  stuffed  into 
cardboard  boxes  which  would  never  figure  in  British  or  American 
tabloids.  Press  photographers  snapped  the  head  of  a  woman  who  had 
been  decapitated  by  her  son,  and  the  skinless  skull  of  a  teenage  kidnap 
victim  whose  body  had  been  found  on  a  hillside.  Prostitution  by  local 
women  and  mainlanders  thrives  in  Triad-run  'vice  villas'  or  the  bars 
and  karaoke  clubs  of  Yeung  Long,  Kam  Tin  and  Mongkok,  where  the 
going  rate  is  HK$4.oo  a  trick.  The  women  serve  a  dozen  clients  a  day. 
After  one  early  morning  raid,  a  policeman  sighed  and  said,  'They'll  be 
back  in  business  tonight.'  Until  recently,  two  leading  popular  news- 
papers ran  regular  reviews  of  the  sex  services  on  offer. 

At  the  same  time,  the  establishment  and  those  connected  with  it 
can  be  decidedly  prudish.  On  one  evening  in  1997,  a  prominent  pro- 
China  figure  presided  over  an  evening  of  French  culture.  Visiting 
Paris,  he  had  been  much  impressed  by  the  spectacle  at  the  Crazy 
Horse  Saloon,  so  he  decided  to  bring  this  particular  aspect  of  Gallic 


i8  Dealing  Wiiii  the   Dragon 

art  to  Hong  Kong  for  a  gala  charity  evening  in  the  ballroom  of  a 
major  hotel.  Leading  businessmen  paid  large  sums  to  take  tables.  The 
Deputy  Director  of  the  Xinhua  News  Agency,  China's  de  facto  repre- 
sentative office  in  Hong  Kong,  was  the  guest  of  honour,  seated  at  the 
top  table  right  in  front  of  the  stage. 

Twenty-four  hours  before  the  occasion,  alarm  bells  started  to  ring. 
What  if  the  press  photographed  the  Xinhua  man  with  bare  Crazy 
Horse  bosoms  beside  him?  The  dancers  were  told  to  cover  up.  The 
photographers  who  normally  immortalise  such  occasions  for  the  soci- 
ety pages  were  banned.  As  the  show  began,  the  embarrassment  level 
mounted.  The  diners  were  with  their  wives  and  found  it  difficult  to 
show  enthusiasm  for  the  showgirls,  whose  idea  of  a  cover-up  was 
hardly  modest.  To  make  things  worse,  they  strutted  out  in  one  poli- 
tically incorrect  number  wearing  busbies  and  very  scanty  costumes  as 
British  Grenadiers. 

The  applause  grew  increasingly  tepid.  When  the  interval  came, 
coffee  was  suddenly  served,  and  the  Xinhua  official  was  called  up  to 
pick  the  lucky  draw.  That  traditionally  marks  the  end  of  a  charity  do 
in  Hong  Kong.  So  everybody  was  free  to  leave.  On  the  way  out,  I 
passed  the  man  who  had  thought  up  the  idea  of  bringing  the  Crazy 
Horse  to  the  party.  'I  hope  you  enjoyed  yourself,'  he  said.  'And  I  hope 
you  did,  too,'  was  all  I  could  reply. 

A  watchdog  body  called  the  Obscene  Article  Tribunal  once  fined 
a  newspaper  for  running  an  advertisement  showing  Michelangelo's 
statue  of  David.  Faced  with  an  outbreak  of  women  being  touched  by 
men  on  the  underground  railway  system,  a  police  chief  advised  them 
to  wear  'conservative  clothing'.  Rock  concerts  are  banned  from  the 
open-air  Hong  Kong  Stadium  because  they  might  make  too  much 
noise.  When  an  Elton  John  performance  was  mooted,  the  local  coun- 
cil suggested  that  the  sound  should  be  piped  to  the  audience  through 
headphones,  and  that  gloves  should  be  issued  to  muffle  any  clapping. 
The  concert  did  not  go  ahead. 


The  Cantonese,  among  whom  the  people  of  Hong  Kong  count 
themselves  despite  their  highly  varied  origins,  are  not  generally  seen 


Hong   Kong    ...  19 

as  having  played  much  of  a  role  in  China's  history.  This  is  unfair.  Some 
researchers  believe  the  first  inhabitants  of  the  country  arrived  from  the 
west  in  the  Pearl  River  Delta,  but  that  is  heresy  to  official  thinking, 
which  insists  that  the  Chinese  sprouted  up  in  China  and  owe  their 
origins  to  nobody  else.  A  Dominican  friar,  Gaspar  da  Cruz,  who  vis- 
ited Canton  -  now  known  as  Guangzhou  -  in  the  sixteenth  century, 
noted  their  prowess  at  duck  farming  and  their  taste  for  tea,  'a  kind  of 
warm  water  which  they  call  cha  .  .  .  made  from  a  concoction  of 
somewhat  bitter  herbs'.  He  also  observed  foot  binding,  blind  prosti- 
tutes and  the  prevalence  of  'unnatural  vice'.  Intrepid  sailors  and 
smugglers  from  the  Pearl  River  opened  up  Asian  trading  routes.  A 
Cantonese  scholar  called  Kang  Yu-wei  drew  up  the  first  coherent 
programme  to  modernise  the  collapsing  Qing  dynasty,  which  led  the 
last  but  one  Emperor  of  China  to  issue  twenty-seven  decrees  in  a  hun- 
dred days  before  the  fearsome  Empress  Dowager  had  her  son 
imprisoned  and  probably  poisoned  while  ordering  Kang  to  suffer 
death  by  a  thousand  cuts,  a  fate  he  avoided  by  escaping  to  Japan. 

Soon  afterwards,  another  Cantonese,  Sun  Yat-sen,  who  used  Hong 
Kong  as  a  refuge,  headed  the  revolutionary  movement  to  establish  a 
modern  republic  in  China,  which  led  to  the  establishment  of  the 
Kuomintang  (KMT)  government  and  the  rise  of  Chiang  Kai-shek. 
The  KMT's  main  power  centre,  Canton,  was  the  scene  of  bloody 
internal  battles  between  different  factions  of  Sun's  movement.  It  was 
from  the  great  southern  trading  city  that  he  set  out  on  his  last  voyage 
to  Beijing  before  dying  of  cancer  in  the  old  imperial  capital,  and  it  was 
from  there  that  Chiang  led  the  Northern  Expedition  of  1926-28 
which  made  him  ruler  of  China.  Twenty  years  later,  the  KMT  found 
its  final  redoubt  in  the  South  before  the  retreat  to  Taiwan. 

The  Cantonese  are  not  much  loved  outside  their  home  region. 
They  have  the  reputation  of  being  rude,  and  interested  only  in  com- 
merce. Their  slang  is  known  for  its  inventiveness  and  its  use  of  sexual 
references:  a  local  editor,  Terry  Cheng,  reckons  it  may  be  the  dirtiest 
dialect  in  China.  Their  cockiness  gets  up  the  noses  of  northerners, 
who  may  envy  their  material  success  but  harbour  no  warm  feelings  for 
the  country's  newest  region.  'How  can  you  live  with  such  people?' 
asks  a  snooty  Beijinger.  'The  Shanghainese  are  bad  enough,  but  all  the 


20  Dealing  With  the   Dragon 

Cantonese  think  about  is  making  money.'  Or  as  Jonathan  Mirsky,  the 
former  East  Asia  editor  of  The  Times,  put  it  in  one  of  his  last  dis- 
patches from  the  city:  'The  Cantonese  are  used  to  living  and  working 
in  cramped  and  crowded  conditions.  They  give  no  mercy  to  each 
other  and  are  no  more  courteous  to  tourists.' 

Sure  enough,  Hong  Kong  people  work  hard:  a  report  by  the 
International  Labour  Organisation  found  that  they  averaged  2,287 
hours  a  year,  or  44  hours  a  week.  Between  1980  and  1996,  their  pro- 
ductivity rose  by  90  per  cent.  They  also  count  the  dollars  and  cents 
assiduously,  and,  for  all  the  conspicuous  consumption,  put  a  lot  aside  - 
the  savings  rate  is  double  that  in  Britain.  But  they  are  also  great  gam- 
blers, wagering  tens  of  millions  of  pounds  on  an  ordinary  mid-week 
race  meeting.  Even  in  the  depths  of  recession,  the  average  bet  was 
$318  (£2$),  and  the  big  dividend  on  the  last  day  of  racing  brought 
$2.15  million  for  a  $10  stake.  Betting  tax  contributes  5  per  cent  of 
government  revenue,  covering  expenditure  on  housing,  the  police 
and  the  environment.  On  top  of  this,  the  Jockey  Club  foots  the  bill 
for  extensive  spending  on  schools,  clinics  and  charities.  Legal  betting 
is  restricted  to  the  horses,  a  weekly  lottery  and  a  few  licensed  mahjong 
parlours.  Anything  else  entails  a  trip  to  the  former  Portuguese  colony 
of  Macau  or  further:  a  couple  who  run  a  garment  factory  flew  to  Las 
Vegas  and  lost  US$4  million  in  two  weeks;  they  then  went  to  court 
claiming  a  50  per  cent  discount  on  their  losses. 

You  certainly  have  to  watch  your  place  in  Hong  Kong  queues,  and 
know  what  you  want  when  you  reach  the  counter.  Getting  on  and  off 
the  MTR  underground,  or  into  a  lift,  can  test  both  willpower  and 
endurance.  In  business,  the  game  is  played  to  the  bitter  end,  and  there 
may  still  be  a  twist  in  the  Cantonese  tail.  Getting  repairs  done  to  a 
rented  flat  can  be  a  marathon  process  that  only  ends  when  you  with- 
hold the  rent:  one  tenant  I  know  refused  to  pay  for  thirteen  months 
until  he  got  some  action  from  the  landlord. 

On  the  money-making  front,  the  inhabitants  live  up  to  their  repu- 
tation all  through  the  social  scale.  Many  have  two  jobs,  or  more  -  the 
Financial  Secretary  says  that  if  they  have  only  one  nine-to-five  job, 
they  get  withdrawal  symptoms.  They  play  the  markets  and  watch 
interest  rates  like  hawks.  Early  on  in  my  time  in  Hong  Kong,  I  learned 


Hong   Kong...  21 

that  I  had  better  know  the  late-morning  close  on  the  Hang  Seng 
index  before  I  went  out  to  meet  anybody  for  lunch:  a  quick  discussion 
of  how  the  market  is  doing  takes  the  place  of  the  weather  in  Britain 
as  a  conversational  ice-breaker.  Even  at  the  depths  of  the  1999  reces- 
sion, there  was  a  constant  buzz  about  the  place.  Taxi  drivers  don't  wait 
for  a  tip;  they  are  too  busy  driving  off  after  the  next  passenger. 

But  this  temple  of  wealth  and  conspicuous  consumption  is  also  a 
city  of  rag  pickers  and  old  women  who  scrape  a  living  collecting 
waste  paper  and  discarded  soft-drink  cans.  At  a  landfill  on  a  hillside  in 
the  New  Territories  which  receives  8,000  tonnes  of  waste  a  day, 
dozens  of  men  paid  the  equivalent  of  £30  for  a  twelve-hour  shift  sort 
their  way  through  the  rubbish,  retrieving  anything  which  can  be 
recycled  for  a  profit  by  their  employers:  they  call  their  pickings 
'curry'.  One  early  sign  of  the  economic  crisis  was  when  the  people 
who  comb  through  the  garbage  by  the  old  airport  reported  a  distinct 
decline  in  the  quality  and  quantity  of  what  was  being  thrown  away. 

The  income  disparity  is  among  the  highest  on  earth  as  shown  by 
the  tax  figures.  Six  per  cent  of  the  population  pays  80  per  cent  of  the 
total  income  tax  bill,  while  a  similar  proportion  of  corporate  tax 
comes  from  5  per  cent  of  taxable  businesses.  It  is  not  simply  that  the 
poor  are  poor  (and  sometimes  do  not  claim  welfare  for  reasons  of 
pride),  but  that  the  rich  are  so  rich.  The  mansions  on  the  Peak  are 
huge  and  protected  by  security  systems  costing  hundreds  of  thousands 
of  pounds;  the  public  housing  estates  elsewhere  on  the  island  or  across 
in  the  New  Territories  contain  some  of  the  most  crowded  accom- 
modation in  the  world. 

Contrasts  are  everywhere.  Sandwiched  between  shining  high-rise 
towers  of  chromium  and  glass  stand  tenements  with  peeling  walls  and 
washing  hanging  out  of  the  windows.  Small  stalls  of  while-you-wait 
cobblers  and  locksmiths  line  an  alley  beside  some  of  the  city's  smartest 
stores.  Near  gleaming  skyscrapers,  a  76-year-old  woman  pays  HK$700 
a  month  for  a  tiny  space  in  which  she  keeps  a  kerosene  stove,  cook- 
ing utensils,  clothes,  plastic  bags  stuffed  with  her  belongings  and  a  big 
metal  box.  She  has  never  fully  stretched  out  her  legs  when  she  sleeps. 
Her  cubicle  is  part  of  a  500-square-foot  unit  where  thirteen  other 
people  live. 


22  Dealing  Wiiii    i  m-    Dragon 

The  pay  of  company  directors  races  far  ahead  of  inflation:  in  the 
boom  time  of  1997,  it  jumped  by  an  average  of  42  per  cent.  But  a 
survey  by  the  Hong  Kong  Social  Security  Society  the  next  year 
reported  that  856,700  people  -  14  per  cent  of  the  population  -  were 
below  the  poverty  line,  double  the  number  a  dozen  years  earlier.  And 
that  was  before  unemployment  hit  a  record  6  per  cent  under  the 
impact  of  the  recession. 

As  the  economy  dropped,  loan  sharks  thrived,  often  using  brutal 
methods  to  recover  their  money.  Debts  were  the  motivation  for  a 
growing  number  of  suicides:  in  one  case  in  the  summer  of  1999  a 
market  cleaner  and  his  wife  asphyxiated  themselves  and  their  three 
children  with  the  smoke  from  a  charcoal  fire  because  they  could  not 
pay  back  their  loans.  Their  neighbours  quickly  collected  HK$20,ooo 
to  pay  for  a  spirit-cleansing  ceremony  outside  the  flat  where  they 
died. 

Personally,  I  find  the  people  of  Hong  Kong  invigoratingly  up- 
front, smart  and  anxious  to  get  on  with  life,  rather  like  the  Parisians, 
who  attract  similar  reactions  from  Anglo-Saxon  visitors  and  superior 
French  provincials.  Yes,  they  hustle  and  keep  their  eye  on  the  main 
chance.  True,  commercialism  and  the  making  of  money  are  the  main 
reasons  for  most  people's  existence.  Yes,  the  very  rich  can  show  an 
ostentatious  superficiality  as  they  parade  their  wealth,  but  that  can  also 
have  its  endearing  side:  the  his  and  hers  Rolls-Royces,  the  real  plea- 
sure at  showing  off  an  £8,000  magnum  of  claret  in  the  cellar,  the 
surge  of  power  as  the  Italian-made  boat  kicks  into  top  gear  and  every- 
thing on  deck  goes  flying,  and  the  endless  glossy  charity  balls  that  fill 
the  society  pages  but  do  raise  a  lot  of  money  for  good  causes. 

It  is  perfectly  true  that  the  inhabitants  can  be  insensitive  and  intol- 
erant as  they  bustle  and  jostle  their  way  through  life.  Hong  Kong 
funeral  parlours  are  brusque,  vertically  integrated  industrial  establish- 
ments, from  the  white-garbed  professional  mourners  on  the  ground 
floor  to  the  cofEns  being  made  on  the  roof.  The  religious  service  at 
a  cremation  I  attended  in  the  New  Territories  was  interrupted  halfway 
through  by  a  manager  who  told  us  our  time  was  up  and  we  should 
make  way  for  the  next  body.  In  a  different  register,  a  television  net- 
work ran  a  promotion  in  the  mid-1990s  saying  that  advertising  with 


Hong   Kong    .   .   .  23 

it  could  have  helped  Hitler  to  achieve  his  'final  solution'.  Prejudice  is 
alive  and  well:  many  Chinese  take  a  dim  view  of  Indians.  In  1999,  a 
survey  of  people  aged  between  twelve  and  twenty-five  reported  that 
a  quarter  regarded  homosexuals  as  abnormal  or  mentally  disturbed.  A 
report  in  the  South  China  Morning  Post  revealed  that  six  funeral  par- 
lours were  refusing  to  handle  the  bodies  of  people  who  had  died 
with  HIV,  while  local  residents  in  one  part  of  Kowloon  waged  a  long 
and  bitterly  abusive  campaign  against  a  nursing  home  for  Aids  suffer- 
ers in  their  street,  driving  a  third  of  the  nurses  away  with  their  abuse. 

On  the  other  hand,  their  trading  links  make  the  business  people  of 
Hong  Kong  admirably  internationally  minded,  a  trait  strengthened, 
for  some,  by  the  acquisition  of  foreign  passports  in  case  things  went 
wrong  after  the  return  to  China:  at  the  last  count,  Hong  Kong  con- 
tained 32,500  people  with  Canadian  passports  as  well  as  29,000 
American  and  20,000  Australian.  They  cannot  afford  to  be  insular: 
their  raison  d'etre  is  bound  up  with  the  wider  world,  over  the  border 
in  China  for  some  but  through  the  rest  of  Asia,  in  North  America  and 
Europe  for  many  more.  While  the  tycoons  are  the  big  players  inter- 
nationally, ordinary  Hong  Kongers  often  have  property  abroad,  plus 
relations  across  the  Pacific  and  in  the  Chinatowns  of  Asia  and  Europe. 
The  airport  has  a  special  importance  as  the  gateway  to  an  outside 
world  that  cannot  be  reached  in  any  other  way.  The  goods  they  buy, 
the  fashions  they  wear,  the  food  they  eat,  make  the  people  of  the  SAR 
citizens  of  the  globalised  world  with  an  immediacy  which  ensures  the 
liveliness  of  the  place:  if  the  place  lacks  depth,  skating  across  its  surface 
is  nevertheless  exhilarating. 

One  result  of  the  concentration  on  the  here  and  now,  rather  than 
on  the  past  or  future,  is  a  notable  lack  of  care  for  the  physical 
environment.  Air  pollution  regularly  reaches  dangerous  levels.  The 
harbour  is  a  sewer  strewn  with  waste.  All  the  assurances  from  colonial 
and  post-handover  administrations  that  something  must  be  done  have 
not  halted,  or  even  slowed  down,  the  degradation:  the  fine  for  smok- 
ing in  a  taxi  is  HK$5,ooo,  but  the  penalty  for  the  vehicle  emitting 
filthy  diesel-fume  exhaust  is  less  than  a  tenth  as  much. 

The  march  of  development  has  left  precious  little  room  for  the 
preservation  of  history.  Elegant  books  of  photographs  of  old  Hong 


24  Dealing  With  the  Dragon 

Kong  sit  on  coffee  tables,  but  just  70  out  of  an  estimated  7,000  pre- 
war buildings  have  been  granted  official  protection  from  destruction. 
There  is  a  'heritage  trail'  which  visitors  can  follow:  but,  as  a  local 
historian,  Jason  Wordie,  says,  it  consists  largely  of  a  series  of  signs 
teDing  you  what  used  to  be. 

Here  and  there,  you  find  survivors  amid  the  tower  blocks.  Elegant 
white  Flagstaff  House  is  the  oldest  colonial  building  still  standing, 
dating  from  1846.  The  former  home  of  British  military  commanders, 
it  is  now  a  teapot  museum  on  the  edge  of  Hong  Kong  Park,  sur- 
rounded by  skyscrapers.  Outside,  you  can  sometimes  catch  a  glimpse 
of  white  cockatoos  descended  from  birds  that  escaped  from  a  Japanese 
aviary  during  the  occupation  of  1941-45.  Down  below,  along  busy 
Queen's  Road  East,  which  used  to  mark  the  waterfront  before  recla- 
mation stretched  Hong  Kong  Island  out  into  the  harbour,  Tai  Wong 
temple  constructed  back  into  the  hillside  has  stood  its  ground  since 
the  1 840s.  At  the  end  of  a  nearby  cul-de-sac  is  a  small  shrine  to  the 
Earth  God,  who  sits  in  a  three-sided  red  wooden  box  with  a  taper 
burning  in  a  two-handled  cup:  it  has  been  in  this  spot  for  more  than 
a  century,  a  relic  of  the  village  customs  of  people  from  southern 
China,  like  a  wayside  cross  in  Catholic  Europe.  Further  along  Queen's 
Road  East,  the  old  one-storey  whitewashed  post  office  has  been  pre- 
served as  an  environmental  centre  and  there  are  a  few  'shop  houses', 
built  in  the  1920s  and  advertised  at  the  time  as  being  rat-proof.  Off  on 
the  right  as  you  head  towards  the  bustling  market  streets,  a  corner  of 
four-storey  houses  has  survived  from  the  turn  of  the  twentieth  cen- 
tury, with  grilled  balconies,  high  ceilings  and  staircases  going  straight 
to  the  first  floor  without  taking  a  turn. 

Further  up  the  hill,  at  the  top  of  a  long  flight  of  steps,  past  a  restau- 
rant that  serves  only  snake  dishes,  there  stands  a  fine  brick  mansion 
with  an  arched  gateway,  colonnaded  balconies,  floors  of  patterned 
tiles,  and  round  Chinese  windows.  A  high  wall  shelters  it  from  the 
outside  world.  Once  the  home  of  a  wealthy  family,  it  was  used  as  a 
'comfort  house'  brothel  for  Japanese  officers  in  the  Second  World 
War.  Now,  it  is  abandoned,  the  wallpaper  is  peeling,  a  bathtub  stands 
in  what  was  the  dining  room,  graffiti  surrounds  the  doorway,  and  the 
garden  is  a  wilderness.  A  similar  house,  used  by  the  Japanese  for  the 


Hong    Kong    .   .   .  25 

same  purpose  for  ordinary  soldiers,  has  been  demolished;  all  that 
remains  is  the  retaining  wall  and  the  balustrade  that  bounded  its 
grounds.  Thus  does  Hong  Kong  treat  its  past. 

This  lack  of  concern  was  only  to  be  expected  of  a  population 
whose  main  priority  was  to  establish  itself,  make  a  living  and  raise  a 
family.  There  was  little  time  to  worry  about  the  environment,  about 
whether  a  colonial  mansion  should  be  preserved  rather  than  being 
torn  down  for  housing,  or  about  the  way  new  high-rise  blocks  blot- 
ted out  the  views  of  the  mountains.  If  some  old  tenement  buildings 
survive  alongside  new  towers,  it  is  often  because  ownership  is  frag- 
mented between  warring  family  clans  or  has  simply  been  obscured 
amid  waves  of  migration.  Reclamation  of  the  harbour  has  enabled  the 
main  business  district  and  the  container  port  facilities  to  expand,  to 
the  general  well-being  of  the  community  as  a  whole.  Several  huge 
apartment  blocks  stand  on  what  were  oil  depots,  shipping  terminals 
and  power  stations  whose  disappearance  nobody  can  lament.  The 
enormous  shopping-hotel-office  complex  of  Pacific  Place  was  built 
on  the  former  British  military  cantonment.  I.  M.  Pei's  Bank  of  China 
tower  stands  on  what  used  to  be  the  soldiers'  Mess. 

Traditions  are  not  destroyed  as  easily  as  buildings.  Chinese  festivals 
are  celebrated,  temples  kept  up,  and  graves  swept  on  the  appointed 
dates.  Models  of  jumbo  jets,  limousines,  and  houses  with  furniture 
and  cardboard  figures  of  maids  are  burned  after  funerals  to  accompany 
the  departed  to  the  next  world.  The  clatter  of  mahjong  tiles  is  one  of 
the  sounds  of  the  place.  Individual  streets  remain  the  home  for  certain 
trades,  as  they  have  done  for  a  century  or  more:  flowers  in  Mongkok, 
dried  fish  in  Western,  furniture  on  Queen's  Road  East. 

Though  an  overwhelmingly  Chinese  city,  Hong  Kong  has  a  vivid 
mix  of  other  races  which  adds  to  its  internationalism.  Some  are 
second  and  third  generation  -  Eurasians,  Indians,  Pakistanis  and  Sri 
Lankans,  Parsees,  the  Jewish  community  that  came  largely  from 
Shanghai,  and,  older  than  any  of  those,  the  Scots  and  the  English  who 
sailed  here  for  profit  and  to  join  in  the  opium  trade  in  the  mid- 
nineteenth  century.  Then  there  are  more  recent  arrivals,  from  Japan, 
the  Americas,  Australia,  New  Zealand  and  Europe.  And  almost 
150,000  serving  maids,  mainly  from  the  Philippines. 


26  Dealing  Wiiii  the   Dragon 

Another  sign  of  Hong  Kong's  internationalism  is  the  range  of  food 
on  offer.  Chinese  cuisine  naturally  predominates,  but  the  dishes  of  the 
rest  of  Asia  are  readily  available,  not  to  mention  American  fast-food 
outlets,  steak  houses,  sports  bars  and  an  English  fish  and  chips  estab- 
lishment. On  Hanoi  Road  in  Tsim  Sha  Tsui,  across  from  Hong  Kong 
Island,  a  short  stretch  takes  you  past  La  Pasion  de  Espaiia  Bodega,  the 
Biergarten  German  pub  and  the  Valentino  Ristorante  Italiano.  The 
Trou  Normand  with  its  exposed  brickwork  and  red  and  white  striped 
tablecloths  stands  nearby  at  the  corner  of  Carnarvon  Road. 

The  prosperity  on  which  all  this  rests  is  supposed  to  have  been  built 
on  an  economic  policy  of 'positive  non-intervention'.  Developed  in 
the  1970s  by  a  long-time  Financial  Secretary  and  Chief  Secretary, 
Philip  Haddon-Cave,  it  made  Hong  Kong  the  idol  of  free  marketeers 
round  the  globe.  Haddon-Cave,  who  disliked  Chinese  food  and 
insisted  on  eating  steak  at  banquets,  earned  the  nickname  of  Choy 
Sun,  God  of  Fortune.  In  fact,  the  non-interventionism  has  not  been 
as  simple  or  as  all-embracing  as  its  boosters  like  to  proclaim. 

The  colonial  administration  pursued  an  active  public  housing 
policy,  which  was  taken  up  in  1997  by  the  new  Chief  Executive  with 
a  pledge  of  80,000  new  units  a  year.  Its  ultimate  ownership  of  land 
means  that  the  government  has  always  had  its  grip  on  a  key  element 
in  Hong  Kong's  economy.  The  sale  of  most  of  that  land  to  a  small  set 
of  developers  has  given  them  a  stranglehold,  and  untold  wealth  into 
the  bargain.  Far  from  opening  up  the  market,  the  government's  non- 
intervention precluded  it  from  taking  measures  to  break  up  the  cartels 
that  riddle  the  city.  Interlopers  are  sent  packing  if  they  try  to  break 
cosy  retail  arrangements.  When  a  freebooting  entrepreneur  tried  to 
undercut  the  supermarket  duopoly  by  direct  home  sales,  some  whole- 
salers simply  refused  to  supply  him  with  goods. 

An  entente  among  banks  to  avoid  competition  over  mortgage  rates 
will  only  be  dismantled  in  2002.  A  year  later,  controls  on  rice  imports, 
introduced  during  the  Korean  War,  will  finally  end.  At  the  New  Year 
of  2000,  five  of  the  six  mobile  telephone  networks  raised  fees  on  the 
same  day  and  by  the  same  amount:  pure  coincidence,  they  insisted 
before  cancelling  the  increases  amid  public  anger  and  after  the 
Director-General  of  Telecommunications  had  identified  'a  tacit 


Hong   Kong    ...  27 

understanding  among  them'.  Soon  afterwards,  it  emerged  that  Hong 
Kong  had  the  world's  highest  pre-tax  petrol  prices,  which  might  not 
be  unconnected  with  the  way  in  which  three  companies  own  80  per 
cent  of  the  filling  stations  and  charge  the  same  rates. 

But  all  this  is  done  between  consenting  businessfolk  and,  for  many 
abroad,  the  headline  appeal  of  15  per  cent  income  tax  seems  to  count 
for  a  lot  more  than  the  dominant  power  of  a  business  establishment  for 
which  economic  freedom  often  simply  means  the  freedom  to  play  the 
game  by  their  own  rules.  As  we  will  see,  the  year  in  question  shows 
quite  vividly  how  far  the  reality  is  from  the  image  that  wins  Hong 
Kong  awards  as  the  world's  freest  economy. 

This  is  just  one  of  a  set  of  contradictions  that  spring  up  at  every 
corner,  even  setting  politics  and  economics  aside.  A  first-world  city  in 
many  respects,  the  SAR  has  third-world  population  growth  due 
largely  to  immigration:  89  per  cent  of  the  increase  of  500,000  in- 
habitants since  1995  is  due  to  the  influx  of  mainlanders  and  to  Hong 
Kong  emigrants  returning  home.  Though  the  birth  rate  is  low,  these 
factors  are  expected  to  push  the  population  up  to  8.9  million  by  2016. 
The  United  Nations  says  Hong  Kong  is  about  to  age  rapidly,  with  the 
median  age  shooting  up  from  the  present  36.2  to  52.2  by  the  middle 
of  the  twenty-first  century.  At  78.5  years,  life  expectancy  is  high,  and 
infant  mortality  among  the  lowest  on  earth. 

How  the  ageing  squares  with  the  official  vision  of  a  bustling  young 
city  is  an  open  question.  But  then  age  has  never  been  an  incentive  to 
relinquish  power  and  authority  here.  Just  look  at  the  serried  ranks  of 
tycoons  in  their  seventies,  or  go  to  a  lunch  where  the  assembled 
company  sits  in  silent  deference  to  the  old  man  at  the  head  of  the 
table. 

The  local  food  is  good  and  healthy,  but  affluence  has  boosted  meat 
consumption  and  medical  problems.  Western  fast  food  is  making  big 
inroads.  The  cholesterol  level  among  seven-year-olds  is  the  second 
highest  in  the  world.  Almost  a  fifth  of  Hong  Kong  babies  are  over- 
weight and  13  per  cent  of  boys  between  six  and  eighteen  are  classed  as 
obese.  An  expert  estimates  that  90  per  cent  of  university  students 
suffer  from  myopia,  and  that  the  proportion  in  the  population  as  .1 
whole  is  50  to  60  per  cent  -  double  that  in  New  York.  Perhaps  as  a 


28  Dealing  With    rHE   Dragon 

result  of  the  demand  resulting  from  the  high  incidence  of  weak  eye- 
sight, this  is  one  of  the  cheapest  places  in  the  world  to  buy  spectacles. 

The  position  of  women  involves  another  of  the  many  paradoxes  of 
Hong  Kong.  Concubinage  was  abolished  only  in  1971.  But  there  is  a 
distinct  tradition  of  what  might  be  called  open  marriages  Chinese- 
style.  A  landmark  legal  case  in  1999  showed  that  SAR  men  had 
fathered  scores  of  thousands  of  illegitimate  children  on  the  mainland. 
Back  at  home,  the  power  of  the  matriarch  remains  strong  inside  many 
households,  even  if  proper  deference  is  paid  to  the  menfolk  in  public. 
Daughters-in-law  are  traditionally  kept  at  the  bottom  of  the  pile, 
patiently  waiting  their  turn  to  lady  it  over  their  sons'  wives  one  day. 
Despite  the  flashing  female  stars  in  retail,  fashion  and  the  charity 
round,  business  remains  almost  exclusively  male-dominated.  There  are 
very  few  women  at  the  top  of  companies,  though  the  daughters  of 
dead  tycoons  form  discreet  networks:  the  four  daughters  of  the  late 
shipping  magnate  Sir  Y.  K.  Pao  are  married  respectively  to  the  chair- 
man of  a  major  conglomerate  founded  by  their  father,  the  head  of  his 
cargo  company,  a  Japanese  businessman,  and  the  director  of  the  gov- 
ernment's policy  unit  who  previously  chaired  the  stock  exchange. 

On  the  other  hand,  the  top  levels  of  the  administration  show  no 
shortage  of  women  in  high  places,  known,  inevitably,  as  the  'handbag' 
brigade.  Two  years  after  Hong  Kong  rejoined  China,  the  Chief 
Secretary  for  Administration,  the  Secretary  for  Justice,  the  Secretary 
for  Security  and  the  directors  of  education,  health  and  trade  were 
women.  So  was  the  President  of  the  Legislative  Council  and  three 
leading  pro-democracy  politicians,  the  head  of  the  Urban  Council, 
and  four  members  of  the  Chief  Executive's  inner  council,  not  to 
mention  the  Director  of  Broadcasting  and  the  head  of  the  powerful 
anti-corruption  commission. 

The  physical  surroundings  are  not  all  they  may  appear  to  the  casual 
visitor.  It  is  easy  to  get  the  impression  that  Hong  Kong  is  just  a  place 
of  concrete  and  glass,  of  soaring  towers  and  crowded  tenements,  of 
often  foul  air  and  jostling  crowds.  Still,  40  per  cent  of  the  land  area  lies 
in  twenty-one  country  parks.  There  are  more  than  200  outlying 
islands,  mostly  uninhabited.  Mai  Po  marshes,  up  by  the  border  with 
the  mainland,  are  a  major  staging  post  for  bird  migration,  with  at  least 


Hong   Kong...  29 

325  species  having  been  recorded  in  the  300  hectares  of  mangroves. 
The  flora  and  fauna  of  both  Hong  Kong  Island  and  the  New- 
Territories  are  exceptional.  Householders  on  the  Sai  Kung  peninsula 
find  their  birdcages  raided  by  snakes,  and  there  are  quiet  walks,  trop- 
ical trees  and  temples  hidden  along  narrow  paths  only  a  few  hundred 
yards  up  the  hill  from  the  teeming  streets  of  the  Central  District. 

Just  before  writing  this,  I  went  on  a  four-hour  hike  with  friends  up 
steep  slopes,  along  ridges  and  down  to  the  sea  opposite  a  suburb  of  the 
mainland  city  of  Shenzhen.  Across  the  water  were  garish  pink  towers 
and  lines  of  cranes  to  unload  containers;  over  the  hills  behind  them 
loomed  high-rise  buildings.  From  the  revolving  restaurant  on  the  top 
of  one,  you  get  a  180-degree  vista  of  a  classic  modern  urban  landscape, 
followed  by  180  degrees  of  empty  countryside.  The  first  is  Shenzhen; 
the  second  the  New  Territories  of  Hong  Kong.  Not  what  you  might 
expect  if  you  spent  all  your  time  in  the  SAR  amid  the  canyons  of 
Central. 

On  that  walk,  the  path  led  through  small  villages  with  old  women 
straight  out  of  a  photograph  of  Imperial  China.  The  rice  paddies 
were  overgrown  with  lush  green  vegetation.  We  could  still  make  out 
the  walls  that  once  divided  them,  and  the  lines  of  agricultural  terrac- 
ing on  the  hillside.  The  mountains  soared  into  the  clouds.  The 
butterflies  were  enormous.  There  were  wandering  water  buffalo  and 
packs  of  stray  dogs.  In  one  stream,  we  counted  the  crabs  and  the 
shrimps  and  the  crayfish.  By  the  sea,  three  men  and  a  woman  sat  play- 
ing mahjong  alongside  an  abandoned  school,  one  room  of  which 
had  been  turned  into  a  temple.  At  the  top  of  a  hill,  graves  and  small 
mausoleums  stood  up  from  the  long  grass.  In  the  whole  four  hours, 
we  passed  one  Chinese  walking  group  and  a  solitary  Westerner. 


China 


The  country  across  the  heavily  guarded  frontier  with  Hong  Kong 
has  more  than  its  share  of  superlatives  and  contradictions,  too. 
This  is  the  nation  that  considered  itself  the  centre  of  the  world  for 
centuries,  and  whose  first  Communist  leader  was  responsible  for  the 
deaths  of  more  of  his  fellow  citizens  than  any  other  ruler  in  history. 
The  size  of  a  continent  and  symbolised  by  the  figure  of  the  dragon, 
China  is  bounded  in  the  west  by  the  Himalayas  and  in  the  east  by  the 
seas  of  the  Pacific.  Stretching  from  steamy  southern  jungles  to  the 
frozen  frontier  with  Russia,  it  is  a  country  of  mountains  and  deserts, 
rice  paddies  and  soaring  cities.  Despite  a  long  campaign  of  birth  con- 
trol and  limiting  urban  families  to  a  single  child,  its  population  of 
more  than  1.2  billion  rose  by  almost  12  million  in  1998  alone,  an 
increase  equivalent  to  all  the  people  of  Belgium. 

Although  Beijing's  time  zone  rules  throughout  its  3.7  million 
square  miles,  China  is  a  collection  of  vast  regions  held  together  by  a 
power  structure  that  can  often  have  only  a  hazy  idea  of  what  is  going 
on  in  its  domain.  Immense  distances  and  the  backwardness  of  much  of 
the  countryside  mean  that,  even  in  an  age  of  air  travel,  many  places  are 
cut  off  from  the  rest  of  the  nation  -  villages  like  Liuyi  in  southern 
Kunming  province,  where  the  women  went  on  binding  their  feet  a 
generation  after  the  rest  of  the  country  had  given  up  regarding  a  7.5- 
centimetre-long  'Golden  Lotus'  foot  as  the  epitome  of  desirability. 


...  China  31 

The  tradition  of  paying  obeisance  to  the  emperor  over  the  moun- 
tain, and  then  getting  on  with  your  business  locally,  is  deeply 
entrenched.  So  is  the  often  futile  attempt  by  central  governments 
over  the  millennia  to  pretend  that  their  people  are  animated  by  de- 
votion to  the  rulers  in  their  palaces  in  the  capital,  be  they  dynastic 
tyrants  or  Leninist  apparatchiks  in  business  suits. 

Half  the  nation  which  Hong  Kong  re-joined  in  1997  is  populated 
by  people  of  different  race,  culture,  traditions  and  religion  from  the 
dominant  Han  Chinese.  On  one  side,  Shanghai,  with  its  soaring  sky- 
scrapers, the  world's  biggest  trading  floor  and  the  highest  per  capita 
income  in  the  country  (equivalent  to  £2,100  a  year);  on  the  other,  the 
backward  settlements  of  the  interior,  the  laid-off  factory  workers  with 
no  jobs  to  go  to,  and  the  village  in  Anhui  province  where  60  per  cent 
of  the  girls  have  moved  to  work  as  entertainers  in  the  southern  boom 
city  of  Shenzhen.  On  the  eastern  coast,  get-rich-quick  entrepreneurs 
hustle  deals  on  mobile  phones.  Thousands  of  miles  to  the  west, 
poachers  roam  roadless  mountain  plateaux  where  there  is  no  water 
and  the  temperature  falls  to  minus  45  degrees  centigrade  in  winter. 

This  a  country  where  the  fiftieth  anniversary  of  the  Communist 
victory  is  marked  by  the  execution  of  200  people  in  one  province 
alone,  and  where  the  livers  of  the  dead  are  offered  for  sale  to  patients 
from  Hong  Kong  for  HK$30o,ooo  (£23,000)  a  time.  Television  sta- 
tions transmit  celebrity  game  shows  and  soap  operas  inspired  by 
Hollywood  while  old  women  scour  the  banks  of  the  Yangtze  river  for 
coal  dropped  from  barges  and  children  aged  under  ten  sing  for  their 
supper  at  flashy  restaurants.  In  Beijing,  Cherie  Booth  and  other 
British  legal  luminaries  attend  earnest  seminars  on  spreading  the  rule 
of  law,  but  down  south  in  Guangdong  province,  a  shop  security  man- 
ager armed  with  a  kitchen  knife  hacks  off  four  fingers  from  a  woman 
accused  of  shoplifting  a  packet  of  ginseng  -  two  of  the  fingers  were 
later  re-attached  in  hospital.  The  'little  emperor'  sons  of  single- 
offspring  families  lord  it  in  the  cities,  while  in  the  countryside, 
children  are  kidnapped  and  sold  as  farm  labourers.  The  new  rich 
aspire  to  smart  modernity  as  they  crowd  into  techno  clubs  and 
sweeten  their  vintage  claret  with  Sprite,  while  stolen  cats  are  served  at 
Beijing  restaurants  and  the   Handsome   Wild   Life   Farming  and 


32  Dealing  Wiiii    i  1 1 1  -:   Dragon 

Development  Park  outside  the  tourist  centre  of  Guilin  fed  live  pigs 
and  calves  to  tigers  in  front  of  spectators  before  killing  the  tigers  to 
offer  their  meat  and  distilled  'restoration  bone  wine'  to  the  visitors. 

Outside  the  Han  domain,  Tibet  and  the  Xinjiang  region  in  the 
west  cover  2.4  million  square  kilometres,  or  almost  half  the  land  mass 
of  China.  The  province  of  Inner  Mongolia  has  more  goats  than 
Australia  has  people.  The  repression  of  Tibet  is  one  of  those  things 
that  the  world's  leaders  have  decided  they  can  do  nothing  about  what- 
ever the  pressure  from  Hollywood  stars  and  street  demonstrators,  the 
twinkling  appeal  of  the  Dalai  Lama,  the  destruction  of  a  traditional 
culture  (including  its  serfdom  and  superstitions),  the  blatant  abduction 
of  the  child  who  was  to  be  divine  and  the  decision  of  the  third- 
highest-ranking  spiritual  leader  to  walk  across  the  Himalayas  in  the 
depths  of  the  winter  to  refuge  in  India  at  the  age  of  fourteen.  In 
Xinjiang,  where  the  army  keeps  watch  and  Beijing  tries  to  dilute  the 
Muslim  natives  by  shipping  in  Han  Chinese,  there  are  occasional 
ethnic  riots,  bombings  and  the  execution  of  separatists. 

All  of  which  raises  the  question  of  what  constitutes  'China'  and 
'the  Chinese'  -  and  where  the  new  SAR  of  Hong  Kong  fits  into  it. 
Is  China  a  purely  geographical  entity  which  has  regained  Hong  Kong 
and  Macau  but  still  has  to  pine  for  Taiwan?  In  which  case,  what 
about  the  many  millions  of  overseas  Chinese  who  think  of  them- 
selves as  Children  of  the  Yellow  Emperor  even  if  they  live  in  Soho, 
Manchester  or  Vancouver?  Are  the  Chinese  a  single  people?  If  so, 
what  about  the  Uigurs  and  Tibetans  and  all  the  other  fifty-four 
minorities  living  from  the  frozen  north  to  the  sweaty  border  with 
Burma?  Is  it  a  culture  bound  by  a  single  language?  But,  though 
China  has  a  national  written  language,  there  are  still  a  multitude  of 
dominant  dialects,  the  Cantonese  who  cannot  understand  the 
Beijingers,  or  the  inhabitants  of  coastal  towns  who  speak  more  easily 
with  second-generation  emigrants  to  Singapore  than  with  their  com- 
patriots in  Sichuan  province.  And  if  being  Chinese  means  belonging 
to  an  ancient  culture  and  society,  what  about  the  growing  gulf 
between  the  Confucian  tradition  and  the  children  of  the  computer 
age? 

Faced  with  so  many  questions  to  which  there  are  so  few  answers,  it 


...China  33 

is  not  surprising  if  the  believers  in  scientific  socialism  who  hold  the  reins 
of  political  power  fall  back  on  dogmatic  statements  about  national  unity 
and  lock  up  anybody  who  asks  what  it  means  to  be  Chinese  today.  But 
until  such  questions  can  at  least  be  broached,  the  prospects  of  China 
unravelling  must  be  all  the  greater  as  economic  progress,  social  unrest 
and  the  Internet  eat  away  at  the  glue  of  totalitarian  nationalism. 

The  nationalist  spirit  is  something  that  the  powers  in  place  play  on 
at  regular  intervals  in  their  desire  to  lead  a  reversal  of  the  decline  and 
shame  which  enveloped  the  country  with  the  decay  of  the  nineteenth 
century,  the  loss  of  Hong  Kong  and  the  Treaty  Ports  to  rapacious 
Westerners,  and  the  humiliation  by  the  Japanese  conquest  of  great 
swathes  of  territory.  Four  centuries  ago,  China  was  the  biggest  and 
most  advanced  nation  on  earth,  with  a  finely  developed  bureaucracy 
and  an  intricate  imperial  system.  But  then  the  country  that  had 
invented  silk,  gunpowder,  paper  and  porcelain  fell  steadily  behind  the 
fast-developing  West  and  its  eager  pupils  in  Tokyo.  Mao  restored 
national  pride  at  an  unacceptable  cost  in  lives;  the  next  paramount 
leader,  Deng  Xiaoping,  moved  to  the  market  with  all  the  prestige  of  a 
Long  March  veteran.  Now  their  successors  have  to  maintain  the  coun- 
try's status  and  self-belief  while  making  it  a  big  international  player. 

The  debate  about  the  scope  of  the  mainland's  progress  in  the  past 
two  decades  remains  open,  particularly  when  comparisons  are  made 
with  the  advance  of  the  economy  and  living  standards  in  the  United 
States.  For  all  the  leaps  forward  since  Deng  led  the  way  to  market,  its 
problems  are  still  as  great  as  its  achievements.  Does  that  mean  China 
is  a  'theoretical  power',  as  the  late  British  commentator  Gerald  Segal 
put  it,  exercising  diplomatic  theatre  to  give  an  impression  of  strength 
that  does  not  exist  in  reality?  Despite  2.5  million  men  in  uniform  and 
the  testing  of  neutron  bombs  and  intercontinental  missiles  with  minia- 
turised warheads,  China's  military  power  lags  far  behind  the  military 
might  of  the  West.  The  heirs  of  the  Middle  Kingdom  live  in  a  sea  of 
outdated  dogma,  nationalistic  pretensions  and  doctored  economic 
statistics.  The  question  is  whether  this  will  always  hold  them  back,  as 
they  cling  on  to  power,  or  whether  they  can  enable  the  country  to 
make  a  decisive  -  and  highly  dangerous  -  move  towards  modernity, 
giving  teeth  to  the  warning  delivered  by  an  imperial  minister  to  a 


34  Dealing  Wmi  the  Dragon 

British  envoy:  'You  are  all  too  anxious  to  awaken  us  and  start  us  on  a 
new  road,  and  you  will  do  it,  but  you  will  regret  it  for  once  awakened 
and  started,  we  shall  move  faster  and  further  than  you  think;  much 
faster  than  you  want.' 

Such  matters  will  be  a  key  element  in  the  rest  of  this  book.  The  vital 
point  as  the  new  century  begins  is  that,  for  the  first  time  in  its  history, 
China  is  engaging  with  the  world  in  politics,  economics  and  other 
domains.  The  relationship  is  prickly,  constantly  thrown  off  course  by 
Beijing's  reluctance  to  give  ground  and  by  enduring,  and  often  well- 
founded,  suspicions  about  its  motives.  As  we  will  see,  conservatives  in 
Beijing  are  anxious  to  slow  down  the  process  of  entering  the  inter- 
national mainstream.  But  the  dynamic  unleashed  by  Deng  Xiaoping  in 
the  late  1970s  seems  unstoppable,  even  if  the  speed  of  change  has  been 
considerably  over-estimated  by  optimistic  Western  businessmen  and 
politicians  dazzled  by  the  potential  of  this  mystery  wrapped  in  an 
enigma  rendered  unique  by  the  sheer  numbers  involved. 

At  lunch  in  Beijing  one  day,  the  Education  Minister  spoke  about 
her  domain:  a  mere  230  million  school  pupils  and  university  students, 
10  million  teachers  and  1  million  education  establishments.  China  has 
the  biggest  army  in  the  world,  and  a  steel  industry  with  6,000  separate 
firms.  The  state  employs  8  million  civil  servants.  The  Three  Gorges 
Dam  project  along  the  Yangtze  is  the  biggest  development  on  earth, 
and  the  new  boundaries  of  the  city  of  Chongqing  upstream  on  the 
river  have  turned  it  into  the  largest  city  on  the  planet,  with  30  million 
inhabitants. 

China  faces  environmental  and  natural  problems  on  a  massive  scale. 
Eight  of  the  ten  most  polluted  cities  in  the  world  lie  within  its 
borders.  Beijing  is  surrounded  by  4,700  rubbish  dumps.  Hundreds  of 
lakes  in  Qinghai  province  which  feed  the  Yellow  River  have  been 
reduced  to  caked  mud  with  devastating  effects  on  the  country's  second 
longest  waterway,  whose  silt  has  traditionally  provided  land  for  crops 
along  its  course.  In  Tibet,  glaciers  have  disappeared,  leaving  only 
boulders  and  pebbles.  Parts  of  northern  China  are  becoming  danger- 
ously short  of  water  in  a  country  where  70  per  cent  of  cereal  output 
is  from  irrigated  land.  Elsewhere,  flooding  makes  millions  homeless 
most  years,  claims  thousands  of  lives  and  causes  damage  running  into 


...China  35 

billions  of  pounds.  Mining  in  river  beds  and  deforestation  could  well 
be  adding  significantly  to  the  man-made  disasters  looming  over  a 
land  where  environmental  concerns  have  taken  second  place  to  crude 
economic  development. 

On  the  human  front,  the  number  of  migrants  moving  about  in 
search  of  work  is  estimated  at  100  million;  about  the  same  number  are 
unemployed  in  rural  areas;  by  coincidence,  around  100  million 
Chinese  are  reckoned  to  suffer  from  hypertension.  HIV  victims  are 
put  at  1  million.  China  has  as  many  smokers  as  all  the  people  in 
Britain,  Germany,  France,  Italy  and  Spain:  unless  abstinence  spreads, 
3  million  are  likely  to  die  of  tobacco-related  illnesses  each  year  by  the 
middle  of  the  twenty-first  century. 

China  manufactures  half  the  world's  output  of  kettles,  and  is  the 
fastest  growing  market  for  mobile  telephones  -  the  government 
expects  200  million  to  be  in  use  by  the  year  2010.  The  Communist 
Party  has  as  many  members  as  there  are  inhabitants  of  France.  Despite 
the  atheist  credentials  of  the  regime,  officially  approved  Protestant 
and  Catholic  churches  count  as  many  adherents  as  the  population  of 
Canada,  and  there  are  reckoned  to  be  at  least  as  many  others  who 
worship  unofficially.  By  the  middle  of  the  twenty-first  century,  440 
million  Chinese  will  be  aged  over  sixty,  and  there  will  be  70  million 
young  people  without  siblings  as  a  result  of  the  one-child  policy. 
When  the  government  ordered  a  campaign  against  crime  in  1999, 
it  was  estimated  that  it  would  have  to  target  no  fewer  than  7,000 
underground  gangs,  some  with  as  many  as  30,000  members.  An  anti- 
prostitution  drive  two  years  earlier  led  to  the  arrest  of  a  quarter  of  a 
million  women. 

The  programme  to  reform  state  enterprises  has  no  parallel  in  its 
scope  and  social  implications.  The  share  of  the  economy  represented 
by  the  state  sector  has  fallen  to  42  per  cent  from  56  per  cent  when 
Deng  Xiaoping's  reforms  began  in  the  late  1970s.  But  there  are  still  a 
multitude  of  mammoth  enterprises  which  act  more  as  sources  of 
employment  than  as  competitive  enterprises.  If  they  now  have  to 
shed  their  excess  labour,  will  this  mean  another  three  million  people 
out  of  work,  or  five  million,  or  even  more?  What  is  to  become  of  the 
one  million  workers  being  laid  off  by  a  single  oil  company?  How  will 


36  Dealing  With  the  Dragon 

cities  and  towns  which  depended  on  the  old  state  sector  survive?  No 
wonder  that  the  'remnant  Maoists',  as  the  old  men  are  known,  have 
been  mounting  a  rearguard  action,  seeing  mass  unemployment  as  the 
greatest  threat  to  the  Communist  Party's  grip  on  power. 

They  could  be  right.  After  Mao  won  in  1949,  the  Chinese  lived 
with  an  'iron  rice  bowl'  of  cradle-to-grave  protection  guaranteeing 
food,  accommodation,  education,  health  care  and  other  benefits.  The 
food  may  have  been  of  low  quality,  the  housing  in  dormitories  and 
the  hospitals  primitive.  But  the  system  was  there,  to  be  relied  on  in 
bad  times.  Now,  the  safety  net  is  being  taken  down,  and  hundreds  of 
millions  fear  the  chill. 

The  scale  of  economic  and  social  re-engineering  surpasses  anything 
else  seen  in  the  world  since  the  initial  revolution  in  China.  The 
market  reforms  introduced  by  Deng  under  the  banner  of 'Socialism 
with  Chinese  characteristics'  require  formidable  levels  of  growth  to  be 
maintained  into  the  new  millennium.  Given  the  extent  of  the  prob- 
lems China  accumulated  for  itself  through  the  twentieth  century, 
there  can  be  no  letting  up.  But  even  the  most  determined  cyclist  may 
run  out  of  energy,  lose  control  and  hit  a  brick  wall. 

The  reform  drive  has  to  deal  with  an  economy  whose  main  aim  for 
half  a  century  has  been  to  maintain  the  public  sector,  whatever  the  price 
and  however  badly  it  was  serving  consumers.  Official  reports  say  that 
twenty  years  after  Deng  launched  his  changes  in  the  late  1970s,  subsidies 
to  the  state  sector  were  still  three  times  as  big  as  its  profits.  When  it 
announced  China's  largest  stock  market  flotation  at  the  end  of  1999,  a 
state  oil  firm  disclosed  that  70  per  cent  of  the  money  to  be  raised 
would  be  used  to  pay  off"  debts  and  fund  lay-offs.  At  the  other  end  of  the 
industrial  scale,  seventy-nine  of  the  eighty-one  state  enterprises  in  the 
county  town  of  Fengje  in  Sichuan  province  were  reckoned  to  be  losing 
money.  Excess  capacity  in  factories  may  be  as  high  as  60  per  cent.  A 
Western  consultant  tells  of  going  to  inspect  a  steel  plant  in  the  middle 
of  China.  He  calculated  that  the  plant  could  run  with  2,000  workers.  It 
had  15,000  and,  through  their  families,  supported  50,000  people  in  all. 

China  probably  has  some  50  million  workers  who  are  surplus  to  its 
requirements,  not  to  mention  hordes  of  local  officials  who  are,  at 
best,  in  make- work  jobs.  Once  it  was  a  factory's  business  to  keep  the 


...China  37 

surrounding  town  in  work,  and  to  support  the  families  of  its  employ- 
ees as  well,  floating,  if  necessary,  on  a  sea  of  state  cash.  Now,  a  new 
logic  prevails.  Tens  of  millions  of  would-be  workers  move  around  the 
country  illegally,  congregating  at  railway  and  bus  stations  in  Shanghai, 
Guangzhou,  Beijing  and  scores  of  other  cities.  A  report  by  the  New 
York-based  organisation  'Human  Rights  in  China'  says  that  several 
million  are  locked  up  each  year  in  700  detention  centres,  where  con- 
ditions are  filthy  and  inmates  are  physically  abused:  one  man  was 
battered  to  death  after  he  tried  to  bargain  down  the  price  of  a  card- 
board box  which  the  warders  were  selling  him  to  sleep  in. 

Out  in  the  vast  rural  spaces  of  China,  where  60  per  cent  of  the 
population  still  lives,  often  on  unproductive  soil  and  facing  harsh  cli- 
mates, the  disparity  with  urban  progress  and  the  rich  coastal  regions  is 
even  greater.  Official  statistics  report  that  50  million  people  are  below 
the  poverty  line,  which  China  sets  at  the  level  of  US$24  a  year.  By  the 
World  Bank's  higher  standard,  that  figure  jumps  to  124  million.  Some 
25  million  women  in  rural  areas  aged  between  fifteen  and  forty  are 
illiterate.  According  to  one  expert  at  an  anti-poverty  workshop  in 
Beijing,  more  than  20  million  people  lack  proper  water  supplies.  In 
some  areas,  villagers  pay  the  equivalent  of  a  couple  of  pounds  a  month 
to  live  in  caves. 

Given  the  uncertainties  of  the  present  and  future,  it  is  not  surpris- 
ing that  savings  rates  are  astronomical,  reaching  an  estimated  US$720 
billion  in  1999.  'We  have  to  keep  as  much  money  as  possible  for  our 
children's  education,  and  in  case  we  fall  ill,'  as  a  young  and  upwardly 
mobile  professional  in  Shanghai  put  it  to  me.  Thanks  to  all  that  saving, 
domestic  demand  is  not  as  high  as  it  should  be  to  fuel  the  growth 
China  needs.  The  property  boom  on  which  so  much  was  banked  is 
hollow.  One  of  the  first  Dengist  development  zones,  on  the  island  of 
Hainan,  had  7  million  square  metres  of  empty  space  by  the  end 
of  1999.  In  the  showpiece  city  of  Shanghai,  60  per  cent  of  office 
buildings  in  the  new  business  district  of  Pudong  are  unoccupied, 
together  with  150  million  square  feet  of  residential  accommodation. 
Completion  of  what  was  to  have  been  the  world's  tallest  building,  the 
94-floor  Shanghai  World  Financial  Centre,  has  been  delayed  for  at 
least  four  years. 


38  Dealing  With  the   Dragon 

As  factories  close,  disgruntled  workers  increasingly  stage  public 
protests  at  lay-offs  and  delayed  wage  payments.  In  Beijing  at  the  end 
of  1999,  dismissed  staff  shut  down  a  department  store  by  occupying 
the  building  for  five  days,  something  which  would  have  been 
unthinkable  a  few  years  ago.  Elsewhere,  workers  have  blocked  railway 
lines  and  roads,  staged  marches  and  held  local  officials  hostage  to 
show  their  discontent.  In  one  case,  farmers  who  had  lost  their  money 
in  failed  government-backed  investment  funds  were  suspected  of 
having  removed  the  bolts  on  the  track  of  the  main  north-south  rail- 
way, derailing  a  train. 

'Workers  are  no  longer  as  docile  as  before,'  President  Jiang  noted  at 
an  economic  meeting,  according  to  a  source  quoted  by  Willy  Lo-lap 
Lam  of  the  South  China  Morning  Post.  'In  many  cities,  they  barge  into 
government  offices,  smash  things  up  and  paralyse  the  local  adminis- 
tration .  .  .  Should  the  disturbances  recur,  the  party  and  state  may  be 
dealt  a  fatal  blow.' 

But  a  multitude  of  individual  entrepreneurs  still  prosper.  There  is 
Nian  Guangjiu,  the  melon-seed  king,  who  experienced  a  switch- 
back of  fortune  and  political  persecution  before  building  up  a  chain  of 
ninety-six  shops  across  the  country;  and  Chen  Jiashu,  who  produces 
badges  in  an  eastern  coastal  town  for  US  police  forces,  Lions  clubs  and 
Ghana's  customs  officers.  Shen  Qing  is  making  a  fortune  marketing  a 
patented  baked  pig's  head.  Zhang  Ruimin,  president  of  the  German- 
sounding  Haier  household  appliance  group,  has  gone  beyond  his 
initial  leap  into  the  US  and  European  markets  in  the  1990s  by  build- 
ing a  factory  to  turn  out  the  company's  goods  in  South  Carolina.  And 
then  there  is  Liu  Chuanzhi  of  Legend  computers,  the  best-selling 
brand  in  Asia  outside  Japan,  which  more  than  trebled  profits  in 
1998-99  as  sales  soared  by  60  per  cent  in  six  months. 

The  new  breed  of  businessmen  look  to  a  huge  national  market  to 
replace  the  old  system  by  which  provinces  produced  and  sold  within 
their  own  boundaries,  sheltering  local  industries  from  competition. 
They  are  penetrating  the  international  market,  too,  and  have  no 
doubts  about  China's  ability  to  become  an  economic  superpower  in 
the  new  millennium.  'The  twentieth  century  was  the  American  cen- 
tury, the  twentieth-first  will  be  ours,'  a  young  entrepreneur  told  me  as 


...  China  39 

we  left  a  crowded  restaurant  in  Beijing  where  he  had  joked  about 
police  listening  devices  in  the  overhead  lights.  This  is  the  new  world 
in  which  China's  central  bank  invests  in  the  Long  Term  Capital  hedge 
fund  in  the  United  States.  The  personal  opportunities  offered  by  the 
opening  up  of  the  economy  provide  the  only  reason  to  live  with  the 
antiquated  political  structure:  following  Deng  Xiaoping's  dictum,  it  is 
now  officially  glorious  to  become  rich,  and  some  have  made  the 
most  of  their  positions  to  live  up  to  his  urgings. 

Contacts  —  or  guanxi,  as  they  are  known  —  are  one  of  the  keys  to  the 
Chinese  way  of  doing  business,  built  up  and  exploited  by  perfectly 
honest  companies  as  well  as  by  people  on  the  make.  Family  connec- 
tions are  important,  so  it  is  not  surprising  to  find  the  son  of  the 
President  running  a  nascent  telecommunications  empire  out  of  his 
father's  power  base  of  Shanghai,  or  the  son  of  the  former  premier 
chairing  a  power  company  with  an  American  listing.  With  parentage 
like  that,  they  can  attract  investors  and  surf  through  the  bureaucracy. 
There  is  nothing  illegal  in  any  of  this;  it  is  simply  that  the  clout  of 
having  a  powerful  father  counts  for  even  more  in  the  Chinese  system 
than  it  does  in  the  West  (though  nobody  has  suggested  that  Jiang 
Zemin's  son  might  run  for  the  office  his  father  holds,  Bush-style). 

Corruption  has  been  a  tradition  of  Chinese  life  from  the  days  of  the 
emperors.  It  ran  rampant  under  the  Kuomintang,  went  into  hiding 
during  the  early  days  of  Communism  and  then  reappeared,  boosted 
by  a  two-tier  price  system  under  which  officials  could  buy  subsidised 
goods  cheaply  and  sell  them  on  at  a  profit.  Now,  graft  has  emerged  as 
a  major  obstacle  to  the  government's  drive  to  reform  industry  and 
agriculture,  and  induces  a  weary  cynicism  throughout  society.  China 
as  a  whole  is,  indeed,  getting  a  lot  richer,  but  too  much  of  the  wealth 
is  going  to  those  who  use  their  official  or  party  status  to  fill  their  own 
pockets  while  hundreds  of  millions  of  the  poor  remain  stuck  at  the 
bottom  of  an  increasingly  unforgiving  social  and  economic  system. 
The  government  is  busy  injecting  money  into  backward  provinces  to 
try  to  spur  growth,  but  it  does  little  good  if  it  ends  up  in  the  bank 
accounts  of  Communist  cadres.  The  figures  involved  are  staggering  for 
a  country  that  is  still  relatively  poor. 

Individual  cases  run  into  the  equivalent  of  tens  of  millions  of 


40  Dealing  Wiiii   mi:   Dragon 

pounds.  Overall,  audits  of  graft  reach  tens  of  billions.  In  Guangdong, 
across  the  frontier  from  Hong  Kong,  six  officials  from  the  state  Bank 
of  China  used  their  position  to  conspire  with  the  manager  of  a  bowl- 
ing alley  to  make  the  equivalent  of  £100  million  in  a  foreign 
exchange  fraud.  In  the  city  of  Wuhan,  four  people  earned  £110  mil- 
lion from  a  scam  involving  fake  receipts  for  non-existent  imported 
chemicals.  A  story  in  the  Asian  Wall  Street  Journal  in  1999  quoted  a 
report  to  the  Prime  Minister  as  estimating  that  enough  money  had 
disappeared  in  the  grain  sector  alone  to  build  a  million  schools,  10,000 
factories  or  a  second  Three  Gorges  Dam. 

Grain  officials  at  one  town  in  the  north-east  siphoned  off  the 
equivalent  of  £3.5  million  by  faking  3,000  receipts  for  purchases 
that  were  never  made.  In  central  Shaanxi  province,  a  manager  of  a 
grain  warehouse  embezzled  ^2  million.  In  the  spring  of  1999,  a 
Shanghai  newspaper  quoted  government  figures  showing  that 
shoddy  public  building  projects  cost  the  country  the  equivalent  of 
£7.5  billion  a  year,  and  that  a  fifth  of  those  still  standing  do  not  meet 
state  quality  standards.  A  hundred  thousand  cases  of  corruption  had 
been  uncovered  involving  public  projects,  63  per  cent  of  them  in 
construction. 

Vice-Premier  Li  Lanqing  calls  the  amount  of  money  involved  in 
graft  'shocking'  and  warns  that  'the  manner  in  which  the  violations 
occur  is  getting  increasingly  covert'.  In  Guangxi  province  alone, 
more  than  400  officials  were  put  under  investigation  in  1999,  includ- 
ing a  vice-chairman  of  the  Chinese  parliament,  the  former  chairman 
of  the  provincial  government  and  a  police  chief  alleged  to  have 
received  bribes  worth  some  10  million  yuan  (.£800,000).  Nothing 
was  sacred.  The  national  auditor's  office  discovered  that  funds  ear- 
marked for  flood-prevention  measures  had  been  misappropriated 
by  officials,  who  set  up  a  bank  account,  invested  in  property  and 
shares,  and  converted  a  flood-monitoring  centre  into  a  hotel  and 
commercial  offices.  Such  is  the  endemic  nature  of  corruption  that 
when  a  6,000-strong  security  force  was  formed  to  combat  smug- 
gling, watchdog  units  were  installed  to  make  sure  that  it  was  free  of 
graft. 

'Not  fighting  corruption  would  destroy  the  country;  fighting  it 


...  China  41 

would  destroy  the  party,'  a  Communist  Party  elder  of  the  Maoist  days, 
Chen  Yun,  remarked.  The  huge  sums  raked  off  by  officials  contrasts 
with  the  abysmally  low  salaries  of  most  Chinese:  this  is,  after  all,  a 
country  where  a  teacher  in  a  rural  area  earns  the  equivalent  of  £2$  a 
month,  and  hundreds  of  millions  make  less.  Some  will  aspire  to  emu- 
late the  fast-money  men  riding  in  imported  limousines,  but  many 
more  will  resent  the  yawning  gap  between  rich  and  poor,  and  the  way 
those  on  the  take  have  amassed  their  wealth.  The  very  legitimacy  of 
the  all-embracing  party  is  at  stake  as  the  government  is  forced  to  get 
to  grips  with  the  graft. 

In  the  most  spectacular  case  to  date,  the  former  Beijing  mayor  and 
party  chief,  Chen  Xitong,  was  sentenced  to  sixteen  years  in  jail  in 
1998  for  corruption  and  dereliction  of  duty.  The  assumption  is  that  he 
used  the  threat  of  disclosing  embarrassing  dirt  to  avoid  the  death 
penalty.  Aged  sixty-seven,  he  certainly  looked  unconcerned  when 
the  sentence  was  passed. 

The  mayor,  who  had  played  a  role  in  the  Tiananmen  massacre,  was 
once  talked  of  as  a  possible  national  leader  after  rising  under  Deng 
Xiaoping.  Some  of  Hong  Kong's  biggest  property  developers  worked 
with  him  on  their  projects  in  the  capital.  Following  an  investigation  led 
by  a  Communist  Party  graft-buster  in  her  sixties,  he  was  specifically 
accused  of  misappropriating  twenty-two  gifts  worth  the  equivalent  of 
^41,000.  His  deputy,  who  died  in  a  mysterious  shooting  incident,  is 
said  to  have  spent  the  equivalent  of  jQj  million  on  a  house.  A  woman 
with  whom  Chen  was  involved  fled  to  Hong  Kong  and  the  United 
States  reportedly  with  US$40  million.  Chen  was  also  alleged  to  have 
conspired  to  use  public  funds  for  two  luxury  villas  at  which,  according 
to  the  Chinese  news  agency,  he  enjoyed  'extravagant  wining,  dining 
and  personal  entertainment'.  He  also  became  the  central  figure  in  a 
book  published  at  the  time  which  did  not  mention  him  by  name  but 
was  generally  taken  as  an  officially  approved  roman  ci  clef.  In  the  book, 
the  central  character  is  in  love  with  his  sister-in-law,  a  lion-tamer  who 
appears  in  figure-hugging  sequin  costumes  and  puts  her  head  into  the 
mouths  of  the  animals  at  the  Municipal  Circus:  she  eventually  dies 
when  a  lion  bites  offher  head  after  its  senses  were  irritated  by  a  chem- 
ical mixed  into  her  hairspray  by  persons  unknown. 


42  Dealing  With  the  Dragon 

If  prominent  mayors  can  be  the  target  of  attack,  so  can  the  once 
invulnerable  police,  who  are  listed  by  a  popular  verse  as  one  of  the 
'seven  vicious  wolves'  of  China,  alongside  judges,  prosecutors,  state 
and  local  taxes,  Triads  and  bar  hostesses.  At  the  end  of  1999,  the 
Minister  of  Public  Security  acknowledged  that  members  of  the 
1.5  million-strong  force  were  guilty  of  accepting  bribes,  abusing  their 
power,  negligence,  illegal  use  of  weapons,  dereliction  of  duty,  incom- 
petence, protecting  smugglers,  drug-trafficking,  torture,  collusion 
with  criminals,  and  corruption  ranging  from  arbitrarily  stopping  cars 
and  demanding  money  to  involvement  in  major  graft.  He  added  that 
3,000  officers  had  already  been  fired.  In  one  city  in  Sichuan,  586  guns 
were  confiscated  from  police  who  were  'subject  to  irritable  temper 
and  alcoholism'. 

In  such  an  atmosphere  it  is  not  surprising  that  get-rich-quick  scams 
have  proliferated.  Fly-by-night  finance  outfits  masquerading  as  offi- 
cially approved  companies  offer  depositors  interest  rates  as  high  as  48 
per  cent  and  then  go  bust,  or  make  off  with  the  money.  In  one  north- 
ern province,  10,000  people  signed  up  for  a  short-lived  scheme  which 
promised  payments  of  100  yuan  every  five  or  ten  days  to  investors 
who  put  up  300  yuan  to  enable  a  stuffed  pancake  company  to  use  a 
'new  business  practice  imported  from  Japan'.  At  the  end  of  1999, 
three  women  were  sentenced  to  death  in  coastal  Zhejiang  province  for 
an  illegal  savings  fund  that  netted  200  million  yuan  G£i6  million). 
More  than  100  people  were  reported  to  have  been  sent  to  prison  for 
such  scams  in  the  Yangtze  city  of  Chongqing,  some  of  them  local  offi- 
cials. Bilked  investors  stage  regular  protests.  In  Chongqing,  they 
blocked  train  lines  and  organised  a  2,000-strong  rally;  the  city  gov- 
ernment promised  to  arrange  compensation.  In  eastern  Henan 
province,  a  train  conductor  who  tried  to  sue  over  a  900  million  yuan 
scam  was  less  lucky.  He  was  locked  up  in  a  mental  hospital  and  only 
freed  after  protests  by  fellow  investors. 

Enterprises  are  floated  with  little  more  motive  than  the  desire  of 
officials  and  their  friends  to  get  rich.  Sales  of  state  land  offer  big 
opportunities  to  siphon  off  cash.  So  does  the  flotation  of  companies 
like  Tibet  Holy  Land.  Its  shares  were  400  times  oversubscribed,  but 
the  firm  still  ran  into  financial  trouble  after  its  scheme  to  make  a 


...  China  43 

smart  new  drink  out  of  holy  water  from  a  spring  beneath  a  mountain 
monastery  went  wrong.  In  the  countryside,  meanwhile  some  rural 
officials  have  taken  to  selling  jobs  in  the  bureaucracy  to  people  who 
then  exploit  their  new  position  to  squeeze  money  out  of  locals. 

Some  of  the  money  has  gone  abroad,  or  been  recycled  through 
banks  in  Hong  Kong.  One  estimate  puts  the  amount  exported  ille- 
gally from  China  in  recent  years  at  the  equivalent  of  £35  billion. 
After  a  large  investment  trust  crashed  in  1999  with  a  gap  of  £1.4  bil- 
lion between  assets  and  liabilities,  I  asked  a  lawyer  in  China  who 
follows  such  things  where  he  thought  the  missing  money  had  gone. 
He  suggested  that  it  would  be  interesting  to  trawl  through  the  land 
registries  in  Southern  California. 

Up  and  down  the  country,  rural  credit  establishments  which  were 
meant  to  fuel  the  growth  of  local  enterprises  are  going  out  of  business 
because  of  poor  investments  or  fraud.  The  losers  are  the  peasants  who 
entrusted  their  money  to  such  organisations.  Managers  of  some  state 
enterprises  have  also  played  fast  and  loose  with  pension  funds,  using 
them  to  cover  their  firms'  losses  or  to  speculate  in  shares  and  property. 
As  a  result,  their  retired  workers  have  had  to  wait  months  for  their 
pension  payments  -  when  they  got  them  at  all  —  provoking  demon- 
strations that  represent  a  further  threat  to  President  Jiang  Zemin's 
dreams  of  social  stability. 

The  extent  of  government  concern  about  corruption  is  shown  by 
the  way  stories  about  it  now  appear  frequently  in  the  press,  such  as  the 
saga  of  the  port  city  of  Zhanjiang  in  Guangdong  province.  With  the 
best  deep-water  harbour  on  China's  southern  coast  and  access  to 
sugar  and  rubber  crops,  oil,  coal  and  timber,  Zhanjiang  became  one  of 
the  first  fourteen  mainland  cities  opened  to  foreign  investment  in  the 
1980s.  Instead  of  turning  into  a  boom  industrial  city,  it  grew  into  a 
honeypot  for  corruption  and  contraband.  Local  businessmen  say  vir- 
tually anything  could  be  purchased  at  a  discount  through  the 
government-backed  rackets.  'They  would  come  around  and  ask  us 
what  we  needed,'  one  local  manufacturer  told  Matthew  Miller  of  the 
South  China  Morning  Post.  'It  was  quite  simple  -  you  paid  them  and 
they  provided  fake  invoices.'  After  raids  in  September  1998  involving 
thousands  of  police,  more  than  sixty  officials  were  arrested  and  found 


44  Dealing  With  the   Dragon 

guilty,  among  them  the  former  Communist  Party  secretary,  the  cus- 
toms chief,  the  deputy  mayor  and  leading  members  of  the  police.  Six 
were  sentenced  to  death.  Apart  from  the  illegality,  corruption  on 
such  a  scale  shelters  inefficient  industries.  When  the  bubble  bursts,  the 
effects  are  catastrophic.  In  Zhanjiang's  heyday,  its  biggest  company,  a 
car  firm  called  Three  Stars  Enterprises,  assembled  25,000  vehicles  a 
year.  Visiting  the  city  a  year  after  the  police  raid,  Miller  reported  that 
the  factory,  with  its  3,000  workers,  stood  idle.  So  did  the  second- 
biggest  state  enterprise,  an  electrical  appliance  outfit. 

Take  any  big  project  and  you  are  likely  to  find  at  least  a  whiff  of 
corruption  in  the  air.  'To  get  rich,  first  make  the  holes,'  as  a  comment 
on  an  Internet  site  in  Guangdong  put  it.  Or,  in  the  official  words  of 
the  Chinese  news  agency,  Xinhua:  'A  large  number  of  projects,  which 
should  have  gone  through  extensive  processes  of  design,  feasibility 
study,  experts'  studies  and  approval,  were  built  purely  because  some 
senior  bureaucrats  had  given  their  endorsement.  This  has  opened  the 
door  of  convenience  to  those  cadres  who  have  fallen  because  of  their 
greed  to  deal  with  unscrupulous  contractors.'  The  extent  of  poor 
work  has  given  rise  to  a  new  phrase,  'torn'  constructions,  as  if  they  had 
been  made  of  bean  curd,  such  as  a  72-kilometre  highway  in  the  south 
which  gave  way  eighteen  days  after  it  was  opened. 

No  project  is  as  big  as  the  Three  Gorges  Dam  on  the  Yangtze,  the 
pet  scheme  of  the  former  Prime  Minister  Li  Peng,  who  is  pictured  on 
cruise  ships  beaming  as  he  observes  the  great  walls  of  concrete  going 
up  on  the  river.  The  total  cost  will  be  more  than  £40  billion,  and 
anywhere  from  1.5  to  2  million  people  will  be  moved  as  the  waters 
rise  to  create  a  huge  reservoir,  flooding  towns  and  cities  and  covering 
30,000  hectares  of  agricultural  land.  Environmentalists  worry  about  its 
effects,  particularly  a  build-up  of  sediment  on  the  river  bed  which  will 
push  up  the  water  level  and  make  flooding  of  the  surrounding  area 
more  likely.  Human-rights  monitors  say  many  local  residents  are  being 
moved  against  their  will. 

Massive  destruction  of  forests  which  used  to  absorb  monsoon  rain- 
fall upstream  of  the  dams  has  increased  the  danger  of  catastrophic 
flooding.  The  electricity  generated  from  the  project  may  not  find  the 
expected  number  of  customers  since  provinces  due  to  use  its  energy 


.   .   .  China  45 

are  building  their  own  power  stations.  Even  the  tourists  seem  to  be 
growing  cool  about  the  trip  through  the  100-metre-high  gorges. 
When  we  made  the  voyage  in  1998,  the  boat  was  full  of  people.  Now, 
the  ships  are  three-quarters  empty.  'Tourists  have  concluded  that  the 
Three  Gorges  have  already  disappeared,'  says  the  captain  of  the  Yangtze 
Angel  cruise  boat. 

But  whatever  the  doubts,  the  project  has  been  a  godsend  for  some. 
The  corporation  running  it  has  reported  a  25  billion  yuan  (£2  billion) 
shortfall,  equivalent  to  one-third  of  the  budget  needed  to  complete 
the  second  phase,  due  for  2003.  One  report  says  that  at  least  232  mil- 
lion yuan  G£i8  million)  has  been  diverted  from  resettlement  funds 
alone.  The  Nanfang  Weekly  recounted  how  a  local  office  pocketed 
one-third  of  the  funds  allocated  by  Beijing  for  building  road  bridges. 
Contractors  have  used  poor  materials  for  dams,  and  paid  the  peasant 
workers  half  the  stipulated  amount.  One  builder  had  been  construct- 
ing roads  and  bridges  for  thirty  years,  but  had  never  been  subject  to 
any  quality  checks. 

The  bigger  the  job,  the  greater  the  take.  So  some  officials  simply 
enlarge  projects  under  their  control.  Buildings  have  been  erected  on 
ground  which  could  not  properly  support  their  weight.  Investigations 
showed  that  seventeen  out  of  twenty  bridges  in  one  area  in  Sichuan 
province  had  'quality  problems';  five  were  so  dangerous  that  they  had 
to  be  destroyed.  Such  scams  arouse  the  particular  anger  of  the  Prime 
Minister,  Zhu  Rongji,  who  insisted  in  1999  that  officials  must  'not 
divert  funds  to  other  uses'.  He  was  a  bit  late,  but  his  ire  mounted  as 
inspection  trips  uncovered  more  and  more  of  what  he  called  'con- 
structions made  of  beancurd  and  turtle  eggs'.  'How  can  corruption 
reach  such  a  stage?'  he  exclaimed  on  one  trip.  Another  time,  he 
sacked  100  officials  on  the  spot. 

This  is  typical  of  a  man  dubbed  a  fellow  reformer  by  Tony  Blair. 
Zhu  himself  says  he  is  an  'ordinary  Chinese  with  a  bad  temper'.  His 
nickname  in  Hong  Kong  is  'iron  face',  and  he  can  bear  a  distinct 
resemblance  to  the  fierce  and  implacable  gods  of  classic  Chinese  sculp- 
ture. He  is  said  to  have  been  the  target  of  several  assassination 
attempts. 

Not  known  for  his  willingness  to  take  prisoners,  the  Premier  is  a 


46  Dealing  Wrin    nil.   Dracon 

man  in  a  hurry.  When  he  got  the  job  in  1998,  he  vowed  to  surmount 
'a  multitude  of  minefields  and  30,000  abysses'  in  his  drive  to  reform 
the  economy  and  cut  the  8-million-strong  civil  service  in  half.  A 
quip  circulating  in  Beijing  about  Zhu  and  his  predecessor,  Li  Peng, 
says  that  'one  guy  with  middling  intelligence  has  left  the  State 
Council,  to  be  succeeded  by  a  smart  madman'.  How  far  the  'smart 
madman'  can  go  in  reforming  China  will  be  a  theme  of  the  year  of 
1999,  with  deep  implications  not  only  for  Hong  Kong  but  also  for  the 
mainland's  whole  relationship  with  the  rest  of  the  world. 

Born  in  Hunan  province  in  1928,  Zhu  had  a  hard  childhood:  his 
father  died  before  he  was  born  and  his  mother  when  he  was  nine.  She 
was  buried  under  a  simple  heap  of  soil  -  in  keeping  with  his  austere 
image,  Zhu  has  given  orders  that  the  family  graves  are  not  to  be 
adorned  in  any  special  fashion.  Married  in  1956,  he  was  purged 
during  the  Cultural  Revolution  as  a  rightist  and  reduced  to  menial 
work.  Rehabilitated,  he  became  a  key  lieutenant  to  Jiang  Zemin 
when  the  future  President  was  Mayor  of  Shanghai.  Zhu  then  became 
mayor  himself  before  being  called  to  Beijing  to  squelch  China's  gal- 
loping inflation.  Gaining  the  sobriquet  of 'economic  tsar',  he  prepared 
a  massive  programme  to  carry  on  Deng's  crusade,  and  was  the  obvi- 
ous candidate  to  succeed  Li  Peng  as  head  of  the  government,  though 
he  has  still  not  been  able  to  rout  critics  who  hanker  for  the  Maoist 
ways. 

Hong  Kong's  Chief  Executive  likens  a  session  with  the  Prime 
Minister  to  a  manager  meeting  his  sharp-eyed,  no-nonsense  company 
chairman  who  has  the  accounts  open  in  front  of  him  and  will  pick  up 
on  any  weakness.  The  reformist,  market-minded  character  of  Zhu's 
economic  policies  has  done  nothing  to  diminish  his  orthodoxy  in 
other  domains.  He  is  the  embodiment  of  the  regime's  insistence  that 
economics  and  politics  can  be  kept  apart  and,  understandably,  hates  to 
be  described  as  China's  Gorbachev. 

To  make  reform  meaningful  and  produce  a  more  level  playing 
field,  Zhu  and  Jiang  have  had  to  attack  one  of  the  sacred  elements  of 
the  system  —  the  People's  Liberation  Army  (PLA)  and  its  involvement 
in  industry  and  business.  Ranking  just  below  the  Communist  Party  at 
the  historic  pinnacle  of  the  regime,  the  military— commercial  complex 


...  China  47 

was  reckoned  to  stretch  over  50,000  companies  with  earnings  of  more 
than  US$5  billion.  One  major  enterprise,  China  Poly,  built  up  more 
than  100  subsidiaries.  The  PLA's  General  Political  Department  bought 
an  Australian  mining  firm  as  well  as  companies  listed  in  Hong  Kong 
and  Toronto.  The  Logistics  Department  runs  a  big  pharmaceutical 
enterprise,  and  the  Staff  Department  is  into  electronics  and  telecom- 
munications. 

As  a  sop  for  their  drive  to  take  the  army  out  of  business,  Jiang  and 
Zhu  boosted  the  military  budget  to  ensure  the  loyalty  of  officers  who 
claim  the  heritage  of  the  Long  March  and  the  victory  of  1949  -  and 
their  sons:  China  Poly  is  headed  by  the  offspring  of  a  revolutionary 
elder.  The  President,  in  particular,  went  out  of  his  way  to  listen  to  the 
generals,  to  safeguard  their  powers  and  privileges,  and  to  sing  the 
PLA's  praises.  Dealing  with  the  army  was  also  vital  to  Zhu's  drive 
against  corruption  and  smuggling.  Army  officers  had  grown  accus- 
tomed to  using  their  position  to  cover  part  of  China's  vast  contraband 
network,  which  is  estimated  to  have  been  costing  the  central  govern- 
ment as  much  as  £10  billion  a  year  in  customs  revenue,  taking  in 
everything  from  tobacco  and  drinks,  food  oil  and  machinery  to  Viagra 
and  pornography,  not  to  mention  human  cargo  shipped  out  in  con- 
tainers for  a  new  life  in  North  America  or  Australia. 

Apart  from  getting  the  army  to  clean  up  its  act,  the  campaign  is 
confronting  some  of  China's  toughest  nuts.  In  the  port  of  Leizhou,  a 
local  gang  thought  nothing  of  shooting  policemen  and  attacking  cus- 
toms officers;  finally,  more  than  a  thousand  security  men  had  to  be 
sent  in  to  arrest  the  underworld  bosses,  three  of  whom  were  executed. 
Pirates  regularly  board  ships  and  kill  the  crews  before  smuggling  the 
cargoes.  In  one  attack  in  1998,  they  beat  the  twenty-three  sailors  on 
a  Hong  Kong-owned  ship  to  death  one  by  one  and  threw  the  bodies 
into  the  sea  off  the  Shanghai  coast.  Less  lethally,  pirates  stole  a  couple 
of  cars  in  Taiwan  in  1999  and  smuggled  them  across  the  Strait,  com- 
plete with  the  sleeping  drivers,  who  were  so  drunk  that  they  didn't 
know  what  was  happening  until  they  came  round  on  the  mainland. 

Cracking  down  on  corruption  and  smuggling  is  essential  it  China 
is  to  regain  its  lure  as  the  last  great  business  frontier  for  Western  com- 
panies. The  statistics  of  the  past  two  decades  are  impressive  enough. 


48  Dealing  With   1111.   Dragon 

with  324,000  foreign-investment  projects  that  will  involve  a  total  of 
US$572  billion  if  they  are  all  completed.  But  few  businessmen  now 
share  the  starry-eyed  vision  of  the  late  chairman  of  Coca-Cola  of  the 
profits  to  be  made  from  putting  a  drinks  can  into  the  hands  of  every- 
body in  China.  For  much  of  the  1990s,  foreign  investment  rose  by  40 
per  cent  or  more  a  year.  In  1993,  it  almost  tripled  as  China  accounted 
for  nearly  half  of  all  foreign  investment  in  developing  countries.  But 
in  1999,  the  inflow  of  funds  began  to  fall. 

The  question  being  asked  in  boardrooms  in  New  York,  Tokyo, 
London  and  Paris  is  very  simple:  where  are  the  returns  and  when  are 
they  going  to  start  showing  up?  The  turn  of  the  century  saw  a  fren- 
zied rush  for  China-related  Internet  companies.  But  for  more 
mundane  goods,  there  are  even  cheaper  manufacturing  centres  than 
China  these  days:  for  really  cut-price  labour  go  to  Cambodia.  The 
low  level  of  domestic  spending  on  the  mainland,  the  rudimentary  dis- 
tribution system,  and  mentalities  bred  by  decades  during  which 
production  took  precedence  over  the  wishes  of  consumers  mean  that 
the  market  is  still  something  of  a  mirage  for  many  searchers  after  the 
Chinese  holy  grail.  A  study  by  City  University  in  Hong  Kong  has 
found  that  while  new  private  Chinese  companies  had  a  return  on 
equity  of  19  per  cent,  foreign  firms  were  making  just  a  sixth  of  that. 
The  consultants  A.  T  Kearney  report  that  only  41  per  cent  of  firms 
which  have  invested  in  China  say  they  are  showing  a  profit,  and  that 
about  a  quarter  of  multinationals  are  pulling  out  of  at  least  one  main- 
land venture. 

After  the  collapse  of  the  big  Gitic  investment  trust  in  Guangdong 
province  in  1999,  foreign  bankers  have  become  all  too  aware  of  the 
dangers  involved  in  pumping  money  into  Chinese  companies,  even  if 
the  state  body  they  wrongly  thought  was  acting  as  a  guarantor  rejoiced 
in  the  acronym  of  SAFE  -  the  State  Administration  of  Foreign 
Exchange.  To  add  to  the  worries,  the  huge  state  banking  sector  is 
awash  with  debts  after  decades  of  being  used  to  keep  public  sector 
enterprises  afloat.  A  junior  banker  from  Fujian  province  was  singled 
out  in  1999  as  the  'national  model  of  the  financial  system'  because 
there  had  not  been  a  single  default  on  any  of  more  than  3 ,000  loans 
he  approved  in  an  eighteen-year  career.  But  Moody's  Investment 


China 


49 


Services  estimates  that  bad  loans  issued  by  less  rigorous  managers 
could  amount  to  a  trillion  yuan,  or  -£75  billion,  equal  to  the  main- 
land's entire  fiscal  revenue  for  1998. 

For  optimists,  the  conversion  to  market  economics  and  growing 
internationalism  will  produce  a  new  China.  Despite  the  backwardness 
of  vast  regions,  there  is  no  doubt  of  the  enormous  social  progress  in 
the  last  decade;  or  of  the  earlier  advances  in  education,  health,  welfare 
and  the  equality  of  women.  Despite  the  oppressive  political  rule  of  the 
Communist  Party,  most  individuals  are  now  far  freer  in  their  everyday 
lives  than  they  have  been  for  four  decades.  For  many  Western  busi- 
nessmen investing  in  China,  the  stability  provided  by  one-party  rule 
is  greatly  preferable  to  the  uncertainties  of  democracy.  On  such  a 
view,  modernity  will  sweep  the  country  along  with  it,  a  new  gener- 
ation of  leaders  will  shake  off  the  heritage  of  Mao,  a  thousand  efficient 
factories  will  bloom,  Taiwan  and  the  mainland  will  co-exist,  and  the 
world  will  acquire  a  new  major  partner  to  balance  the  power  of  the 
United  States  in  a  positive  manner. 

Pessimists  see  a  paranoid,  self-centred  state  which  will  not  give  up 
an  inch  of  its  internal  power,  a  government  intent  on  exerting  its 
authority  over  free  and  democratic  Taiwan,  a  regime  incapable  of 
real  evolution.  As  for  the  economy,  consider  two  sets  of  statistics: 
official  annual  growth  is  put  at  7  to  8  per  cent,  but  electricity  con- 
sumption, a  good  gauge  of  economic  expansion,  is  only  rising  by  2 
per  cent.  And  with  three-quarters  of  state  firms  surveyed  in  1999 
admitting  to  falsifying  their  figures,  who  can  believe  in  the  statistics  in 
any  case?  As  one  banker  remarked:  'It's  the  last  great  illusion.'  But 
great  illusions  live  by  their  own  logic,  and  China's  logic  is  all  its  own. 
So,  welcome  to  China  and  its  administrative  region  of  Hong  Kong, 
and  to  the  concept  of  one  country,  two  systems. 


One   Country,  Two   Systems 


At  the  stroke  of  midnight  on  30  June  1997,  China  regained  sover- 
eignty over  the  mountainous  island  of  Hong  Kong,  the  bigger 
area  of  Kowloon  and  the  New  Territories,  and  the  235  outlying 
islands  scattered  round  one  of  the  world's  finest  harbours.  The 
Chinese  national  flag  was  raised  at  midnight,  and  the  soldiers  of  the 
People's  Liberation  Army  rolled  into  Hong  Kong  standing  ramrod  stiff 
in  the  rain  on  the  back  of  their  trucks.  But  life  went  on  as  usual  the 
next  morning  in  the  new  Special  Administrative  Region  of  the 
People's  Republic  of  China  as  Deng  Xiaoping's  formula  of  one  coun- 
try, two  systems  was  put  to  the  test. 

The  soldiers  were  quickly  hidden  away  in  their  barracks. 
Democratic  critics  of  Beijing  climbed  to  the  balcony  of  the  Legislative 
Council  building  in  the  early  hours  to  make  defiant  speeches  for  the 
crowd  below  and  the  television  cameras  of  the  world.  The  President 
and  Prime  Minister  of  China  came  and  sat  on  the  platform  at  the  cer- 
emonies. The  Prince  of  Wales  sailed  off  into  the  humid  night  with  the 
last  Governor  on  the  Royal  Yacht.  And,  up  the  road  through  the  New 
Territories,  past  the  paddy  fields  abandoned  by  owners  who  make 
more  from  leasing  them  out  as  container  dumps,  the  border  remained 
as  closely  guarded  as  ever.  But  still  the  illegal  immigrants  kept  head- 
ing for  the  mecca  of  Hong  Kong,  following  a  pattern  which  gave  a 
special  irony  to  the  decolonisation. 


One   Country,  Two   Systems  51 

Most  inhabitants  of  the  new  SAR  are  of  refugee  stock.  The  coun- 
try which  they,  or  their  parents,  fled  was  China,  particularly  after  the 
Communist  victory  of  1949.  Some  came  legally;  others  were  smug- 
gled in  by  land  or  sea,  or  swam  across  to  the  New  Territories.  More 
recently,  Hong  Kong  has  taken  in  150  mainlanders  a  day.  Families 
from  China  have  dominated  Hong  Kong  for  years.  Many  come  from 
Shanghai,  Asia's  most  international  city  in  the  days  of  the  defeated 
Kuomintang:  textile  tycoons  who  brought  their  machinery  with 
them,  shipping  magnates  like  the  Chief  Executive's  father,  film  pro- 
ducers and  entrepreneurs  by  the  thousand.  Before  the  handover,  all 
but  one  of  the  four  serious  candidates  for  the  post  of  Hong  Kong's 
first  Chief  Executive  traced  their  roots  back  to  the  city  which  loomed 
as  an  eventual  rival  to  Hong  Kong. 

Other  refugees  came  from  Fujian  up  the  coast,  or  from  the  neigh- 
bouring southern  province  of  Guangdong  whose  dialect  is  the 
territory's  principal  tongue.  Fleeing  China  did  not  mean  rejecting 
mainland  roots.  Apart  from  Cantonese,  some  dialects  from  across  the 
border  still  enjoy  more  currency  in  the  SAR  than  the  official  main- 
land language  of  Putonghua.  There  are  mutual  aid  organisations  for 
those  from  the  different  provinces.  Restaurants  offer  the  cuisine  of  all 
parts  of  China;  only  the  traditional  food  of  the  original  Hakka  inhab- 
itants of  Hong  Kong,  with  its  salt-baked  chicken  and  marinated  fatty 
pork,  is  hard  to  find. 

The  feelings  of  this  essentially  refugee  population  about  returning 
to  the  sovereignty  of  the  country  which  they  or  their  parents  fled  have 
been  more  mixed  than  the  patriots  would  like  to  pretend,  even  if  the 
term  'reunification'  has  come  increasingly  into  official  vogue.  There 
was  a  notable  absence  of  rancour  towards  the  colonialists  who  were 
leaving  after  156  years,  or  of  any  great  rush  to  follow  the  Chief 
Executive's  exhortation  to  become  more  Chinese.  True,  a  few  com- 
mentators and  a  couple  of  politicians  did  play  the  anti-colonial  card, 
and  some  of  those  who  had  gratefully  accepted  knighthoods  stopped 
calling  themselves  'Sir'.  Memories  of  the  opium  trade  and  the  con- 
struction of  great  Scottish  and  English  fortunes  were  evoked 
repeatedly  in  the  more  mainland-minded  media  at  the  time  of  the 
handover.  Beijing  suspected  that  lucrative  contracts  had  been  given  to 


H  > 

IA1 


52  Dealing  Wiiii    iiii-;   Draijon 

British  firms  in  order  to  sluice  money  out  of  the  territory,  though 
there  proved  to  be  no  foundation  to  rumours  of  a  submarine  hidden 
in  a  secret  dock  beneath  the  Hong  Kong  and  Shanghai  Bank,  ready  to 
spirit  away  its  wealth  to  London  at  midnight  on  30  June.  And  yes,  over 
the  decades,  Hong  Kong  had  served  as  an  easy  source  of  enrichment 
for  second-raters  from  the  colonial  power  immortalised  in  the 
acronym  FILTH  -  Failed  In  London,  Try  Hong  Kong. 

But  although  the  British  influence  never  reached  deeply  into  the 
lives  of  the  mass  of  the  population,  too  many  members  of  the  terri- 
tory's establishment  had  ties  with  the  former  sovereign  power  for  the 
usual  end-of-empire  sentiments  to  take  much  hold  outside  old  left- 
ist circles.  The  movers  and  shakers  of  Hong  Kong  have  homes  in 
London,  children  at  public  schools,  links  with  the  City,  horses  run- 
ning at  Ascot.  Lower  down  the  social  scale,  however  badly  the 
British  had  behaved  towards  the  Chinese  earlier  in  the  century,  the 
freedom  to  live  as  one  wished  meant  that  there  was  little  reason  for 
resentment.  It  wasn't  even  as  if  the  departing  power  had  converted 
most  of  the  people  of  Hong  Kong  to  speaking  its  language,  the  low 
level  of  English  fluency  being  a  constant  source  of  surprise  to  visitors 
and  concern  to  the  administration  and  internationally  minded 
businesses. 

In  a  display  of  political  correctness  before  the  handover,  officials 
referred  to  Hong  Kong  as  a  'territory'  rather  than  a  colony.  One  sea- 
soned British  official  says  this  was  not  so  much  out  of  respect  for  the 
colonised  natives  as  to  avoid  antagonising  Beijing,  which  did  not  wish 
to  be  reminded  that  part  of  China  was  still  held  by  European  imperial- 
ists. What  used  to  be  the  Royal  Hong  Kong  Golf  Club  has  dropped 
the  adjective.  The  flag  is  no  longer  hoisted  at  dawn  at  the  Cenotaph 
in  Central,  built  as  a  replica  of  the  memorial  in  Whitehall,  nor  does 
the  government  arrange  a  Remembrance  Day  ceremony  there. 

Still,  the  relics  of  the  past  are  all  around.  A  leading  hotel  has  kept  its 
Churchill  Room.  A  large  portrait  of  the  Queen  and  Prince  Philip  in 
ceremonial  dress  hangs  in  the  Windsor  Room  of  the  Hong  Kong 
Club.  The  table  mats  in  the  dining  room  at  the  Chief  Executive's 
offices  during  the  handover  showed  English  hunting  scenes.  An 
elderly  radio  presenter  called  Ralph  Pixton  continued  to  run  a  Sunday 


One   Country,  Two   Systems  53 

phone-in  show  redolent  of  the  Light  Programme  of  the  1940s.  The 
official  residence  of  the  Chief  Secretary  of  the  Special  Administrative 
Region  is  still  called  Victoria  House.  Ladies  in  white  hats  enjoy  games 
of  bowls  at  their  club  in  Kowloon;  the  police  band  in  Macintosh 
tartan  plays  traditional  British  tunes  at  national  day  ceremonies,  and 
you  can  post  letters  in  boxes  with  the  royal  crest  (even  if  the  paint  has 
been  changed  from  red  to  green  or  purple).  At  the  military  head- 
quarters building,  the  metal  lettering  of  the  name  on  the  cream  tower 
has  been  removed,  but  the  words  -  The  Prince  of  Wales  Building  — 
can  clearly  be  read  from  indentations  in  the  concrete  as  if  carved 
there  for  perpetuity. 

Anglican  services  are  celebrated  in  the  Gothic-revival  Cathedral  of 
St  John's.  The  quiet  residential  streets  of  the  Kowloon  Tong  district 
still  bear  the  names  of  English  counties;  in  the  Central  district  there  is 
a  street  called  Lambeth  Walk.  The  new  office  complex  in  which  I 
used  to  work  has  towers  with  the  names  of  Dorset,  Somerset,  Devon, 
Warwick  and  Lincoln.  In  a  nearby  club,  old  Punch  covers  hang  in  the 
men's  lavatory.  A  British  company,  Stagecoach,  runs  many  of  Hong 
Kong's  buses.  The  underground  rolling  stock  is  from  Cammell  Laird. 
The  Hongkong  and  Shanghai  Banking  Corporation  and  Standard 
Chartered  Bank,  both  with  their  ultimate  headquarters  in  London, 
issue  banknotes  for  the  SAR  as  they  did  for  the  colony.  And  when  it 
comes  to  the  world  game,  Manchester  United  are  the  most  popular 
team,  drawing  a  capacity  crowd  in  high  summer  heat  in  1999. 

For  individuals,  adopted  English  names  persist,  though  some  would 
raise  eyebrows  in  London.  The  head  waiter  at  the  Hong  Kong  Club 
is  called  Paprika.  Two  women  flight  attendants  on  a  trip  to  Shanghai 
had  name  badges  telling  passengers  they  were  Keith  and  Aegean. 
Then  there  are  Fruit  the  film  director,  Garidge  and  Diesel  the  pho- 
tographers, Starboard  the  yachtsman,  Charcoal  the  businessman  and 
Garment  and  Echo  the  television  executives.  One  of  the  two  public 
statues  on  Hong  Kong  Island  is  of  Queen  Victoria,  in  a  park  which 
still  carries  her  name.  At  the  fashionable  China  Club,  the  telephone  in 
the  library  is  an  old  British  apparatus  in  black  Bakelite,  its  dial 
engraved  with  'Emergency  Calls  for  Fire  Police  Ambulance  Dial  999' 
and  the  number  Barnet  8235.  Two  of  the  senior  officials  shaping  the 


54  Dealing  With  the   Dragon 

government's  legal  policies  are  British,  and  one  of  them  found  him- 
self acting  as  Solicitor-General  when  the  administration  failed  to 
come  up  with  a  local  candidate  for  the  job.  Most  High  Court  cases  are 
still  heard  in  English  before  judges  wearing  horsehair  wigs. 

The  colonial  era  was  not  democratic  until  the  last  gasp  of  Chris 
Patten's  opening-up  of  the  electoral  franchise.  But  British  rule  was 
generally  benign  in  its  later  days,  particularly  compared  with  what  was 
going  on  across  the  border.  As  the  Queen's  portrait  was  taken  down 
at  the  Central  Post  Office,  few  people  could  remember  the  days  when 
Chinese  had  not  been  allowed  to  live  on  the  heights  of  the  Peak, 
when  a  magnate  bequeathed  money  to  a  hospital  on  condition  that  it 
would  not  treat  Chinese  patients,  or  when  senior  civil  servants  could 
not  take  local  wives. 

The  key  difference  from  other  colonies  from  which  Britain  with- 
drew was  that  Hong  Kong  did  not  move  to  independence.  Instead, 
London  handed  it  over  to  the  sovereignty  of  another  nation.  Indeed, 
it  can  be  argued  that  what  happened  on  i  July  is  best  seen  as  a  trans- 
fer of  colonialism  with  the  old  system  of  government  that  had 
pertained  before  Patten's  reforms.  In  that  scenario,  the  Chief 
Executive  of  the  SAR  became  the  heir  of  the  pre-Patten  Governor, 
with  institutions  like  his  Executive  Council,  the  civil  service  and  the 
legislature  carried  on  intact  from  one  era  to  another  and  a  business 
elite  calling  the  shots  when  it  mattered.  The  provisional  legislature 
sworn  in  to  replace  the  elected  body  of  late  Patten  days  echoed  the  era 
when  the  Governor  appointed  legislators.  The  difference  is  that  before 
1997,  the  man  in  charge  had  been  the  emissary  of  a  liberal  democracy 
ultimately  responsible  to  the  House  of  Commons;  now,  the  line  runs 
to  the  Communist  rulers  in  Beijing. 

Nobody  could  pretend  that  the  choice  of  Tung  Chee-hwa  as  Chief 
Executive  in  1997  was  a  matter  of  popular  consultation.  If  they  had 
had  a  free  choice,  the  people  of  Hong  Kong  would  almost  certainly 
have  picked  Anson  Chan  Fang  On-sang,  the  first  local  Chief  Secretary 
appointed  by  Patten  to  head  the  civil  service.  But  that  was  not  to  be, 
as  Tung  moved  smoothly  to  centre  stage,  resigning  from  the 
Governor's  Executive  Council  and  hewing  to  the  party  line  on  any 
controversial  issues.  When  one  criticised  the  extremely  restricted 


One   Country,  Two   Systems  55 

nature  of  the  selection  committee  that  chose  Tung  to  rule  Hong 
Kong,  the  response  was  that  at  least  they  numbered  400  and  were 
from  Hong  Kong.  Critics  of  the  Patten  reforms  rarely  miss  an  oppor- 
tunity to  point  out  that  Britain  had  left  it  till  the  very  last  moment  to 
introduce  democracy,  and  had  been  unable  to  do  anything  to  ensure 
its  preservation.  At  one  point,  Margaret  Thatcher  had  wondered  wist- 
fully if  Hong  Kong  could,  indeed,  be  given  its  freedom  when  Britain's 
treaties  or  ownership  expired  in  1997.  But  China  would  never  have 
agreed,  and  would  British  troops  have  been  deployed  to  hold  back  the 
PLA?  Not  a  chance,  as  was  brought  home  forcefully  in  1996  when  the 
American  fleet  sailed  through  the  Taiwan  Strait  after  China  staged  war 
games  to  try  to  intimidate  the  breakaway  island.  Who  could  imagine 
Ark  Royal  dropping  anchor  in  the  harbour  to  defend  Hong  Kong? 

Power  politics  aside,  there  was  the  simple  fact  that  the  territory 
depended  on  the  mainland  for  its  water  and  most  of  its  food.  The 
contents  of  the  beautiful  Plover  Cove  reservoir  in  the  New  Territories 
come  from  over  the  border  —  770  million  cubic  metres  a  year 
compared  to  280  million  cubic  metres  collected  from  rainfall.  Econo- 
mically, the  link  has  been  with  China  since  Deng  launched  the  move 
to  the  market  in  the  south.  Hong  Kong  companies  have  signed  some 
180,000  investment  contracts  in  the  mainland  amounting  to  the 
equivalent  of  ^Tn  billion,  most  of  it  in  the  Pearl  River  Delta,  where 
they  are  now  reckoned  to  employ  about  three  million  people. 
Property  companies  from  the  SAR  have  put  up  towering  office  and 
accommodation  blocks  in  Beijing  and  Shanghai.  One  of  the  big  con- 
glomerates set  out  to  turn  the  city  of  Wuhan  into  'China's  Chicago'. 
Others  constructed  mainland  expressways  and  shopping  malls. 
Tycoons  went  back  to  their  native  towns  and  villages  and  spread  the 
manna  of  capitalism  in  the  form  of  hospitals  and  schools.  SAR  resi- 
dents make  40  million  trips  across  the  frontier  each  year.  Some  50,000 
vehicles  will  cross  each  day  by  the  year  2005. 

At  the  same  time,  the  Hong  Kong  establishment  did  not  wait  for 
the  handover  to  move  closer  and  closer  politically  to  the  mainland. 
The  British  could  no  longer  offer  anything,  and  one  country,  two  sys- 
tems covered  the  disparity  between  Hong  Kong's  capitalism  and  the 
creed  still  professed  up  north.  If  the  date  for  change  had  not  been 


56  Dealing  With  the   Dragon 

fixed,  there  might  have  been  more  equivocation.  But  i  July  was  set, 
and,  since  Beijing  would  be  in  the  driving  seat,  it  was  clearly  advan- 
tageous to  board  its  vehicle.  Soon  after  arriving  in  the  territory  in 
1995,  I  naively  asked  a  local  businessman  one  evening  on  his  corpo- 
rate boat  how  he  thought  Britain  was  handling  the  change  of 
sovereignty.  'But  it  is  us  and  Beijing  who  are  handling  the  handover,' 
he  replied  with  a  smile. 

If  few  people  actively  disliked  the  departing  colonial  power,  there 
was  no  definable  'pro-British'  sentiment.  Nor  did  independence 
figure  high  in  the  polls.  Even  the  most  died-in-the-wool  democratic 
opponents  of  Beijing  could  not  deny  that  they  were  Chinese.  What 
mattered  was  what  you  meant  by  that  description:  could  a  line  be 
drawn  between  belonging  to  the  Chinese  race  and  counting  yourself 
a  subject  of  the  Leninist  Yellow  Emperors  in  Beijing?  In  all  the  cele- 
bration of  the  preservation  of  the  Hong  Kong  system  it  was  easy  to 
forget  about  the  first  two  words  of  the  formula  —  one  country  —  but 
nobody  who  knew  how  the  People's  Republic  functioned  could 
doubt  that  the  new  sovereign  power  would  give  them  precedence. 

Opinion  polls  in  1997  showed  a  high  degree  of  anxiety  about  how 
Beijing  would  act.  There  was  little  of  the  popular  exuberance  that 
accompanied  the  end  of  colonialism  in  Africa.  For  all  the  official 
rejoicing,  the  SAR  has  no  Reunification  Square  or  Motherland 
Avenue.  Rather,  there  was  a  general  recognition  in  the  public  that  a 
historic  turning  point  had  been  reached,  a  tentative  welcome  at  re- 
joining the  Chinese  nation,  but  also  an  insistence  that  Hong  Kong 
must  remain  Hong  Kong,  and  a  corresponding  concern  about  the 
behaviour  of  the  new  sovereign  and  whether  the  Tung  government 
would  stand  up  for  its  citizens.  Such  concerns  had  fuelled  a  rush  for 
foreign  nationalities  and  passports  after  Britain  imposed  strict  immi- 
gration restrictions  on  Hong  Kong  people.  For  many,  however, 
acquiring  a  passport  was  an  insurance  policy,  not  a  final  decision  to 
live  in  Canada,  Australia  or  the  USA.  Though  some  made  the  move 
permanent,  many  others  went  for  long  enough  to  qualify  for  pass- 
ports, and  then  returned. 

The  worry  about  what  Beijing  would  do  had. been  a  significant 
factor  in  the  emergence  of  the  Democratic  Party  as  the  main  political 


One   Country,  Two   Systems  57 

force  after  the  Tiananmen  Square  massacre  of  1989.  Equally,  its  main 
rival,  the  Democratic  Alliance  for  the  Betterment  of  Hong  Kong 
(DAB),  suffered  from  being  seen  as  a  'pro-Beijing'  movement.  To  vote 
Democrat  was  also  to  vote  for  Hong  Kong's  separate  identity,  epito- 
mised by  the  way  people  tend  to  describe  themselves.  Opinion  surveys 
carried  out  in  1999  by  an  academic  group  called  the  Hong  Kong 
Transition  Project  showed  that  46  per  cent  regarded  themselves  as 
'Hong  Kong  people',  27  per  cent  as  'Hong  Kong  Chinese'  and  21  per 
cent  simply  as  'Chinese'.  In  another  poll  among  6,500  students,  those 
who  regarded  themselves  as  being  purely  Hong  Kongers  outnumbered 
those  who  saw  themselves  as  solely  Chinese  by  nearly  three  to  one. 

Just  as  the  government  in  Beijing  describes  the  mainland's  hybrid 
state-market  economy  as  'socialism  with  Chinese  characteristics',  so 
the  best  description  of  the  inhabitants  of  Hong  Kong  may  be  'Chinese 
with  Hong  Kong  characteristics'.  Those  characteristics  enjoy  the 
underpinning  of  the  agreement  reached  in  1984  between  China  and 
Britain,  known  as  the  Joint  Declaration,  and  of  the  Basic  Law  which 
acts  as  Hong  Kong's  constitution.  There  is  to  be  a  fifty-year  span  in 
which  the  concept  of  one  country,  two  systems  will  prevail,  with 
Beijing  taking  charge  of  foreign  and  military  affairs  but  otherwise 
leaving  Hong  Kong  with  its  way  of  life  basically  intact.  This  gives  the 
Special  Administrative  Region  of  the  People's  Republic  of  China  a 
degree  of  autonomy  unknown  anywhere  else  in  the  world. 

Which  other  region  of  a  unitary  state  has  its  own  constitution,  cen- 
tral bank,  legal  code,  tax  system  and  civil  service  structure?  Or  a 
currency  pegged  to  that  of  another  country,  and  note-issuing  banks 
with  their  group  headquarters  on  the  other  side  of  the  world?  In 
which  other  region  do  you  have  to  dial  an  international  code  to  tele- 
phone the  capital?  Where  else  does  only  1  per  cent  of  the  population 
use  the  national  language  as  its  usual  means  of  expression,  and  where 
else  would  a  poll  show  90  per  cent  of  teachers  against  the  idea  of  con- 
ducting lessons  in  the  national  tongue? 

Over  the  border,  you  cannot  move  about  legally  without  a  permit, 
let  alone  travel  abroad;  in  Hong  Kong,  you  go  to  the  airport  and  fly 
wherever  you  like.  There,  the  currency  is  not  convertible;  here,  you 
dial  instructions  to  your  bank  to  move  your  money  into  US  dollars. 


58  Dealing  With  the  Dragon 

euros  or  whatever.  There,  the  stock  market  is  in  its  highly  volatile 
infancy  and  the  banking  system  opaque;  here  is  a  world-class,  largely 
transparent  financial  structure.  On  the  mainland,  corruption  has  been 
a  way  of  life  as  a  means  of  supplementing  low  official  salaries;  in 
Hong  Kong,  civil  servants  are  among  the  highest  paid  on  earth  and 
investigators  of  the  anti-corruption  body  haul  in  eminent  suspects  at 
will.  In  the  rest  of  China,  freedom  of  political  expression  is  severely 
limited;  here  you  can  say  what  you  want.  On  the  mainland,  any  airing 
of  the  Taiwanese  government's  point  of  view  is  taboo;  in  Hong  Kong, 
the  idea  of  a  ban  on  such  views  attracts  only  20  per  cent  support.  The 
Beijing  government  has  an  awful  human  rights  record;  despite  criti- 
cism from  a  United  Nations  hearing  in  1999,  a  poll  in  the  SAR 
showed  that  94  per  cent  of  people  thought  human  rights  were  being 
respected. 

The  mainland  lives  with  a  heavy  burden  of  history;  in  Hong  Kong, 
Tiananmen  apart,  there  is  little  feeling  of  the  past,  no  legacy  of  emper- 
ors, civil  war,  the  Communist  victory,  the  Great  Leap  Forward, 
famine,  the  Cultural  Revolution  or  the  Gang  of  Four.  And  as  for  the 
instant  history  providers  of  the  media,  on  the  mainland  they  are  part 
of  the  political  apparatus  run  by  the  state  and  the  Communist  Party; 
in  Hong  Kong,  most  are  commercially  driven.  There,  the  media  hail 
the  patriotism  of  the  army  in  1989;  here,  newspapers  run  huge  front- 
page photographs  of  the  Hong  Kong  vigil  to  commemorate  the  dead 
of  4  June.  There  independent  media  politics  are  still  taboo;  here  a  lead 
letter  in  the  main  English-language  daily  declares:  'The  Chinese 
Communist  Party  is  a  failure.  It  has  lasted  fifty  years  only  through  dic- 
tatorial rule,  employing  tactics  of  terror,  secrecy,  suppression  and  fear.' 

In  China,  tiny  groups  of  dissidents  are  subject  to  persecution  and 
long  prison  terms:  the  authorities  say  2,000  people  are  locked  up  for 
subversion  but  human  rights  groups  put  the  number  at  10,000.  In 
Hong  Kong,  anti-government  demonstrations  are  a  regular  occur- 
rence, and  democrats  attack  the  regime  in  the  Legislative  Council 
rather  than  in  jail.  On  the  mainland,  the  parliament  is  a  one-party 
body;  here,  despite  large  imperfections  in  the  electoral  system,  anti- 
government  candidates  won  most  of  the  popularly  elected  seats  at 
the  first  post-handover  poll.   On  the  mainland,  the  Communist 


One   Country,  Two   Systems  59 

Party  rules;  here  the  Chief  Executive  cannot  even  count  on  a  pro- 
government  party,  while  the  Communists  have  no  official  status  and 
are  run  by  a  secret  cell  in  a  liaison  office.  For  China,  the  idea  of  an 
independent  judiciary  is  strange  and  foreign.  In  Hong  Kong,  it  is 
central.  On  the  mainland,  freedom  of  worship  is  strictly  controlled, 
and  the  government  insists  that  the  ordination  of  Catholic  bishops  is 
a  matter  for  the  Patriotic  Catholics'  Association,  in  which  the  Vatican 
has  no  say.  In  Hong  Kong,  religions  of  all  kinds  flourish.  The 
Financial  Secretary  and  several  senior  government  colleagues  are 
Catholics,  as  is  the  leading  opposition  figure. 

In  the  summer  of  1999,  the  mainland  authorities  banned  a  mystic, 
deep-breathing  sect  which  claims  70  million  members  in  China;  in 
Hong  Kong,  local  practitioners  sat  freely  in  the  lotus  position  outside 
the  Chinese  news  agency  in  protest.  Across  the  border,  urban  couples 
were  for  years  only  allowed  to  have  one  child;  here  you  can  have  as 
many  offspring  as  you  wish.  In  China,  despite  the  lessening  of  state 
control  in  recent  years,  everything  from  possession  of  satellite  dishes  to 
the  permitted  size  of  dogs  is  subject  to  official  restrictions.  Even  the 
weather  reports  were  doctored  to  pretend  that  the  heat  never  rose 
above  37  degrees.  In  Hong  Kong,  the  administration  cannot  even 
clamp  down  on  illegal  smoky  exhausts,  and  regularly  loses  in  court 
when  it  tries  to  impose  laws  against  spitting. 

All  this  is  summed  up  in  the  concept  of  one  country,  two  systems 
launched  by  Deng  Xiaoping  as  the  panacea  for  the  intractable  prob- 
lem of  how  to  recover  Hong  Kong  without  undermining  its  success, 
which  would  add  so  much  to  China's  wealth.  The  concept  was  both 
a  recognition  of  reality  and  a  bargain.  Hong  Kong  would  be  left  to 
pursue  its  internationalist,  capitalist  ways,  but  at  the  same  time,  it 
would  become  part  of  China,  and  so  must  not  threaten  the  system  on 
the  mainland,  in  particular  the  primacy  of  the  Communist  apparatus. 
In  one  place,  freedom  was  to  go  on  as  before;  in  the  other,  an  auto- 
cratic, outmoded  power  structure  was  to  be  preserved  based  on  a  mix 
of  oppression  and  economic  opportunity. 

Then  politics  raised  its  head.  This  was  most  troublesome,  tor  Deng 
had  decreed  that  Hong  Kong  was  an  economic,  not  a  political,  city. 
But  the  demonstration  and  ensuing  massacre  at  Tiananmen  Square 


60  Dealing  With    i  he   Dragon 

changed  Hong  Kong  for  ever.  A  fifth  of  the  population  took  to  the 
streets  in  support  of  the  protest.  Large  amounts  of  money  were  raised. 
Tents  and  aid  flowed  north  to  give  fresh  resources  to  the  students. 
After  the  killings,  Hong  Kong  became  a  key  staging  post  for  dissidents 
smuggled  out  of  the  mainland. 

What  4  June  1989  brought  was  the  chilling  realisation  that  eight 
years,  three  weeks  and  five  days  later,  Hong  Kong  would  become  part 
of  the  country  whose  leaders  had  called  in  the  army  against  their  own 
citizens  for  daring  to  challenge  their  power.  But  the  handover  clock 
could  not  be  stopped.  Nobody  in  London  was  going  to  go  back  on 
the  Joint  Declaration.  Just  two  years  after  the  killings,  Britain's  Prime 
Minister  was  the  first  Western  visitor  to  go  to  Beijing  since  the  mas- 
sacre, shaking  hands  with  the  Chinese  as  he  signed  an  agreement  on 
Hong  Kong's  new  airport  and  inspected  an  honour  guard  of  the  army 
that  had  crushed  the  demonstrators. 

One  man  came  to  symbolise  Tiananmen.  Of  stocky  build,  he  has 
thick  black  hair,  heavy  dark  spectacles  and  a  signal  lack  of  charisma.  Li 
Peng,  Prime  Minister  of  the  People's  Republic  until  1998,  was  gen- 
erally believed  to  have  been  the  man  who  executed  Deng  Xiaoping's 
orders  to  suppress  the  1989  protest.  That  made  him  a  hate  figure 
among  Hong  Kong  democrats.  The  feeling  was  mutual.  Li  Peng  made 
his  first  visit  to  Hong  Kong  for  the  handover.  While  he  sat  in  the 
shiny  new  Convention  Centre  on  the  waterfront,  shouting  demon- 
strators outside  waved  banners  denouncing  'the  Butcher  of 
Tiananmen'.  But  the  Premier  heard  nothing,  thanks  to  a  policeman 
called  Dick  Lee,  and  a  pragmatic  decision  he  made  that  night. 

A  history  graduate,  Lee  spoke  twice  to  Jonathan  Dimbleby  for  his 
book  on  the  Patten  years,  The  Last  Governor.  In  1992,  he  said  that  after 
the  handover,  'we  are  afraid  that  we  will  be  ordered  to  do  things  that 
we  don't  want  to  do'.  He  added  that  he  would  'stand  up  and  say  no'. 
Four  years  later,  he  defined  his  job  as  'enforcing  the  laws  of  Hong 
Kong.  Whatever  the  law  says,  we  carry  out.'  Even  if  the  law  was 
unjust?  'If  the  new  government  changes  the  law,  then  the  police  have 
to  enforce  it.'  As  30  June  turned  into  1  July  the  Deputy  Commissioner 
responsible  for  Security  Affairs  had  a  problem  not  with  unjust  laws  but 
with  a  matter  of  immediate  practicality. 


One   Country,  Two   Systems  6i 

The  protestors  in  the  street  were  within  their  rights,  but  if  Li  Peng 
heard  them  he  might  take  umbrage,  which  would  not  be  the  best 
birth  gift  for  the  SAR.  So  Lee  decided  that  loud  music  should  be 
played  to  alleviate  the  strain  for  his  men  of  watching  over  the  protest. 
What  better  than  a  spot  of  Beethoven?  As  the  protest  chants  rose,  the 
Fifth  Symphony  came  over  the  loudspeakers  at  high  volume,  drown- 
ing out  their  noise.  Questioned  about  the  incident  later,  Lee  got  into 
a  spot  of  trouble  for  insisting  on  his  cultural  cover  story.  A  document 
showing  his  real  motivation  came  to  light,  and  he  was  criticised  for 
not  telling  the  truth.  Some  thought  this  bore  out  Dimbleby's  fears  of 
back-sliding.  For  myself,  I  saw  it  as  a  pretty  good  example  of  the  way 
Hong  Kong  can  square  the  circle. 

In  1997,  such  pragmatism  seemed  to  ensure  that  everything  would 
sail  along  in  the  SAR  more  smoothly  than  anybody  had  the  right  to 
expect.  But  nothing  can  be  set  in  stone,  particularly  not  in  a  place  as 
exposed  to  the  currents  of  the  world  as  Hong  Kong.  Those  who  had 
forecast  trouble  after  1  July  had  concentrated  on  politics,  freedom  of 
expression  and  media.  There  were  scary  predictions  of  tanks  in  the 
streets,  democrats  under  house  arrest,  censors  in  newspaper  offices. 
But  the  first  challenge  came  from  a  very  different  direction,  when  the 
East  Asian  economic  crisis  broke,  starting  with  the  devaluation  of  the 
currency  in  Thailand.  At  first,  Hong  Kong  showed  remarkable  insou- 
ciance. As  the  crisis  toppled  currencies  and  economies  throughout 
South-East  Asia,  the  Financial  Secretary  even  advised  that  it  was  time 
to  start  buying  shares,  and  thought  that  a  crash  on  Wall  Street  might 
help  the  SAR  by  sending  funds  in  its  direction. 

Ignoring  his  advice,  the  market  plunged.  So  did  property  prices, 
with  all  that  entailed.  As  1998  drew  on,  the  golden  goose  of  Hong 
Kong  turned  into  a  squawking  turkey.  A  sure-fire  bet  for  speculators 
was  to  take  a  short  position  in  the  market  by  betting  on  a  fall  and 
contracting  to  buy  shares  at  a  future  date  below  their  prevailing 
price.  Then  sell  large  amounts  of  Hong  Kong  dollars.  Given  the  cur- 
rency peg,  this  automatically  forces  up  interest  rates.  That  drags 
down  share  prices.  So  all  you  have  to  do  is  to  clean  up  on  your  short 
positions,  and  you're  in  the  money.  It  was  done  time  and  again  in  the 
summer  of  1998,  not  just  by  cowboy  outfits  but  by  well-established 


62  Dealing  With  the  Dragon 

international  banks.  Officials  feared  that  the  index  could  be  brought 
down  to  a  third  of  its  existing  value.  To  prevent  that,  Joseph  Yam,  the 
head  of  the  Monetary  Authority,  Hong  Kong's  de  facto  central  bank, 
proposed  going  into  the  market.  It  was  something  he  had  been 
thinking  of  since  huge  rises  in  overnight  interest  rates  at  the  start  of 
the  Asian  crisis  showed  how  vulnerable  Hong  Kong  could  be  to  out- 
side pressure.  Yam  worked  on  the  plan  for  two  weeks  with  Donald 
Tsang,  the  Financial  Secretary.  It  was  presented  to  the  Chief 
Executive,  who  gave  the  go-ahead.  A  trial  run  was  done  with  trusted 
brokers.  The  next  day  the  government  of  free-market  Hong  Kong 
plunged  in  massively  to  buy  leading  stocks,  followed  by  some  over- 
due tightening  of  regulations  a  little  later.  The  index  shot  up,  the 
speculators  were  defeated,  and  the  world  was  left  wondering  what 
had  happened  to  Hong  Kong's  hallowed  non-interventionist  princi- 
ples. 

It  was  hardly  what  Deng,  who  died  four  months  before  China 
regained  Hong  Kong,  had  been  expecting  from  the  freewheeling 
capitalist  icon  that  was  meant  to  be  a  model  for  China's  march  to 
market  economics.  But  after  a  pause  following  the  handover,  the 
course  of  events  in  the  SAR  had  begun  to  take  on  its  own  momen- 
tum, played  out  against  the  imposing  backdrop  of  China's  meeting 
with  the  world  and  the  mainland's  engagement  with  the  greatest  eco- 
nomic and  social  challenge  on  earth.  The  two  processes  —  Hong 
Kong  and  China,  China  and  the  world  —  are  symbiotically  linked.  The 
SAR  is  both  a  part  of  the  emerging  nation  to  the  north,  and  its 
bridge  to  the  rest  of  the  planet,  as  well  as  being  a  vital  place  which  has 
to  retain  its  own  identity  as  a  region  of  a  monolithic  power  preaching 
an  outdated  political  ideology  that  runs  counter  to  everything  that  has 
made  Hong  Kong  what  it  is.  How  one  of  the  world's  most  extraordi- 
nary places  deals  with  its  vast  dragon  sovereign  in  the  last  year  of  the 
century  says  much  about  how  men  and  women,  institutions  and 
society  react  when  they  become  a  testing  ground  for  a  unique  exper- 
iment. 


January 


i— 14  January 

Eighteen  months  after  Hong  Kong  returned  to  Chinese  sovereignty, 
the  wife  of  the  chairman  of  one  of  the  old  British  companies,  the 
Swire  Group,  fires  the  traditional  midnight  gun  in  Causeway  Bay  to 
welcome  in  1999.  It  is  as  if  nothing  had  changed  in  1997.  Immediately 
afterwards,  the  other  great  colonial  hong,  Jardine  s,  holds  its  New 
Year  party  in  the  penthouse  of  its  headquarters  overlooking  the  har- 
bour, with  the  host  attired  in  a  clan  tartan  kilt.  It  may  be  New  Year 
but,  this  being  Hong  Kong,  business  is  never  too  far  away.  At  the 
Jardine's  party,  the  boss  of  a  big  financial  group  comes  up  to  ask  me 
about  the  prospects  of  one  of  his  clients  buying  into  the  South  China 
Morning  Post,  the  newspaper  I  edit. 

Three  babies  are  born  on  the  stroke  of  midnight.  There  is  a  600- 
metre  swimming  race  on  the  south  side  of  the  island,  and  thousands 
gather  in  Victoria  Park  for  a  'Family  Fun  Carnival'.  The  ballroom  of 
the  Grand  Hyatt  Hotel  is  turned  into  Camelot,  with  papier-mache 
medieval  decor,  attendants  in  armour  and  champagne  to  wash  down 
the  caviar  and  lobster. 

A  New  Year  opinion  poll  reports  that  the  number  of  people  who 
are  pessimistic  about  the  future  has  fallen  to  34.6  per  cent  from  42  per 
cent  a  year  ago.  Still,  concern  about  the  economy  remains  strong  amid 
continuing  recession.  On  the  radio,  the  Chief  Executive  advises  the 


64  Di- Aung  With  the   Dragon 

unemployed  to  take  jobs  even  if  it  means  accepting  a  wage  cut.  'My 
own  experience  shows  the  most  important  thing  is  maintaining  con- 
fidence and  to  keep  strengthening  yourself,'  adds  Tung  Chee-hwa. 

The  Hong  Kong  Special  Administrative  Region  is  about  to  face  a 
year  of  truth.  It  will  not  take  the  form  of  the  drama  foretold  so  loudly 
by  journalists  and  some  politicians  in  1997.  It  will  be  much  more 
subtle,  largely  escaping  scrutiny  from  abroad,  a  process  with  profound 
implications  for  the  experiment  being  conducted  here.  The  advance 
signs  are  there  to  be  picked  up,  but  most  people  are  too  busy  wel- 
coming 1999  and  getting  on  with  their  lives  to  pay  much  notice. 
After  all,  a  report  from  the  European  Union  tells  us  that  our  basic 
rights  and  freedoms  have  been  upheld  since  the  handover. 

Politically,  the  gulf  between  the  government  and  the  most  popular 
political  party  grows  greater  by  the  day.  To  mark  the  end  of  1998,  the 
chairman  of  the  Democrats  calls  Tung  Chee-hwa  'a  benign  dictator', 
and  his  party  gives  the  administration  a  30  per  cent  rating.  The 
Secretary  for  Constitutional  Affairs  tells  a  visiting  American  delegation 
that  the  people  of  Hong  Kong  are  not  really  interested  in  democracy 
and  that  the  Democrats  are  in  an  extreme  minority.  The  linchpin  of 
the  administration,  Anson  Chan,  warns  of  the  destabilising  effect  of 
speculation  about  her  own  future. 

In  his  New  Year  radio  appearance,  the  Chief  Executive  advises 
people  that  'destiny  is  in  your  hands'.  That  is  going  to  become  a  major 
issue  for  the  year  ahead,  with  a  long-running  legal  and  political  con- 
troversy which  will  bring  a  key  element  in  the  foundations  of  the 
SAR  into  question.  The  first  tremors  are  already  apparent  as  the  gov- 
ernment makes  it  known  that  it  is  going  to  ask  the  territory's  supreme 
court  to  consider  referring  a  human  rights  case  involving  mainland 
migrants  to  the  Chinese  parliament.  The  issue  of  the  relationship 
with  Beijing  takes  on  another  form  during  the  New  Year  holiday 
when  a  nineteen-year-old  demonstrator  is  arrested  for  defacing  the 
Chinese  national  flag;  two  other  men  have  already  been  charged  for  a 
similar  offence.  Given  the  central  government's  sensitivities  over  any- 
thing involving  national  sovereignty,  how  the  courts  will  handle  these 
incidents  has  a  particular  significance. 

Up  in  the  capital,  President  Jiang  Zemin  and  Prime  Minister  Zhu 


January  65 

Rongji  attend  a  New  Year  performance  of  Beijing  opera  and  shake 
hands  with  the  stars  in  their  ornate  ceremonial  costumes  afterwards. 
Zhu's  future  -  and  that  of  one-fifth  of  humanity  -  is  riding  on  his  abil- 
ity to  push  through  the  biggest  economic  reform  programme  on  earth. 
If  he  had  a  free  hand,  his  task  would  be  great  enough.  But  much 
more  is  at  stake  than  increasing  industrial  efficiency,  expanding  services 
and  cutting  down  the  bloated  state  sector.  The  politics  of  mainland 
economics  provide  an  obstacle  course  that  are  bound  to  produce  some 
extreme  variations  of  fortune  in  the  coming  twelve  months.  Zhu's 
deeply  entrenched  opponents  warn  that  the  very  foundations  of  the 
regime  are  at  stake.  They  see  the  drive  to  modernise  and  open  up  the 
economy,  including  agreeing  to  abide  by  the  rules  of  the  World  Trade 
Organisation,  as  deeply  subversive  for  the  maintenance  of  the 
Communist  power  which  celebrates  its  fiftieth  anniversary  this  year. 
Above  all,  Zhu  has  to  convince  his  master  that  China  can  take  the  pain 
without  cracking  apart.  President  Jiang  is  a  cautious,  calculating  man. 
Whether  he  is  committed  to  thorough  economic  change  is  an  open 
question.  But  his  first  priority  is  to  retain  power  for  himself  and  for  the 
party  which  has  cocooned  his  adult  life.  If  that  is  threatened,  Zhu  can 
expect  little  support,  however  high  his  international  star  rises. 

In  his  New  Year  address,  Jiang  pledges  to  'continue  to  deepen 
reform  and  expand  our  opening  to  the  outside  world'.  But  reports  by 
the  South  China  Morning  Post's  well-informed  China  editor,  Willy 
Lo-lap  Lam,  do  not  provide  much  comfort  for  reformers.  At  a  meet- 
ing of  the  Central  Economic  Work  Committee,  Jiang  is  said  to  have 
sounded  a  familiar  theme  -  the  need  to  preserve  social  calm  above  all 
else.  Every  worker  must  have  rice  in  his  bowl,  the  President  insisted. 
The  authorities  are  particularly  concerned  about  the  appearance  of 
underground  trade  unions.  The  performance  of  officials  at  national 
and  local  levels  is  to  be  judged  by  their  ability  to  maintain  stability. 

Jiang's  concern  not  to  rock  the  boat  any  more  than  is  absolutely 
necessary  leads  to  a  series  of  emollient  decisions.  Factories  which  had 
been  due  to  be  shut  down  at  the  Lunar  New  Year  in  February  have 
been  given  a  grace  period.  The  move  away  from  subsidised  state 
housing  and  free  medical  care  has  been  postponed.  The  jobless  will 
get  a  special  New  Year  payment  to  help  tide  them  over.  There  is  a 


66  Dealing  With  thl;    Dragon 

stick  to  go  with  these  carrots:  the  full  force  of  the  state  security  appa- 
ratus is  to  be  deployed  to  prevent  trouble.  One  source  says  the  public 
security  budget  is  being  doubled  this  year  because  of  the  number  of 
potentially  troublesome  occasions  over  the  next  twelve  months, 
including  the  tenth  anniversary  of  the  Tiananmen  massacre. 

A  poet  called  Ma  Zhe  has  just  been  jailed  for  seven  years  for  sub- 
version after  setting  up  a  movement  called  'Cultural  Renaissance'  to 
press  for  political  reform  and  literary  freedom.  In  Shanghai,  two  mem- 
bers of  the  China  Democracy  Party  are  sent  to  prison  for  nine  months 
for  allegedly  visiting  prostitutes.  One  says  he  was  dining  with  a  business 
partner  in  a  hotel  room  when  two  women  came  in  and  took  their 
clothes  off;  the  police  arrived  immediately  afterwards.  The  other  says 
he  went  drinking  with  a  friend  one  night  and  woke  up  in  custody. 

In  the  city  of  Chongqing  above  the  Yangtze  Gorges,  a  bridge  col- 
lapses on  4  January  killing  forty  people.  A  senior  official  in  the  local 
Communist  Party  is  arrested  and  accused  of  taking  a  bribe  to  steer  the 
construction  contract  to  a  former  school  classmate,  who  then  sub- 
contracted to  builders  ready  to  pay  the  highest  amount.  The  Chinese 
news  agency  says  that  nearly  every  building  regulation  had  been  vio- 
lated. The  official  wanted  the  bribe  to  pay  for  his  children  to  go  to  a 
good  school. 

In  the  Portuguese  enclave  of  Macau  across  the  Pearl  River  estuary 
from  Hong  Kong,  a  crime  wave  gathers  force.  A  suspected  Triad 
who  ran  a  private  casino  gambling  room  is  killed  in  a  New  Year 
shooting  at  an  aquarium  shop.  The  deputy  chief  of  the  main  jail  is  hit 
by  bullets  in  the  face  and  shoulder;  a  little  while  ago,  one  of  his 
warders  was  shot  dead  in  a  cafe.  In  December,  Macau  will  follow 
Hong  Kong  to  become  a  region  of  China.  The  gangsters  are  carving 
out  turf  before  the  handover. 

Further  up  the  Pearl  River,  the  family  of  a  Hong  Kong  man  hacked 
to  death  in  Guangdong  province  says  the  local  morgue  is  demanding 
payment  of  12,000  yuan  to  hand  over  the  body.  This  is  a  lot  more  than 
mainlanders  would  pay,  but  the  morgue  insists  that  there  is  a  special  rate 
for  bodies  of  SAR  people.  The  family  takes  the  matter  to  the  Hong 
Kong  government.  It  says  the  response  is  that  'because  of  one  country, 
two  systems,  it  is  not  proper  for  us  to  interfere  in  mainland  affairs'. 


January  67 

Divisions  between  an  appointed  government  and  a  popularly 
elected  opposition;  the  economy;  the  Chief  Executive's  pleas  for 
people  to  look  on  the  bright  side;  a  looming  challenge  to  the  rule  of 
law  and  the  autonomy  of  the  SAR;  mainland  migrants  and  flag  dese- 
cration; the  travails  of  Hong  Kong  residents  on  the  mainland;  Triad 
crime  in  Macau;  China's  balancing  act  between  change  and  stability. 
A  series  of  patterns  is  being  set  for  the  coming  twelve  months  as  the 
former  colony  moves  towards  its  real  handover  in  a  year  of  its  great- 
est change  and  challenge  -  and  the  mainland  decides  if  there  is  to  be 
such  a  thing  as  a  truly  new  China. 

15  January 

A  couple  of  the  kind  of  incidents  that  so  worry  President  Jiang  are 
reported  today.  Outside  Changsha  city  in  Hunan  province,  1,500 
troops  and  police  had  to  be  called  in  to  deal  with  thousands  of  vil- 
lagers protesting  against  taxes  and  corruption.  One  demonstrator  bled 
to  death  after  being  hit  by  a  tear-gas  canister.  Reports  from  the  area 
tell  of  a  flood  of  incidents  involving  farmers,  including  attempts  to 
break  into  banks  and  post  offices.  In  Beijing,  meanwhile,  angry 
investors  who  lost  money  in  the  default  of  a  brokerage  affiliated  with 
the  army  have  been  out  demonstrating  on  the  streets. 

To  counter  such  discontent,  Jiang  is  shown  on  television  announc- 
ing new  moves  against  corruption,  including  banning  officials  from 
holding  meetings  in  well-known  tourist  spots.  As  a  sign  that  nobody 
is  safe,  a  Vice-Minister  of  Public  Security  with  the  rank  of  lieutenant- 
general  has  been  arrested  for  graft.  'The  party  faces  some  of  the  most 
serious  challenges  in  history,'  the  President  warns.  The  Prime 
Minister,  who  has  forbidden  his  relatives  to  get  involved  in  financial  or 
property  deals,  repeats  a  mantra  at  a  meeting  of  senior  officials:  'We 
will  kiU,  kill,  kill.' 

16  January 

The  SAR  may  be  insulated  from  the  mainland  by  a  high  and  heavily 
guarded  fence  on  the  border  at  Shenzhen  and  by  the  promise  of  one 


68  Dealing  Wuh  the   Dragon 

country,  two  systems,  but  when  it  comes  to  the  economy,  the  two  are 
umbilically  linked,  for  good  or  ill.  Figures  from  the  Hong  Kong 
Monetary  Authority  today  show  that  bad  debts  held  by  banks  tripled 
last  year.  Most  of  that  is  because  of  mainland  borrowers  who  cannot 
meet  their  obligations.  Exposure  of  the  local  banks  to  Chinese  firms 
has  reached  the  equivalent  of  £26  billion. 

One  particularly  jarring  piece  of  bad  news  from  the  mainland  is  the 
sudden  collapse  of  a  big  investment  vehicle  called  Gitic  in  Guangdong 
province.  Investors  from  Hong  Kong  and  abroad  had  thought  that 
their  loans  to  Gitic  were  guaranteed  by  the  Chinese  state.  This  turns 
out  not  to  be  the  case.  Though  the  books  still  have  to  be  combed 
through,  it  is  evident  that  billions  of  dollars  have  vanished. 


1  j  January 

Unemployment  in  Hong  Kong  has  reached  its  highest  total  ever,  at 
5.8  per  cent.  Two  years  ago  it  was  2.5  per  cent.  Worst-affected  sectors 
are  building,  manufacturing,  import-export  and  retail.  Companies  are 
laying  people  off  as  never  before.  The  government  talks  of  creating 
100,000  new  jobs.  But  inflation  is  hovering  around  negative  territory, 
shops  are  empty  and  everybody  worries  about  their  bonus  at  Chinese 
New  Year  in  a  month's  time.  There  is  little  retraining  for  many  of 
those  losing  their  jobs.  Manufacturing  is  unlikely  to  pick  up  even  if 
the  economy  improves  because  factories  have  moved  across  the  border 
to  the  mainland. 

The  Chief  Executive  keeps  urging  people  to  remain  confident  and 
to  strengthen  themselves.  But  as  a  unionist  legislator  says  today,  'I  ask 
Mr  Tung:  if  you  were  out  of  work  for  three  months,  then  for  four 
months  and  then  for  six  months,  I  would  like  to  see  if  you  wouldn't 
lose  hope  of  getting  a  job.'  This  is  a  new  experience  for  many  people, 
who  grew  up  in  the  boom  years.  It  is  altering  the  psychology  of  the 
place.  Hong  Kong  will,  undoubtedly,  recover.  It  is,  after  all,  a  city  of 
survivors;  as  one  top  businessman  puts  it:  'This  place  is  like  bamboo; 
it  bends  with  the  storm,  but  it  never  snaps  -  and  always  bounces 
back.'  But  the  experience  of  the  current  recession  has  made  its  mark, 
which  will  not  evaporate  for  a  long  time. 


January  69 

19  January 

First- wo  rid  infrastructure,  third-world  environment:  the  story  of  a  city 
that  grew  so  fast  it  didn't  have  time  to  worry  about  the  air  and  water 
around  it.  Pollution  readings  hit  record  levels  in  the  New  Territories 
today.  A  foul  yellow  mist  spreads  across  the  city.  Ships  are  on  alert  as 
visibility  closes  in. 

There  is  a  meteorological  explanation:  low  winds  and  a  tempera- 
ture inversion  which  traps  the  air.  But  the  truth  is  that  nobody  with 
the  power  to  act  cares  enough  about  the  environment  to  stop  it  being 
steadily  degraded.  Sometimes  the  atmosphere  is  so  filthy  that  people 
with  breathing  problems  are  advised  to  stay  at  home.  The  incidence  of 
bronchitis  has  more  than  doubled  in  five  years.  The  cost  of  pollution- 
related  illnesses  is  estimated  at  ^300  million  a  year.  One  day  last 
September,  air  quality  fell  to  the  level  of  Mexico  City,  the  most  pol- 
luted metropolis  on  earth. 

The  causes  are  well  known:  pollution  blown  across  the  frontier 
from  Guangdong,  buses  and  cars  that  keep  their  engines  idling  for  the 
air-conditioning  even  on  cool  winter  days,  and  diesel  taxis  using  ille- 
gal high-sulphur  industrial  fuel,  much  of  it  smuggled  in  from  the 
mainland  or  diverted  from  construction  sites  and  sold  by  the  roadside 
under  Triad  control. 

It  is  not  only  the  air  that  gets  filthy.  Picnic  sites  end  the  weekends 
deep  in  litter.  Debris  is  strewn  across  beaches.  Household  appliances 
are  discarded  at  random:  the  government  once  produced  a  television 
commercial  to  advise  people  not  to  throw  their  old  sets  out  of  the 
windows  of  their  flats.  The  harbour  that  first  attracted  the  British  is 
awash  with  rubbish,  industrial  debris  and  the  outpourings  of  ships' 
engines.  Levels  of  chemical  and  metal  waste  flushed  out  into  the 
water  reach  danger  levels.  Some  t  .75  million  tonnes  of  partially 
treated  sewage  are  pumped  into  the  sea  every  day;  a  proper  system  will 
not  go  into  service  until  2001,  four  years  behind  schedule.  A  few  old 
fishermen  cast  their  lines  from  sampans  by  the  shore  just  down  from 
my  office,  and  you  can  still  take  a  boat  to  see  pink  dolphins  playing  in 
the  sea.  But  marine  life  is  dying,  and  if  you  are  unlucky  enough  to  tall 
into  the  harbour,  it's  best  to  have  a  quick  jab. 


70  Dealing  With  the   Dragon 

20  January 

Three  executives  of  the  Hong  Kong  Standard  newspaper  are  jailed  for 
a  fraud  involving  the  inflation  of  sales  figures.  There  is  a  saying  about 
'statistics,  lies  -  and  newspaper  circulation  figures',  but  this  is  much 
more  than  an  everyday  story  of  press  folk  as  it  sets  off  the  first  of  a 
series  of  politico-legal  storms  that  will  blow  through  Hong  Kong 
during  the  year,  involving  senior  officials  and  leading  figures  of  the 
SAR  establishment. 

Two  and  a  half  years  ago,  a  fax  arrived  in  the  management  offices 
of  the  South  China  Morning  Post.  'You  may  be  interested  to  learn  how 
the  Hong  Kong  Standard  is  cheating  advertisers  and  the  ABC  Audit 
system  by  creating  phoney  circulation  figures,'  it  began.  The  method 
was  to  supply  15,000  copies  a  day  to  a  distributor,  who  delivered  the 
papers  to  a  warehouse  from  which  they  were  shipped  off  for  recycling 
without  ever  having  been  offered  to  the  public.  The  Standard  charged 
the  distributor  the  normal  wholesale  price,  and  so  could  include  them 
in  its  sales  figure.  Approved  by  the  Audit  Bureau  of  Circulation,  this 
formed  the  basis  for  advertising  charges.  What  the  ABC  did  not 
know  was  that  the  distributor  submitted  an  invoice  to  the  paper  for 
'Promotional  Activities'  amounting  to  precisely  the  sum  it  was  paying 
for  the  unsold  copies. 

We  were  not  the  only  ones  to  get  the  tip-off.  The  Independent 
Commission  Against  Corruption  -  the  much-feared  ICAC  -  was 
also  on  the  case.  Our  management  did  not  want  to  run  the  story,  fear- 
ing that  we  would  be  seen  as  bullying  a  much  weaker  rival  and 
opening  a  can  of  worms  about  newspaper  circulation  practices.  I 
thought  we  should  publish,  but  before  I  could  argue  the  toss,  the 
ICAC  swooped  on  the  Standard,  questioned  managers  and  the  owner, 
and  charged  three  people,  making  the  story  subjudice.  The  raid  caused 
sharp  intakes  of  breath  in  the  Hong  Kong  establishment  if  only 
because  of  the  identity  of  one  of  the  people  interrogated. 

This  was  Sally  Aw  Sian,  proprietor  of  the  Standard  and  of  a 
Chinese-language  newspaper  group.  She  was  a  grande  dame  of  Hong 
Kong  and  the  international  press  world.  Her  father,  Aw  Boon  Haw, 
had  made  a  fortune  out  of  a  widely  used  camphor-and-menthol 


January  71 

ointment  called  Tiger  Balm.  Originally  from  Burma,  he  drove  a  car 
with  the  bonnet  styled  like  a  tiger's  head,  branched  out  into  the 
press,  and  built  Tiger  Balm  Gardens  in  Hong  Kong  and  Singapore 
full  of  fearsome  Chinese  mythical  figures.  In  193 1,  he  and  the  second 
of  his  four  wives  adopted  the  five-year-old  daughter  of  a  distant  rel- 
ative, changing  her  name  from  She  Moi  to  Sian,  or  Goddess. 

In  1951,  Aw  Boon  Haw's  eldest  son  was  killed  in  a  plane  crash.  Two 
years  later,  the  patriarch  himself  died.  Sally  Aw  Sian  inherited  the 
Hong  Kong  newspapers.  She  established  a  Chinese-language  press 
chain  in  North  America  and  Europe.  Her  main  paper,  Sing  Tao,  grew 
rich  on  property  advertising.  She  became  prominent  in  the  world  of 
international  publishers,  inviting  famous  foreign  figures  to  join  her 
advisory  boards  and  sitting  on  committees  of  the  great  and  the  good. 
A  local  shipping  magnate  called  Tung  Chee-hwa  was  one  of  her  non- 
executive directors,  and  she  was  appointed  to  Beijing's  rubber-stamp 
Chinese  People's  Political  Consultative  Committee. 

Rich  as  she  was,  the  stout,  bespectacled  Sally  Aw  was  famous  for 
watching  the  pennies.  She  signed  company  cheques  personally  and 
checked  reporters'  expenses  herself,  returning  them  when  she  saw  a 
taxi  fare  for  a  journey  she  felt  could  have  been  made  by  public  trans- 
port. Unusually  for  a  person  in  her  position  in  Hong  Kong,  she  rarely 
went  out  to  social  occasions.  Unmarried,  her  main  confidante 
appeared  to  be  her  adoptive  mother,  who  had  the  next  door  office  at 
Sing  Tao.  The  two  women  lived  in  a  gloomy,  dark  house  in  Tiger 
Balm  Garden.  By  one  account,  when  they  flew  abroad,  they  would 
drive  by  Rolls-Royce  to  the  airport  and  then  sit  in  economy-class 
seats  or  haggle  for  an  upgrade.  'I  go  straight  home  after  work  and 
seldom  go  out,'  Sally  Aw  once  said.  'Sometimes  I  make  a  short  trip  by 
chauffeur-driven  car  accompanied  by  my  mother.  But  otherwise, 
most  nights  I  am  working  on  my  administration.'  When  I  met  her  for 
the  first  time  in  Hong  Kong,  it  was  in  a  conference  room  with  a 
wooden  frieze  of  her  father's  heroic  days  on  one  wall  and  a  huge 
Mickey  Mouse  doll  on  a  side  table. 

After  her  initial  successes,  business  became  less  promising.  A  mer- 
curial manager,  Sally  Aw  worked  with  faithful  underlings  who  never 
queried  her  decisions,  even  when  they  made  no  sense.  'She  will  say 


72  Dealing  With  the  Dracon 

yes  to  a  project  in  the  morning  and  no  in  the  afternoon,'  one  former 
executive  told  Asiaweek  magazine.  Her  empire  was  highly  extended, 
ranging  from  property  to  dental  clinics.  She  also  ran  into  problems 
with  the  Hong  Kong  financial  regulators. 

A  combination  of  bad  investments  and  the  1997  economic  crash 
forced  Aw  to  sell  off  assets,  including  the  Tiger  Balm  Garden,  which 
went  to  the  tycoon,  Li  Ka-shing.  In  1998,  she  relinquished  control  of 
her  big  Chinese-language  Canadian  operations  to  the  Toronto  Star.  By 
the  following  year,  she  was  being  sued  over  a  HK$300  million  debt  as 
she  negotiated  to  cede  a  minority  stake  in  Sing  Tao  while  trying  to 
hang  on  to  power  and  the  chairmanship.  It  was  an  impossible  dream, 
and  she  finally  sold  out  to  the  investment  bank,  Lazard  Asia.  Not  that 
Sally  Aw  did  too  badly  out  of  the  deal.  She  was  taken  on  as  an  adviser 
at  HK$9  million  a  year  for  six  years,  and  given  a  loan  of  HK$58  mil- 
lion —  exactly  half  of  the  group's  annual  loss. 

It  was  no  secret  that,  after  questioning  Sally  Aw  about  the  fraud,  the 
ICAC  was  anxious  for  her  to  be  charged,  along  with  the  Standard's 
general  manager,  finance  manager  and  a  former  circulation  director. 
She  was  mentioned  as  a  co-conspirator  in  the  charge  sheet  for  the 
other  three,  but  was  not  brought  to  court.  Some  well-informed 
observers  think  that  the  Chief  Executive,  who  had  previously  sat  on 
her  board,  felt  sorry  for  Aw,  and  that  the  Secretary  for  Justice  would 
have  picked  up  the  vibes  from  her  boss.  'She  was  old,  her  business  was 
doing  badly  so  he  would  have  taken  pity  on  her,'  as  one  former 
member  of  the  Executive  Council  puts  it  to  me  later  in  the  year. 
'There's  a  Cantonese  saying:  "Take  pity  on  her  this  time."  It  would 
have  been  enough  for  Tung  to  have  said  that.' 

For  its  part,  the  Justice  Department,  as  is  usual  in  such  cases,  refuses 
to  give  any  details  of  why  it  did  not  charge  Sally  Aw,  beyond  saying 
that  there  were  insufficient  grounds  to  do  so.  That  explanation  runs 
into  an  immediate  problem  when  the  South  China  Morning  Post  prints 
a  page-one  story  reporting  what  Aw  said  during  her  ICAC  question- 
ing. One  of  our  excellent  court  reporters  had  seen  a  copy  of  the 
transcript.  We  held  the  story  until  the  case  had  finished,  and  then  ran 
it  on  the  front  page  beside  the  report  of  the  sentences  handed  down 
to  the  three  Standard  managers. 


January  73 

'I  just  wanted  to  raise  the  circulation  figures,'  Sally  Aw  is  quoted  as 
saying.  'This  was  a  commercial  decision,  that  is  to  get  more  advertis- 
ers.' She  denied  knowing  that  what  was  being  done  could  be  fraud  or 
deception,  and  said  she  had  left  the  detailed  implementation  to  her 
staff.  'I  agree  [sic]  to  it,  but  I  did  not  do  it,'  she  added,  'because  it  was 
done  by  them.' 


21  January 

One  of  the  most  closely  watched  Chinese  women  in  the  world  is  in 
town.  Wendy  Deng,  a  31 -year-old  vice-president  of  the  STAR  satel- 
lite television  station,  is  staying  in  a  HK$8,ooo-a-night  suite  at  the 
Shangri-La  Hotel.  There  has  been  much  speculation  in  the  inter- 
national press  about  the  tall,  young  woman,  and  whether  she  has 
significant  connections  with  the  mainland.  Nobody  has  come  up 
with  much  on  her  except  that  she  was  educated  in  the  United  States, 
and  is  hard-working,  upwardly  mobile  and  perhaps  on  the  verge  of 
marriage.  The  Hong  Kong  press  shows  more  interest  in  her  clothes 
than  her  political  connections  as  she  steps  out  in  a  burgundy  jacket 
and  black  trousers  with  a  grey  bag  slung  over  her  left  shoulder  and  a 
slightly  shy  smile  on  her  face.  A  fashion  designer  sniffs  that  she  looks 
'very  common,  like  a  housewife'.  Another  leaps  to  her  defence  saying 
there  is  no  reason  she  can't  wear  the  same  clothes  as  an  ordinary 
woman.  'She  isn't  using  the  way  she  dresses  as  a  statement  about  her- 
self- she  doesn't  need  to,'  he  adds. 

In  the  evening,  Deng  returns  to  her  hotel  suite  to  change  into  a 
smart  black  dress  with  diaphanous  sleeves  and  accompanies  her  smil- 
ing partner  in  a  limousine  with  white-draped  seats  to  a  dinner  with 
the  Chief  Executive.  At  sixty-seven,  he  is  more  than  twice  her  age. 
His  name  is  Rupert  Murdoch. 

The  media  magnate  is  in  Hong  Kong  as  part  of  a  panel  of  inter- 
national bigwigs  who  have  been  asked  by  Tung  Chee-hwa  to  advise  on 
how  the  SAR  can  improve  its  position  as  a  world-class  commercial  and 
financial  centre.  Others  on  the  team  are  from  the  USA,  Europe  and 
Japan.  After  six  hours  of  deliberations,  they  tell  us  Hong  Kong  is  too 
expensive,  that  the  air  is  too  dirty  and  that  we  need  better  education, 


74  Dealing  With  the  Dragon 

good  financial  services  and  more  tourists.  One  does  not  wish  to  be 
inhospitable,  but  I  think  we  knew  this  already.  Their  prediction  that 
Hong  Kong's  main  markets  in  the  US  and  Europe  will  remain 
restrained  in  1999  raises  some  doubts  about  their  powers  as  crystal-ball- 
gazers,  given  the  robustness  of  the  American  economy  and  the 
resurgence  of  European  growth.  They  will  return  at  the  end  of  the  year 
at  the  taxpayers'  expense  with  more  sage  counsel.  The  general  opinion 
is  that  this  is  window-dressing  which  is  not  going  to  do  much  to  help 
the  SAR,  and  that  Mrs  Murdoch-to-be  could  do  with  some  fashion 
advice. 


24  January 

Albert  Ho  Chun-yan,  a  tubby,  determined  solicitor,  is  elected  vice- 
chairman  of  Hong  Kong's  biggest  political  party,  the  Democrats.  He 
replaces  an  academic  who  was  forced  to  resign  last  month  for  being 
too  moderate.  The  change  reflects  a  big  problem  facing  the  party 
which  is  going  to  have  a  major  effect  on  the  political  landscape  of 
Hong  Kong. 

Like  the  old  Labour  Party  in  Britain,  the  Democratic  Party  is  a 
coalition  between  the  working-class  rank-and-file,  middle-class  pro- 
fessionals and  deeply  motivated  intellectuals.  It  draws  strength  from 
long-time  campaigners  such  as  the  intense  veteran,  Szeto  Wah,  who 
heads  the  post-Tiananmen  movement,  the  Hong  Kong  Alliance  in 
Support  for  Patriotic  Democratic  Movements  in  China.  Its  voting 
numbers  come  from  the  grass  roots,  but  the  leadership  is  mainly 
middle-class,  symbolised  by  Martin  Lee  Chu-ming,  its  lawyer  chair- 
man with  his  cut-glass  English. 

The  party  grew  out  of  a  union  of  pro-democratic  groups  for  whom 
the  massacre  in  Tiananmen  Square  was  a  great  spur  to  action.  In  the 
pre-handover  period,  its  main  platform  was  the  defence  of  Hong 
Kong  against  oppression  from  the  mainland.  That  proved  a  winning 
plank  at  the  1995  election.  At  the  time  of  the  handover,  the 
Democrats  were  flavour  of  the  month  with  the  international  media  as 
speculation  mounted  as  to  whether  its  chairman  would  end  up  as 
'Martyr  Lee'.  He  announced  that,  whatever  happened,  he  would  not 


January  75 

leave  Hong  Kong,  and  liked  to  stress  that  he  was  not  anti-China,  just 
against  the  regime  in  Beijing.  The  grim  picture  he  painted  of  the 
future  provoked  the  incoming  administration  to  deplore  those  who 
'poor-mouthed'  Hong  Kong  to  international  audiences. 

After  the  interregnum  of  the  appointed  provisional  legislature, 
which  sat  for  a  year  after  the  handover,  the  Democrats  did  well  again 
in  the  limited  number  of  popularly  elected  seats  contested  in  the 
legislative  election  of  1998.  But  there  were  warning  signs.  Though 
they  easily  maintained  their  position  as  Hong  Kong's  most  popular 
political  movement,  they  stood  more  or  less  still  in  terms  of  their  share 
of  the  vote,  whereas  the  pro-Beijing  populist  party,  the  DAB, 
increased  its  slice  significantly,  and  the  indomitable  Emily  Lau  racked 
up  a  huge  plurality  with  her  hard  rhetoric  and  street-cred  flair.  The 
danger  for  the  Democrats  is  that  if  fear  of  the  mainland  decreases,  their 
appeal  as  the  party  which  will  stand  up  to  Beijing  will  diminish  while 
other  groups  attract  voters  who  want  a  more  radical  approach  or  who 
feel  that  the  DAB  represents  a  pragmatic  choice  for  the  future. 

It  is  not  surprising,  therefore,  that  the  Young  Turks  among  the 
Democrats  are  getting  fed  up.  They  see  the  proceedings  at  the 
Legislative  Council  as  a  charade  into  which  their  chiefs  have  been 
sucked.  What  is  the  point  of  winning  half  the  popular  vote  if  the  gov- 
ernment ignores  you?  The  leadership  is  seen  as  being  unrepresentative, 
too  middle  class  and  too  male.  Some  of  the  most  prominent  and 
forceful  pro-democracy  politicians  are  women,  but  they  do  not 
belong  to  Lee's  party. 

The  Young  Turks  dismiss  the  comfortable  chairs  and  parliamentary 
rules  of  LegCo.  They  want  to  go  out  on  the  streets  instead.  Some 
would  like  to  provoke  a  real  confrontation.  This  leaves  Martin  Lee 
with  a  distinct  problem.  As  a  man  who  burned  the  Basic  Law  after 
Tiananmen  and  has  never  wavered  in  standing  up  for  Hong  Kong's 
rights,  he  has  the  weight  of  democracy  on  his  side.  But  it  is  no  longer 
sufficient  to  say,  as  his  former  vice-chairman  did  in  a  private  discussion 
last  year,  that  all  the  Democrats  need  to  do  is  to  tell  voters  they  stand 
for  democracy.  After  almost  a  decade  of  political  debate  in  Hong 
Kong,  Lee  and  partners  have  to  explain  the  benefits  of  democracy  and 
the  practical  disadvantages  caused  by  its  absence.  The  eight  months 


76  Dealing  With  the  Dragon 

since  the  1998  election  having  shown  scant  evidence  of  the  concrete 
effects  of  a  dose  of  democracy,  how  much  easier  it  may  seem  to  the 
more  radical  party  members  to  stage  demonstrations,  pick  up  single 
issues  and  keep  the  pot  boiling  against  an  administration  prone  to 
being  wrong-footed. 

But  Hong  Kong  is  not  a  radical  place.  An  ideologically  led  protest 
compaign  would  scare  off  much  of  the  middle  class  which  votes 
Democrat  and  pays  the  bills.  So  it  is  not  surprising  if  Lee  says  he  still 
prefers  a  broad  movement  for  democracy,  and  insists  that  he  will  not 
abandon  the  middle  class,  while  carefully  adding  that  support  for  the 
party  derives  principally  from  its  willingness  to  speak  up  for  the 
deprived.  His  new  deputy  is  less  academic  than  his  predecessor,  with 
stronger  grass-roots  links  and  a  combative  style.  Taking  up  the  job, 
Albert  Ho  talks  about  how  healthy  it  is  for  different  members  to  have 
different  views.  His  appointment  is  acceptable  to  both  sides  in  the 
party,  but  the  Democrats  face  a  big  test  in  defining  their  own  identity. 
Simply  being  on  the  side  of  the  angels  is  no  longer  enough. 

25  January 

Just  how  cheap  the  mainland  can  be  for  Hong  Kong  manufacturers  is 
shown  by  the  Four  Seas  Handbag  Company,  owned  by  a  couple  from 
the  SAR.  Attention  has  focused  on  the  firm's  200- worker  factory  in 
the  boom  city  of  Shenzhen  after  a  packager  and  loader  called  Xu 
Zhangshu  died  in  his  sleep.  Aged  twenty-seven,  Xu  had  tuberculosis, 
but  colleagues  say  he  was  killed  by  exhaustion  after  working  fourteen- 
hour  shifts  with  only  half  a  day  off  each  week. 

The  daily  rate  for  such  workers  is  HK$io,  equivalent  to  80  pence. 
The  minimum  monthly  wage  in  Shenzhen  is  meant  to  be  HK$43o; 
Xu  would  had  to  have  put  in  forty-three  days  to  meet  that.  Sewing 
workers  at  the  factory  earn  HK$i.50  (12  pence)  an  hour.  Four  of  Xu's 
fellow  workers  told  Cindy  Sui  of  the  South  China  Morning  Post  that 
they  couldn't  quit  because  they  had  to  wait  twenty-five  days  to  be  paid 
each  month.  They  say  the  managers  have  a  quota  of  how  many  people 
they  want  to  quit:  'Once  they  meet  that  quota,  they  won't  give  you 
your  money  so  you  can't  leave.' 


January  77 

Many  of  the  women  workers  in  Shenzhen  have  arrived  in  the  past 
couple  of  years  from  inland  provinces.  They  put  in  fourteen-  or 
fifteen-hour  shifts  and  are  closely  supervised.  At  one  plant  with  SAR 
owners,  the  girls  are  searched  when  they  leave  for  the  day.  They  pay 
100  yuan  a  month  to  sleep  in  locked  quarters  patrolled  by  guards  with 
electric  batons.  A  Hong  Kong  academic  who  spent  six  months  work- 
ing with  them  reckons  that  there  are  6  million  such  women  in  the 
Pearl  River  region.  They  get  no  health  care  and  are  often  overcharged 
by  local  shops.  They  are  resented  for  taking  jobs  from  longer-estab- 
lished workers,  and  face  problems  when  they  go  home  to  their  rural 
villages  with  their  urban  way  of  life. 

The  hardships  they  face  can  become  lethal.  A  couple  of  years  ago, 
eighty-seven  workers  died  in  an  inferno  at  a  Hong  Kong-owned  toy 
plant  where  the  windows  were  sealed  and  escape  routes  blocked.  In 
another  fire  at  a  Taiwanese-owned  factory  making  electric  fans,  thick 
smoke  killed  sixteen  workers  because  the  windows  were  covered  by 
metal  screens  to  prevent  theft.  Sixty-eight  died  in  an  earlier  blaze  in 
nearby  Dongguan.  'There  was  this  girl  who  was  only  fifteen,'  the 
Hong  Kong  academic  recalls.  'Every  part  of  her  body  was  charred 
except  for  her  cherubic  face.' 

Ironically  -  for  me  at  least  -  the  story  about  the  Four  Seas  Handbag 
Company  appears  in  the  Post  on  the  same  day  as  an  investigation  I  had 
launched  into  conditions  in  the  Pacific  island  of  Saipan.  This  little- 
known  place  has  a  unique  status  as  part  of  an  American-administered 
territory  called  the  Commonwealth  of  the  Northern  Mariana  Islands. 
That  means  it  escapes  textile  import  quotas  and  can  label  goods  'Made 
in  USA'.  But  it  is  not  bound  by  American  labour  laws.  So  garment 
manufacturers  have  set  up  there  using  workers  flown  in  from  China 
who  get  around  half  the  US  minimum  wage  to  turn  out  goods  for 
celebrated  brand  names  and  retail  chains.  Many  of  the  manufacturing 
firms  are  from  Hong  Kong.  One  SAR  company,  headed  by  a  busi- 
nessman called  Willie  Tan  Wai-li,  is  the  biggest  manufacturer  on 
Saipan,  as  well  as  owning  cinemas,  freighters,  hotels,  ice-cream  dis- 
tribution and  slot  machines.  The  Post's  Glenn  Schloss,  who  went 
down  to  Saipan  to  investigate,  found  that  the  workers  had  to  promise 
to  pay  up  to  HK$33,500  to  mainland  officials  and  middlemen  before 


7$  Dealing  With  the   Dragon 

leaving  China.  As  a  result,  they  were  often  deeply  in  debt  to  money- 
lenders. Having  been  told  they  would  be  working  in  the  United 
States,  they  found  themselves  in  sweatshop  conditions  in  the  middle 
of  the  Pacific,  sleeping  in  rudimentary  dormitories,  charged  high 
prices  for  their  food  and,  according  to  one  lawyer  working  for  them, 
treated  like  indentured  labourers. 

But  bad  as  conditions  are  in  Saipan,  what  goes  on  there  doesn't 
look  quite  so  awful  when  you  compare  it  with  what  is  happening  just 
across  the  frontier  from  Hong  Kong.  The  money  in  Willie  Tan's 
plants  may  be  less  than  on  the  US  mainland,  but  it  is  far  above  any- 
thing the  women  could  make  back  home.  In  Saipan,  garment  workers 
get  US$3.05  an  hour.  At  the  Four  Seas  factory,  a  seamstress  would 
have  to  work  fifteen  hours  to  earn  as  much. 


29  January 

If  you  stand  in  the  main  square  in  the  middle  of  Hong  Kong  and  look 
up  the  narrow  street  between  the  metal  and  glass  headquarters  of  the 
Hongkong  Shanghai  Bank  and  the  old  stone  premises  of  the  Bank  of 
China,  you  see,  neatly  framed  by  the  two  high  buildings,  a  red-brick 
edifice  on  a  promontory.  Once,  this  was  the  French  mission.  Since  1 
July  1997,  it  has  housed  Hong  Kong's  top  judicial  body,  the  Court  of 
Final  Appeal  (CFA).  Sitting  up  there  above  Central,  with  the  Anglican 
cathedral  to  its  left  and  the  main  government  offices  behind  it,  the 
building  looks  almost  iike  a  fortress.  As  things  are  turning  out,  that  is 
exactly  what  it  is  becoming,  a  stronghold  where  the  fate  of  one  of  the 
vital  elements  of  one  country,  two  systems  will  be  decided. 

Up  the  wooden  stairs  inside,  behind  the  green  shutters,  all  is  peace 
and  solemnity.  It  lacks  the  scale  and  echoing  corridors  of  the  law 
courts  in  London,  but  in  this  small  chamber  under  a  white  dome,  his- 
tory is  being  made,  or  unmade.  The  judges,  who  arrive  in  official 
white  cars,  are  august  figures.  The  Chief  Justice  is  a  member  of  a 
major  Hong  Kong  family  with  relatives  scattered  through  banking, 
academia,  the  Bar  and  politics.  One  sits  on  the  board  of  my  newspa- 
per; another  will  appear  in  his  court  to  plead  against  the  government; 
a  third  was  a  candidate  for  Chief  Executive.  Another  of  the  justices 


January  79 

behind  the  wide  wooden  desk  on  a  raised  platform  in  the  CFA  cham- 
ber takes  a  lively  interest  in  promoting  French  literature  and  culture; 
one  evening,  I  find  myself  sitting  beside  him  as  we  read  passages  from 
books  about  VHexagone  at  the  Alliance  Francaise. 

The  court  proceedings  are  irredeemably  old-fashioned,  with  the 
barristers'  wigs  and  black  court  dress,  references  to  obscure  legal 
points  and  orotund  speeches.  What,  one  wonders,  can  the  people 
whose  case  is  being  heard  make  of  it  all?  They  are  would-be  migrants 
from  the  mainland  who  want  to  come  to  live  in  Hong  Kong.  For 
them,  the  issue  is  simple.  But  the  government's  determination  to 
keep  them  out  is  setting  in  train  a  process  that  goes  far  beyond  the 
straightforward  matter  of  their  fate. 

The  Court  of  Final  Appeal  was  born  from  controversy.  It  was 
needed  after  the  handover  to  replace  the  Privy  Council  in  London, 
which  acted  as  the  ultimate  court  in  colonial  days.  Those  who  feared 
that  it  might  not  be  fully  independent  pressed  for  a  majority  of 
common-law  judges  to  come  from  outside  Hong  Kong.  That  always 
seemed  a  pretty  far-fetched  demand:  which  sovereign  country  would 
accept  a  majority  of  foreign  judges  on  the  top  court  in  one  of  its 
regions?  China  initially  refused  any  idea  of  foreigners.  There  was 
deadlock  with  London.  Then  business  made  its  voice  heard.  At  a 
meeting  with  a  senior  mainland  official,  a  group  of  tycoons  stressed 
the  need  for  a  supreme  court  to  ensure  the  rule  of  law  and  the  con- 
tinuation of  the  common  law  for  commerce  and  finance.  Soon 
afterwards,  Beijing  agreed  to  one  foreign  judge  sitting  on  the  court's 
bench  at  any  one  time  alongside  four  local  justices.  That  clinched  a 
compromise,  but  enraged  the  Chairman  of  the  Democratic  Party. 

I  met  Martin  Lee  for  the  first  time  soon  after  the  agreement  had 
been  announced.  Over  lunch  in  the  placid  surroundings  of  the  Hong 
Kong  Club,  he  put  down  his  chopsticks,  stared  at  me  across  the  table 
and  said:  'Mr  Fenby,  you  are  an  Englishman.  Can  you  explain  to  me 
how  that  man  can  sleep  at  night?'  Which  man?  I  asked.  The  Governor, 
he  replied.  Lee  told  me  that  he  had  been  leaving  a  reception  at 
Government  House  when  Chris  Patten  had  buttonholed  him  and  said 
that  if  the  Chinese  thought  he  had  been  a  tough  opponent  in  the  past, 
'they  ain't  seen  nothing  yet'  over  the  composition  of  the  Court  of  Final 


80  Dealing  With  the   Dragon 

Appeal.  A  few  days  later  came  the  compromise.  'That  man  betrayed 
me,'  Lee  said  over  our  lunch.  Better  no  court  at  all,  he  went  on,  than 
a  flawed  court.  I  had  to  disagree.  If,  for  instance,  the  Post  was  accused 
of  subversion,  I  would  prefer  to  have  my  day  in  court  than  being  sub- 
ject to  an  administrative  decision  in  a  closed  tribunal. 

It  was  said  that  Patten  confided  to  aides  that  the  compromise  had 
caused  him  a  sleepless  night.  But  his  administration  showed  no  hesi- 
tations about  throwing  its  weight  behind  the  deal.  The  Governor's 
press  spokesman  called  me  on  the  afternoon  of  the  agreement  to  'dis- 
cuss' some  lines  I  might  like  to  consider  for  the  next  clay's  editorial. 
Somewhat  annoyingly,  most  of  what  he  suggested  was  already  in  the 
leader  up  on  my  screen. 

For  the  first  eighteen  months  of  its  existence,  the  court  attracted 
little  attention,  but  now  it  is  at  the  very  centre  of  things  because  it  has 
found  for  the  mainlanders  and  against  the  government.  The  case  con- 
cerns children  of  Hong  Kong  residents  born  on  the  mainland.  The 
court  gives  them  the  unrestricted  right  to  come  to  live  in  the  SAR.  It 
extends  this  to  all  offspring  of  Hong  Kong  residents  whenever  they 
were  born,  including  illegitimate  children.  The  judgement  rests  on  its 
interpretation  of  the  Basic  Law,  Hong  Kong's  mini-constitution  since 
the  handover.  That  is  likely  to  prove  a  red  rag  to  the  Beijing  bull, 
which  insists  that  the  power  of  interpretation  lies  with  its  parliament, 
the  National  People's  Congress  (NPC). 

The  government  argued  for  a  far  more  restrictive  approach,  want- 
ing to  limit  the  right  of  abode  to  children  born  after  their  parents  had 
become  Hong  Kong  citizens.  One  of  the  judges  tells  me  later  that  the 
administration's  case  was  so  badly  put  together  that  the  court  had  no 
alternative  but  to  find  as  it  did:  'As  judges  we  can  only  go  on  what  is 
presented  to  us.'  Not  that  the  Department  of  Justice  is  too  worried. 
One  of  its  top  British  legal  officers  says:  'We  have  ways  of  dealing  with 
this.' 


February 


2  February 

A  senior  government  chemist,  Dr  Ting  Ti-lun,  has  a  disagreeable  sur- 
prise when  he  gets  home  to  his  fifth-floor  government  flat.  The  rod 
from  which  a  valued  Chinese  painting  had  hung  is  broken.  The 
Indonesian  maid,  Rukiyah,  says  his  wife,  Maria  Mui  Yuk-ming,  is 
responsible.  At  that,  Mui  goes  for  the  maid,  hitting  her  over  the  head 
with  the  rolled-up  painting.  Dr  Ting  intervenes  to  take  the  painting 
from  his  wife.  But  she  then  slaps  Rukiyah  on  the  face.  Finally,  she 
grabs  a  broom  and  hits  the  maid  in  the  stomach.  'It  sounded  like 
someone  was  getting  a  damn  good  hiding,'  says  a  neighbour. 

Charged  with  assault,  Mui  is  fined  HK$500  GC+o).  The  case  has 
special  resonance  because  of  recurrent  complaints  of  mistreatment  of 
maids,  of  whom  there  are  some  184,000  in  Hong  Kong.  After  the 
court  hearing,  Rukiyah  says  her  daily  diet  consisted  of  an  egg,  a  bowl 
of  rice  and  two  slices  of  bread  -  'Sometimes  I  got  a  chicken  wing.' 
She  was  not  allowed  hot  water,  and  had  to  wash  from  a  bucket.  She 
adds  that  she  was  slapped  regularly,  given  no  holidays  and  told  she 
would  have  to  pay  HK$5  a  day  if  she  wanted  a  light  bulb  in  her 
room. 

Some  135,000  of  the  maids  are  from  the  Philippines.  They  are 
generally  referred  to  as  'domestic  helpers',  which  is  considered  more 
polite  than  'maids',  or  by  the  old  Indian  term  of 'amah'.  Filipinas  are 


82  Dealing  With  the  Dragon 

popular  because  they  speak  English  to  the  children  of  the  house, 
though  some  of  their  charges  also  grow  up  with  a  smattering  of 
Tagalog,  their  national  language. 

On  Sunday,  they  have  their  day  off  and  flock  to  the  streets,  open 
spaces  and  walkways,  particularly  in  the  Central  District  of  Hong 
Kong  Island.  The  space  under  the  Hongkong  Bank  sounds  like  an 
aviary  as  it  is  filled  with  their  voices.  Chater  Road  running  through 
Central  is  shut  to  traffic  every  Sunday  as  the  Filipinas  take  over. 
They  play  cards,  write  to  their  families,  eat,  have  their  pictures 
taken,  show  one  another  snaps,  sing,  play  Scrabble,  listen  to  tape 
machines,  read,  sit  under  sunshades,  sell  cheap  clothes,  buy  towels 
and  enormous  teddy  bears  from  Indian  hawkers,  practise  line  danc- 
ing, do  one  another's  hair,  compare  lipsticks,  send  money  home, 
read  the  tabloids  flown  in  from  Manila,  and  attend  revivalist  religious 
meetings. 

A  stranger  to  Hong  Kong  might  wonder  what  all  this  was  about. 
Indeed,  one  visiting  British  newspaper  editor  asked  me  where  all  the 
Filipinas'  husbands  and  children  were.  The  answer  is  that  if  the  amahs 
have  husbands  and  offspring,  they  are  back  in  the  Philippines,  living 
on  the  remittances  from  Hong  Kong  and  all  the  other  places  where 
Filipinas  do  domestic  work.  In  the  SAR,  they  can  earn  more  as  maids 
than  professionals  make  in  Manila.  Some  are  content  with  one  job; 
others  work  for  several  employers.  Some  people  think  their  monthly 
minimum  wage  of  HK$3,86o  (,£300)  is  too  generous.  A  local  coun- 
cillor suggests  that  a  20  per  cent  cut  would  be  in  order,  and  that  the 
working  day  should  be  set  at  sixteen  hours.  She  says  she  gets  'com- 
plaints from  several  employers  saying  their  domestic  helpers  start 
around  8  a.m.  and  are  going  to  their  room  at  9  p.m.  and  will  not  do 
any  more  work'.  A  letter- writer  to  the  South  China  Morning  Post 
laments  that  Filipinas  are  'so  well-organised  and  so  well-educated 
about  their  numerous  rights  that  employers  are  often  at  a  disadvan- 
tage'. A  legislator  proposes  that  they  should  pay  a  special  tax  for  the 
use  they  make  of  government  services,  and  for  the  cost  of  cleaning  up 
after  their  Sundays  in  town. 

Discrimination  comes  from  other  sources,  too.  When  Hongkong 
Telecom  advertised  a  service  enabling  subscribers  to  block  calls  from 


February  83 

certain  numbers  automatically,  it  helpfully  listed  those  you  might  want 
to  shut  off  as  ex-lovers,  loan  sharks  and  your  amah's  friends.  Employers 
are  sent  the  results  of  health  checks  on  maids  and  can  choose  whether 
to  pass  them  on  to  the  women:  last  year,  one  amah  only  learned  that 
she  was  HIV-positive  when  her  employer  gave  her  the  news. 

The  foreign  workers  have  replaced  Cantonese  maids,  known  as 
'black  and  white'  from  their  black  trousers  and  white  Chinese  blouses, 
and  ma-jeh,  or  'mother-sister'.  At  the  time  of  the  handover,  there  was 
speculation  about  a  return  of  the  'black  and  whites'  in  the  form  of 
mainland  women  coming  in  from  the  Pearl  River  delta  to  take  over 
from  the  foreign  amahs.  This  has  not  happened,  though  a  few  locals 
have  taken  a  government  training  course  for  domestic  workers.  Most 
of  the  maids  probably  have  as  happy  a  life  as  one  can  have  as  an  eco- 
nomic refugee  living  apart  from  family  and  friends.  But  there  are 
plenty  of  horror  stories  like  Rukiyah's  around.  Welfare  groups 
reported  sixty-seven  cases  of  beatings  of  maids  in  a  year,  thirty-four 
cases  of  more  serious  assault,  including  attacks  with  hot  irons,  and 
nearly  400  complaints  of  being  overworked.  There  is  an  urban  myth 
about  the  employer  who  says  yes,  of  course  her  amah  has  a  shower, 
that's  where  she  sleeps.  Indonesians  seem  to  be  particularly  badly 
done  by,  probably  because  they  speak  little  English  and  do  not  have 
the  self-help  networks  set  up  by  the  Filipinas  over  the  past  decade. 
One  twenty-year-old  told  of  being  slapped  and  shouted  at  during  her 
nineteen-hour  day,  which  began  at  5.30  a.m.,  and  of  being  bilked  of 
her  pay  by  an  employment  agency. 

Indians  and  Nepalese  have  joined  the  hunt  for  domestic  jobs,  and 
also  suffer  from  exploitation.  A  44-year-old  woman  from  Bombay  is 
seeking  compensation,  saying  she  was  paid  HK$200  G£i6)  a  month 
for  a  year  by  her  Indian  employer  here.  She  worked  fourteen  hours 
a  day  and  slept  on  the  floor  of  the  room  occupied  by  the  family's 
grandmother,  whom  she  had  to  take  to  the  toilet  several  times  a 
night.  Not  that  all  the  complaints  are  to  be  believed,  or  all  the  tales 
of  petty  thieving  are  to  be  dismissed.  One  amah  faked  the  kidnapping 
of  herself  and  her  four-year-old  charge  to  try  to  get  a  HK$200,ooo 
ransom.  An  Indonesian  was  filmed  by  a  secret  camera  in  the  home 
where  she  worked  punching  the  two-year-old  son  of  the  house  on 


84  Dealing  With  the   Dragon 

the  face  and  thigh,  throwing  him  on  to  a  sofa  and  leaving  him  alone 
crying. 

A  letter-writer  to  the  South  China  Morning  Post  told  of  a  Filipina 
who  got  a  wage  30  per  cent  above  the  minimum  and  other  perks  for 
agreeing  to  accompany  her  employer  to  England,  but  reneged  on  the 
bargain  at  the  last  moment.  'I  find  myself  paying  for  out-of-season 
strawberries  (which  I  hate),  cosmetics  (which  I  don't  use),  French 
mineral  water  (which  I  never  drink)  and  anything  else  my  helper 
thinks  she  is  entitled  to  bully  me  for,'  the  letter  went  on.  'If  the  living 
is  so  bad  here,  why  bellyache?  Go  home!  I  would  certainly  not  hesi- 
tate to  employ  a  legal  mainlander  if  that  option  were  available  to  me 
rather  than  put  up  with  all  the  lies  and  deceit.' 

Today,  the  maids  learn  that  they  are  going  to  have  to  join  in  the 
financial  pain  of  recession.  The  administration  decrees  that  their  fixed 
wage  will  be  cut  by  5  per  cent.  If  they  get  their  money  at  all,  that  is. 
It  emerges  that  Rukiyah  was  receiving  only  a  fraction  of  the  stipulated 
HK$3,86o  a  month.  The  rest  was  kept  by  the  recruitment  agency  that 
placed  her  with  the  Tings. 

4  February 

The  Sally  Aw  case  comes  back  with  a  vengeance,  moving  from  the  legal 
to  the  political  arena.  Leaving  a  meeting  of  the  Executive  Council,  the 
Secretary  for  Justice  repeats  that  there  was  not  enough  evidence  to 
charge  the  newspaper  owner.  Then,  despite  having  been  warned  by 
aides  not  to  say  this,  the  Secretary  adds:  'At  the  time,  the  Sing  Tao  group 
was  facing  financial  difficulties  and  was  negotiating  restructuring  with 
banks.  If  Aw  Sian  had  been  prosecuted,  it  would  have  been  a  serious 
obstacle  for  restructuring.  If  the  group  should  collapse,  its  newspapers 
would  be  compelled  to  cease  operations.  Apart  from  losing  employ- 
ment, the  failure  of  a  well-established  important  media  group  at  that 
time  could  send  a  very  bad  message  to  the  international  community.' 

This  raises  a  couple  of  questions:  can  company  bosses  expect  to 
escape  prosecution  if  this  might  endanger  their  plans  to  rescue  their 
firms  from  commercial  decline  —  and  are  media  groups  immune  to 
laws  that  apply  to  others?  If  so,  that  seems  calculated  to  send  a  'bad 


February  85 

message  to  the  international  community'  about  double  standards 
before  the  law. 

The  woman  who  delivers  the  message  will  figure  prominently  in 
the  events  of  the  year  to  come.  Elsie  Leung  is  even  less  of  a  natural 
political  animal  than  the  Chief  Executive.  A  demure  woman  in  her 
early  sixties,  the  Secretary  for  Justice  could  have  stepped  out  of  the 
pages  of  a  Victorian  novel,  with  her  conservative  clothes  and  neatly 
parted  black  hair.  She  won  public  sympathy  last  year  when  she  was  the 
victim  of  a  medical  leak:  after  she  had  gone  into  hospital  supposedly 
with  a  minor  stomach  complaint,  an  employee  at  the  hospital  sent  a 
newspaper  a  copy  of  her  medical  records  showing  that  she  was  in  fact 
being  treated  for  cancer.  An  invasion  of  privacy,  no  doubt,  though,  as 
a  leading  television  executive  pointed  out,  should  the  government 
have  been  allowed  to  get  away  with  lying  about  the  health  of  one  of 
its  leading  members? 

A  specialist  in  Chinese  family  law,  Leung  is  among  those  who  are 
particularly  anxious  for  us  to  understand  China  better.  On  one  occa- 
sion, she  said  that  if  anti-subversion  legislation  was  introduced  in 
Hong  Kong,  it  should  take  account  of  mainland  norms.  Asked  why 
she  came  in  for  so  much  press  criticism,  she  responded  by  pointing  to 
the  support  she  received  from  a  paper  called  Wen  Wei  Po,  which  is 
financed  by  Beijing.  Everybody  insists  that  Elsie  Leung  is  'really  very 
nice'.  With  her  shy  smile  and  gracious  manner,  she  does  not  seem  like 
somebody  who  would  say  boo  to  a  goose,  but  she  rarely  engages  in 
real  discussion  about  what  she  is  doing  in  the  vital  area  of  the  law, 
backed  by  two  British  law  officers  who  use  their  skills  to  press  the 
government  case. 

The  Chairman  of  the  Bar  Association  calls  her  last  statement  incon- 
ceivable. 'If  you  are  a  rich  man  and  you  run  a  lot  of  companies,  you 
are  immune,  but  if  you  are  poor  you  are  fair  game,'  comments  a  law 
professor  at  Hong  Kong  University.  Even  the  pro-business  Liberal 
Party  has  to  reject  the  notion  of  one  law  for  employees  and  another 
for  bosses.  Margaret  Ng,  the  representative  of  the  legal  constituency  in 
the  Legislative  Council,  tables  a  motion  of  no  confidence  in  the 
Secretary.  A  big  political  drama  is  about  to  unfold,  all  because  a  news- 
paper played  around  with  its  sales  figures. 


86  Dealing  With  the   Dragon 

8  February 

The  first  major  challenge  to  the  supremacy  of  the  courts  in  Hong 
Kong  starts  to  take  shape.  A  group  of  mainland  legal  experts  warns 
that  the  Court  of  Final  Appeal's  verdict  last  month  in  favour  of  main- 
land migrants  violates  the  Basic  Law,  and  amounts  to  an  attempt  to 
turn  Hong  Kong  into  an  independent  political  entity.  The  final  word, 
the  experts  insist,  must  lie  with  the  National  People's  Congress  in 
Beijing,  whose  legislation  and  decisions  are  not  subject  to  challenge  or 
refutation.  The  experts  say  that  the  judgement  was  'in  direct  opposi- 
tion to  the  interests  of  Hong  Kong  residents  and  has  hindered  efforts 
to  maintain  stability  and  prosperity'.  Their  views  are  made  known  by 
the  official  Xinhua  news  agency. 

The  Chairman  of  the  Hong  Kong  Bar  Association,  Ronny  Tony, 
warns  that  'it  will  be  a  great  disaster  if  the  rule  of  law  turns  out  to  be 
the  rule  of  man'.  Martin  Lee,  himself  a  lawyer,  warns  of  a  constitu- 
tional crisis  if  the  NPC  overrules  the  court.  There  is  irony  in  the 
mainland  position;  in  closed-door  talks  with  the  British,  Beijing 
repeatedly  promoted  the  idea  of  the  reunion  of  Chinese  people  on 
both  sides  of  the  border.  But  that  was  then,  and  this  is  now.  At  a 
reception  in  the  capital,  a  State  Council  official  sounds  the  same  tune 
as  the  experts,  and  wonders  why  the  Tung  administration  doesn't 
simply  change  the  law.  Instead,  the  SAR  government  plays  for  time, 
saying  it  will  study  what  the  experts  have  said. 

15  February 

A  5 5 -year-old  woman  called  Gao  Yu  is  freed  from  prison  on  the 
mainland  today.  She  was  arrested  in  1993,  two  days  before  she  had 
been  due  to  leave  China  to  become  a  visiting  scholar  at  the  Columbia 
School  of  Journalism  in  New  York.  After  being  held  for  a  year,  she 
was  sentenced  to  six  years  for  'divulging  state  secrets  overseas'  by 
writing  for  a  magazine  and  a  newspaper  in  Hong  Kong.  Gao  was  no 
stranger  to  jails,  having  spent  fourteen  months  in  prison  after  the 
Tiananmen  Square  demonstration  in  1989. 

Now  she  has  been  freed  on  medical  parole  and  is  allowed  to  rejoin 


February  87 

her  family  for  the  Lunar  New  Year  starting  tomorrow.  Her  son  says 
she  is  suffering  from  high  blood  pressure,  heart  disease  and  kidney 
problems.  A  dozen  other  mainland  journalists  are  in  jail  for  reporting 
material  that  would  provoke  no  official  action  in  Hong  Kong.  The 
press  freedom  group,  Reporters  Sans  Frontieres,  ranks  China  second 
only  to  Ethiopia  in  the  number  of  journalists  behind  bars.  Some  have 
been  imprisoned  since  the  early  1990s. 

One  condition  of  Gao's  release  is  that  she  must  not  talk  to  the  press. 
This  is  a  familiar  stipulation.  Xi  Yang,  a  mainland  reporter  for  a  Hong 
Kong  newspaper  who  spent  three  years  in  detention  for  writing  about 
official  economic  statistics,  has  not  been  heard  from  since  being  sent 
off  to  a  new  life  by  his  employers  after  he  was  freed,  probably  in 
Canada.  The  US  Secretary  of  State,  Madeleine  Albright,  will  be  in 
Beijing  in  ten  days,  and  President  Jiang  Zemin  is  due  to  go  to  Europe 
shortly.  The  central  government  has  a  way  of  releasing  a  prominent 
dissident  or  two  just  before  such  visits,  hoping  to  blunt  attacks  on  its 
awful  human  rights  record. 

The  freeing  of  Gao  Yu  does  not  signal  any  loosening  of  control  of 
the  media.  Some  mainland  publications  have  grown  slick  and  glossy. 
An  increasing  number  have  been  able  to  undertake  investigative 
reporting,  but  usually  only  in  spheres  where  the  authorities  want  to 
show  up  wrong  doing,  like  corruption.  A  daily  in  Guangzhou,  the 
New  Express,  has  pioneered  a  mix  of  sensational  crime  coverage  and 
political  debate,  seeking  readers  with  'youth,  knowledge  and  wealth'. 
But  experiments  are  tightly  controlled,  and  as  a  general  rule,  the  con- 
tradiction between  the  desire  to  raise  revenue  from  advertising  and  the 
dead  hand  of  politics  is  as  heavy  as  was  evident  at  a  dinner  which  a 
group  from  the  South  China  Morning  Post  had  in  Beijing  last  year. 

The  setting  for  the  meal  was  quite  an  honour:  the  hallowed  sanc- 
tum of  the  Great  Hall  of  the  People  on  Tiananmen  Square.  After  our 
credentials  were  checked  at  the  door  of  the  huge,  dimly  lit  mau- 
soleum-like building,  we  were  escorted  to  a  lift  which  rose 
automatically  to  the  first  floor.  There,  young  ladies  wearing  white 
gloves  brought  us  tea,  and  I  visited  the  lavatory,  its  door  marked 
'Gents'  in  English  over  the  outline  of  a  European  head.  After  a  suit- 
able delay,  we  were  escorted  into  a  big  square  room  with  chandeliers 


88  Dealing  With  the   Dragon 

hanging  at  each  corner  and  an  even  larger  one  in  the  middle.  We  sat 
in  a  semi-circle  of  brown  armchairs  round  our  host,  Ding  Guan'gen, 
a  squat,  bespectacled  man  with  no  evident  charisma  who  is  said  to 
have  owed  his  rise  up  the  ladder  of  power  to  having  been  Deng 
Xiaoping's  bridge  partner.  After  running  the  railways,  he  became 
head  of  China's  Propaganda  Department,  though  that  evening  he  was 
introduced  as  Director  of  the  Publicity  Department. 

Whatever  his  title,  Ding  is  the  chief  propagator  of  the  thoughts  of 
President  Jiang  Zemin.  He  tells  cadres  that  they  should  'sing  praises  to 
the  motherland,  socialism  and  reform  loudly,  encourage  further  reform 
and  maintain  social  stability,  satisfy  the  spiritual  needs  of  the  people,  and 
adopt  the  right  attitude  about  the  world,  life  and  values'.  In  a  homily 
worthy  of  Eric  Idle,  he  exhorts  them  to  'do  more  to  channel  the  opin- 
ion of  the  public  to  the  bright  side,  persuade  them  patiently,  clear  their 
doubts,  heighten  their  awareness  and  unify  people's  thoughts'. 

When  the  women  attendants  had  poured  boiling  water  from  thermos 
flasks  on  to  the  tea  leaves  in  cups  on  tables  beside  our  armchairs,  Ding 
gave  us  the  party  line  about  the  development  of  the  economy,  and  asked 
us  what  lessons  we  drew  from  the  South-East  Asian  crisis.  He  mentioned 
the  film  Titanic  several  times.  Jiang  is  particularly  keen  on  the  movie,  and 
would  like  China  to  be  able  to  undertake  productions  of  similar  scope. 

Dinner  followed  in  the  Beijing  Hall.  There  were  twelve  courses, 
including  lobster  and  duck,  accompanied  by  tea  and  orange  juice 
served  from  a  plastic  bottle.  I  can't  tell  you  what  it  all  tasted  like.  I  had 
contracted  a  bout  of  dysentery  from  bad  seafood  at  lunch,  and  had  no 
appetite.  My  stomach  rumbled  ominously  as  I  shifted  the  food  on  my 
plate  in  a  vain  effort  to  pretend  to  be  eating.  Each  time  I  could  feel  a 
major  explosion  coming  on,  I  moved  my  chair  noisily,  drawing  sur- 
prised looks  from  our  host  across  the  table.  I  had  to  hurry  off  to  the 
lavatory  several  times.  I  can't  imagine  what  those  who  would  write 
the  report  on  the  dinner  made  of  my  behaviour. 

One  of  the  participants  on  Ding's  side  of  the  table  steered  the  con- 
versation to  the  prospects  for  expanding  advertising  in  the  mainland 
media,  for  which  he  could  see  limitless  possibilities  if  publications 
could  become  more  attractive  to  readers.  Later,  we  were  told  that  he 
had  been  a  minor  press  photographer  in  southern  China  a  couple  of 


February  89 

years  ago,  but  now  had  official  backing  to  turn  a  group  of  newspapers 
there  into  money-makers.  Ding  listened  quietly.  All  this  talk  of  adver- 
tising and  colour  printing  and  popular  journalism  sat  ill  with  his 
definition  of  the  media's  role  as  being  to  'resolutely  develop  the  leit- 
motif of  patriotism,  collectivism  and  socialism;  and  to  combat  the 
influence  of  corrupt  and  decadent  thoughts'. 

Before  long,  our  host  swung  the  conversation  up  the  table  to  an 
elderly  man  who  turned  out  to  have  been  a  former  military  officer  but 
was  now  a  senior  editor  of  People's  Daily.  Commercialism  was  forgotten 
as  this  venerable  figure  mouthed  platitudes  about  the  role  of  the  media 
in  building  socialism,  and  the  need  for  'objectivity',  a  phrase  much  used 
to  mean  that  the  official  viewpoint  should  be  amply  represented.  Ding 
suggested  to  me  that  I  might  like  to  have  a  discussion  of  professional 
topics  with  the  fellow  editor.  Apart  from  the  anxiety  caused  by  my 
stomach,  I  must  admit  that  I  did  not  quite  see  the  two  of  us  conduct- 
ing a  debate  on  the  merits  of  eight-column  photographs,  or  putting 
sport  on  the  back  page.  The  ex-general  nodded  politely  at  me.  I  half 
smiled  back.  Ding  said  how  pleased  he  was  to  have  brought  us  together, 
and  we  trooped  out  into  the  evening  air. 

The  sharper  mainland  editors  know  that  the  stilted  diet  of  political 
news  they  are  allowed  to  serve  up  has  scant  public  appeal.  Before  the 
handover,  the  boss  of  one  big  mainland  daily  in  Guangdong  showed 
me  the  different  sections  of  his  paper.  Here  was  sport,  he  said,  and 
here  were  the  entertainment  pages;  here  was  local  news,  here  was  for- 
eign news.  And  what's  that  at  the  bottom  of  the  pile?  I  asked.  Oh, 
that's  political  news.  What  do  you  put  there?  I  enquired.  What  the 
government  tells  us  to,  he  replied,  just  as  you  print  what  the  Governor 
tells  you  to.  A  Cantonese  colleague  explained  that  this  was  not  quite 
the  Hong  Kong  way. 

So,  extremely  welcome  as  Gao  Yu's  release  is,  she  is  only  one  of  a 
number  of  proverbial  pawns.  The  international  climate  has  certainly 
softened  towards  Beijing.  After  inveighing  against  George  Bush  for 
cosying  up  to  the  butchers  of  Beijing  in  his  first  presidential  campaign. 
Bill  Clinton  has  'de-linked'  human  rights  and  trade.  The  Europeans 
tut-tut  about  the  treatment  of  people  like  Gao  Yu  while  getting  on 
with  winning  contracts  and  exchanging  high-level  visits.  Still,  human 


90  Dealing  With  the  Dragon 

rights  will  not  go  away,  in  large  part  because  of  Beijing's  obduracy. 
The  dissidents  may  be  pitifully  few  and  far  between  but  the  central 
government  cannot  give  up  suppressing  any  sign  of  discord  which 
might  threaten  its  authority  in  any  way.  So  long  as  that  remains  the 
case  and  orthodox  ideologues  like  Ding  stay  on  top  of  the  power 
structure,  China  cannot  expect  to  be  fully  accepted  into  an  inter- 
national community  that  professes  to  regard  the  exercise  of  individual 
rights  as  an  integral  part  of  modern  civilisation. 


16-17  February 

kung  hei  fat  choy:  Get  Rich.  That's  the  greeting  for  the  Lunar  New 
Year  as  we  say  goodbye  to  the  Year  of  the  Tiger  and  hello  to  the  Year 
of  the  Rabbit.  Forget  the  worst  recession  the  territory  has  known. 
This  is  a  time  for  celebration  and  fireworks.  Julio  Iglesias  performs  at 
the  main  indoor  venue  for  an  audience  that  includes  the  Chief 
Secretary,  Anson  Chan,  and  her  retired  police  commander  husband. 
'Go  back  and  make  love  like  rabbits  .  .  .  and  if  you  have  a  baby,  call  it 
Julio,'  the  crooner  tells  the  crowd. 

Elsewhere  in  town,  the  Chief  Executive's  matronly  wife  comes 
under  flak  for  having  'abused'  a  goldfish  while  playing  a  game  at  a  car- 
nival which  involved  transferring  the  fish  from  one  blue  plastic  bowl  to 
another.  The  Society  for  the  Prevention  of  Cruelty  to  Animals  says  the 
game  might  give  the  impression  that  people  in  Hong  Kong  do  not 
respect  animals.  Betty  Tung  expresses  her  deep  regret  at  the  incident, 
and  her  unease  at  the  suffering  she  has  caused.  Presumably  the  SPCA 
does  not  spend  too  much  time  in  the  markets,  where  fish  are  scooped 
out  of  tanks  to  be  taken  off  wriggling  in  plastic  bags  and  chickens  have 
their  necks  slashed  to  make  sure  customers  get  fresh  meat.  But  our  First 
Lady  has  her  sensitive  side.  Once,  she  telephoned  me  at  home  after  a 
mildly  embarrassing  story  about  her  appeared  in  the  Post.  She  asked 
how  she  could  avoid  such  awkwardness.  It  comes  with  the  territory,  I 
replied.  She  said  she  took  the  point,  but  she  still  sent  me  a  letter  and 
documentation  to  try  to  show  that  she  was  being  badly  treated. 

The  Lunar  New  Year  is  when  you  are  meant  to  clear  the  decks,  pay  off 
debts,  clean  the  dust  from  homes  and  give  bank  notes  in  paper  packets  to 


February  91 

unmarried  young  people:  the  packets  are  red,  the  colour  of  prosperity.  It 
is  a  time  for  family  gatherings,  prayers,  feasts  and  everything  that  sounds 
lucky.  At  a  lunch  at  the  Chinese  Chamber  of  Commerce,  oysters  and 
fungus  are  on  the  menu:  the  name  of  the  dish  in  Cantonese  sounds  like 
Kung  Hei  Fat  Choy.  'I'm  not  superstitious,  of  course,'  says  a  banker  sitting 
beside  me,  'but  I  like  to  eat  it  all  the  same  at  this  time  of  the  year.' 

Having  been  born  under  the  sign  of  the  horse  in  the  twelve-animal 
Chinese  zodiac,  I  am  told  that  this  is  going  to  be  a  good  year  for  me 
as  regards  work,  family  and  money.  I  will  be  lucky  with  investments 
between  April  and  November,  but  should  keep  an  eye  out  for  gastric 
problems.  Those  born  under  the  sign  of  the  monkey  will  have  a  bad 
time  with  off-shore  investments;  roosters  and  oxen  should  keep  clear 
of  meeting  the  sick  and  the  bereaved;  tigers  may  undergo  law  suits  as 
a  result  of  betrayal  by  friends.  As  for  rabbits,  it  is  to  be  a  year  of  self- 
destruction,  bloodshed  and  financial  loss. 

The  Lunar  New  Year  would  be  nothing  without  fireworks.  The 
Chinese  invented  them,  after  all.  On  the  mainland,  however,  individ- 
ual firecrackers  are  banned  in  many  major  cities  for  safety  reasons.  But 
the  Cantonese  go  on  celebrating.  Ten  thousand  fireworks  are  let  off  in 
Guangzhou  up  the  Pearl  River.  Hong  Kong  easily  outdoes  that,  with 
31,388  being  fired  in  a  23-minute  display  in  the  harbour.  Great  arcs  of 
colour  criss-cross  the  sky  under  the  moon  amid  the  rat-tat-tat  of 
explosions.  Each  burst,  each  fountain  of  falling  stars  draws  an  appre- 
ciative 'Wah!'  from  the  crowd.  Barges  sprout  sparkling  cascades  of 
light.  Rings  of  fire  appear  in  the  heavens,  followed  by  cascades  of 
silver  rain.  And  then,  as  suddenly  as  it  started,  the  show  is  over. 

What  remains  is  the  blaze  of  lighting  on  the  tall  buildings  along  the 
harbour,  decked  out  with  displays  to  welcome  the  Year  of  the  Rabbit. 
But  even  here,  recession  is  making  itself  felt.  Two  years  ago,  the  light- 
ing king  of  Hong  Kong,  Terence  Wong,  put  60,044  bulbs  on  one 
office  block  in  the  Wanchai  district  at  Christmas.  Now,  his  business  is 
down  by  35  per  cent.  Some  companies  have  gone  in  for  the  ultimate 
cost-cutting  step  of  simply  replacing  December's  Santa  Claus  with 
February's  Chinese  God  of  Money,  taking  out  the  reindeer  and 
putting  in  rabbit  outlines  instead. 

On  the  mainland,  a  New  Year  television  programme  called  Spring 


92  Dealing  With  the   Dragon 

Festival  Evening  Party  is  said  to  have  attracted  a  93  per  cent  audience  for 
five  hours  of  singing,  dancing  and  comedy.  Guangzhou  has  chosen  the 
occasion  to  inaugurate  its  18.5  kilometre-long  underground  railway: 
unfortunately,  cracks  appeared  in  the  tunnels  just  before  the  opening, 
and  a  local  newspaper  reports  that  passengers  left  10  tonnes  of  rubbish 
a  day  in  the  trains,  on  the  platform  and  in  ticket  lobbies;  later  in  the 
year,  its  manager  will  be  arrested  for  alleged  corruption.  In  Guangxi 
province  in  the  south-west,  the  authorities  begin  the  Year  of  the  Rabbit 
by  setting  up  anti-pornography  'training  centres'  in  major  cities, 
destroying  78,000  videotapes  and  80,000  compact  discs.  In  Hebei 
province,  south  of  Beijing,  100,000  laid-off  workers  are  given  free  food. 

18  February 

Hidden  away  behind  the  buildings  which  the  lighting  king  Mr  Wong 
has  illuminated  so  brightly  for  the  Christmas  and  Lunar  New  Year 
periods  in  Hong  Kong,  350  mainlanders  camp  out  on  the  paving 
stones  of  the  courtyard  of  the  principal  government  building.  They 
are  'overstayers':  that  is  to  say,  they  remained  in  the  SAR  after  the 
expiry  of  permits  issued  for  them  to  visit  their  families.  Some  50,000 
mainlanders  settle  legally  in  Hong  Kong  each  year.  In  addition,  an 
average  of  2,000  mainlanders  cross  the  border  daily  on  two-way  per- 
mits. Around  100  are  estimated  to  overstay  at  any  one  time.  The 
government  wants  this  group  of  350  to  go  back  over  the  border  to 
join  the  queue  of  others  waiting  to  come  across  legally.  They  have 
refused  to  leave,  and  squat  in  front  of  the  Central  Government  Office 
demanding  to  be  allowed  to  remain. 

By  any  definition,  they  are  illegal  immigrants.  Most  Hong  Kong 
people  would  undoubtedly  like  to  see  the  back  of  them;  one  local 
Chinese  newspaper  calls  them  'repulsive'.  For  all  the  official  talk  about 
the  need  for  Hong  Kong  to  draw  closer  to  the  mainland,  migrants  are 
not  popular.  A  poll  by  Hong  Kong's  Chinese  University  shows  that 
between  60  and  80  per  cent  of  those  who  replied  regard  them  as  un- 
educated, unhygienic  welfare  scroungers  out  to  take  jobs  from  locals. 
After  lunch  with  a  government  official  one  day  which  included  a 
lecture  on  how  Hong  Kong  people  should  not  feel  so  superior 


February  93 

towards  their  fellow  Chinese,  my  host  glanced  at  a  group  of  men  in 
boxy  suits  getting  out  of  the  lift  and  murmured:  'Mainlanders.  You 
can  tell  from  the  way  they  dress.'  Many  immigrants  are  from  poor 
rural  areas,  country  bumpkins  who  do  menial  jobs  and  find  it  hard  to 
integrate  into  an  advanced  society.  A  recurrent  jibe  involves  their 
supposed  unfamiliarity  with  Western  toilets.  How  do  you  know  a 
mainlander  has  been  there  before  you?  By  the  footprints  on  the  seat. 

The  presence  of  the  overstayers  in  the  courtyard  of  the  main  gov- 
ernment offices  is  a  testament  to  the  strength  of  the  rule  of  law.  As 
long  as  their  case  is  going  through  the  courts,  they  will  not  be 
deported.  Eighteen  have  even  got  what  are  called  'walkabout  permits', 
allowing  them  to  leave  their  camp  and  move  about  freely  pending  the 
outcome  of  the  legal  process. 

Their  authorisation  to  protest  outside  government  headquarters 
on  Lower  Albert  Road  was  obtained  by  two  unlikely  figures:  a  silver- 
haired  Italian  Catholic  priest  and  a  doughty  Scottish  grandmother. 
Born  in  Milan,  Franco  Mella  came  to  Hong  Kong  in  1974,  the  year 
of  his  ordination.  He  was  soon  involved  in  defending  the  rights  of 
squatters.  For  a  time,  he  worked  in  a  garment  factory.  A  veteran  of 
arrests  and  hunger  strikes,  he  tells  reporters:  'I  am  blessed  by  the  Lord 
to  be  able  to  help  give  a  voice  to  the  poor,  to  the  weak  and  to  those 
who  are  fighting  for  basic  human  rights.  In  the  Kingdom  of  God  all 
people  are  equal,  men,  women,  rich,  poor,  and  this  is  how  it  should 
be  on  earth.'  Although  he  crossed  to  work  on  the  mainland  in  1991, 
he  remains  a  familiar  figure  at  protests  in  Hong  Kong  and  became  the 
subject  of  a  film  called  Ordinary  Heroes.  He  wears  faded  clothes,  has  his 
hair  in  a  headband,  beds  down  with  the  protestors,  and  goes  to  the 
house  of  the  Foreign  Religious  Missions  every  few  days  for  a  shower. 

The  mainlanders'  other  friend  and  protector  is  a  lawyer  from 
Britain  who  is  pushing  seventy  and  was  previously  best  known  for  her 
defence  of  the  Vietnamese  boat  people  washed  up  in  Hong  Kong. 
Pam  Baker,  a  wartime  evacuee  to  South  Africa  who  doesn't  count  the 
cigarettes  she  smokes  each  day  and  was  divorced  after  twenty-seven 
years  of  marriage,  came  to  Hong  Kong  in  1982.  She  worked  for  the 
Legal  Aid  Department  for  nine  years.  Then  came  the  Vietnamese. 
With  them  largely  gone,  she  decided  she  had  had  enough  and  closed 


94  Dealing  With  the  Dragon 

her  law  office,  intending  to  write,  be  a  grandmother  and  relax.  But 
then  the  overstayers'  case  emerged,  and  she  rushed  to  the  barricades. 
Baker  is  a  woman  who  relishes  a  fight  on  behalf  of  idealism  and 
human  rights.  Her  tenacity  drives  the  authorities  crazy.  Mother  of  six 
children,  she  has  been  a  Nonconformist,  an  Anglican  and  a  Catholic. 
Now  she  counts  herself  as  an  agnostic.  As  she  explained  in  an  inter- 
view with  my  colleague,  Fionnuala  McHugh,  this  came  about  after 
she  visited  one  of  her  daughters,  who  had  joined  the  Moonies.  'I  used 
to  be  allowed  to  visit  -  they  smiled  all  the  time  and,  of  course,  there 
was  no  drinking  and  no  smoking,  I  had  to  go  into  the  woods  with  my 
hip  flask  and  fags.  I  started  reading  everything  I  could  on  organised 
religion,  and  I  realised  they  were  all  the  same.  So  that's  when  I  became 
an  agnostic'  Adrenalin,  she  adds,  is  a  great  cure  for  Alzheimer's. 

Protected  by  their  permit,  the  protestors  sit  on  the  cobbles  watched 
by  two  bored  policemen.  On  one  side  are  tall  black  railings  erected  after 
the  handover.  On  the  other  are  waist-high  crush  barriers  hung  with  the 
demonstrators'  red,  white  and  yellow  banners  adorned  with  slogans  in 
Chinese  characters.  Some  of  the  overstayers  sleep  on  mats  or  card- 
board. Others  listen  to  Walkmans,  or  talk  on  mobile  phones.  Three 
young  women  share  a  meal  from  plastic  boxes.  One  has  bundled  up  her 
belongings  in  a  big  bag  labelled  'Tough  City,  Tough  Jeans'.  Two  smart 
young  men  in  dark  suits  circulate.  A  few  yards  away,  a  cashier  takes 
money  from  motorists  leaving  an  underground  parking  garage.  A 
throng  gathers  when  a  television  reporter  arrives  with  a  cameraman  to 
check  out  the  situation.  A  child  walks  daintily  out  of  the  crowd  and  puts 
a  plastic  bag  of  rubbish  into  a  wicker  refuse  basket  by  the  railings. 

In  their  way,  these  people  are  the  heirs  of  the  millions  who  have 
come  to  Hong  Kong  from  China  ever  since  it  began  to  look  like  a 
more  attractive  place  in  which  to  live  than  the  mainland.  Since 
China's  border  opened  up,  there  has  also  been  movement  the  other 
way,  though  in  more  temporary  form.  During  this  month's  Lunar 
New  Year  holiday,  hundreds  of  thousands  of  people  from  Hong  Kong 
cross  through  the  checkpoint  at  Lo  Wu.  Among  the  few  who  cannot 
cross  the  frontier  to  see  their  families,  buy  bargains  or  get  cheap  sex 
are  democrats  on  the  mainland's  black-list:  Martin  Lee  joked  at  break- 
fast the  other  day  that  Hong  Kong  women  were  happy  for  their 


February  95 

husbands  to  join  his  party  because  they  knew  that  this  would  prevent 
them  setting  up  with  a  mistress  in  Guangdong. 


20  February 

An  anniversary  to  remember,  but  one  recalled  by  few  people  in  Hong 
Kong. 

Two  years  ago  today,  I  had  just  gone  to  bed  when  the  telephone 
rang.  Our  night  crime  reporter  had  received  a  call  from  a  contact  at  a 
Beijing-funded  Chinese-language  newspaper  which  had  been  told  to 
put  a  black  border  round  the  front  page.  That  could  mean  only  one 
thing.  Deng  Xiaoping,  the  veteran  of  the  Long  March  and  the 
Communist  triumph,  who  then  launched  China  on  its  course  of 
economic  liberalisation,  conjured  up  the  one  country,  two  systems 
concept  for  Hong  Kong  and  presided  over  the  crushing  of  the 
Tiananmen  demonstration,  had  been  allowed  to  die  after  being  kept 
alive  on  a  life-support  machine  for  months.  The  official  report  from 
the  Xinhua  news  agency  at  2.41  a.m.  said  he  had  died  from 
Parkinson's  disease,  lung  infection  and  the  failure  of  his  respiratory- 
circulatory  functions  at  9.08  p.m.  the  previous  night.  One  could  only 
wonder  what  went  through  the  doctor's  mind  as  he  switched  off  the 
life  support,  after  getting  the  word  from  on  high. 

We  ran  four  pages  on  Deng  wrapped  round  the  main  section  of  the 
paper.  A  huge  black  and  white  photograph  of  the  patriarch  covered 
most  of  the  front.  We  followed  that  with  a  special  lunchtime  edition, 
and  ten  pages  in  the  following  day's  paper.  I  later  learned  that  our  use 
of  a  black  and  white  picture  was  seen  in  Beijing  as  a  suitable  sign  of 
respect;  as  far  as  I  was  concerned,  it  was  simply  much  more  striking 
than  a  colour  shot.  I  was  also  told  that  the  propaganda  chief,  Ding 
Guan'gen,  had  waved  these  editions  at  mainland  editors  demanding  to 
know  why  they  couldn't  do  as  well.  It  was  not  a  recommendation  I 
planned  to  make  too  much  of.  Later  that  year,  a  mainland  journalist 
asked  me  how  our  editorial  board  had  been  able  to  decide  so  quickly 
on  the  coverage  on  the  night.  I  told  him  that  we  did  not  have  an  edi- 
torial board,  and  that  it  wouldn't  have  had  time  to  meet  if  it  had 
existed.  One  country,  two  media  systems. 


96  Dealing  With  the  Dragon 

That  afternoon  in  1997,  everybody  who  was  anybody  in  the 
Chinese  community  went  to  the  bleak  building  opposite  the  main 
racecourse  in  Happy  Valley  which  housed  the  office  of  Xinhua,  the 
mainland's  de  facto  embassy  in  Hong  Kong.  With  less  than  five  months 
to  go  until  the  handover,  everybody  who  wished  to  be  on  good 
terms  with  the  new  sovereign  turned  up,  among  them  the  cinema 
tycoon  Sir  Run  Run  Shaw,  Macau  casino  boss  Stanley  Ho  Hung-sun, 
old  China  friend  Henry  Fok  Ying-tung,  and  tycoons  Li  Ka-shing, 
Peter  Woo  Kwong-ching  and  my  newspaper's  chairman,  Robert 
Kuok.  The  Chief  Executive-designate  went  to  pay  tribute,  wearing  a 
black  armband.  Outside  the  building,  a  clutch  of  demonstrators 
shouted  their  'grief-stricken  mourning  for  the  butcher  of  democracy'. 
Chris  Patten  drove  to  Happy  Valley  to  join  the  throng,  bowing  three 
times  before  the  altar  set  up  for  the  occasion  and  shaking  hands  with 
the  hardline  Xinhua  chief. 

Deng  had  as  much  influence  on  as  many  people  as  anybody  except 
Mao.  He  never  visited  Hong  Kong  (though  his  widow  attended  the 
handover),  but  as  the  prophet  of  economic  modernisation,  he  could 
only  be  fascinated  by  the  contrast  between  what  his  fellow  Chinese 
had  done  here  and  their  failure  to  achieve  anything  equivalent  at 
home.  It  was  under  his  aegis  that  the  village  of  Shenzhen  on  the 
border  grew  into  a  money-chasing  city  of  several  million  inhabitants. 
The  patriarch  who  told  the  Chinese  that  it  didn't  matter  what  colour 
a  cat  was  so  long  as  it  caught  the  mice  made  his  last  public  appearance 
there  in  January  1992,  and  a  huge  colour  picture  of  him  posed  against 
a  blue  sky  still  stands  on  its  main  street. 

On  the  first  anniversary  of  his  death,  the  man  who  had  introduced 
market  forces  to  the  mainland  was  honoured  as  the  nation's  'symbol, 
banner  and  soul'.  Jiang  Zemin  assured  the  editor-in-chief  of  the  Time 
magazine  empire  that  Deng  had  taught  China  the  need  to  'open  its 
doors  and  establish  economic  links  with  the  capitalist,  developed  world'. 
The  National  People's  Congress  is  to  enshrine  Deng  Xiaoping  Theory 
in  the  constitution.  The  role  of  the  private  sector  will  be  affirmed.  In 
Shenzhen,  a  local  newspaper  says  people  have  been  visiting  the  giant 
poster  to  'cherish  the  memory  and  take  pictures'.  But  in  a  country 
where  the  size  of  photographs  and  the  placing  of  stories  still  has  a 


February  97 

Kremlinological  importance,  nobody  can  fail  to  notice  that  the  main 
newspaper,  the  People's  Daily,  did  not  mention  today's  anniversary. 

The  way  is  being  carefully  prepared  for  Jiang  Zemin  to  join  the 
Mao-Deng  pantheon.  As  well  as  the  page-one  photographs  of  the 
President  opening  industrial  plants,  giving  his  imprimatur  to  devel- 
opment projects,  smiling  at  folklore  groups  and  greeting  visitors  from 
overseas,  the  human  side  of  Jiang  is  also  being  revealed  to  the  waiting 
world.  We  know  he  is  a  dab-hand  at  karaoke,  once  singing  along  with 
Elvis's  'Love  Me  Tender'  during  an  evening  party  at  a  Pacific  region 
summit.  He  also  likes  to  show  off  his  knowledge  of  foreign  languages, 
though  what  he  said  to  Prince  Charles  in  a  brief  one-to-one  remark 
during  the  handover  ceremony  in  Hong  Kong  remains  unknown. 
The  President  is  keen  on  quoting  from  Chinese  poetry,  and  on  letting 
visitors  know  about  his  familiarity  with  European  classical  music.  To 
console  himself  for  Deng's  death,  which  he  must  have  authorised,  he 
is  said  to  have  read  Tang  Dynasty  poems  and  listened  to  Mozart. 

As  he  has  grown  into  the  job,  Jiang  has  developed  a  taste  for  foreign 
travel.  His  vanity  has  bloomed,  but  he  can  also  betray  his  insecurities. 
A  stocky  man  with  a  pudgy  face  and  heavy  black  spectacles,  he  was 
embarrassingly  photographed  giving  his  jet-black  hair  a  last  going- 
over  with  a  comb  before  being  ushered  in  to  see  the  King  of  Spain. 
On  a  visit  to  the  United  States  in  1998,  he  had  a  'look-at-me-now' 
smile  as  he  rang  the  bell  at  the  New  York  Stock  Exchange,  donned  a 
revolutionary-era  tricorne  and  went  through  the  publicity  hoops. 
But  he  never  matched  the  folksy  appeal  achieved  by  Deng  when  the 
pint-sized  Long  Marcher  put  on  a  ten-gallon  hat  at  a  rodeo  or  was 
dwarfed  meeting  the  Harlem  Globetrotters. 

Protests  that  would  not  ruffle  a  Western  leader  can  rouse  Jiang  to 
indignation.  Visiting  Switzerland,  he  warned  the  President  of  the 
Confederation  that  her  country  had  'lost  a  good  friend'  when  pro- 
Tibetan  demonstrators  appeared  in  Berne.  China's  main  official 
newspaper  describes  Jiang  as  a  'principal  violinist',  which  leaves  open  the 
question  of  who  holds  the  conductor's  baton.  He  is  the  epitome  of  feng- 
pai,  people  who  move  with  the  prevailing  breeze,  mainland  Vicars  of 
Bray.  The  President  is  most  at  home  with  his  cronies  in  the  'Shanghai 
faction'  whom  he  has  brought  from  that  city  to  surround  him  in  Beijing. 


98  Dealing  With  the  Dragon 

One  biographer,  Willy  Wo-lap  Lam,  describes  him  as  possessing  the 
haipei  personality  attributed  to  inhabitants  of  the  city  where  he  was 
mayor  before  moving  to  the  capital.  Their  traits  include  'an  expansive, 
outward-going  style  bordering  on  the  unctuous;  an  ability  to  handle  one- 
self to  good  advantage  in  public  arenas;  a  soft  spot  for  lavish  ceremonies 
and  big  feasts;  and  a  concern  for  public  relations  rather  than  substance'. 

Born  in  1926  into  a  comfortably-off  family  in  the  Yangtze  Valley 
city  of  Yangzhou,  Jiang  went  through  an  orthodox  classical  education, 
but  then  joined  the  underground  Communist  Party  in  1946  while 
studying  engineering.  He  worked  in  a  soap  factory  and  for  an 
American-owned  firm  that  made  popsicle  sticks.  In  the  1950s,  Jiang 
went  to  Moscow  to  the  Stalin  vehicle  factory,  where  he  learned  the 
Russian  he  still  uses  on  visitors  from  the  former  Soviet  Union. 
Another  trip  took  him  on  an  engineering  mission  to  Romania.  Back 
in  Beijing,  he  worked  his  way  up  the  Ministry  of  Machine  Building, 
keeping  his  head  down  in  the  Cultural  Revolution. 

The  end  of  that  upheaval  and  the  fall  in  1976  of  the  Gang  of  Four 
who  had  spearheaded  it  led  to  Jiang  being  sent  to  their  former  bastion 
of  Shanghai,  where  he  took  charge  of  the  city's  industry  and  began  to 
emerge  as  a  political  leader,  involving  himself  in  the  development  of 
the  Special  Economic  Zones,  or  SEZs,  which  Deng  Xiaoping 
launched  to  spearhead  economic  progress.  Becoming  head  of  the 
Ministry  of  Electronics  in  1983,  he  forged  ahead  politically  as  a  new 
member  of  the  200-strong  Central  Committee  of  the  Communist 
Party.  In  1985,  Jiang  rose  to  become  Mayor  of  Shanghai,  and  went 
into  the  streets  himself  to  argue  with  the  first  student  protestors  in 
1986.  His  orthodoxy  was  not  in  doubt,  but  troops  were  not  used  in 
Shanghai  as  they  were  in  Beijing  to  suppress  the  protests  of  1989. 

Twenty  days  after  the  Tiananmen  massacre,  Jiang  was  officially 
named  General  Secretary  of  the  Chinese  Communist  Party.  With  the 
genius  of  a  high-level  survivor,  he  has  confounded  the  sceptics  who  did 
not  expect  him  to  last  long.  Starting  out  by  beating  a  neo-Maoist 
drum,  he  developed  into  a  self-styled  team-playing  'chief  engineer'. 
Unlike  Mao  and  Deng,  Jiang  does  not  give  off  a  historic  aura.  Though 
his  vanity  is  growing  and  he  clearly  revelled  in  the  royal  pomp  of  his 
visit  to  Britain  in  1999,  he  has  none  of  the  imperial  mystery  which  is 


February  99 

meant  to  surround  Chinese  rulers.  That  does  not  mean  that  he  is 
short  of  cleverness  or  great  ambition.  'Behind  the  Buddy  Holly  glasses, 
Jiang  is  a  very  intelligent  and  shrewd  politician,'  remarks  an  American 
academic  who  used  to  play  bridge  with  him  in  Shanghai. 

The  man  is  the  system  incarnate,  ready  to  sacrifice  everything  to 
put  off  the  day  of  reckoning  between  the  party,  the  state  and  the  eco- 
nomic demons  unleashed  by  Deng.  The  contradictions  would  boggle 
the  mind  of  anybody  not  steeped  in  the  switchbacks  of  China's 
ideology.  While  his  Prime  Minister  pushes  on  with  plans  to  disman- 
tle the  state  sector,  the  President  instructs  cadres  to  raise  the  level  of 
their  Marxist  righteousness,  and  his  protege,  Vice-President  Hu 
Jintao,  says  they  should  'check  if  they  truly  follow  the  mass  direction 
as  enshrined  by  Marxism'. 

Obsessed  with  the  paramount  need  to  maintain  stability,  the  'chief 
engineer'  may  be  as  much  the  prisoner  of  the  apparatus  he  heads  as  its 
master,  a  ruler  who  sits  on  top  of  the  tree  of  party  and  state,  but  who 
cannot  be  sure  of  controlling  the  branches  below  him,  a  consummate 
trimmer  who  lacks  final  authority  because  of  his  care  not  to  be  caught 
out  on  a  limb,  a  leaf  that  rose  seamlessly  in  the  wind  as  revolution  gave 
way  to  administration. 

The  first  direct  sight  Hong  Kong  had  of  the  man  in  charge  of  the 
country  it  was  about  to  rejoin  came  at  the  1997  handover.  Jiang 
walked  stiffly  like  a  man-sized  doll;  there  was  speculation  that  he  was 
wearing  a  bulletproof  corset.  On  the  platform  at  the  Convention 
Centre,  it  was  the  Chief  Secretary,  Anson  Chan,  who  seemed  to 
dominate,  resplendent  in  red  on  a  throne-like  seat  above  the  throng  of 
dignitaries.  On  his  second  visit,  a  year  later,  the  President  was  more  at 
ease.  He  seemed  to  be  positively  enjoying  himself  as  he  surveyed 
China's  newest  region.  He  attended  a  gala  performance  that  ranged 
from  mask  dancers  to  Cantopop  stars  and  the  soprano  saxophone 
player  Kenny  G.  He  made  an  optimistic  speech,  and  then  presided 
over  the  opening  of  the  new  airport,  leaving  the  administration  of 
Tung  Chee-hwa  to  deny  that  its  haste  to  open  the  project  in  time  for 
his  visit  was  responsible  for  systems  failures  that  began  almost  as  soon 
as  the  President  had  left. 

Jiang  had  every  reason  to  be  pleased  as  he  headed  home.  It  had 


ioo  Dealing  Wn  n   ini    Dragon 

been  under  his  command  that  China  had  undone  the  shame  of  seeing 
Hong  Kong  under  Western  colonial  rule.  He  had  installed  his  trusted 
man  in  charge  of  the  SAR,  and  if  the  economy  there  was  not  bound- 
ing along  as  it  had  done  in  the  past,  the  transition  had  gone  smoothly. 
That,  Jiang  well  knew,  had  an  importance  stretching  beyond  Hong 
Kong.  As  he  had  told  a  pre-handover  secret  meeting  across  the  border 
with  tycoons  from  the  territory,  if  things  went  wrong  in  Hong  Kong, 
it  would  greatly  complicate  China's  aim  of  recovering  the  island  of 
Taiwan,  the  ultimate  prize  for  his  presidency.  Though  the  Taiwanese 
reject  any  comparison  with  ex-colonial  Hong  Kong,  Jiang  sees  a  suc- 
cessful SAR  as  one  of  the  keys  to  the  full  reunification  of  China.  But 
can  such  a  product  of  the  system  that  has  run  China  since  1949  under- 
stand how  Hong  Kong  really  works?  It  is  the  question  the  SAR  has  to 
live  with  as  it  watches  the  way  the  wind  is  blowing  from  the  north. 

21  February 

The  overstayers  from  the  mainland  are  allowed  to  remain  a  while 
longer.  In  Immigration  Tower  in  the  Wanchai  district,  they  are 
handed  cards  giving  them  temporary  immunity  from  arrest  and 
deportation. 

At  a  meeting  of  the  government's  main  think-tank,  the  Central 
Policy  Unit,  some  members  criticise  the  administration  for  the 
absence  of  a  contingency  plan  to  deal  with  legal  decisions  that  could 
open  the  door  to  a  flood  of  migrants.  Officials  reply  that  they  hadn't 
planned  on  losing.  That  is  part  of  their  problem:  they  find  it  hard  to 
imagine  that  they  will  make  mistakes,  and  show  an  arrogance  inher- 
ited from  the  Whitehall  way  of  doing  things.  The  civil  service  is 
sometimes  referred  to  as  a  Rolls-Royce.  Previously,  they  had  a  chauf- 
feur on  call  by  the  Thames.  Now  it  is  self-drive. 

Talking  about  the  administration's  performance  one  evening,  a 
Hong  Kong  woman  in  her  thirties  says  she  does  not  think  much  of 
the  Chief  Executive.  Who  would  do  better?  I  ask.  Well,  she  replies, 
Tung  clearly  isn't  listening  to  his  Chief  Secretary,  Anson  Chan,  and 
Anson  seems  resigned  to  that.  As  for  the  others,  she  doesn't  think 
much  of  them  either.  So  finally  she  concludes  that  maybe  Chris 


February  ioi 

Patten  would  have  handled  it  all  much  better.  'But  that's  not  a  good 
thing  for  me  to  say  as  a  Chinese,'  she  adds  with  a  smile  and  an  intake 
of  breath  that  whistles  over  her  teeth. 


26  February 

As  a  first  move  over  the  Court  of  Final  Appeal's  verdict  against  it  in 
the  mainland  migrants'  case,  the  government  is  asking  the  judges  for 
a  'clarification'  -  in  particular,  how  they  see  their  prerogatives  vis-a-vis 
China's  National  People's  Congress  (NPC).  The  proceedings  have 
had  their  lighter  moments.  When  the  government's  lawyer  asks  the 
Chief  Justice  to  clarify  the  verdict,  the  SAR's  top  judge  replies,  to 
chuckles  from  those  in  the  courtroom,  that  this  is  exactly  what  has 
been  done  on  page  five  of  the  judgement. 

'It  may  be  argued  that  this  is  what  the  judgement  says  anyway,'  the 
lawyer  blunders  on.  'It  may  cause  laughter  .  .  .' 

'We  could  do  with  a  bit  of  light  relief,'  the  Chief  Justice  remarks. 

The  court  could  have  stood  on  its  dignity  and  refused  to  give  the 
requested  clarification.  That  would  have  been  politically  provocative, 
and  the  judges  are  not  by  nature  trouble-stirrers.  So  they  come  back 
with  a  carefully  calibrated  response.  While  saying  that  the  court  had 
not  intended  to  challenge  the  NPC,  their  position  does  not  basically 
shift.  They  acknowledge  that  they  'cannot  question  the  authority  of 
the  National  People's  Congress  ...  to  do  any  act  which  is  in  accor- 
dance with  the  provisions  of  the  Basic  Law  and  the  procedure 
therein'.  But  this  does  not  mean  they  feel  any  need  to  alter  their  ver- 
dict. The  ball  is  back  in  the  government's  court,  and  over  cognac  at  a 
dinner,  a  senior  official  expresses  deep  concern  at  what  lies  in  store. 
The  government  simply  cannot  accept  the  decision,  he  says.  The 
court  got  the  Basic  Law  wrong.  The  practical  effects  of  its  verdict 
would  be  horrendous  in  terms  of  immigrant  numbers.  If  the  court 
persists,  the  government  will  have  to  go  to  the  NPC.  There  is  no  way 
of  knowing  what  precedents  may  be  set,  opening  the  door  to  main- 
land interference  in  Hong  Kong  and  giving  the  impression  of  an 
administration  that  needs  Beijing  to  do  its  job  for  it.  But  if  this  is  the 
price  to  be  paid,  so  be  it. 


March 


i  March 

The  annual  Spring  Reception  at  Government  House,  former  home 
of  British  rulers  of  Hong  Kong,  for  which  a  new  name  has  not  been 
found  twenty  months  after  the  handover.  The  Chief  Executive  is 
smiling  affably  as  he  says  he  has  so  many  problems  to  deal  with,  so 
many  fronts  calling  for  action.  Not  just  the  economy,  but  also 
tourism  and  the  environment.  He  is  keen  on  the  idea  of  Hong 
Kong  finding  a  new  role  for  itself  neither  upstream  nor  downstream 
in  high  tech  but  in  midstream,  taking  innovation  by  others  and 
applying  it  to  production.  This  sounds  much  like  its  traditional  mid- 
dleman role. 

Tung  says  he  was  much  impressed  by  what  he  saw  in  Israel  on  a 
recent  visit  on  his  way  home  from  the  World  Economic  Forum  in 
Davos.  After  getting  back,  he  took  a  couple  of  days  off  over  the  Lunar 
New  Year  to  go  walking.  He  enthuses  over  Hong  Kong's  country 
parks  and  trails.  Recalling  his  days  in  Britain,  he  recalls  the  smog  that 
meant  you  couldn't  see  more  than  an  arm's  length  in  front  of  you. 
Now  it  has  been  cleared  up  in  Britain;  the  same  should  be  done  here. 
Indeed  -  and  as  Chief  Executive,  he  is  better  placed  than  anybody  else 
to  get  things  done.  But  there  are  depressing  precedents.  Chris  Patten 
promised  a  clean-up  that  never  materialised.  Officials  say  one  has  to  be 
patient;  the  environment  will  certainly  figure  prominently  in  the 


March  103 

Chief  Executive's  annual  Policy  Address.  That  will  be  delivered  in 
October.  Meanwhile  the  air  gets  steadily  worse. 


2  March 

Hong  Kong  may  be  special,  but  it  is  increasingly  feeling  the  pressure 
from  another  small  enclave  built  by  refugees  from  China  - 
Singapore.  The  Lion  City,  as  it  is  known,  has  been  busy  attracting 
high-tech  companies  and  getting  its  economy  into  leaner  shape  to 
meet  the  challenge  of  the  recession.  Eleven  per  cent  of  its  GDP 
comes  from  electronics,  and  major  international  computer  firms  are 
being  lured  south  by  cheaper  rents  and  tax  breaks.  The  government 
there  is  decidedly  interventionist  in  what  it  sees  as  the  country's  best 
interests  in  a  way  that  would  be  impossible  in  Hong  Kong.  There 
are  business  links  between  the  two  -  one  of  the  big  Hong  Kong 
property  firms  is  run  by  Singaporeans.  But  from  time  to  time,  SAR 
officials  go  public  with  their  feelings  about  the  other  former  British 
colony.  The  Trade  and  Industry  Secretary,  Chau  Tak-hay,  has  just  set 
off  a  row  by  telling  a  Legislative  Council  panel  of  Singapore's  'four 
great  advantages'. 

'First,  the  government  has  complete  control  of  the  legislature, 
which  always  supports  it.  Second,  the  media  never  criticise  the  gov- 
ernment. Third,  the  government  has  complete  control  of  the  trade 
unions.  Fourth,  the  people  never  dare  openly  criticise  the  govern- 
ment.' Singapore's  highly  active  Consul-General  calls  those  remarks 
inaccurate  and  misinformed.  'His  assertion  of  compulsion  and  control 
shows  a  lack  of  understanding  of  how  Singapore  works,'  he  adds. 
Chau  is  unabashed.  'Of  course  we  are  different  from  Singapore,'  he 
says.  'The  opposition  parties  in  Singapore  do  not  raise  opposition.  If 
they  do  raise  opposition,  they  might  be  arrested  [but]  our  Legislative 
Council  has  sixty  opposition  members.' 

Still,  the  attractions  of  the  Lion  City  model  are  undeniable  for 
some  people  here.  Tung  Chee-hwa  is  a  warm  admirer  of  its  Senior 
Minister,  Lee  Kuan-yew.  Sitting  beside  Lee  on  a  platform  at  the 
World  Economic  Forum  in  Davos,  the  Chief  Executive  showed  pal- 
pable deference  to  the  older  man.  For  his  part,  Lee  lets  it  be  known 


104  Dealing  With  the   Dragon 

that  he  thinks  the  people  running  Hong  Kong  are  good  men  and 
women,  but  lack  experience. 

Around  the  time  of  the  handover,  there  was  some  speculation  that 
Tung  might  try  to  impose  a  Singapore-style  system,  though  that 
would  be  difficult  under  the  Basic  Law  and  would  be  strongly  resisted. 
'It's  like  a  nice  prison,'  said  one  middle-class  Hong  Konger  when  I 
asked  her  what  she  thought  of  the  other  city.  At  a  deeper  level,  the 
inventiveness  and  individuality  that  lie  behind  Hong  Kong's  success 
would  die  a  lingering  death  in  a  society  where  dissent  is  frowned  upon 
and  consensus  rules.  Yet  Tung  clearly  cannot  get  the  lure  of  the  Lion 
City  out  of  his  mind.  At  lunch  with  a  group  of  editors,  he  reflects  on 
the  criticism  he  faces,  and  says  he  can't  help  being  jealous  of 
Singapore.  'But  don't  quote  me  on  that,'  he  adds  with  a  smile.  'Or  else 
everybody  will  think  I'm  going  to  bring  in  their  system  here.' 

3  March 

The  Financial  Secretary,  Donald  Tsang,  is  driven  to  the  Catholic 
cathedral  this  morning  in  his  green  BMW.  Then  he  goes  on  to  his 
office.  The  mainland  migrants  are  camped  just  opposite.  After  lunch, 
Tsang  goes  down  the  hill  to  the  Legislative  Council  chamber  to 
deliver  his  fourth  Budget.  The  spiritual  preparation  has  become  a 
habit.  He  also  likes  to  invoke  the  titles  of  films  in  speeches:  having 
spoken  of  Godzilla  and  The  Silence  of  the  Lambs  in  the  past,  he  now 
likens  Hong  Kong's  situation  to  Saving  Private  Ryan. 

It  is,  most  people  agree,  a  good  Budget.  Tsang  certainly  shows  a 
deft  political  touch.  A  year  ago,  he  telephoned  me  from  his  car  after 
delivering  a  more  orthodox  package  to  offer  an  assurance  that  he  'felt 
the  people's  pain'  but  could  not  divert  from  the  tradition  of  balancing 
the  books.  Since  then,  things  have  changed.  The  government  has  left 
the  strict  path  of  non-intervention,  and  it  is  no  secret  that  the  Chief 
Executive  wants  a  spot  of  reflation.  So,  Tsang's  Budget  is  out  to  inject 
some  optimism  into  the  place. 

There  is  to  be  a  one-off  10  per  cent  income  tax  rebate;  govern- 
ment fees  and  charges  will  not  rise  for  six  months  after  their  last 
settlement;  pay  will  be  frozen  for  330,000  civil  servants  and  public 


March  105 

sector  staff;  one  of  the  jewels  in  Hong  Kong's  crown,  the  Mass 
Transit  Railway  Corporation,  is  to  be  partially  privatised.  Nego- 
tiations are  going  on  to  build  a  Disneyland  on  Lantau  Island.  This 
is  a  very  popular  idea,  which  was  first  publicly  launched  in  an  arti- 
cle in  the  South  China  Morning  Post  by  the  entrepreneur  who 
developed  the  city's  main  restaurant  and  bar  area  in  an  old  ware- 
house section  of  town.  Some  people  wonder  why,  if  Disneyland  is 
such  a  good  idea,  the  project  is  not  being  done  in  traditional 
fashion  as  a  purely  private-sector  deal.  Others  fear  that  the  govern- 
ment's public  enthusiasm  may  put  it  at  a  disadvantage  in 
negotiations.  But  the  Financial  Secretary  appears  to  have  achieved 
his  aim  of  lifting  people's  spirits. 

In  keeping  with  the  vogue  for  high-tech  development,  the  budget 
also  contains  a  surprise  announcement  that  a  'Cyberport'  will  be  put 
up  on  a  previously  protected  26-hectare  site  by  the  sea  on  Hong 
Kong  Island.  It  is  not  quite  clear  what  this  HK$I3  billion  project 
involves:  it  seems  to  be  a  cluster  of  'intelligent  buildings'  equipped 
with  all  the  latest  technology,  which  will  attract  foreign  companies, 
create  a  local  technological  seedbed  and  catapult  the  SAR  into  a 
high-tech  future.  The  project  has  been  agreed  with  a  company  called 
Pacific  Century,  headed  by  Richard  Li  Tzar-kai,  son  of  the  great 
tycoon,  Li  Ka-shing. 

The  younger  Li  has  had  an  eventful  career,  setting  up  the  Star 
satellite  television  station  and  subsequently  selling  out  to  Rupert 
Murdoch  at  a  good  profit,  investing  in  real  estate  in  Tokyo  and  always 
pursuing  his  dreams  of  becoming  a  king  of  advanced  technology. 
Nobody  can  have  anything  against  his  ambitions,  particularly  when 
Cyberport  is  due  to  create  12,000  jobs  on  completion  in  eight  years' 
time.  But  two  things  arouse  concern. 

One  is  that  the  project  includes  a  luxury  residential  development 
attached  to  it  on  prime,  and  previously  unavailable,  land.  It  turns  out 
that  as  well  as  three  office  buildings  and  a  'cyber mall',  there  will  be  30 
blocks  containing  a  total  of  2,932  flats,  plus  a  hotel  and  a  tower  of  ser- 
viced apartments.  So  this  is  a  big  property  play  as  well  as  a  leap  into 
the  cyberfuture.  But  the  real  departure  is  that  the  development  was 
not  put  out  to  tender  as  is  customary.  The  government  is  not  meant 


106  Dealing  With  the  Dracon 

to  seal  deals  like  this  in  private.  Other  developers  are  soon  up  in 
arms.  They  get  an  audience  with  Anson  Chan,  but  the  Chief 
Secretary  can  only  say  they  should  trust  the  government  and  that 
clear  guidelines  will  be  drawn  up  for  the  future. 

I  can't  help  thinking  back  to  a  flight  from  Hong  Kong  to  Zurich  at 
the  end  of  January.  In  the  first-class  Cathay  Pacific  cabin  were  the 
Chief  Executive  and  a  group  of  prominent  Hong  Kong  figures, 
including  Richard  Li.  They  were  on  their  way  to  the  Davos 
Economic  Forum.  Li  made  the  mistake  of  travelling  on  his  SAR  pass- 
port, and  was  held  up  at  the  Zurich  immigration  desk  because  it  did 
not  have  a  Swiss  visa.  After  Davos,  the  party  went  on  to  Israel  to  study 
the  high-tech  industry  there.  Now  Richard  Li's  company  has  got  the 
Cyberport  project  without  other  firms  having  a  chance  to  compete, 
much  to  their  annoyance. 

5  March 

A  jolly  evening  at  the  annual  dinner  of  the  Pacific  Rim  wine  soci- 
ety. As  always,  the  occasion  is  presided  over  by  the  Deputy  Chief 
Justice,  a  very  tall  New  Zealander  who  revels  in  auctioning  choice 
bottles  for  charity  at  outrageous  prices.  The  police  band  marches 
through  the  hotel  dining  room,  dressed  in  white  helmets,  white 
coats  and  blue  trousers  as  though  they  were  on  the  parade  ground 
rather  than  a  parquet  floor.  They  play  'John  Peel'  and  'Rule 
Britannia'  and  'Land  of  Hope  and  Glory'.  A  visitor  from  Britain 
seated  at  our  table  says  he  didn't  think  that  this  kind  of  thing  would 
be  allowed  now  that  Hong  Kong  was  part  of  China.  By  then,  the 
Deputy  Chief  Justice  and  an  eminent  wine  merchant  from  Bristol 
are  on  their  feet  singing  along  to  Elgar. 

ii  March 

If  we  were  worried  about  the  way  things  are  going  with  the  rule  of 
law  and  Cyberport,  a  third  shoe  has  just  fallen  with  the  case  of  the 
non-prosecution  of  the  newspaper  owner,  Sally  Aw  Sian,  which 
reaches  its  political  conclusion  today.  The  no-confidence  motion  in 


March  107 

the  Secretary  for  Justice  tabled  by  Margaret  Ng,  the  representative  of 
the  legal  constituency  in  the  Legislative  Council,  speaks  volumes 
about  the  way  politics  works  when  the  chips  are  down.  The  story  so 
far  has  taken  us  through  the  decision  not  to  prosecute  Sally  Aw,  the 
sentencing  of  three  of  her  underlings  and  Elsie  Leung's  remark  that 
one  reason  she  was  not  charged  was  because  of  the  effect  that  might 
have  had  on  her  business.  But  now  the  tale  gets  a  fresh  twist. 

To  explain  how  this  happens,  it  is  first  necessary  to  describe  the 
arcane  nature  of  the  voting  procedure  in  the  Legislative  Council.  To 
pass,  the  motion  put  forward  by  the  terrier-like  Ng  not  only  has  to 
get  an  absolute  majority  in  the  chamber,  but  also  the  support  of  a 
majority  of  the  thirty  functional  constituency  members.  That  would 
normally  condemn  any  anti-government  motion  to  defeat,  since  most 
functional  constituency  representatives  can  be  counted  on  not  to  rock 
the  governmental  boat.  But  in  this  case,  the  pro-business  Liberal  Party, 
which  has  ten  functional  seats,  has  already  expressed  its  opposition  to 
the  Secretary  for  Justice's  statement.  The  pro-democracy  camp  can 
muster  twenty  votes,  mainly  in  the  popularly  elected  seats,  but  also 
including  a  few  functionals.  Then  there  are  some  independents  who 
may  back  Ng.  Even  if  she  falls  short  among  the  functional  con- 
stituencies, a  31—29  vote  for  her  motion  in  the  chamber  as  a  whole 
would  represent  a  huge  moral  defeat  for  the  government  in  its  biggest 
test  in  the  legislature  since  the  handover. 

In  today's  four-and-a-half-hour  debate,  Anson  Chan  delivers  a 
strong  speech  which  implicitly  acknowledges  the  scope  of  concern  as 
she  widens  her  defence  to  take  in  the  Court  of  Final  Appeal.  The  rule 
of  law  is  the  foundation  for  the  community,  the  Chief  Secretary  says. 
'I  can  assure  members  that  we  have  acted  out  of  principle,  not  ex- 
pediency; that  we  have  acted  not  to  undermine  the  rule  of  law  but  to 
observe  it;  that  we  have  acted  not  to  challenge  the  independence  of 
the  judiciary  but  out  of  respect  for  it.  We  know  precisely  what  is  the 
rule  of  law.'  This  does  not  explain  why  Sally  Aw  is  free  at  her  home 
in  the  Tiger  Balm  Garden  while  the  manager  to  whom  she  gave  the 
green  light  is  in  jail. 

Knowing  the  impact  a  defeat  would  have,  officials  have  gone  to 
work  on  the  businessmen  who  pull  the  strings  of  the  functional 


io8  Dealing  Wiih  the   Dragon 

constituencies  represented  by  Liberal  Party  members.  The  business- 
men do  their  duty.  It  could  be  argued  that  they  are  only  exercising 
their  democratic  rights,  just  as  voters  might  petition  their  MP  to  back 
the  government  on  a  no-confidence  motion  in  the  Commons.  But 
these  are  not  ordinary  constituents.  They  are  a  small  group  of  men 
who  enjoy  political  influence  because  of  the  business  and  financial 
muscle  they  are  now  flexing  on  behalf  of  the  administration. 

At  the  last  minute,  the  Chairman  of  the  Liberals  announces  that  the 
party  has  decided  to  abstain,  after  all.  'If  all  civil  servants  were  to  resign 
for  their  mistakes  then  the  whole  top  tier  of  government  might  go,'  he 
remarks  in  what  sounds  like  considerably  less  than  a  ringing  endorse- 
ment. The  decision  is  particularly  embarrassing  for  a  prominent  Liberal 
who  lobbied  the  main  Chamber  of  Commerce  to  distance  itself  from 
the  Secretary  for  Justice.  One  party  member,  Ronald  Arculli,  a  well- 
known  solicitor,  prefers  to  walk  out  rather  than  remain  in  the  chamber 
and  abstain.  He  is  in  tears  as  he  leaves.  'Whatever  the  result,  there  are  no 
winners,'  he  says.  'The  loser  is  Hong  Kong.' 

There  are  two  ironies  in  this.  Arculli  is  on  the  board  of  the  South 
China  Morning  Post.  At  a  lunch  of  the  board  in  a  seafood  restaurant 
back  before  the  handover,  his  impending  appointment  to  the  Tung 
administration  was  the  subject  of  congratulations  and  toasts.  The  job 
he  was  supposed  to  have  got  was  that  of  Secretary  for  Justice.  A  year 
later,  the  Post  ran  a  story  about  how  a  property  developer  was  using 
shelf  companies  to  increase  his  influence  in  a  functional  constituency 
on  behalf  of  his  favoured  candidate  -  who  was  none  other  than  the 
man  who  walked  out  of  the  Legislative  Council  rather  than  follow  the 
pressure  to  stay  and  abstain. 

The  volte-face  by  other  Liberals  means  that  Ng's  motion  goes  down 
to  a  29—21  defeat,  with  ten  Liberal  abstentions.  If  the  abstainers  had 
voted  as  originally  planned,  the  outcome  would  have  been  a  narrow 
victory  for  Ng  in  the  chamber  as  a  whole. 

The  computerised  voting  system  breaks  down,  so  the  Liberals  have 
to  raise  their  hands  to  abstain  rather  than  pressing  the  buttons  on 
their  desks.  Elsie  Leung's  supporters  are  beaming.  A  senior  official  in 
her  department,  Greville  Cross,  says  the  SAR  is  fortunate  to  have  such 
a  dedicated  public  servant.  Sounding  a  familiar  theme,  the  Chief 


March  109 

Executive  hails  the  result  as  a  vote  of  confidence  in  the  integrity  of  the 
legal  system.  One  pro-China  legislator  says  that  Ng,  not  Leung, 
threatens  the  rule  of  law;  another  talks  of  terrorism  and  the  danger  of 
'handing  over  the  jewels  to  Hitler',  whatever  that  means.  Business  has 
spoken  in  an  unusually  open  manner,  but  there  is  also  an  intriguing 
suggestion  in  a  remark  by  a  legislator  to  a  reporter  some  time  later. 
'Only  once,'  he  says,  'was  I  lobbied  by  Chinese  officials:  not  to  vote 
for  the  motion  of  no  confidence  on  Elsie  Leung.' 

20  March 

Recession  may  still  have  us  in  its  grip,  but  the  rich  aren't  doing  too 
badly.  The  wealth  of  Henderson  Land's  Lee  Shau-kee  is  reckoned  to 
have  grown  by  US$1.9  billion  in  the  past  twelve  months.  'The  worst 
is  behind  us,'  he  tells  Forbes  magazine.  'But  like  a  patient  recovering 
from  a  serious  illness,  it  will  be  a  gradual  process.'  Although  corporate 
profits  are  generally  down,  the  Hang  Seng  stock  market  index  is  up  by 
22  per  cent  so  far  this  year.  Sentiment  is  clearly  shifting,  and  money 
returning.  Who  needs  to  bother  about  politics? 

Another  big  beneficiary  of  this  is  'Superman'  Li  Ka-shing,  now 
estimated  to  be  worth  some  £7.5  billion.  At  the  end  of  last  year,  he 
caused  a  shock  by  letting  it  be  known  that  he  was  worried  about  the 
'unfavourable  political  environment'  here,  and  was  unlikely  to  go 
ahead  with  an  unspecified  big  project  as  a  result.  It  was  hard  to  see 
what  was  causing  such  concern  to  K.S.,  as  his  fellow  businessmen 
call  him.  Even  less  so  when  shares  in  his  main  company  have 
doubled  from  their  low  of  last  year.  The  archetypal  poor-boy-made- 
tycoon  is  as  much  king  of  the  big  deal  as  ever,  and  is  about  to  get  the 
recognition  of  an  honorary  degree  at  Cambridge,  to  which  he  has 
donated  tens  of  millions  of  pounds.  Opinion  polls  regularly  place  the 
dapper  Li  as  the  man  Hong  Kong  people  most  admire.  Starting  out 
as  a  manufacturer  of  plastic  products,  he  rules  an  empire  stretching 
from  Britain  via  the  most  strategic  waterway  in  the  Americas  to 
Beijing's  biggest  building  site.  Li  was  the  first  Chinese  to  take  over 
a  big  British  trading  company,  Hutchison  Whampoa.  His  other 
main  firm,  which  originated  with  the  plastics  business  he  set  up  in 


iio  Dealing  With  the  Dragon 

1950,  is  called  Cheung  Kong  after  the  Cantonese  words  for  a  long 
river. 

In  public,  Li,  who  looks  much  younger  than  his  seventy-one  years, 
strikes  a  graceful,  courteous  pose  in  keeping  with  his  status  in  the 
community.  He  makes  a  point  of  attending  ceremonies  and  funerals 
and  staying  to  the  end.  Though  he  has  a  garden  and  swimming  pool 
outside  his  seventieth-floor  office  on  top  of  a  tower  in  Central,  he  is 
not  ostentatious  about  his  wealth.  His  sleek  black  and  white  boat, 
Concordia  A,  is  relatively  modest  by  the  standards  of  the  Hong  Kong 
mega-rich,  though  the  bodyguards  are  very  much  in  evidence  -  for 
good  reasons,  as  we  will  see.  When  the  great  and  good  of  Hong  Kong 
gather  for  an  important  national  occasion,  he  lines  up  on  the  platform 
with  Tung  Chee-hwa,  Anson  Chan  and  the  director  of  the  Xinhua 
news  agency.  In  private,  he  is  intensely  focused  on  the  deal  at  hand, 
symbolised  by  his  purchase  of  a  controlling  stake  in  Hongkong  Electric 
back  in  1985  in  just  seventeen  hours,  including  eight  for  sleep. 

I  first  met  Li  in  the  autumn  of  1995  when  the  South  China  Morning 
Post  opened  its  new  printing  plant  in  the  New  Territories.  As  he  went 
to  make  his  speech,  the  chairman  of  the  newspaper,  Robert  Kuok, 
said:  'Look  after  my  friend  Mr  Li,  will  you,  Jonathan?'  There  stood  a 
slim,  immaculately  dressed  man  with  black-rimmed  spectacles  and  a 
friendly  smile. 

He  said  he  had  to  go  to  a  meeting  shortly,  but  wanted  to  do  Kuok 
the  courtesy  of  staying  and  listening  to  his  speech.  So  we  stood  on  a 
gallery  and  watched  the  proceedings.  At  one  point,  Li  sidled  through 
the  crowd  and  tried  to  use  a  telephone:  wasn't  the  owner  of  the 
Orange  network  carrying  a  mobile?  He  seemed  to  be  having  trouble, 
so  I  went  over  and  pressed  the  button  to  get  an  outside  call.  Li  smiled, 
dialled  and  spoke  briefly. 

As  the  speeches  finished,  Li  walked  off,  waving  to  me  to  stay 
behind.  But  he  was  heading  in  the  wrong  direction,  straight  on  for  the 
press  hall  where  printing  was  in  full  swing.  I  had  a  vision  of  Hong 
Kong's  best-known  businessman  wandering  out  on  to  a  gantry,  top- 
pling over  the  railings  and  being  chewed  up  with  the  next  day's  front 
page.  I  went  after  him,  and  guided  him  down  to  the  front  entrance 
and  into  his  Mercedes.  Do  you  want  to  go  back  to  Central?  he  asked. 


March  hi 

No,  I  said,  I  am  staying  for  dinner  (which  ended  with  another  noted 
local  property  tycoon  downing  a  glass  full  of  Scotch  in  one  go,  think- 
ing it  was  beer). 

A  while  later,  I  found  myself  walking  out  of  Government  House 
with  K.  S.  Li  after  a  dinner  for  John  Major  in  the  dying  days  of  colo- 
nialism. Again,  he  asked  me  if  I  wanted  a  lift  in  his  limousine.  My  red 
Honda  was  waiting  in  the  line  down  the  drive,  so  I  declined.  I  seem 
fated  to  become  the  man  who  always  turns  down  a  ride  with  Li  Ka- 
shing.  Other  offers  came  after  a  couple  o£  dinners,  and  once  at  the 
opening  of  the  new  airport  in  1998.  Maybe  I  have  lodged  in  Li's 
mind  as  a  earless  journalist. 

Despite  his  offers  of  a  lift,  the  Post  seems  to  have  fallen  foul  of  Li's 
empire,  though  we  have  not  suffered  in  the  same  way  as  a  press  group 
which  lost  advertising  from  his  companies  after  one  of  its  magazines 
ran  several  pages  of  photographs  of  the  tycoon  with  a  homely-look- 
ing woman  at  the  airport.  One  of  Li's  senior  executives  told  me 
outright  in  the  spring  of  1999  that  we  would  never  get  an  interview 
with  his  boss  because  the  Post  was  regarded  as  'unfriendly'.  A  little 
later,  Li  himself  spoke  of  critical  remarks  about  him  and  his  family's 
projects  in  the  'English-language  press'.  When  a  columnist  criticised 
the  group,  the  matter  was  taken  up  directly  with  the  paper's  chairman. 
Li's  lieutenants  say  they  cannot  understand  why  anybody  is  concerned 
about  his  influence.  'If  you  ever  want  to  get  anything  done  in  this 
town,  you  always  make  your  dispositions  in  advance,'  as  one  of  them 
put  it. 

23  March 

Anson  Chan  Fang  On-sang's  term  as  Chief  Secretary  of  the  SAR  is 
renewed  until  30  June  2002,  when  the  Chief  Executive's  term  also 
ends.  This  will  take  her  two  and  a  half  years  beyond  the  normal 
retirement  age  of  sixty.  She  and  Tung  appear  together  to  make  the 
announcement  today.  It  is  all  smiles  and  expressions  of  mutual  esteem. 
Tung  says  he  did  not  ask  for  Beijing's  approval  but  'informed'  the 
Central  Government  of  his  decision.  Answering  questions,  Chan  tells 
reporters  that  there  are  occasions  when  she  does  not  agree  with  Tung, 


ii2  Dealing  With  the   Dragon 

as  there  were  times  when  she  didn't  agree  with  Chris  Patten.  But  their 
relationship  is  'based  on  trust  and  frankness'. 

Chan  is  a  tough  administrator  with  a  flashing  dimpled  smile  who  is 
always  impeccably  dressed.  Married  to  a  former  senior  policeman,  she 
was  born  into  a  distinguished  Chinese  family  in  January  1940.  One  of 
her  forebears  was  a  leading  general.  Her  mother  is  a  well-known 
painter.  As  she  rose  through  the  civil  service,  she  ran  into  a  major 
controversy  over  a  five-year-old  girl  whom  Chan,  as  Director  of 
Social  Welfare,  ordered  to  be  taken  from  her  mother.  Social  workers 
broke  down  the  door  of  their  home  and  put  the  child  into  care.  The 
mother  was  placed  in  a  mental  ward. 

In  1993,  Chan  was  appointed  by  Chris  Patten  as  the  first  local 
Chief  Secretary.  Two  years  ago,  Tung's  decision  to  keep  her  in  her  job 
was  a  sine  qua  non  for  confidence  in  Hong  Kong.  She  has  been  the 
most  vital  single  element  in  the  administration  so  far,  regularly  push- 
ing the  two  systems  button  when  the  Chief  Executive  or  the  Secretary 
for  Justice  sounds  off  about  how  we  should  put  the  one  country  first. 
Although  a  natural  conservative,  she  shows  a  real  respect  for  democ- 
racy and  diversity  as  key  elements  in  Hong  Kong's  character.  A 
ferociously  hard  worker,  she  tops  popularity  polls  and  is  genuinely 
respected.  But  some  wonder  if  the  agreement  to  stay  on  means  she 
will  find  herself  following  the  Chief  Executive's  agenda  willy-nilly.  A 
couple  of  members  of  her  coterie  of  female  civil  servants  say  she  is 
finding  life  with  Tung  and  his  proteges  increasingly  difficult.  'We  all 
know  how  the  power  is  flowing,'  says  one.  But  there  is  talk  that  she 
harbours  hopes  of  succeeding  him,  and  so  will  grow  less  ready  to 
make  waves. 

Chan  would  have  been  the  best  choice  for  Chief  Executive  in 
1997.  But  she  didn't  get  anywhere  near  the  starting  gate  at  the  time, 
if  only  because  of  her  links  with  the  British  and  her  loyalty  to 
Patten.  Beijing  is  said  to  think  well  of  her  as  a  firm  manager  who  has 
the  keys  to  the  Rolls-Royce  government  machine.  Loyalty,  even  if 
it  was  to  the  last  Governor,  is  a  quality  much  prized  in  China. 
Beside  the  slow-moving,  indecisive  Tung,  she  cuts  a  brisk  and  reas- 
suringly businesslike  figure.  Or  is  this  all  just  a  story  that  is  being 
spread  in  an  attempt  to  fan  her  ambition  and  to  ensure  that  she  keeps 


March  113 

in  line  in  the  hope  of  future  advancement?  As  for  her  own  approach 
to  life,  Chan  says,  'The  most  important  thing  is  that  you  keep  an 
optimistic  attitude  and  do  not  make  a  fuss  about  little  things.'  She 
has  taken  to  exercising  in  her  office,  and  relaxes  with  an  occasional 
turn  on  the  ballroom  floor  -  her  twin  sister  used  to  run  a  dancing 
school.  But  a  week  after  the  announcement  that  she  was  staying  on, 
she  collapses  as  she  leaves  the  Legislative  Council  chamber  after 
delivering  her  speech  in  the  Budget  debate.  She  has  to  be  taken  out 
of  the  building  in  a  wheelchair,  and  driven  to  hospital  where  the 
Chief  Executive  and  other  government  officials  visit  her.  A  doctor 
says  she  is  suffering  from  Meniere's  syndrome,  an  imbalance  of  fluid 
in  the  middle  ear  that  causes  dizziness,  hearing  loss  and  nausea.  She 
will  be  up  and  back  to  work  in  a  week's  time.  But  it  is  a  reminder  of 
the  mortality  of  the  pillar  of  the  administration,  who  looks  pretty 
much  irreplaceable. 

28-29  March 

Hong  Kong  is  not  the  only  European  colony  to  return  to  China  as  the 
millennium  looms.  Today  we  cross  to  Macau  for  the  night,  a  hover- 
craft ride  past  the  islands  in  the  bay,  across  the  mouth  of  the  Pearl 
River  delta  and  under  a  huge  bridge  to  the  landing  stage  of  Europe's 
oldest  possession  on  the  Asian  mainland.  Deng  Xiaoping  dreamed  of 
all  China  being  reunited  by  the  end  of  the  century.  Taiwan  is  still  far 
from  returning  to  the  fold.  But  on  the  night  of  19—20  December, 
Beijing  will  recover  the  smallest  of  its  lost  lands,  with  410,000  people 
in  19.3  square  kilometres,  as  the  Portuguese  fly  home  for  Christmas 
for  the  last  time. 

Macau  used  to  be  known  as  a  haven  from  the  modern  world,  a 
place  dotted  with  casinos  and  Portuguese  restaurants  under  a  sleepy 
administration,  set  on  a  somewhat  seedy  course  of  decline.  Errol 
Flynn  tried  to  introduce  cock-fighting  in  the  1930s,  and  Portugal's 
neutral  status  in  the  Second  World  War  made  the  enclave  a 
Casablanca-like  refuge  from  the  all-conquering  Japanese.  More 
recently,  there  have  been  recurrent  rumours  of  money  being  funnelled 
back  secretly  from  Macau  to  fund  the  Socialist  Party  in  Portugal:  a 


ii4  Di-Ai.iNc;  Wnn  the  Dragon 

local  newspaper  is  launching  a  signature  campaign  for  an  investigation 
into  the  allegations. 

I  first  came  here  from  Vietnam  in  1965,  and  stayed  at  a  dowdy, 
shabby  hotel  where  I  drank  vinho  verde  on  the  balcony  and  was  eaten 
alive  by  mosquitoes  before  spending  the  night  playing  blackjack  at  a 
floating  casino:  I  seem  to  remember  getting  out  just  about  even.  In 
those  days,  the  64-kilometre  crossing  took  several  hours  by  ferry  boat. 
Now,  there  is  Cantopop  on  the  screens  above  our  heads  in  the  jetfoil, 
and  Macau  is  just  forty-five  minutes  away  from  Hong  Kong.  There 
are  tower  blocks  on  the  waterfront  and  on  the  adjoining  island  of 
Taipa.  But  the  casinos  and  the  decaying  colonial  atmosphere  still  give 
the  place  a  special  character. 

When  we  first  arrived  in  Hong  Kong  in  1995,  we  left  our  super- 
efficient  hotel  one  weekend  to  spend  a  couple  of  days  in  one  of 
Macau's  superior  establishments.  In  our  room  overlooking  the  har- 
bour, the  television  didn't  work;  the  wash  basin  was  cracked;  the 
headboard  threatened  to  tip  over  on  to  us,  and  it  took  so  long  to 
check  out  that  we  missed  the  hovercraft  back.  Welcome  to  southern 
Europe,  we  said  as  we  waited  to  zip  back  to  modernity  in  Hong 
Kong.  But  the  atmosphere  was  mellow,  the  food  was  excellent  and  I 
found  my  favourite  barber's  shop  in  Asia  at  the  back  of  the  main 
square.  We  walked  among  the  once-grand  ochre  buildings,  through 
the  shaded  parks  and  along  Shrimp  Paste  Alley,  Knife's  Lane,  Pig's 
Lane  and  Straw  Street.  We  admired  the  facade  of  the  burned-out 
cathedral  and  climbed  to  the  Portuguese  fort  on  the  hill  above  the 
church  with  its  old  cannons  pointing  out  to  repel  any  invaders.  We  ate 
Portuguese  pastries  and  bought  anti-itching  powder  in  an  old  phar- 
macy. 'A  weed  from  Catholic  Europe,'  wrote  Auden.  'Nothing  serious 
can  happen  here.' 

The  Portuguese  arrived  in  1513,  and  formally  took  charge  of  the 
place  in  1557.  The  Dutch  tried  to  invade,  but  fled  after  a  cannonball 
fired  by  a  priest  hit  a  barrel  of  gunpowder  in  their  midst  and  caused 
havoc.  The  Jesuits  established  the  first  Western-style  university  in 
Asia,  the  College  of  the  Mother  of  God,  in  1594.  Their  great  church 
of  St  Paul's,  with  its  Chapel  of  the  Eleven  Thousand  virgins,  was 
consecrated  in  1623.  Francis  Xavier  died  here,  after  failing  to  get  into 


March  115 

China.  The  diocese  of  Macau  stretched  across  China,  Japan  and 
Korea,  and  down  to  Timor  and  Malacca. 

As  a  trading  centre,  Macau  dealt  in  spices,  silk,  pepper,  cloves, 
silver,  sandalwood,  tea,  ginger,  nutmeg  and  plates  -  the  fine  new 
museum  up  the  hill  from  St  Paul's  contains  a  porcelain  bidet  from 
Canton,  reminding  one  of  where  china  got  its  name  from.  The 
Portuguese  settlers  also  prospered  from  taking  silks  and  porcelain  to 
Japan  and  returning  with  silver  which  they  sold  to  China  at  highly 
advantageous  rates.  A  foundry  set  up  in  1625  was  so  good  that  it 
received  orders  for  cannons  and  bells  from  Europe.  Later,  Macau 
became  famous  for  its  fireworks,  with  names  like  Roaring  Lion, 
Camel,  Elephant,  Polar  Bear,  Black  Hawk  Extra  Loud  Firecrackers  - 
and  the  ne  plus  ultra  Supercharged  Flash  Firecrackers  Super  Zoo 
Brand.  Matches  were  also  a  big  industry.  But  both  had  died  out  by  the 
early  1960s,  and  the  place  became  a  backwater,  with  its  pink  and 
white  government  buildings,  its  decaying  colonial  houses,  its 
Portuguese  restaurants,  its  Buddhist  monastery  with  a  vegetarian  can- 
teen, and  its  many  ornate  churches. 

For  some,  Macau  means  the  annual  Grand  Prix  motor  race  run 
through  the  winding  city  streets.  For  others,  the  magnet  is  Fernando  s 
restaurant  in  a  bare  brick  edifice  behind  the  black  sand  beach  on  the 
island  of  Coloanne,  where  the  prehistoric  inhabitants  of  Macau  lived. 
Fernando 's  serves  enormous  portions  of  grilled,  garlicky  food  from 
Portugal  and  its  other  former  possessions:  the  chicken  comes  from 
Brazil,  the  sardines  from  the  home  country.  The  other  island,  Taipa, 
has  an  ornate  church  on  a  hill,  and  a  restored  colonial  residence  below 
that  reflects  a  strait-laced  life  many  thousand  miles  from  home.  In  the 
city  on  the  mainland,  the  Club  Militar  has  been  given  a  facelift,  and 
outsiders  can  rub  elbows  with  the  colonial  elite  in  its  stylish  dining 
room.  Reclamation  and  development  have  ruined  the  gracious  old 
waterfront,  but  there  are  still  the  small  pastelaria  round  the  main  square 
in  the  middle  of  the  old  town,  and  the  beautiful  lines  of  the  churches 
and  the  nearby  Senate  building. 

At  the  back  of  the  square  lies  the  Shanghai  Barberia,  with  its 
revolving  red,  white  and  blue  pole,  old  reclining  chairs  in  faded  imi- 
tation leather  and  equally  aged  attendants,  one  with  a  huge  powder 


i  i ()  Dealing   With  the    Dragon 

puff  of  white  hair  who  cuts  my  thin  topping  strand  by  strand  this 
afternoon  with  all  the  attention  of  a  brain  surgeon.  Inexplicably,  the 
bibs  they  put  round  customers'  necks  used  to  be  printed  with  a  map 
of  the  Arctic;  equally  inexplicably,  they  have  been  replaced  with  bibs 
bearing  advertisements  in  French  and  Japanese  for  a  cafe  in  Tokyo 
called  Bananas,  which  offers  'a  meeting  of  European  and  Japanese 
cakes'.  On  the  television  set  installed  on  the  wall  above  my  chair,  a 
noisy  Hong  Kong  gangster  film  is  showing  a  fight  in  a  warehouse.  A 
man  with  a  blowtorch  confronts  a  man  with  a  revolver.  The  blow- 
torch melts  the  revolver  barrel,  which  bends  downwards.  The  gunman 
abandons  the  pistol  on  top  of  a  packing  case.  Another  man  picks  it  up, 
not  noticing  the  state  of  the  barrel.  A  minute  later  he  points  the  gun 
at  an  adversary  and  fires,  literally  shooting  himself  in  the  foot.  I  laugh. 
The  puftDall  barber  holds  his  scissors  aloft  for  a  moment  and  then  goes 
on  cutting  my  hairs  one  by  one.  The  cost  is  one-fifth  of  what  you'd 
pay  in  Hong  Kong. 

We  are  here  this  weekend  for  the  closing  of  a  Macau  monument, 
the  Bela  Vista.  Launched  as  a  hotel  by  an  English  boat  captain  at  the 
end  of  the  nineteenth  century,  it  has  served  many  purposes  over  the 
years,  but  has  recently  been  a  small  jewel  of  a  place  on  a  hill,  run  by 
a  Hong  Kong  company,  with  its  elegantly  furnished  bedrooms,  its 
cool  dining  room,  its  terrace  overlooking  the  harbour  and  its  none 
too  distinguished  food.  Now  it  is  to  close  as  a  hotel  in  order  to 
become  the  residence  of  the  Portuguese  consul  to  China's  last  re- 
acquisition  of  the  twentieth  century.  On  this  Saturday  night,  the 
superb  bedrooms  are  thrown  open  as  though  the  Bela  Vista  was  just 
opening  and  soliciting  guests.  There  is  a  sumptuous  buffet  and  a  big 
band  that  plays  show  tunes  and  a  bit  of  swing  before  launching  into  a 
Latin  American  medley.  As  the  strains  of  the  tango  and  paso  doble  waft 
out  towards  the  sea,  a  Chinese  couple  take  the  floor.  They  perform 
perfectly,  each  movement  synchronised  on  best  dance-school  lines. 
They  know  how  good  they  are,  pausing  to  look  at  the  spectators  and 
elicit  applause.  They  could  have  danced  all  night,  for  sure,  but  at 
2  a.m.  it  is  time  to  wander  down  the  hill  to  the  Mandarin  hotel  and 
casino,  where  the  punters  are  heading  for  the  VIP  room  and  a  couple 
of  heavy-looking  fellows  are  keeping  watch  outside. 


March  117 

For,  despite  all  its  legacies  from  a  past  that  set  Macau  apart  from  the 
pace  and  prosperity  of  Hong  Kong,  one  industry  dominates. 
Gambling  is  the  lifeblood  of  this  place,  and  the  bloodstream  is  far  from 
pure. 

Macau's  gaming  tradition  reaches  back  for  more  than  a  century, 
boosted  in  1872  by  the  ban  on  gambling  in  Hong  Kong  except  for  the 
horses  and  a  few  mahjong  parlours  (and,  more  recently,  a  weekly  lot- 
tery). The  Portuguese  started  taxing  gambling  in  the  1850s.  They 
used  the  money  not  only  to  cover  local  expenditure,  but  also  to 
finance  the  colony  of  East  Timor,  which  was  administered  from 
Macau.  A  monopoly  casino  franchise  was  instituted  in  1937,  and  was 
held  for  many  years  by  a  Hong  Kong  Chinese  family,  some  of  whose 
members  live  in  the  same  apartment  block  as  us.  In  1962,  the  family 
dropped  out  (one  story  has  it  that  they  netted  US$350  million  for 
giving  up  the  franchise).  They  were  succeeded  by  a  company  which 
may  be  regarded  as  the  real  master  of  present-day  Macau. 

The  Sociedade  de  Turismo  e  Diversoes  de  Macau  (STDM)  is 
headed  by  the  dapper  Stanley  Ho,  a  member  of  a  celebrated  family 
which  rose  to  fame  and  fortune  as  compradors,  or  local  go-betweens, 
for  Jardine's,  the  Hongkong  and  Shanghai  Bank  and  other  big  ex- 
patriate firms.  There  were  five  brothers  Ho,  and  they  speculated 
jointly  in  shares  and  went  badly  wrong  when  Jardine's  stock  slumped  - 
two  of  the  brothers  committed  suicide.  Stanley,  who  likes  to  be 
referred  to  as  'Dr  Ho'  for  his  honorary  doctorate  from  the  Macau 
University  of  East  Asia,  is  also  head  of  the  property-owners'  associa- 
tion in  Hong  Kong,  where  his  Shun  Tak  company  owns  three  big 
sites.  In  Macau,  he  was  originally  associated  with  a  tycoon  called  Yip 
Hon  whom  he  described  at  his  funeral  as  the  'God  of  Gambling'. 
Now  it  is  Ho  who  is  the  gambling  king  of  the  enclave.  Indeed,  given 
the  STDM's  position  in  the  place,  you  might  say  that  he  is  the  real 
governor  of  Macau. 

The  casino  takings  account  for  a  quarter  of  the  territory's  gross 
domestic  product,  and  provide  billions  of  dollars  in  taxes,  even  if  the 
government's  revenue  fell  by  13  per  cent  in  1999  due  to  the  Asian 
recession.  Five  per  cent  of  the  workforce  is  directly  employed  by  the 
casinos;  many  more  depend  on  the  tourists  gambling  attracts.  Dr  Ho's 


1 1 8  Dealing  With  the   Dragon 

company  has  its  own  bank  and  a  fleet  of  thirty-two  high-speed  ferries. 
It  built  the  garish  Hotel  Lisboa,  with  its  golden  cupolas,  industrial 
gaming  areas  for  the  ordinary  punters  and  carefully  protected  VIP 
rooms  on  the  upper  floors  for  the  high  rollers.  It  runs  horse  and 
greyhound  racing.  It  recently  completed  a  major  development  project 
of  roads  and  new  buildings  round  the  main  waterfront.  The  French 
may  know  Macau  as  ll'enfer  dujeu,  but,  for  the  territory's  people,  the 
roulette,  blackjack  and  fan-tan  tables  are  more  of  a  source  of  deliver- 
ance from  an  economy  that  would  otherwise  have  even  less  to  offer 
since  trade  and  manufacture  moved  elsewhere. 

The  STDM  has  also  tested  the  gambling  waters  in  Vietnam  and 
opened  the  first  casino  in  the  North  Korean  capital  of  Pyongyang. 
The  minimum  bet  there  is  US$10,  or  half  a  week's  earnings  for  a  local 
worker.  Not  that  locals  are  allowed  into  the  establishment,  which  has 
cost  some  US$30  million.  It  is  part  of  a  wider  attempt  by  Macau  to 
forge  links  with  Pyongyang.  North  Korea's  airline  is  due  to  run  a 
weekly  service  to  the  Portuguese  colony.  Unfortunately,  the  flights 
will  only  go  once  a  month  due  to  limited  demand. 

The  company  invited  100  guests  from  Macau  and  Hong  Kong  to 
the  opening  of  the  Pyongyang  casino  in  1999.  Among  them  was  a 
flamboyant  figure  from  the  SAR,  Albert  Yeung  Sau-shing,  chairman 
of  a  conglomerate  called  the  Emperor  Group.  The  President  of  the 
Legislative  Council,  Rita  Fan,  worked  for  two  years  as  the  group's 
general  manager.  Yeung  was  the  man  mentioned  earlier  who  was 
freed  after  a  string  of  witnesses  lost  their  memories  when  called  to 
give  evidence  against  him.  In  the  course  of  his  career,  he  has  been 
jailed  for  attempting  to  pervert  the  course  of  justice,  banned  from 
being  a  director  of  a  listed  company  because  of  insider  trading,  and 
fined  for  illegal  bookmaking.  Now  he  is  launching  North  Korea's 
second  casino  in  a  US$180  million  hotel  complex  in  a  trade  zone  on 
the  border  with  China  and  Russia. 

The  future  of  the  casino  franchise  after  Macau's  return  to  China  has 
not  been  settled,  but  the  STDM  holds  it  until  2001.  The  territory's 
Basic  Law  contains  an  explicit  provision  that  its  government  may 
'define  its  own  policies  on  the  tourism  and  amusement  sector'  —just  in 
case  any  officials  in  Beijing  were  tempted  to  meddle  with  the  principal 


March  119 

source  of  amusement.  Dr  Ho  is  sure  to  play  the  game  with  all  the  skill 
bred  from  a  lifetime  of  experience  as  a  high-level  go-between. 

Born  in  192 1,  he  has  a  house  in  Hong  Kong  with  James  Bond- 
style  protection  gadgets.  A  big  philanthropist,  he  is  vice-president  of 
the  local  Girl  Guides.  A  pledge  to  contribute  large  sums  of  money 
to  the  Franklin  Roosevelt  Memorial  campaign  got  him  coffee  with 
Bill  Clinton  at  the  White  House.  When  a  Hong  Kong  newspaper 
asked  its  readers  who  they  would  most  like  to  be,  Ho  came  second 
to  the  mega-tycoon  Li  Ka-shing.  Ho's  cash,  women  and  good  looks 
were  seen  as  his  most  attractive  qualities.  With  his  slicked-back 
black  hair  and  elegant  frame,  he  looks  the  part  of  the  superb  ball- 
room dancer  he  is.  A  couple  of  years  ago,  he  won  two  business-class 
return  tickets  to  Paris  in  the  lucky  draw  at  a  French  Chamber  of 
Commerce  gala  dinner.  The  other  guests  wondered  what  Stanley 
would  want  with  mere  business  class  when  he  has  his  own  US$18 
million  private  jet,  named  after  his  mother,  Florinda,  on  which  he 
likes  to  watch  videos  and  catch  up  on  sleep  as  he  spends  400  hours 
a  year  in  the  air. 

After  the  share  slump  in  the  1930s  and  the  suicide  of  two  of  his 
brothers,  Ho's  father  fled  to  Saigon.  'I  was  so  broke,  dead  broke,' 
Stanley  recalls.  He  worked  his  way  through  a  scholarship  education  at 
the  University  of  Hong  Kong,  and  then  moved  to  Macau  when  the 
Japanese  occupied  the  British  colony.  As  a  possession  of  Axis-friendly 
Portugal,  Macau  was  left  alone.  Ho  made  his  first  small  fortune  deal- 
ing in  rice,  beans  and  kerosene.  Back  in  Hong  Kong  after  the  end  of 
hostilities,  he  earned  a  much  bigger  fortune  from  real  estate  and  trad- 
ing. A  report  commissioned  by  the  government  into  a  big  takeover 
which  was  kept  secret  for  years  found  that  one  of  his  close  associates 
funded  the  purchase  of  three  properties  in  New  York  with  money 
borrowed  from  the  STDM  by  cashing  gambling  chips  from  a  room  at 
the  Lisboa  casino. 

In  his  home  on  the  south  side  of  Hong  Kong  Island,  Ho  has  a  col- 
lection of  multi-carat  jewelled  objects  bought  from  the  best  Western 
suppliers.  On  his  office  sideboard,  there  sits  a  golden  beast  studded 
with  diamonds  and  emeralds  for  eyes.  He  buys  a  new  animal  each 
year.  Last  year,  it  was  a  tiger.  A  week  ago  it  was  reported  that  his 


120  Dealing  Wiiii   rHE   Drac.on 

fourth  wife,  Angela,  was  expecting  his  sixteenth  child  -  she  has 
already  had  three  sons  and  a  daughter.  Asked  about  Viagra,  Ho  was 
reported  to  have  replied,  'I  have  absolutely  no  need  for  such  things.' 

The  good  doctor  holds  a  20  per  cent  stake  in  STDM.  Behind  him 
stands  the  formidable  figure  of  Henry  Fok  Ying-yung,  a  long-time 
China  power-broker  who  has  risen  from  a  childhood  on  a  junk  to 
great  wealth  and  a  vice-chairmanship  of  the  Chinese  People's  Political 
Consultative  Congress.  After  the  Second  World  War,  Fok  built  up  a 
shipping  business,  and  smuggled  embargoed  goods  into  the  mainland 
during  the  Korean  War;  the  grateful  Chinese  government  later 
granted  him  a  sand  monopoly.  Known,  as  a  result,  as  'the  Sandman', 
Fok  found  that  his  China  connections  earned  him  a  bad  name  with 
the  British  authorities,  which  was  one  reason  he  turned  his  attentions 
to  Macau  and  southern  China. 

Slight  and  small-eyed,  with  his  skin  drawn  tightly  over  his  skull,  he 
built  China's  first  luxury  hotel,  the  White  Swan  in  Guangzhou,  which 
still  hands  guests  postcards  of  Queen  Elizabeth's  stay  there.  He  also 
organised  the  China-backed  US$120  million  loan  that  bailed  out  the 
family  shipping  firm  of  Tung  Chee-hwa  when  it  ran  into  financial  dif- 
ficulties. Long  a  critic  of  the  British  -  'I  feel  more  free,'  he  said  at  the 
handover  -  Fok  is  believed  to  have  played  a  role  in  the  subsequent  ele- 
vation of  the  Chief  Executive.  To  be  sure,  when  people  speak  of  Stanley 
Ho,  they  do  so  with  proper  respect.  But  Henry  Fok  counts  for  even 
more,  even  if  the  degree  of  his  current  involvement  in  Macau  is  opaque. 

Gambling  is  'a  very  special  kind  of  business',  as  Stanley  Ho  told 
Greg  Torode  of  the  South  China  Morning  Post  in  an  interview  in  1998. 
'It  is  not  good  publicity  to  tell  the  world  how  much  money  we  make,' 
he  added.  'It  might  scare  away  our  big  clients.  My  God,  I  have  been 
a  sucker  contributing  so  much,  they  might  say.  You  need  confiden- 
tiality very  much,  so  you  really  need  your  own  people.' 

Ho's  'own  people'  have  been  none  too  fortunate.  His  first  wife, 
Clementina,  was  seriously  injured  in  a  road  accident  in  Portugal  in 
1972,  and  now  lives  in  seclusion  in  a  house  in  Macau  on  the  ridge 
overlooking  the  strip  of  water  that  separates  the  colony  from  the 
mainland.  His  eldest  son,  Robert,  died  with  his  wife  in  another  car 
crash  in  198 1.  His  right-hand  man,  Thomas  Chung  Wah-tin,  bled  to 


March  121 

death  in  minutes  after  being  slashed  on  his  arms  and  legs  on  his  way 
to  a  tennis  game  in  the  Mid-Levels  district  of  Hong  Kong  in  1986:  the 
crime  remains  unsolved.  In  1992  a  US  Senate  Committee  hearing 
alleged  links  with  associates  involved  in  organised  crime.  In  1993 
police  raided  Ho's  Hong  Kong  mansion  during  investigations  into  the 
empire  of  the  Australian  businessman,  Alan  Bond.  'As  we  say  in 
Chinese,  real  gold  is  not  afraid  of  the  fire  of  the  furnace,'  Ho  said.  'I 
have  done  nothing  wrong.  I  am  very  happy  with  what  I  am  .  .  .  No 
regrets,  no  regrets.' 

He  says  he  is  not  worried  about  the  Triads  fighting  and  killing  one 
another,  even  if  it  does  give  Macau  a  bad  name.  'At  most,  there  might 
be  a  few  dozen  people  killed,'  Ho  told  reporters  on  a  visit  to  Beijing 
earlier  this  month.  'It's  none  of  our  business.'  What  really  worries  him 
and  other  big  businessmen  in  Macau  is  the  threat  of  being  kidnapped. 
There  has  been  a  series  of  unreported  abductions,  he  says,  with  the  vic- 
tims not  informing  the  police  for  fear  of  reprisals.  Ho  insists  he  does  not 
know  a  single  Triad  member.  'I  don't  need  them  and  I  don't  like  them.' 

No  doubt.  But,  as  a  Macau  police  cliche  has  it,  as  light  attracts  mos- 
quitoes so  casinos  attract  criminals.  Elsewhere,  it  is  the  Mafia;  in  this 
part  of  the  world  it  is  the  Triads.  Ho's  company  says  it  keeps  a  firm 
grip  on  its  own  operations.  As  for  corruption,  he  once  remarked: 
'The  whole  world  is  corrupt.  It's  only  a  matter  of  degree.' 

The  practice  of  leasing  out  rooms  at  the  casinos  where  high-stakes 
games  are  played  is  an  obvious  magnet  for  the  criminals,  as  is  the  traf- 
fic in  gambling  chips  and  the  pickings  from  prostitution  and 
protection  rackets.  There  are  also  the  high  rollers  who  fly  in  and 
want  to  be  entertained,  and  the  losers  who  need  to  borrow  money  for 
that  elusive  big  hit.  Traditionally,  the  big  gamblers  have  come  from 
Hong  Kong  and  Taiwan,  but  some  are  now  arriving  from  the  main- 
land, like  the  deputy  mayor  of  a  big  city  who  has  been  accused  of 
gambling  away  the  equivalent  of  £2.5  million  from  municipal  funds 
when  he  was  meant  to  be  attending  a  study  course  at  the  Central 
Party  School  in  Beijing. 

Loan-sharking  is  a  favoured  Triad  activity,  and  one  that  fits  in 
neatly  with  gambling.  Freelance  dealers  in  casino  chips  offer  them  on 
credit  at  extortionate  daily  interest  rates.  In  one  terrible  case,  a  Hong 


122  Dealing  Wiih  the   Dragon 

Kong  woman  went  across  to  Macau  while  her  husband  was  away 
sweeping  the  graves  of  his  ancestors  on  the  mainland  during  the 
season  of  family  mourning.  She  lost  all  their  savings.  She  borrowed 
money  from  loan  sharks.  She  lost  that,  too.  She  went  home  and  tried 
to  kiU  herself  and  her  children  with  gas,  rat  poison  and,  eventually,  by 
slitting  their  veins.  The  father  returned  to  a  scene  of  carnage.  His  wife 
was  taken  to  court  and  sentenced  to  jail  -  she  had  to  be  put  in  a  spe- 
cially protected  area  of  the  prison  because  the  Triad  loan  sharks  were 
still  after  her  for  their  money. 

Prostitution  is  another  underworld  mainstay.  Smart  hotel  lobbies 
have  their  contingent  of  elegantly  turned-out  Russian  tarts.  In  less 
plush  establishments,  saunas,  nightclubs  and  on  the  streets,  the  young 
women  are  from  the  mainland,  several  thousand  of  them.  They  turn 
tricks  for  a  couple  of  hundred  local  dollars,  and  give  most  of  their 
money  to  pimps  who  provide  them  with  hotel  rooms.  Many  send 
much  of  their  remaining  earnings  to  their  families,  telling  their  parents 
they  have  jobs  as  waitresses  or  shop  assistants. 

When  times  were  good  in  Macau  and  there  was  enough  loot  to 
keep  everybody  happy,  each  Triad  gang  kept  to  its  own  turf.  Now  the 
Asian  economic  crisis  means  that  less  money  is  being  spent  on  gam- 
bling, and  the  hoods  are  at  one  another's  throats  for  what  there  is.  In 
a  series  of  gangland  killings,  underworld  figures  have  been  shot  or 
chopped  to  death.  The  last  Portuguese  Governor  describes  the  cur- 
rent violence  as  'unprecedented'.  Nobody  seems  safe.  A  senior 
gambling  inspector  was  shot  dead  and  one  of  his  superiors  wounded 
twice  in  the  head.  A  government  prosecutor  involved  in  fighting  the 
Triads  and  casino  crime  was  shot  and  wounded  in  the  chest  by  two 
men  on  a  motorcycle  who  also  hit  his  pregnant  wife  in  the  hip. 
Journalists  have  been  warned  that  if  they  write  about  the  main  Triad 
gang,  'bullets  will  have  no  eyes  and  knives  and  bullets  will  have  no 
feelings'.  In  one  incident,  three  men  in  a  green  van  tried  to  kidnap  the 
grandson  of  Stanley  Ho's  late  partner,  the  God  of  Gambling,  shooting 
him  in  the  stomach  before  he  forced  them  to  flee  by  returning  fire. 
Though  the  numbers  are,  by  their  nature,  unverifiable,  Triads  may 
outnumber  the  4,300  members  of  the  police  and  security  forces. 

They  are  used  to  moving  with  relative  impunity  across  the  border 


March  123 

with  Guangdong  province,  but  now  police  have  pulled  in  622  alleged 
Triads  in  a  three-day  operation.  Half  the  inmates  of  Macau  jails  come 
from  outside  the  colony.  A  leading  local  gang  boss  celebrated  for  his 
crime  wave  on  both  sides  of  Macau's  border  with  Guangdong  hails 
from  Hong  Kong.  Some  of  the  other  hoods  come  from  Taiwan,  or 
from  the  mainland. 

The  threat  from  foreign  mobsters  is  such  that  four  local  Triad 
bosses  are  said  to  have  hatched  a  plan  to  unite  their  gangs  to  fight  the 
interlopers.  Before  that  could  happen,  the  most  prominent  of  the 
locals,  a  45-year-old  known  as  Broken  Tooth,  was  arrested  in  the 
Lisboa  Hotel  after  a  bomb  was  set  off  under  the  car  of  the  head  of  the 
Judicial  Police  while  he  was  out  jogging.  Broken  Tooth,  whose  real 
name  is  Wan  Kuok-koi,  has  not  been  accused  of  that  bombing,  but 
rather  of  being  the  head  of  the  much-feared  14K  Triad  gang,  com- 
manding associates  known  as  Smuggling  Queen,  Fat  Woman,  Big 
Sister,  Terrible  Ghost,  Scarface  and  Fishmonger.  The  head  of  the 
Judicial  Police  says  that  14K  carried  out  a  string  of  attacks  on  officials 
and  underworld  murders  including  the  sensational  killing  of  a  Hong 
Kong  Triad  boss  known  as  the  'Tiger  of  Wanchai'  during  the  1993 
Macau  Grand  Prix  motor  race.  In  another  incident,  three  of  Wan's 
leading  lieutenants  were  shot  in  the  street  in  1997. 

Wan,  who  has  been  described  as  a  psychopath,  is  thought  to  have 
believed  that  he  could  shoot  and  bomb  his  way  to  control  of  the  Macau 
underworld.  Starting  out  as  a  seller  of  chicken  wings,  he  ended  up  with 
more  than  twenty  bank  accounts  and  a  string  of  properties,  including  a 
nightclub  called  Heavy  Di  with  a  large  swastika  and  a  skull  and  cross- 
bones  on  its  facade.  A  visitor  recalls  seeing  a  life-sized  mannequin  in  a 
police  uniform  hanging  from  the  ceiling  at  the  end  of  a  noose.  Broken 
Tooth  lost  the  use  of  two  fingers  in  a  chopper  attack  and  has  been  shot 
twice.  An  inveterate  high-stakes  punter,  he  was  once  caught  on  security 
camera  footage  jumping  on  to  a  gambling  table  and  flinging  chairs 
round  the  room  after  he  had  suffered  a  bad  streak. 

In  a  crazy  act  of  self-glorification,  he  produced  a  film  called  Casino, 
studded  with  incriminating  depictions  of  violence  and  soft  porn 
scenes.  He  was  watching  a  documentary  about  himself  when  he  was 
picked  up.  He  denies  being  anything  more  than  a  businessman  and 


124  Dealing  With  the   Dragon 

high-stakes  gambler,  and  says  his  fortune  is  based  on  a  big  win  at  the 
Lisboa  casino.  Still,  Wan  has  been  charged  with  weapons  trafficking, 
illegal  gambling,  loan-sharking,  blackmail,  unlawful  detention  and 
possession  of  fake  identity  documents,  as  well  as  being  a  member  of 
the  illegal  14K  Triad  organisation.  At  his  home,  police  found  a  scan- 
ner which  could  have  been  used  to  listen  in  to  their  radio 
wavelengths:  Wan  says  it  was  a  gift  from  'a  fat  woman  who  died  in  a 
shipwreck  in  China'.  A  former  Portuguese  gambling  inspector  who 
was  shot  twice  in  the  head  by  two  motorcycle  gunmen  in  1996  says 
Wan  told  him  the  14K  was  'my  group'.  The  gang  is  alleged  to  have 
gone  to  China  and  Vietnam  to  hire  killers  to  carry  out  revenge  mur- 
ders in  Macau  in  the  mid-1990s.  Police  reports  say  Broken  Tooth  had 
planned  to  establish  a  weapons  factory  in  Cambodia  and  to  buy  tanks, 
missiles  and  rockets  from  arms  dealers. 

The  main  prison  where  he  was  first  held  is  described  as  being  out 
of  control.  Although  there  is  one  guard  for  every  three  prisoners, 
Triads  rule  the  roost  behind  the  twenty-foot  walls.  Wan  is  said  to  have 
run  his  gang  from  inside  the  jail  by  mobile  telephone,  and  to  have 
held  all-night  parties  with  drink  and  drugs.  When  he  and  eight  other 
men  were  moved  to  a  special  high-security  unit  nearby,  300  police 
guarded  them.  The  Judicial  Police  director  says  Broken  Tooth  pro- 
vided another  prisoner  with  Ecstasy  pills  during  his  birthday  party 
earlier  in  the  year:  the  man  overdosed  and  died.  The  judge  who  was 
originally  to  have  heard  his  case  has  decided  to  take  retirement.  A  sub- 
stitute has  been  sent  from  Portugal;  he  is  rarely  seen  without  a 
bodyguard.  New  prison  guards  have  also  been  drafted  in  from  Europe. 
Their  families  have  stayed  behind  -  it's  safer  that  way. 

The  Broken  Tooth  case  apart,  the  future  of  Macau's  legal  system  is 
murky.  Very  few  Chinese  understand  it.  Many  judges  are  new 
appointments.  Most  of  the  senior  policemen  will  be  going  back  to 
Europe.  No  wonder  that  officials  in  Beijing  roll  their  eyes  when  the 
matter  of  law  and  order  in  the  Portuguese  colony  is  raised.  Stanley  Ho 
once  suggested  that  Hong  Kong  might  take  responsibility  for  such 
matters  after  the  handover  in  December. 

That  will  not  happen.  On  the  other  hand,  if  the  Triads  keep  up 
their  present  level  of  activity,  the  Chinese  army  garrison  in  Macau 


March  125 

might  find  itself  as  the  ultimate  arbiter  of  public  security.  They  may 
not  be  on  the  streets  in  Hong  Kong,  but  what  price  a  PLA  detach- 
ment fighting  crime  in  Macau?  Would  a  savvy  Triad  then  claim 
democratic  credentials  and  become  a  political  martyr?  Stranger  things 
have  happened. 

From  20  December,  this  will  be  a  problem  for  the  new  Chief 
Executive  of  Macau,  a  well-connected  banker  called  Edmund  Ho 
who  has  adopted  the  hopeful  slogan  'advancing  from  adversity  to 
opportunity'.  Ho  should  have  a  much  smoother  political  passage  than 
his  counterpart  in  Hong  Kong.  Portugal  was  ready  to  hand  back 
Macau  after  its  own  revolution  in  1974,  particularly  when  local  leftists 
flexed  their  muscles  during  the  Cultural  Revolution.  But  Beijing  had 
other  things  on  its  mind,  and  didn't  want  Macau  just  then.  So  the 
Portuguese  took  the  line  that  Macau  was  Chinese  territory  being 
administered  by  Europeans  for  the  time  being. 

This  meant  that  though  the  Governor  has  formally  ruled  from  his 
pink  palace,  virtually  nothing  was  done  that  would  not  find  favour 
with  the  mainland  authorities.  China's  influence  is  felt  throughout  the 
community,  from  the  meetings  of  the  local  legislature  in  the  Senate 
building  to  the  decision  to  remove  an  equestrian  statue  of  a  nine- 
teenth century  Portuguese  governor  from  a  square  opposite  Stanley 
Ho's  main  casino  because  it  was  regarded  as  a  politically  incorrect 
piece  of  colonial  symbolism. 

The  veneer  of  Portuguese  rule  has  become  even  thinner  than  that 
of  the  British  in  their  last  years  in  Hong  Kong.  The  President  of 
Portugal,  who  did  not  get  on  politically  with  the  more  right-wing 
Governor,  was  reported  to  have  thought  of  appointing  Edmund  Ho 
to  run  the  colony  back  in  1996.  There  are  around  2,000  'continentals' 
in  Macau.  Only  a  few  hundred  will  stay  after  the  end  of  the  year. 
Most  civil  service  jobs  have  already  been  transferred  to  local  people. 
Though  there  are  some  10,000  Macanese  born  from  unions  between 
local  Chinese  and  Portuguese,  particularly  soldiers  from  the  garrison 
who  used  local  marriages  as  a  way  of  avoiding  being  posted  to  the 
awful  colonial  wars  in  Angola  and  Mozambique,  this  is  a  Chinese  city. 
Macau  has  always  felt  strong  identification  with  the  mainland,  be  it 
under  the  Kuomintang  regime  or  the  Communists.  In  recent  years, 


126  Dealing  With  the  Dragon 

money  has  flowed  into  Macau  from  China,  funding  the  building  of 
empty  tower  blocks  by  the  waterfront.  The  neighbouring  city  of 
Zhuhai  has  had  its  eye  on  the  colony. 

When  the  Portuguese  go,  they  will  leave  their  mark,  but  it  seems 
unlikely  to  endure  to  any  great  extent.  Nine  months  before  it  rejoins 
a  motherland  it  never  knew,  Macau  remains  a  fascinating,  outlandish 
place,  with  its  casino  bosses  and  Graham  Greenesque  officials,  its 
Russian  prostitutes  and  its  sardines  from  the  Atlantic,  but  it  seems  des- 
tined to  become  a  true  backwater,  with  a  name  that  people  recognise 
but  cannot  quite  place  on  the  map  any  more.  Still,  Dr  Ho  is  not 
giving  up.  He  is  opening  a  tenth  casino  on  Taipa  island,  making  sure 
that  he  schedules  the  ceremony  for  an  auspicious  date.  He  is  also 
diversifying  into  the  Philippines.  The  share  price  of  an  obscure  com- 
pany there  soared  when  Ho's  interest  in  it  became  known,  and  he  had 
a  floating  restaurant  towed  in  from  Hong  Kong:  speculation  that  one 
floor  would  be  turned  into  a  casino  was  dampened  down  after  the 
Cardinal  Archbishop  of  Manila  said  that  this  would  destroy  families 
and  bankrupt  homes.  He  is  also  pushing  a  big  property  redevelopment 
scheme  in  Hong  Kong  -just  in  case  things  go  wrong  across  the  bay 
in  the  place  where  nothing  is  ever  supposed  to  happen. 

31  March 

The  tax  rebates  promised  in  the  Budget  have  been  sent  out  with 
cheques  worth  HK$8.5  billion.  But  all  the  evidence  suggests  that 
rather  than  rushing  out  to  spend  and  giving  the  economy  a  kick-start, 
people  are  putting  the  money  in  the  bank. 


April 


i  April 

Mobile  telephone  ownership  in  the  SAR  has  passed  three  million,  or 
nearly  three-quarters  of  adults.  This  is  the  second  highest  penetration 
in  the  world  after  Finland.  Today  the  system  has  been  made  easier  to 
use:  if  you  switch  telephone  companies,  you  no  longer  have  to  get  a 
new  number.  Advertisements  proclaim  this  to  be  'Independence  Day'. 
To  encourage  people  to  sign  up  with  it,  firms  offer  free  noodles,  a 
yoghurt  drink,  cash  and  discounts.  Spending  on  advertising  mobiles 
has  jumped  by  70  per  cent  in  the  first  quarter  of  the  year.  A  television 
station  prudently  decided  not  to  show  a  documentary  on  the  possible 
health  dangers  involved  in  using  them. 

On  the  mainland,  the  poor  state  of  land  lines  makes  the  jump  to 
mobiles  a  sensible,  if  expensive,  step.  In  Guangzhou  last  year,  I 
watched  a  young  woman  praying  at  a  temple.  Her  mobile  rang.  She 
took  it  from  her  pocket  and  conducted  a  conversation  without  miss- 
ing a  single  bow  towards  the  altar.  In  Hong  Kong,  the  fixed-line 
system  is  perfectly  good  and  local  calls  are  free,  but  mobiles  have 
become  an  inherent  part  of  everybody's  life.  Being  a  non-owner  is 
roughly  akin  to  not  being  interested  in  making  money.  Such  people 
do  exist,  but  they  are  rare.  There  are  jokes  not  a  million  miles  from 
reality  about  diners  at  adjoining  restaurant  tables  conversing  over  their 
telephones,  or  ordering  the  next  course  on  a  mobile.  When  a  plane 


128  Dealing  With  the   Drag  on 

lands  in  Hong  Kong,  passengers  rush  to  get  out  the  telephones  and 
make  a  call.  So  that  small  children  don't  feel  left  out,  toy  shops  sell 
rubber  mobile  phones.  One  woman  says  her  daughter  rejects  the  toy 
and  is  only  content  with  the  real  thing.  The  other  day,  a  workman 
balanced  on  top  of  a  bamboo  scaffolding  outside  our  flat  was  talking 
busily  into  his  mobile  without  any  visible  means  of  support  hundreds 
of  feet  above  the  ground. 

Last  summer,  I  lunched  with  a  major  Hong  Kong  property  devel- 
oper in  the  dining  room  of  his  penthouse  office.  He  insisted  on 
accompanying  me  down  to  street  level  when  I  left.  Did  I  need  a  lift 
back  to  my  office?  he  asked.  No,  I  said,  I  had  an  office  car  coming  to 
pick  me  up.  Why  didn't  I  call  the  driver  to  make  sure  I  didn't  waste 
any  time  waiting?  I  said  I  didn't  have  a  telephone  with  me.  Shocked, 
he  handed  me  his.  Two  hours  later,  he  sent  a  mobile  round  to  my 
office  as  a  gift. 

2  April 

The  Yancheng  Evening  News  reports  that  ioo  condom  dispensers  are  to 
be  installed  in  Guangzhou  city,  selling  a  box  of  two  contraceptives  for 
the  equivalent  of  14  pence.  They  will  be  made  theft-proof  with  spe- 
cial 'drill-in  screws'.  This  follows  a  bad  experience  in  the  city  of 
Chengdu  where  similar  machines  had  a  habit  of 'disappearing  during 
the  night',  the  newspaper  says. 

5  April 

Today  is  Ching  Ming,  the  Festival  of  Pure  Brightness  or  the  Festival 
of  the  Dead.  Like  Easter,  with  which  it  coincides,  it  is  a  time  to  con- 
template death,  resurrection  and  the  afterlife,  for  which  the  Chinese 
ensure  that  the  departed  enjoy  worldly  comforts  by  burning  fake 
paper  money  and  models  of  cars,  houses,  boats  and  mobile  telephones 
which  are  wafted  aloft  in  the  smoke.  This  is  a  time  at  which  Hong 
Kong  people  flood  to  the  mainland,  to  visit  family  graves  there: 
140,000  people  went  through  the  frontier  today. 

Some  400  fires  started  by  people  burning  paper  money  or  leaving 


April  129 

smouldering  incense  sticks  at  graves  are  blazing  on  the  hillsides  of 
Hong  Kong.  Most  are  in  the  New  Territories.  Government  heli- 
copters are  busy  water-bombing  the  flames.  Dozens  of  people  have  to 
be  rescued.  Almost  9  million  square  metres  and  5,400  trees  are 
affected.  A  photograph  of  a  fire  on  the  crest  of  Kowloon  Peak  makes 
such  a  dramatic  front-page  image  that  some  readers  mistake  it  for  the 
latest  picture  from  the  war  in  Yugoslavia.  On  the  mainland,  news- 
papers report  that  more  than  50  people  were  killed  and  205  injured  in 
similar  fires  this  week. 


6—7  April 

Some  crime  and  economic  news  from  China. 

A  restaurant  owner  in  Henan  province  has  been  sentenced  to 
death  for  pouring  nitric  acid  into  a  vat  of  donkey  soup  at  a  rival 
establishment.  In  all,  148  people  received  hospital  treatment  after 
drinking  it. 

On  the  border  between  Guangdong  and  Guanxi  provinces,  police 
with  rocket  cannons  have  finally  got  the  better  of  a  twenty-strong 
gang  that  has  been  indulging  in  murder,  robbery  and  drug  trafficking 
for  five  years.  The  police  were  initially  outgunned,  but  their  400- 
strong  force  triumphed  after  an  eight-hour  battle. 

And  on  the  economic  front,  a  television  price  war  has  broken  out. 
Like  many  Chinese  companies,  manufacturers  are  suffering  from 
excess  production,  low  domestic  demand  and  slumping  exports.  Last 
year  the  mainland  made  35  million  sets,  double  the  1994  figure.  In 
the  first  quarter  of  1999,  output  has  shot  up  by  another  46  per  cent. 
Five  new  producers  have  entered  the  market.  But  sales  are  still  slug- 
gish. 

The  biggest  producer,  a  former  military  factory  in  Sichuan 
province  which  makes  6.7  million  sets  a  year,  announces  price  cuts  of 
between  10  and  33  per  cent.  Sounding  for  all  the  world  like  British 
newspapers  inveighing  against  Rupert  Murdoch's  tactics,  the  general 
manager  of  another  manufacturer  calls  on  the  government  to  'act 
against  this  vicious  cycle  of  competition  and  move  against  firms  that 
sell  below  production  cost  to  ensure  a  level  playing  field'.  But  within 


130  Dealing  With  the  Dragon 

two  weeks,  the  other  companies  follow  the  Sichuan  approach.  Still, 
the  depth  of  consumer  caution  is  such  that  few  people  rush  out  to 
buy.  Many  city-dwellers  either  own  or  have  access  to  a  set.  And 
even  at  the  knock-down  prices,  televisions  are  still  too  expensive  for 
most  people  in  country  areas.  When  rural  incomes  average  2,160 
yuan  a  year,  even  a  cut-price  set  at  1,800  yuan  is  an  unattainable 
luxury. 


9  April 

The  need  to  give  the  mainland  economy  a  serious  kick-start  forms  the 
backdrop  to  the  most  important  foreign  visit  ever  undertaken  by  the 
Prime  Minister,  Zhu  Rongji,  who  is  in  the  United  States.  The  cool- 
ing of  relations  since  Bill  Clinton's  trip  to  China  last  summer,  in 
which  he  spoke  of  a  new  strategic  partnership  with  Beijing,  means 
Zhu's  journey  is  an  on-off  affair  till  the  very  last  moment,  when  it  is 
approved  by  an  emergency  meeting  of  the  Politburo.  'President  Jiang 
made  me  come,'  Zhu  says  in  Washington.  'He  is  China's  Number 
One.  Of  course  I  obeyed  his  order.'  Thus  does  the  Prime  Minister  fix 
final  responsibility  with  Jiang. 

In  Washington,  Zhu  unveils  an  extraordinary  set  of  concessions 
aimed  at  getting  the  US  to  agree  to  admit  China  into  the  World 
Trade  Organisation,  thereby  sealing  its  economic  relationship  with  the 
rest  of  the  world.  Although  the  Europeans  get  a  trifle  shirty  when 
WTO  membership  is  seen  as  being  a  matter  for  Washington  to 
decide,  the  Chinese  know  who  matters  most  in  this  process.  So  Zhu 
offers  to  slash  import  duties  on  a  big  range  of  products,  from  food  and 
chemicals  to  cars  and  mobile  phones.  He  says  China  will  allow  foreign 
ownership  in  telecommunications,  hotels  and  insurance  companies,  a 
significant  expansion  in  the  activities  of  foreign  banks,  and  the  elim- 
ination of  tariffs  on  computers  and  agricultural  products.  A  leading 
American  China  expert,  Nicholas  Lardy,  calls  the  offer  'breathtaking'. 
Business  Week  magazine  describes  it  as  an  'amazing  deal'.  Zhu  jokes 
that  if  the  extent  of  the  concessions  is  made  public  back  home,  he  will 
face  a  revolt.  Before  long,  the  Clinton  administration  will  turn  the  jest 
into  reality. 


April  131 

Despite  his  pre-emptive  remark  about  Jiang,  Zhu  is  taking  a  con- 
siderable personal  gamble,  given  the  residual  strength  of  Chinese 
conservatives  who  disagree  with  his  policies.  But  Clinton  lets  him 
down.  Some  senior  presidential  aides,  including  the  Secretary  of  State, 
the  National  Security  Adviser  and  the  US  Chief  Trade  Negotiator,  are 
for  an  immediate  deal.  Yet,  bowing  to  a  mixture  of  congressional  anti- 
China  pressure  and  arguments  from  Wall  Street,  which  wants  even 
more,  the  President  refuses  to  respond.  Then  his  administration  makes 
things  far  worse  by  posting  the  Prime  Minister's  terms  on  the  Internet 
where  they  can  be  read  by  his  enemies  back  home.  According  to  the 
Wall  Street  Journal,  a  new  phrase  is  born:  to  be  'Zhu'd'  means  having 
the  rug  pulled  from  under  you  at  the  last  moment. 

The  Sino-US  climate  has  already  been  soured  by  allegations  of 
Chinese  political  funding  and  by  continuing  arguments  over  human 
rights.  Blaming  the  'bad  political  atmosphere'  in  the  United  States  for 
the  breakdown,  Zhu  gamely  insists  that  the  differences  do  not  amount 
to  much.  Clinton  stresses  that  he  still  wants  a  deal  by  the  end  of  the 
year,  and  is  ready  to  send  an  emissary  to  Beijing  to  re-open  talks.  But 
can  Zhu  offer  anything  more? 

In  his  post-Washington  travels,  the  Premier  dons  a  ten-gallon  hat, 
pitches  a  football  at  the  Denver  Broncos  training  camp  and  gives 
commodity  dealers  a  Chinese  hand  signal  for  good  fortune.  In 
Chicago  he  says,  'It's  like  I  am  in  a  department  store  and  I  want  to  buy 
everything  I  see.  But  I  do  not  have  enough  money  in  my  pocket.'  He 
asks  his  American  hosts  how  stock  options  work,  and  quotes  from  the 
free-market  philosopher  Friedrich  von  Hayek.  But  some  remarks  are 
more  pointed.  Zhu  says  China  is  seeking  improvement  in  human 
rights  every  day  'but  the  US  isn't  working  as  quickly  to  improve 
theirs'.  On  occasion,  he  goes  off  the  screen  altogether,  calling 
Lincoln's  opposition  to  the  Confederacy  'a  model,  an  example'  for 
Beijing's  policy  towards  Taiwan. 

11  April 

For  anybody  unacquainted  with  Hong  Kong's  popular  Chinese- 
language  press,  today  provides  a  good  introduction  to  what  you  may 


132  Dealing  With  the   Dragon 

expect  on  page  one.  At  the  time  of  the  handover,  the  independence 
of  the  media  and  their  ability  to  criticise  Beijing  and  the  SAR  gov- 
ernment exercised  politicians,  press  freedom  bodies  and  foreign 
correspondents.  Now,  it  is  their  ethics  and  standards  that  give  cause  for 
concern.  This  morning's  front  pages  show  why. 

Readers  of  the  main  popular  papers  were  greeted  with  photographs 
of  the  body  of  a  twenty-year-old  woman  found  in  a  cardboard  box  on 
the  stairway  of  a  public  housing  estate,  her  mouth  bound  with  tape. 
The  photographers,  who  monitor  the  police  radio,  arrived  in  time  to 
snap  close-up  pictures  before  the  corpse  was  taken  away.  These  show 
the  twisted  body  in  the  box,  with  the  thick  platform  heels  of  black 
patent-leather  shoes  sticking  up  in  the  air.  One  newspaper,  Apple 
Daily,  also  runs  a  close-up  of  the  woman's  disfigured  face  across  half 
the  top  of  the  page.  (For  the  record,  my  paper  did  a  two-paragraph 
story  at  the  foot  of  the  front  page,  with  no  photograph.) 

Dumbing  down  and  page  three  in  the  Sun  have  nothing  on  what  is 
happening  in  Hong  Kong.  The  popular  press  here  has  never  been 
noted  for  restraint,  but  the  launch  of  Apple  in  1995  set  off  a  full- 
blooded  press  war,  which  is  being  fought  with  sensationalism, 
paparazzi  pursuit  of  celebrities,  intrusion,  price-cutting,  advertising 
deals  and  the  occasional  use  of  faked  photographs.  Polls  show  the 
credibility  of  the  media  at  an  all-time  low,  with  magazines  ranked  as 
the  worst  products  on  the  market  in  Hong  Kong.  One  particular 
incident  has  stoked  concern.  It  involves  a  man  whose  wife  threw 
herself  and  their  two  children  off  the  top  of  a  building  after  finding  he 
had  mistresses  in  China.  Apple  subsequently  paid  for  him  to  make  a 
trip  to  the  mainland  that  ended  with  him  posing  in  bed  with  two 
young  women  for  the  paper's  photographers.  As  the  outrage  mounted 
and  a  rival  newspaper  castigated  the  man  as  'human  scum',  Apple 
devoted  its  front  page  to  an  apology  for  having  been  led  astray  by  mis- 
guided zeal  to  serve  its  readers. 

The  paper's  owner,  Jimmy  Lai  Chee-ying,  is  one  of  those  arche- 
typal Hong  Kong  figures  who  rose  from  being  a  penniless  refugee  to 
great  wealth.  Born  on  the  mainland  in  1948,  he  was  smuggled  in  at 
the  age  of  twelve.  After  working  in  garment  sweatshops,  he  made  his 
first  serious  money  by  stock  market  speculation.  Then  he  built  up  a 


April  133 

successful  rag  trade  business,  copying  European  designs  and  manufac- 
turing techniques.  From  there,  it  was  a  natural  jump  into  retailing 
with  a  chain  called  Giordano,  modelled  on  Benetton. 

Moving  into  the  media,  Lai  launched  a  successful  glossy,  gossipy 
magazine  called  Next,  and  brought  new  life  to  the  daily  press  with 
Apple  in  1995.  Awash  with  colour,  graphics,  sensationalism,  short 
news  items  and  consumer  service  tests,  the  paper  was  an  immediate 
hit.  It  quickly  soared  to  a  circulation  of  400,000,  within  spitting  dis- 
tance of  the  market  leader,  the  Oriental  Daily.  Apple  reflected  the 
street-smart  attitude  of  a  man  who  eats  at  three-star  restaurants  in  Paris 
but  is  in  his  element  wolfing  down  Chinese-Malaysian  food  in  a  bare 
walk-up  in  the  back  streets.  The  stocky,  crew-cut,  jeans-clad  Lai, 
who  likes  to  read  the  abridged  thoughts  of  great  philosophers, 
appeared  in  his  paper's  launch  television  commercials  in  person.  He 
stood  with  an  apple  on  his  head  in  a  circle  of  shadowy  enemies  firing 
arrows.  The  clip  ended  with  him  munching  the  fruit,  unharmed. 

Lai  has  been  the  target  of  mainland  enmity  ever  since  he  wrote  a 
celebrated  article  in  Next  magazine  describing  the  then  Premier,  Li 
Peng,  as  a  'turtle's  egg'  who  should  drop  dead.  His  journalists  are 
banned  from  crossing  the  border.  When  Lai  tried  to  float  his  group  on 
the  Hong  Kong  stock  exchange  around  the  time  of  the  handover, 
established  finance  houses  were  strangely  unwilling  to  take  him  on. 
One  underwriter  withdrew  at  the  eleventh  hour,  and  it  was  not  until 
the  autumn  of  1999  that  he  finally  obtained  a  listing  with  a  reverse 
takeover  of  a  printing  group.  'Controversy  has  been  my  nature,'  he 
says.  That  has  helped  to  make  him  a  democratic  hero,  even  if  he  did 
run  brothel  reviews  in  his  newspaper  as  a  reader  service. 

Lai  tells  me  that  his  publications  are  successful  because  he  does  not 
come  from  a  press  background.  'I  don't  see  newspapers  any  differently 
from  the  T-shirts  I  was  selling  at  Giordano,'  he  says.  'I  just  wanted  to 
go  against  City  Hall.  We  advocate  freedom  and  democracy,  and  we 
also  have  the  sex  columns.  I  don't  see  any  contradiction  there.'  Still, 
Lai's  critics  have  a  point  when  they  see  the  launch  of  Apple  as  a 
moment  when  the  popular  Chinese-language  press  headed  for  the 
gutter  in  a  vicious  war  for  readers.  In  March  1999,  the  Oriental  Daily 
brought  out  a  sister  paper  called  the  Sun  to  undercut  Apple.  One  of 


134  Dealing  With  the   Dkacon 

the  new  daily's  senior  executives  describes  it  to  me  as  'a  children's 
paper  for  childish  adults'.  It  has  a  drawing  of  the  chairman's  son  on  the 
masthead:  when  the  news  is  good  he  smiles;  when  it  is  bad  he  frowns. 

The  only  thing  uniting  Lai  and  the  owners  of  the  Oriental  is  their 
insistence  that  they  are  just  giving  the  public  what  it  wants.  Still, 
pressure  is  growing  for  a  press  council  to  rein  in  the  excesses.  There 
are  two  snags  with  this.  First,  any  such  body  might  try  to  extend  its 
activities  to  put  a  gag  on  stories  which  need  to  be  covered  but  which 
inconvenience  people  of  influence.  Secondly,  to  imagine  Apple  and 
the  Oriental  sitting  on  the  same  committee  is  about  as  feasible  as 
Jimmy  Lai  interviewing  President  Jiang. 

Anyway,  Apple's  proprietor  is  already  off  pursuing  another  career 
with  a  direct  sales  firm  called  AdMart,  which  enables  customers  to 
order  goods  through  his  publications,  the  Internet,  telephones  and 
fax.  The  established  supermarkets  are  being  forced  to  follow  suit. 
They  are  also  withdrawing  advertising  from  Lai's  newspaper  and  mag- 
azine. As  if  this  was  not  enough  of  a  headache,  AdMart  runs  into  a 
spot  of  bother  when  it  is  found  to  be  unwittingly  selling  poor-quality 
wine  in  bottles  with  the  Mouton  Cadet  claret  label. 


13  April 

In  another  part  of  the  Hong  Kong  media  forest,  I  have  been  reading 
on  the  Internet  about  a  sad  wreck  of  a  journalist  who  shows  how  jus- 
tified fears  were  about  the  way  the  media  would  go  after  the 
handover.  A  pitiable  victim  of  guilt-ridden  obsessions,  this  refugee 
from  London  has  turned  his  newspaper  into  a  biased,  stuffy,  misin- 
formed, hypocritical  pro-China  propaganda  rag  in  return  for  hush 
money  from  a  Beijing  bagman.  Fat  and  greedy,  he  possesses  the  ethics 
of  a  Mafia  lawyer  and  the  selective  memory  of  a  Latin  American  dic- 
tator. His  news  agenda  is  decided  by  a  censor  from  the  mainland  or  by 
the  government's  information  services  as  he  reels  back  from  lunch  and 
sleeps  off  the  gin  and  tonics.  Even  his  private  life  is  a  ruin:  Hong 
Kong's  dullest  man,  he  is  so  boring  that  his  wife  has  left  him. 

I  must  meet  this  pathetic  figure  some  day,  particularly  since  his 
name  is  Jonathan  Fenby. 


April  135 

The  depiction  ofme  is  to  be  found  on  an  Internet  website  run  by 
a  man  called  George  Adams,  who  used  to  teach  teachers  at  the  Hong 
Kong  Institute  of  Education,  and  whose  offer  to  write  a  column  in 
the  South  China  Morning  Post  I  declined.  I  have  never  encountered 
Adams  in  person,  but  he  describes  himself  in  lonely-hearts  style  on  his 
website  as  being  six  foot  in  height,  of  'muscular'  build,  interested  in 
swimming,  running,  cinema,  music  and  the  Internet;  he  dislikes  cats, 
lawyers  and  1997.  He  styles  himself  'Dr'  for  his  academic  achieve- 
ments, and  fancies  his  talents  as  a  satirist.  He  says  the  board  of  the  Post 
has  ordered  me  not  to  reply  to  his  attacks,  as  if  the  paper's  directors 
have  the  slightest  idea  of  his  existence. 

All  this  would  be  just  another  example  of  a  wayward,  ego-boosting 
mind  let  loose  on  the  Internet,  except  that,  in  his  outlandish  way, 
Adams  represents  the  reductio  ad  absurdum  of  a  process  that  has  been 
going  on  around  me  since  I  arrived  in  Hong  Kong  in  May  1995.  One 
of  my  early  surprises  was  to  discover  how  "western  correspondents  in 
Hong  Kong,  local  democrats,  media  watchdog  bodies  and  Govern- 
ment House  all  seemed  to  have  made  a  point  of  poor-mouthing 
the  Post. 

If  we  ran  a  photograph  of  the  President  of  China  on  page  one,  it 
was  a  sign  of  kowtowing  to  Beijing.  If  I  decided  to  use  a  text  from 
China's  news  agency  as  a  matter  of  record  on  a  meeting  between 
Jiang  Zemin  and  a  group  of  Hong  Kong  tycoons,  I  was  met  with 
sarcastic  speculation  about  whether  the  Post  was  going  to  print 
Xinhua  reports  as  a  matter  of  course  from  now  on.  Martin  Lee  told 
a  big  media  lunch  in  the  United  States  that  the  bridge  column  was 
the  'only  independent  and  interesting  thing'  in  the  paper,  which 
presumably  ruled  out  our  extensive  political  news  coverage,  the 
regular  columns  by  three  pro-democracy  politicians  and  the  op-ed 
article  we  commissioned  for  handover  day,  by  none  other  than  the 
Chairman  of  the  Democrat  Party.  Emily  Lau  accused  us  of  cen- 
soring her  out  of  the  paper,  although  I  gave  her  statistics  to  show 
that  she  was  the  single  most  reported  politician  in  the  pages  of  the 
Post. 

Then  there  was  the  Governor,  a  politician  who  had  masterminded 
the  Conservative  general  election  campaign  of  1992  with  its  'Double 


136  Dealing  Wiiii   im.   Dragon 

Whammy'  assault  on  the  Labour  Party.  In  the  past,  British  rulers  had 
been  able  to  count  on  the  loyal  support  of  the  Post  as  a  pillar  of  the 
colonial  establishment.  But  the  sale  of  the  paper  in  1993  by  Rupert 
Murdoch  to  a  Malaysian-Chinese  tycoon  with  strong  mainland  links 
made  it  suspect.  So  officials  looked  with  a  kindly  eye  on  plans  by  the 
Oriental  Press  Group  to  set  up  a  rival  daily  which  would  be  more 
dependably  in  tune  with  official  thinking. 

The  new  paper  saw  the  light  of  day  in  1994,  before  I  arrived  in 
Hong  Kong.  Called  the  Eastern  Express,  it  set  out  to  be  the  Independent 
of  the  South  China  Sea,  with  a  bold  design,  big  photographs,  long  for- 
eign features  and  an  excellent  sports  section.  Its  editor  was  a  British 
journalist,  Stephen  Vines,  who  had  been  the  Hong  Kong  stringer  for 
the  Guardian  and  the  Observer.  Unfortunately,  its  local  news  was  patchy, 
and  it  led  with  an  embarrassingly  wrong  'scoop'  in  its  first  issue.  Despite 
Martin  Lees  jibe,  the  main  pro-democracy  columnists  stayed  with  the 
Post.  Before  long,  Vines  was  replaced,  and  called  on  me  to  give  evi- 
dence to  get  him  his  pay-off.  A  succession  of  subsequent  editors  tried 
to  find  a  vocation  for  the  Express,  but  in  the  summer  of  1996,  the 
owners  reserved  a  big  space  on  the  front  page  to  announce  its  closure. 

There  was  no  doubt  about  the  government's  interest  in  the  Express. 
The  Post's  political  editor  was  invited  up  to  tea  at  Government  House 
to  be  urged  by  one  of  Patten's  civil  servants  to  move  to  the  new 
paper;  she  decided  not  to  go.  There  were  reports  of  official  advice 
over  other  senior  appointments.  The  Oriental  group's  boss  made  a 
number  of  visits  to  Government  House.  Patten  went  to  the  Oriental 
headquarters.  One  of  his  senior  aides  made  enquiries  about  which 
British  newspapers  the  Oriental  group  might  buy,  specifically  men- 
tioning the  Independent  and  Observer. 

The  motivation  for  all  this  activity  may  have  been  purely  and  laud- 
ably pro-democratic,  but  the  Express  was  a  newspaper  which  sought  to 
compete  in  the  marketplace  with  the  Post  and  the  Hong  Kong  Standard. 
That  could  have  led  to  some  pointed  questions  had  civil  servants 
acted  in  a  similar  manner  back  in  Britain,  but  this  was  Hong  Kong, 
and  back  home,  Patten  walked  on  water,  with  many  friends  in  the 
media  who  brushed  aside  such  behaviour  as  being  quite  normal  for  a 
faraway  place  of  which  they  knew  little. 


April  137 

But  that  left  the  question  of  what  the  bosses  of  the  Oriental  may 
have  expected  in  return  for  launching  the  Eastern  Express.  Two  of  the 
group's  founding  members  had  been  forced  to  leave  Hong  Kong  for 
Taiwan  in  the  late  1970s  to  escape  drug  trafficking  charges.  Reports  at 
the  time  said  they  were  alleged  to  be  at  the  head  of  the  biggest  nar- 
cotics ring  the  territory  had  known.  One  had  subsequently  died.  But 
the  family  members  remaining  in  Hong  Kong,  who  were  never  the 
subject  of  any  drug  allegations,  wanted  the  other  to  be  allowed  to 
come  home  to  die  in  peace. 

In  the  mid-1990s,  the  head  of  the  group,  C.  K.  Ma,  a  nephew  of 
the  founders,  was  reported  to  have  donated  hundreds  of  thousands 
of  pounds  to  the  British  Conservatives,  and  to  have  bought  a  print- 
ing press  to  turn  out  posters  and  leaflets  for  the  party.  The  Sunday 
Times  reported  that  Ma  was  known  at  Central  Office  as  'Golden 
Boy'.  To  thank  him  for  his  generosity,  John  Major  issued  an  invita- 
tion to  tea  at  Downing  Street.  Ma  established  links  with  a  number 
of  Tory  MPs,  and  acquired  prestigious  properties  in  London.  He 
mused  about  getting  a  British  honour  and  sending  his  sons  to  Eton. 
He  hired  the  former  Cabinet  minister,  David  Mellor,  as  his  con- 
sultant. 

It  was  against  this  background  that  C.  K.  Ma  launched  the 
Eastern  Express,  with  a  strongly  pro-Patten  editorial  line.  When 
the  British  turned  down  an  application  for  his  uncle  to  be  allowed 
to  come  home  shortly  before  the  handover,  Ma  revealed  details  of 
the  collaboration  over  the  Express,  noting  each  of  his  visits  to 
Government  House  and  a  trip  by  Patten  across  to  the  Oriental 
headquarters  on  the  Kowloon  side  of  the  harbour.  Some  senior 
local  civil  servants  took  a  decidedly  dim  view  of  the  administration 
having  anything  to  do  with  the  Oriental  group.  Interestingly,  there 
is  no  mention  of  the  episode  in  Jonathan  Dimbleby's  otherwise 
exhaustive  account  of  the  last  Governor's  years  in  Hong  Kong.  In 
his  own  book  about  Hong  Kong,  the  founding  editor  of  the  Express 
economically  refers  to  his  proprietors  simply  as  'controversial', 
without  any  elucidation  for  readers  unfamiliar  with  the  Ma  family 
saga. 

Whether  it  was  because  he  felt  he  had  to  justify  his  backing  for  the 


\}X  Dealing  With  the   Dracon 

Express  or  simply  that  he  needed  a  media  punching  bag,  the 
Governor  seemed  unable  to  find  a  good  word  to  say  about  the  Post. 
The  falling-out  had  begun  under  my  predecessor,  a  leading 
Australian  journalist,  who  had  certainly  not  adopted  a  line  of  uncrit- 
ical support  and  once  ordered  an  editorial  telling  Patten  to  shut  up. 
On  the  fundamental  issues,  the  Post  never  budged  while  I  was  editor 
in  its  support  for  freedom,  human  rights,  democracy  and  the  rule  of 
law.  That  did  not  stop  Patten  poor-mouthing  us  to  guests  from 
London  even  as  we  printed  his  speeches  as  op-ed  pieces.  When  one 
of  his  leading  critics,  the  former  diplomat  Sir  Percy  Cradock,  became 
a  non-executive  director  of  the  Post  a  year  before  the  handover, 
Government  House  took  this  as  proof  that  we  were  in  the  enemy 
camp.  (Cradock  contributed  a  couple  of  articles,  but  never  tried  to 
get  involved  in  the  paper's  contents.) 

Patten's  friend  and  chronicler,  Jonathan  Dimbleby,  told  me  that 
the  Governor  simply  had  'a  blind  spot'  as  far  as  the  paper  was 
concerned.  Appearing  at  the  Legislative  Council  early  in  1997, 
Patten  attributed  views  to  us  which  were  the  exact  opposite  of  an 
editorial  we  had  written  a  few  days  earlier.  When  I  objected,  I  was 
told  that  the  Governor  was  entitled  to  say  whatever  he  wanted.  On 
another  occasion,  his  Information  Co-ordinator  gatecrashed 
a  lunch  with  the  Financial  Secretary  and,  to  the  evident  em- 
barrassment of  my  guest,  launched  into  a  lengthy  denunciation  of 
my  failure  to  stand  up  for  press  freedom  -  shortly  after  I  had  writ- 
ten a  1, 200- word  editorial  explaining  why  press  freedom  was  so 
important  to  Hong  Kong.  (The  official  in  question  went  on  to 
take  a  job  with  the  information  service  of  the  new  regime  after  the 
handover.) 

Correspondents,  commentators  and  press  freedom  bodies,  some 
of  whom  never  read  the  paper,  picked  up  the  tune.  In  an  unex- 
pected bout  of  imperial  nostalgia,  a  British  Labour  MP,  Denis 
MacShane,  told  the  Commons  that  the  Post  was  a  mere  shadow  of 
what  it  had  been  in  the  1980s,  when  it  had  faithfully  carried  the 
official  colonial  line.  The  Lonely  Planet  guide  informed  its  readers 
that  the  paper  was  'known  as  the  Pro  China  Morning  Post'  and 
vaunted  the  merits  of  the  Hong  Kong  Standard,  which  was  pursuing 


April  139 

a  more  patriotic  line.  The  Observers  Peter  Hillmore  reported  that  we 
were  well  prepared  for  the  kowtow  when  it  came  to  reporting 
Chinese  dissidents:  this  was  after  we  had  devoted  the  front  of  our 
Saturday  Review  section  to  letters  smuggled  out  of  prison  by  the 
leading  dissident  Wei  Jingsheng.  On  handover  day,  a  BBC  television 
presenter  opened  an  interview  with  me  by  saying:  'Now,  your 
paper's  gone  pretty  soft,'  waving  a  feature  supplement  as  if  it  was  the 
front  page.  In  another  BBC  programme,  a  well-known  British  jour- 
nalist and  the  founder  of  Index  on  Censorship  referred  to  our 
'pre-emptive  cringe'. 

The  bottom  line,  which  did  not  speak  too  well  about  my  trade, 
was  that  the  story  was  too  simple  and  too  appealing  to  be  resisted. 
After  the  handover,  Hong  Kong  was  bound  to  go  down  the  drain. 
For  that  to  be  true,  the  media  had  to  be  headed  for  the  plughole, 
with  the  Post  in  the  vanguard.  The  way  we  reported,  commented 
on  and  analysed  events  was  taken  as  a  barometer  of  how  Hong 
Kong  was  moving.  'You  are  the  canary  in  the  coalmine  for  Hong 
Kong,'  as  a  visiting  American  editor  put  it  to  me.  And  since  the 
bad-news  story  was  the  one  that  would  sell,  the  view  had  to  be 
negative. 

Even  when  the  Post  was  named  best  English-language  paper  in 
Asia  and  Democrats  publicly  praised  our  record,  some  still  stuck  to 
their  guns.  Stephen  Vines,  stringing  for  the  Independent,  has 
declared  that  the  Post  had  been  'neutralised',  which  was  satisfactory 
enough  for  Beijing.  Jonathan  Mirsky,  the  former  East  Asia  Editor 
of  The  Times,  told  a  meeting  in  London  that  it  had  been  the 
'drip,  drip,  drip'  of  criticism  in  the  first  eighteen  months  after 
Rupert  Murdoch  sold  the  paper  which  had  pushed  me  back  on  to 
the  high  road.  'It's  a  very  good  example  of  shame  directing  an 
editor,'  he  added.  This  overlooked  the  fact  that  the  editor  in  ques- 
tion had  been  at  the  Observer  in  London  during  those  eighteen 
months. 

All  things  considered,  I  preferred  the  copy  of  an  election  poster 
Martin  Lee  sent  me  in  1998  inscribed,  'Thank  you  for  your  defence 
of  press  freedom  in  Hong  Kong!  Yours  democratically,  Martin.' 


140  Dealing  Wnn  the   Dragon 

16  April 

The  stock  market  powers  on  despite  otherwise  gloomy  economic 
figures.  Foreign  investors  have  decided  that  they  may  have  overdone 
the  flight  from  Asia,  and  want  to  hedge  their  bets  in  case  the  Wall 
Street  bubble  bursts.  The  Hang  Seng  index  soars  through  the  12,000- 
point  level,  ending  the  week  at  a  seventeen-month  high.  Property 
prices  have  slumped,  but  the  share  prices  for  big  developers  have 
more  than  doubled.  Traditional  valuations  have  gone  out  of  the 
window.  The  Asian  Development  Bank  forecasts  more  pain  for  Hong 
Kong.  But  who  cares  about  such  predictions  any  more? 

The  Hong  Kong  dollar  has  stood  firm  against  the  tide  of  devalu- 
ations all  around  it,  and  the  Government  has  done  well  out  of  its 
intervention  in  the  market  last  August:  the  overall  value  of  its  holdings 
has  increased  by  61  per  cent  for  a  paper  gain  of  ^6.5  billion  in  eight 
months.  The  Financial  Secretary  waves  his  hands  in  embarrassment 
when  I  refer  to  him  at  an  awards  ceremony  as  Hong  Kong's  biggest 
and  most  successful  fund  manager.  But  he  still  talks  about  the  gov- 
ernment's pile  of  cash  in  rather  personal  terms.  'I  have  over  ninety 
billion  US  dollars  in  reserves  and  no  debt,'  he  tells  a  meeting  of  pen- 
sion fund  gurus. 

Donald  Tsang,  who  has  taken  to  describing  the  market  move  as  'an 
incursion',  says  he  hates  what  has  happened,  and  never  wants  to  live 
through  such  an  experience  again.  'Faced  with  the  prospect  of  a 
market  set  to  implode  through  manipulative  activities,'  he  adds,  'I 
decided  it  was  better  to  have  a  market  in  which  to  invest  than  to  have 
no  market  at  all.'  Now  the  question  is  how  the  government  is  going 
to  get  rid  of  the  shares  to  prove  that  this  was  an  incursion,  not  an  inva- 
sion. 

18  April 

A  day  trip  by  train  to  Shenzhen.  The  half-hour  journey  is  like  any 
commuter  shuttle.  There  is  no  sense  of  going  anywhere  special,  even 
when  the  loudspeaker  announces,  'Welcome  to  China',  as  the  train 
pulls  into  the  frontier  station  of  Lo  Wu.  At  the  crossing  point,  there 


April  141 

are  duty-free  shops,  Chinese  soldiers  in  olive-green  uniforms,  and  a 
special  channel  for  'VIP  Honorary  Citizens  The  Elderly  and 
Handicapped'.  A  health  form  asks  if  you  suffer  from  'rash,  HIV,  VD 
or  psychosis':  one  wonders  who  would  reply  in  the  affirmative.  As  my 
entry  form  is  being  checked,  a  young  woman  in  uniform  at  the  immi- 
gration counter  picks  up  a  New  Yorker  from  a  bunch  of  magazines  I 
brought  along  to  read  on  the  journey.  She  points  out  the  fashion 
advertisements  to  a  colleague. 

The  Shenzhen  river  which  marks  the  border  stinks:  a  boy  from 
Hong  Kong  holds  his  nose  demonstratively  on  the  way  across  the 
bridge  into  the  mainland.  It  is  the  weekend,  and  most  of  the  other 
passengers  on  the  Kowloon  and  Canton  Railway  Corporation  train 
are  seeking  bargains  -  cheap  Chinese-manufactured  goods,  low-price 
hairdos  and  massages,  fake  handbags  and  watches  handed  over  in  per- 
fectly imitated  Chanel  and  Cartier  bags. 

The  retail  competition  from  Shenzhen  is  causing  problems  for 
Hong  Kong  shops.  So  much  so  that  there  are  suggestions  of  impos- 
ing a  departure  tax  on  the  SAR  side  of  the  border  to  make 
bargain-hunting  dearer  as  well  as  to  raise  revenue.  Outside  the  sta- 
tion, an  avenue  of  stalls  and  shops  sells  everything  under  the  sun. 
Curtains  made  to  measure  are  in  particular  demand.  Big  department 
stores  and  arcades  stand  on  one  side  of  the  road;  lines  of  massage  par- 
lours and  beauty  salons  on  the  other.  One  group  of  masseuses  is 
kitted  out  in  blue  dungarees  and  red  T-shirts;  those  at  the  Mang 
Bing  Massage  service  wear  red  dresses  with  yellow  sashes  and  hand 
out  leaflets  assuring  potential  clients  in  English,  'You  are  Welcome'. 
In  some  establishments,  you  can  be  pummelled  by  the  feet  of 
women  hanging  above  you  from  metal  bars.  Hairdressing  shops  are 
a  well-known  euphemism  for  brothels  -  the  'human  scum'  widower 
in  the  notorious  story  in  Apple  Daily  picked  up  the  two  young 
ladies  in  one.  But  Hong  Kong  women  genuinely  come  to  Shenzhen 
to  have  their  hair  done:  in  a  hairdresser's  near  the  station  this  after- 
noon my  wife  spent  a  tenth  of  what  she  would  have  paid  in  Hong 
Kong. 

Boosted  by  low  tax  rates  for  companies,  Shenzhen's  industrial  and 
technology  parks  are  forging  ahead  in  electronics,  computers  and 


142  Dealing  Wiiii    ini-.   Dragon 

software  at  a  speed  that  should  give  the  SAR  pause  for  thought  about 
its  own  ambitions  to  become  a  hi-tech  centre.  It  now  accounts  for  44 
per  cent  of  the  mainland's  high-tech  output,  with  exports  in  the 
sector  rising  60  per  cent  a  year.  While  Hong  Kong  sank  into  recession 
in  1998,  Shenzhen  reported  15  per  cent  growth,  though  its  economy 
is  still  only  a  fraction  of  the  SAR's.  Most  of  the  technology  enterprises 
are  funded  by  private  Chinese  investors,  or  from  Hong  Kong  and 
Taiwan;  only  10  per  cent  of  the  finance  has  come  from  the  Chinese 
government.  Twelve  overseas  venture  capital  funds  have  put  money 
into  local  start-ups.  Shenzhen's  container  ports  comfortably  undercut 
the  rates  in  Hong  Kong,  and  have  boosted  business  nearly  fourfold  in 
the  past  three  years.  If  other  mainland  cities  could  expand  as  fast,  Zhu 
Rongji  remarked  on  a  visit,  China's  economy  might  surpass  the  USA 
and  Japan. 

The  buildings  along  the  main  avenues  are  high  and  gleaming,  the 
streets  crowded  and  busy.  The  suburbs  and  adjoining  towns  house 
some  of  China's  largest  companies.  A  flashing  display  board  at  the 
Agricultural  Bank  of  China  gives  the  latest  rate  for  the  euro.  There  is 
a  New  York,  New  York  disco  and  a  championship  golf  club  in  the 
hills  outside  town.  But  for  all  its  progress  from  a  country  village  to  a 
metropolis  that  has  attracted  millions  of  workers  from  all  over  China, 
Shenzhen  is  still  far,  far  behind  Hong  Kong. 

The  pavements  are  cracked;  stinking  rubbish  is  loaded  into  open 
trucks;  there  is  a  fetid  smell  in  the  air.  The  weekend  store  promotions 
are  flashily  tacky,  with  young  women  in  bright  bathing  suits  teetering 
about  uneasily  on  high  heels  outside  the  Shenzhen  International 
Arcade.  The  big  household  appliance  stores  are  yawningly  deserted. 
Girls  as  young  as  six  from  poor  provinces  sing  in  the  streets  and  restau- 
rants, handing  over  their  takings  to  employers  who  dole  them  out  a 
small  salary  at  the  end  of  each  month.  Later,  some  become  hostesses, 
and  boost  their  money  sleeping  with  clients. 

The  area  is  notorious  as  a  sexual  playground  for  Hong  Kong  men, 
who  keep  'second  wives'  there  or  simply  play  the  field  of  prostitutes 
and  karaoke  girls.  It  is  also  becoming  a  magnet  for  Hong  Kong  drug- 
users,  who  find  law  enforcement  less  of  a  problem  than  at  home, 
despite  the  higher  penalties  if  they  are  caught  and  convicted.  A  couple 


April  143 

of  SAR  politicians  were  forced  to  resign  recently  after  being  spotted 
up  to  high  jinks  with  bar  girls  over  the  frontier.  A  local  newspaper 
reports  that  Zhu  Rongji  has  ordered  that  the  law  be  changed  to  face 
men  from  the  SAR  patronising  prostitutes  with  the  threat  of  six 
months  in  a  labour  camp.  It  sounds  highly  unlikely.  Whatever  the 
Premier's  moral  feelings,  why  would  Shenzhen  cut  off  the  flow  of 
money?  This  is,  after  all,  a  country  where  visitors  to  Mao  Tse-tung's 
home  village  are  offered  sex  as  soon  as  they  check  in  at  the  guest 
house. 

If  the  queue  of  mainlanders  who  want  to  move  to  Hong  Kong  is  as 
big  as  ever,  Shenzhen  women  seem  to  be  cooling  on  the  idea  of  mar- 
rying Hong  Kong  men:  cross-border  marriages  are  running  at  half  the 
peak  of  1 ,069  a  year  at  the  start  of  the  decade.  A  24-year-old  shop 
assistant  told  Cindy  Siu  of  the  South  China  Morning  Post  earlier  in  the 
year:  'My  mum  wants  me  to  marry  a  Hong  Kong  man  because  she 
thinks  they  are  rich.  But  to  me  their  standard  of  living  is  not  very 
high.  My  home  seems  better  than  a  lot  of  Hong  Kong  homes.'  'You 
can't  trust  Hong  Kong  men,'  says  another.  'One  of  my  friends  has  just 
found  out  that  her  father,  a  Hong  Kong  man,  has  a  separate  family  in 
Hong  Kong.' 

For  lunch  today,  we  take  a  taxi  driven  by  a  migrant  from  north- 
ern China  to  a  Muslim  Chinese  restaurant  in  a  back  street.  The 
menu  has  the  usual  quaint  translations  of  the  dishes:  'insensitive 
slices  of  meat'  and  'strongly  fried  sheep's  heart'.  We  have  neither. 
Nor  do  we  taste  the  steamed  sheep's  head  or  the  'snow  mountain 
camel's  feet',  having  tried  that  last  delicacy  on  a  trip  to  the  Muslim 
north-west  of  China  last  year  and  decided  that  it  wasn't  up  to  much. 
Instead  we  eat  dumplings,  kebabs,  chapatis  and  aubergines.  The 
head  waitress  recognises  Monica  Lewinsky  on  the  cover  of  Time  in 
the  pile  of  magazines  I  am  carrying.  The  bill  for  two  comes  to  a 
little  over  two  pounds.  Outside,  we  buy  three  big  bunches  of  aspara- 
gus for  the  equivalent  of  £1.50;  it's  a  rip-off  by  local  standards,  but 
at  those  prices,  who  cares? 

Later  in  the  day,  we  have  a  couple  of  cups  of  coffee  in  the  Shangri- 
La  Hotel  near  the  station  where  the  rich  people  gather  on  a  weekend 
afternoon.  A  woman  with  her  black  hair  in  a  perfect  1940s  perm  toys 


144  Dealing  Wiiii  the   Dragon 

with  an  iced  cappuccino.  The  band  plays  'Just  the  Way  You  Are'.  In 
the  driveway,  a  Mercedes  festooned  with  pink  ribbons  and  carnations 
waits  for  the  bride  and  groom.  Our  two  coffees  cost  four  times  as 
much  as  our  lunch. 

This  is  a  place  where  local  officials  on  minimal  salaries  turn  up  at 
the  golf  course  in  black  limousines  with  all  the  clubs  any  professional 
could  wish  for,  and  where  the  sewing  workers  at  the  Four  Seas 
Handbag  Factory  earn  12  pence  an  hour;  where  fortunes  are  being 
made  and  village  girls  sing  for  their  supper.  Hong  Kong  is  not  the 
only  place  where  Deng  Xiaoping  has  left  a  legacy  of  one  country, 
two  systems. 

19  April 

An  unexpected  visitor  flies  in  to  Hong  Kong  for  an  interview 
with  CNN  -  Wan  Azizah  Ismail,  wife  of  Anwar  Ibrahim,  the 
former  Deputy  Premier  of  Malaysia  jailed  for  six  years  last  week  on 
corruption  charges  after  one  of  the  most  dubious  and  sensational 
trials  of  a  politician  in  Asia  for  a  long  time.  That  she  comes  here 
demonstrates  another  continuing  special  feature  of  Hong  Kong; 
you  can  say  just  about  whatever  you  like,  whoever  you  are  and 
wherever  you  hail  from.  Whether  anybody  takes  notice  is  another 
matter. 

There  was  no  question  of  Dr  Azizah  doing  the  phone-in  from  the 
state-run  studios  back  home  in  Kuala  Lumpur:  they  have  a  habit 
there  of  interrupting  transmission  when  politically  sensitive  material  is 
being  put  out  by  foreign  broadcasters.  The  Prime  Minister,  Dr 
Mahathir,  does  not  like  critical  US  television  stations.  This  is  the 
man  who  blames  the  Jews  for  the  Asian  economic  crisis,  and  who 
thinks  governments  which  do  not  curb  the  activities  of  currency 
traders  should  be  overthrown.  (When  I  asked  him  how  he  squared  this 
with  his  own  central  bank's  past  speculative  activities,  he  replied:  'But 
we  lost.'  I  don't  think  it  was  a  joke.) 

In  Singapore,  the  local  broadcasting  station  refused  to  help  with  the 
interview.  Bangkok  and  Jakarta  also  declined.  So  Dr  Azizah,  who  has 
emerged  as  a  strong  political  figure  in  her  own  right  at  the  head  of  a 


April  145 

new  party,  came  to  Hong  Kong.  'We  brought  her  here  because  we 
didn't  have  to  ask  anybody,'  says  a  CNN  source. 

At  lunchtime,  a  limousine  takes  Azizah  to  lunch  with  the  leading 
Malaysian-Chinese  inhabitant  of  Hong  Kong,  Robert  Kuok.  Kuok, 
the  chairman  of  the  Post,  became  close  to  Mahathir  as  he  built  up  his 
fortune.  But  I  am  told  that  he  has  always  admired  Azizah,  so  it  is  nat- 
ural for  him  to  see  her  during  her  visit  to  Hong  Kong,  whatever 
might  be  read  into  the  meeting.  A  couple  of  years  ago,  a  tea  party  was 
held  in  a  suite  at  Kuok's  Shangri-La  Hotel  on  Hong  Kong  Island  for 
Anwar  to  set  out  his  ideas  to  a  small  group  of  journalists,  an  exposition 
studded  with  quotations  from  Shakespeare  and  references  to  Western 
literature. 

That  was  before  the  Mahathir-Anwar  rift  and  at  a  time  when  the 
chairman  of  the  South  China  Morning  Post  had  been  most  anxious  to 
look  after  the  Prime  Minister.  Mahathir's  crusade  against  the  forces  of 
international  finance  had  earned  him  considerable  derision,  and  when 
he  came  to  the  annual  meeting  of  the  World  Bank  and  the 
International  Monetary  Fund  in  Hong  Kong  in  September  1997, 
Kuok  arranged  an  interview  in  which  the  Prime  Minister  could  reply 
to  his  critics.  I  was  a  bit  leery  about  the  motivation  behind  this,  but 
the  opportunity  of  an  exclusive  interview  with  the  man  who  was 
going  to  be  a  star  turn  at  the  conference  could  not  be  passed  up.  I 
planned  to  run  it  as  the  page-one  splash  in  the  paper  on  the  opening 
day  of  the  meeting,  a  Monday. 

On  the  previous  Saturday  evening,  I  and  another  journalist  drove 
up  to  Robert  Kuok's  house  in  the  hills  of  Hong  Kong.  The  chairman 
was  not  there,  and  we  waited  by  the  pool  with  members  of  his  family 
for  an  hour  or  so,  sipping  iced  water  and  making  polite  conversation. 
Then  Kuok  arrived  with  Mahathir.  The  Prime  Minister,  my  col- 
league and  I  went  into  a  side  room.  We  set  up  a  tape  machine  on  a 
table.  Is  this  on  the  record?  I  asked.  Yes,  said  the  Prime  Minister, 
before  launching  into  a  denunciation  of  currency  trading,  which 
could  not  be  allowed  to  go  on  'because  there  is  no  benefit  to  us'.  He 
spoke  forcefully  but  without  raising  his  voice.  Regulations  would  be 
introduced  in  Malaysia  on  Monday  to  limit  currency  trading  to 
financing  trade,  he  said.  Then  he  got  up,  smiled,  and  went  through  to 


146  Dealing  With  the  Dragon 

join  Robert  Kuok,  Anson  Chan  and  the  other  guests  for  dinner. 
Time  for  the  journalists  to  leave.  The  story  was  too  strong  to  hold  for 
Monday.  It  led  the  Sunday  edition. 

The  next  morning,  Anwar  Ibrahim  was  handed  a  copy  of  Sunday's 
Post  as  he  arrived  in  Hong  Kong  a  day  ahead  of  the  IMF-World 
Bank  meeting.  The  lead  story  came  as  quite  a  shock  to  him.  He  had 
not  expected  such  an  outburst  before  Mahathir's  speech  to  the  con- 
ference. The  clampdown  on  currency  trading  would  cause  havoc 
when  markets  opened  on  Monday. 

The  Malaysian  consulate  had  already  issued  a  denial.  No  interview 
had  been  on  Mahathir's  schedule.  The  Post  must  have  made  the  whole 
thing  up.  The  Malaysian  Finance  Ministry  weighed  in,  saying  that  the 
Prime  Minister  had  been  misquoted.  A  press  conference  was  arranged 
at  the  IMF  conference  hall  at  3  p.m.  to  denounce  this  latest  tissue  of 
media  lies.  Anwar  also  issued  a  denial,  and  made  it  known  that  he 
would  be  at  the  press  conference. 

At  lunchtime,  I  went  along  to  the  Convention  Centre  with  our 
tape  recording  of  the  interview,  and  my  colleague's  shorthand  notes. 
I  sent  word  to  the  Malaysian  delegation  that  if  the  briefing  went 
ahead,  I  would  be  happy  to  play  the  tape  of  the  Prime  Minister's 
remarks.  The  press  conference  was  cancelled. 

By  then,  it  appeared,  Anwar  had  spoken  to  Mahathir.  The  Prime 
Minister  told  his  deputy  for  the  first  time  about  the  Saturday  night 
interview,  confirmed  our  story,  and  said  he  had  no  desire  to  retract 
what  he  had  said.  Anwar  managed  to  get  the  currency  measures  put 
off,  though  they  came  into  effect  after  his  own  downfall.  I  was  told 
subsequently  that  his  denial  sharpened  Mahathir's  antagonism  towards 
him.  In  a  conversation  two  years  later,  Mahathir  told  me  that  Anwar 
'brought  it  on  himself  by  the  way  he  behaved;  he  was  in  too  much  of 
a  hurry  and  thought  he  knew  it  all'. 

The  interview  caused  problems  for  me,  too.  After  our  story  was 
widely  picked  up  by  international  news  agencies  and  foreign  media, 
I  was  told  that  Robert  Kuok  felt  humiliated  by  the  storm  it  set  off. 
He  appeared  to  feel  that  his  hospitality  had  somehow  been  betrayed 
by  me,  that  he  had  unwittingly  led  Mahathir  into  a  trap.  Much  was 
made  of  the  fact  that  we  had  originally  planned  to  hold  the  story  for 


April  147 

the  Monday  paper,  but  had  run  it  on  Sunday.  I  couldn't  see  how  that 
changed  anything,  but  it  was  advanced  as  proof  of  my  bad  faith.  Nor 
were  matters  improved  when  the  Post's  main  headline  on  the  open- 
ing of  the  conference  reported  George  Soros  calling  Mahathir  a 
'moron'. 

Since  the  Prime  Minister  was  quite  happy  with  what  he  had  said, 
the  complaints  were  somewhat  hard  to  follow.  Robert  Kuok's  pain 
was  only  understandable  if  he  himself  was  embarrassed  by  his  guest's 
remarks.  In  our  conversation  in  1999,  after  he  had  imposed  capital 
controls,  Mahathir  asked:  'I  said  what  I  thought,  what's  wrong  with 
that?'  Having  rejected  the  IMF  rescue  package  adopted  by  South 
Korea,  Thailand  and  Indonesia,  he  went  on  to  plough  his  own  furrow 
in  defiance  of  international  conventional  wisdom,  and  was  able  to 
report  revived  growth  and  an  improved  trade  position  within  a  year. 
He  felt  no  reason  to  worry  about  what  he  had  said  that  evening  at 
Kuok's  home.  But  that  did  not  stop  a  management  executive  at  the 
paper  telling  me  that  the  chairman  felt  he  could  never  trust  me  again. 

20  April 

Despite  his  new  shoes  and  a  suit,  Li  Yuhui  has  his  hands  tied  as  he 
appears  in  court  in  the  mainland  city  of  Shantou  at  9.30  a.m.  today. 
The  rope  is  knotted  over  his  heart  as  if  it  could  be  the  target  for  a 
firing  squad. 

A  former  lorry-driver,  Li  is  known  in  Hong  Kong  as  the  Telford 
Gardens  Poisoner,  after  a  block  of  flats  where,  posing  as  a  feng  shui 
master,  he  killed  three  women  and  two  girls  with  'holy  water'  laced 
with  cyanide  at  a  'life-lengthening'  ceremony.  Neighbours  recalled 
that  the  curtains  were  always  closed,  and  that  a  wok  with  a  pair  of  scis- 
sors and  a  brush  tied  to  it  had  been  hung  outside  the  door  as  a 
cabalistic  sign.  After  the  women's  deaths,  Li  walked  away  with 
HK$i.2  million  of  their  money. 

A  mainlander,  Li  was  caught  across  the  border,  and  brought  to 
court  in  his  home  city  of  Shantou.  The  trial  began  in  a  local  dialect 
which  one  of  the  defence  lawyers  could  not  understand,  not  to  men- 
tion the  pack  of  reporters  from  Hong  Kong.  The  judge  switched  the 


1 48  Dealing  With   mm    Dragon 

proceedings  to  the  national  language  of  Putonghua.  But  then  it  turned 
out  that  Li  could  not  speak  Putonghua  too  well,  so  he  was  allowed  to 
revert  to  dialect.  Since  everybody  knew  what  the  outcome  would  be, 
this  all  seemed  something  of  a  nicety. 

After  Li  was  found  guilty,  his  wife,  a  hairdresser,  with  whom  he  was 
not  on  the  best  of  terms,  came  up  with  2,000  yuan  for  an  appeal.  Li 
claims  that  the  murders  were  carried  out  in  a  ritual  Zen  ceremony  by 
a  mysterious  monk  who  subsequently  disappeared.  When  his  appeal 
is  rejected  this  morning,  Li  frowns,  and  asks  to  see  his  elderly  mother 
and  two  children.  The  request  is  refused.  He  is  not  allowed  to  see  his 
wife,  either.  His  lawyer  enquires  whether  the  condemned  man  may 
give  his  last  wishes.  The  judge  says  the  officers  at  the  execution  site 
will  take  them  down.  His  property  is  confiscated;  some  of  it  will  be 
given  to  the  relatives  of  his  victims.  In  a  typical  final  mainland  gesture, 
he  is  deprived  of  his  political  rights. 

Following  the  usual  procedure,  Li  is  driven  in  a  convoy  of  vehicles 
to  the  shooting  field  immediately  after  the  verdict  has  been  read  out. 
The  Shantou  City  Intermediate  People's  Court  formal  execution 
ground  is  regarded  as  too  public,  given  the  crowd  of  Hong  Kong 
journalists  waiting  there.  So  three  policemen  wearing  white  gloves 
take  Li  to  an  open  space  nearby.  Two  hold  him.  The  third  shoots  him 
twice,  at  10.15  a.m.,  three-quarters  of  an  hour  after  he  entered  the 
court  to  hear  the  result  of  his  appeal.  'Three  pairs  of  white  gloves 
donned  by  security  officers  and  another  one  worn  by  the  pathologist 
were  abandoned  on  the  ground  afterwards,'  writes  the  Post's  reporter, 
Stella  Lee.  Blood  stains  the  earth.  The  body  is  burned  in  the  local  cre- 
matorium. The  ashes  will  be  returned  to  his  family. 

Local  people  in  Shantou  cannot  understand  the  interest  the  Hong 
Kong  media  is  showing  in  the  case.  After  all,  China  executes  at  least 
2,000  people  each  year.  The  authorities  say  this  'satisfies  popular 
demand'.  But  Li's  case  involves  a  wider  concern  in  Hong  Kong  fol- 
lowing another  headline-grabbing  case  which  aroused  deeper  worries 
about  the  relationship  between  the  SAR  and  the  mainland,  and  the 
conduct  of  some  rich  and  famous  people. 

That  case  starred  Hong  Kong's  best-known  gangster,  Cheung  Tse- 
keung,  also  known  as  Big  Spender.  Cheung  was  a  pretty  spectacular 


April  149 

criminal  by  any  standards.  An  ardent  gambler,  he  was  surrounded  by 
stories  of  wild  jaunts  that  took  him  from  Macau  to  Las  Vegas,  of 
nights  when  he  staked  HK$200  million  and  of  debts  that  rose  to  three 
times  that  figure.  He  became  a  celebrity  after  being  charged  in  con- 
nection with  one  of  the  world's  biggest  cash  robberies,  the  haul  of 
HK$i67  million  from  a  security  van  at  the  airport  in  1991.  He  was 
convicted,  and  then  acquitted  on  a  technicality  —  and  then  re-acquit- 
ted at  a  retrial.  Outside  the  court,  he  posed  for  photographers  in  a  red 
and  white  spotted  short-sleeved  shirt  and  white  trousers,  grinning  and 
punching  the  air,  his  mobile  telephone  hooked  to  his  designer  belt. 

Cheung  was  at  the  centre  of  a  web  of  gangs.  One  became  infamous 
for  armed  raids  on  gold  and  jewel  shops,  spraying  bullets  from  AK47 
rifles  as  it  went  into  action.  Other  associates  kidnapped  Hong  Kong 
men  visiting  the  mainland  and  demanded  ransoms  amounting  to  the 
equivalent  of  £1.5  million.  Another  group,  with  assault  rifles  and  in 
military  uniforms,  staged  highway  robberies  on  the  mainland,  killing 
eight  truck  drivers. 

Cheung  had  all  the  trappings  of  a  famous  hood.  He  posed  lying  on 
top  of  his  yellow  V12  Lamborghini  Diabolo  with  pop-up  headlights 
that  cost  ^250,000  in  the  showroom.  He  also  had  a  string  of 
Mercedes  limousines.  Driving  fast,  he  said,  'makes  me  orgasm'.  In  one 
of  his  many  homes,  he  kept  a  life-sized  metal  bust  of  himself.  At 
social  occasions,  he  appeared  as  a  Cantonese  Godfather,  a  caring 
family  man  who  was  kind  to  his  two  young  children,  a  well-spoken, 
non-smoking  teetotaller,  however  much  vintage  brandy  he  bought  for 
his  guests.  He  had  two  sphinx  statues  made  with  the  face  of  his 
common-law  wife,  who  had  been  working  in  the  control  room  of  the 
security  company  at  the  time  of  the  199 1  airport  robbery.  He  filled  his 
flat  with  golden  religious  images  to  bring  him  luck.  True  to  the  Hong 
Kong  style,  Cheung  bought  thirty-one  residential  and  commercial 
sites.  In  the  middle  of  1996,  he  went  into  a  new  line  of  business,  grab- 
bing very  rich  people. 

Hong  Kong  has  always  been  the  scene  of  some  spectacular  kidnap- 
pings. But  Big  Spender  was  in  a  different  league.  On  23  May  1996, 
one  of  his  men  posted  outside  the  offices  of  the  tycoon  Li  Ka-shing 
called  Cheung  on  his  mobile  telephone  to  say  that  Li's  son,  Victor  Li 


150  Dealing  Wiiii  the  Dragon 

Tzar-kuoi,  had  left  for  the  day.  Victor,  an  intense,  bespectacled  man, 
was  a  major  figure  in  his  own  right;  he  was  in  the  process  of  taking 
over  the  running  of  the  family's  property  empire.  As  Victor  drove  up 
the  narrow  road  towards  his  home  on  the  south  side  of  Hong  Kong 
Island,  Cheung  and  an  associate  came  up  on  either  side  in  separate 
cars,  and  pinned  his  limousine  between  them. 

The  two  gangsters,  wearing  bulletproof  vests  and  carrying  AK47 
assault  rifles  and  pistols,  bundled  Li  into  a  waiting  van,  taped  his 
mouth,  bound  him  and  drove  him  off  to  a  safe  house  in  the  New 
Territories.  Cheung  then  went  to  the  home  of  Victor's  father,  made 
his  demands  and  spent  two  days  waiting  for  the  ransom  to  be  paid. 
One  report  had  it  that  he  insisted  on  the  money  being  stowed  in 
designer  bags.  At  one  point,  Cheung  was  said  to  have  been  asked  if  he 
wanted  to  count  the  money.  He  lifted  the  bag,  weighed  it  in  his  hand 
and  said  it  seemed  to  be  about  right.  As  to  why  he  had  kidnapped  the 
son  and  not  the  father,  he  remarked  that  Li  Ka-shing  could  come  up 
with  more  cash  than  Victor  -  HKI1.3  billion  or  £100  million 
Cheung  kept  a  quarter,  and  left  the  gang  to  divide  up  the  rest. 

The  Lis  said  nothing,  but  rumours  spread.  Sitting  next  to  Victor  at 
a  business  lunch,  I  ventured  to  ask  him  if  there  was  anything  in  them. 
He  stared  at  me  impassively  from  behind  his  glasses  and  said  flatly: 
'There  is  no  truth  in  such  rumours.' 

Sixteen  months  later,  Walter  Kwok  Ping-sheung,  chairman  of 
another  big  property  company  called  Sung  Hung  Kai,  was  picked  up 
outside  his  office  by  the  harbour.  The  gang  had  been  following  him 
for  seven  months.  Kwok,  a  big,  reserved  man,  is  one  of  three  broth- 
ers who  were  all  raised  in  the  real-estate  business.  Their  father's  idea 
of  a  Sunday  outing  was  to  take  the  three  boys  round  his  property 
developments;  after  his  death,  the  brothers  still  showed  their  mother 
major  sites  for  her  approval. 

Big  Spender  had  forked  out  HK$i.4  million  to  set  up  the  Victor  Li 
kidnapping,  including  the  purchase  of  weapons.  For  Kwok,  his  outlay 
rose  to  HK$2  million.  Both  victims  were  taken  to  an  isolated  hut  up 
near  the  border  with  China  and  put  into  a  wooden  box  with  air 
holes  punched  in  it.  Their  eyes  were  masked  and  they  were  given  roast 
pork  and  rice  to  eat  through  the  openings.  Victor  Li  was  said  to  have 


April  151 

been  kept  overnight  with  his  legs  in  chains  and  his  mouth  covered 
with  bandages. 

Walter  Kwok  was  held  for  six  days  stripped  to  his  underwear  and 
with  his  hands  tied.  Then  his  ransom  was  paid:  half  that  of  Victor  Li 
at  a  mere  HK$6oo  million.  Again  the  victim  made  no  complaint  to 
the  police.  Nor  did  the  family  raise  the  alarm  when  he  was  kid- 
napped. Cheung  took  half  the  ransom  and  told  his  gang  to  'swim 
across  the  river  like  a  Chinese  bullfrog' ,  which  meant  they  should  flee 
individually  and  not  meet  again.  According  to  mainland  police,  they 
managed  to  buy  more  than  fifty  pieces  of  property  in  China,  and  a 
fleet  of  luxury  cars. 

Now  we  enter  the  realms  of  the  generally  believed  probability 
which  remains  unprovable.  Cheung  and  his  gang,  many  of  whom 
were  mainlanders,  had  dodged  back  and  forth  across  the  border  at 
will.  They  met  in  hotels  in  Shenzhen  to  plan  their  coups.  There  was 
speculation  that  their  weapons  had  been  bought  from  the  People's 
Liberation  Army  in  southern  Yunan  province,  a  region  celebrated  for 
its  lawlessness.  Cheung  was  also  said  to  have  purchased  explosives  in 
Guangdong  province  and  to  have  smuggled  them  into  Hong  Kong  by 
boat.  But,  in  Li  Ka-shing,  he  had  bitten  off  even  more  than  he  could 
chew. 

Hong  Kong's  'Superman'  has  powerful  contacts  in  Beijing.  When 
Jiang  Zemin  came  to  the  SAR  for  the  first  anniversary  of  the  hand- 
over, his  generally  anodyne  speech  was  punctuated  by  a  single  sharp 
sentence  vowing  that  contempt  for  the  law  would  not  be  permitted. 
At  the  time,  people  thought  he  was  referring  to  the  upsurge  in  gang 
violence  in  Macau.  Later,  it  seemed  he  was  talking  about  Cheung 
Tse-keung. 

The  President  handed  the  Big  Spender  case  to  the  Vice-Minister  of 
Public  Security  in  Beijing.  According  to  a  mainland  newspaper,  offi- 
cers from  Hong  Kong  and  Guangdong  met  in  the  capital  on  10 
January  1998.  Two  days  later,  three  Public  Security  Bureau  officials 
flew  south.  In  Guangdong,  they  found  that  police  were  already  on  Big 
Spender's  trail,  investigating  whether  he  was  linked  with  the  death  of 
a  police  informer  from  Hong  Kong  who  had  been  shot  dead  in  the 
street  in  Shenzhen. 


152  Dealing  Wiiii  the   Dracon 

While  all  this  was  going  on  across  the  border,  Cheung  and  his 
associates  were  keeping  busy  in  Hong  Kong.  On  8  January,  police 
hiding  in  bushes  near  one  of  his  safe  havens  in  the  New  Territories 
filmed  him  unloading  big  white  boxes  from  a  van  into  a  Mercedes. 
Dressed  only  in  white  underwear,  and  wearing  gloves,  the  crime  boss 
is  seen  on  the  video  making  three  trips  to  move  the  boxes.  After 
Cheung  had  left  for  the  last  time,  police  emerged  from  the  shrubbery 
to  take  soil  samples.  These  showed  that  the  boxes  contained  800  kilos 
of  explosives  which  Cheung  was  said  to  have  ordered  from  mainland 
contacts  at  a  meeting  in  the  Lisboa  Hotel  and  casino  in  Macau.  The 
cargo  was  smuggled  into  the  SAR,  transferred  from  the  van  to  the 
Mercedes  and  buried  under  a  deserted  container  parking  lot.  On  a 
subsequent  trip  to  the  scene,  police  arrested  three  men,  but  Big 
Spender  had  gone  across  the  border. 

On  23  January,  an  underworld  associate  from  Hong  Kong  known 
as  'Old  Fox'  flew  into  Guangzhou  city  from  Thailand.  Police  followed 
him  to  a  meeting  with  Big  Spender.  The  two  men  drove  off  in  a 
Mercedes  .  Apparently  noticing  the  tail,  they  abandoned  the  car  and 
hijacked  a  taxi.  Two  hundred  police  were  alerted,  and  the  pair  were 
nabbed  half  an  hour  later. 

Both  Cheung  and  the  white-haired  Old  Fox  gave  false  names. 
Later,  Big  Spender  told  one  of  his  lawyers  that  he  never  imagined  he 
would  face  a  mainland  court.  He  'believed  he  would  have  to  return  to 
Hong  Kong  to  be  tried',  the  lawyer  added.  'If  he  had  known  the  law, 
he  would  never  have  dared  to  step  over  the  border.' 

News  of  his  capture  was  not  made  public  until  July,  though  his  36- 
year-old  wife  did  receive  an  anonymous  call  at  the  time  saying  he  was 
being  held  on  the  mainland.  After  holding  out  for  some  time,  Big 
Spender  cracked  when  he  learned  that  other  members  of  his  gang  had 
been  caught,  and  that  one  had  grassed.  Police  said  he  told  them  that 
he  had  had  a  premonition  of  trouble  when  a  big  jade  pendant  he  was 
wearing  broke  shortly  before  his  arrest. 

Video  footage  showed  Big  Spender  dressed  in  a  white  singlet 
and  looking  relaxed  as  he  was  presented  with  an  arrest  statement. 
'What  is  my  offence?'  he  asked.  A  police  officer  replied,  'Explo- 
sives.' 'Explosives?  Not  smuggling?'  Cheung  said,  before  signing 


Victory  day:  the  Chief  Executive  jubilates  as  Beijing  overrules  the  Hong  Kong  courts,  watched  by 
right)  the  Chief  Justice  and  fellowjudges,  and  (left)  Emily  Lau,  Martin  Lee  and,  with  pen,  the  author. 


3.  Tears  in  the  night:  Chris  Patten  consoles  his  daughters  as  they  leave,  and  Hong  Kong  reverts  to 
Chinese  sovereignty. 


mm.- 


Ll:..\l)I-R 


4.  Follow  the  leader:  Chief  Executive 
Tung  Chee-hwa  shows  the  way. 


5.  The  proprietor:  Robert  Kuok,  a  discreet 
billionaire  who  found  the  ways  of  the  press 
puzzling. 


6.  Do  it  ni)'  way: 
Premier  Zliu  Rongji 
lays  down  the  law. 


7.  One  government,  two  views:  Chief  Secretary 
Anson  Chan  (left)  and  Justice  Secretary 
Elsie  Leung. 


8.  High  hopes:  Financial  Secretary  Donald  Tsang. 


9.  Justice  and  the  law:  Chief  Justice  Andrew  Li,  whose  judgment  set  off  Hong  Kong's  greatest  crisis. 


i 


/ 


i 


10.  My  husband  lives:  Nina  Wang,  a  true  Hong  Kong  original. 


1.  Paper  tiger:  Sally  Aw,  the  newspaper  boss  at 
lie  centre  oi  a  legal-political  storm. 


12.  Rule  of  law:  Margaret  Ng,  the  journalist- 
turned-barrister  who  became  the  symbol  of 

legal  integrity. 


13.  Unexpected  threat:  a  Falun  (long 
practitioner  is  lifted  away  by  police 
at  Macau's  return  to  China. 


14.  Palace  meeting:  Queen  Elizabeth  gives 
a  state  banquet  for  the  President  of  the  last 
major  Communist  state  in  the  world. 


15.  Face-off:  Charlene  Barshefsky  launches  into  the  vital  WTO  negotiations  in  Beijing.  Beside  her  is 
presidential  adviser  Gene  Sperling;  opposite,  the  Chinese  Trade  Minister  and  his  team. 


6.  Big  Spender:  high  roller  and  mega-kidnapper  ( "hciing  Tse-keung,  who  ended  up  with  .1  bullet 
I'll  his  head  after  a  string  of  spectacular  crimes. 


17.  The  real  handover:  government,  business  and  China  come  together  as  Chief  Executive 
Tung  Chee-hwa,  tycoon  Li  Ka-shing  (left)  and  top  mainland  representative  Jiang  Enzhu  raise 
their  glasses  to  the  fiftieth  anniversary  of  Mao's  victory. 


April  153 

the  statement  with  a  smile  and  putting  his  thumbprint  on  it.  In  a 
later  interview  shown  in  a  mainland  television  documentary,  he 
told  police,  'You  take  the  credit.  I've  lost.'  The  documentary  said 
that  he  planned  to  use  the  800  kilos  of  explosives  which  he  had 
been  filmed  transporting  in  the  New  Territories  for  'threatening 
the  Hong  Kong  government,  bombing  Hong  Kong  prisons  and 
continuing  to  kidnap  Hong  Kong  tycoons'.  Cheung  was  said  to  be 
particularly  keen  to  spring  an  associate  who  had  been  crippled 
when  shot  by  police  and  was  serving  a  long  jail  term. 

In  fact,  the  charges  were  more  wide-ranging,  and  included  having 
planned  the  kidnappings  of  Victor  Li  and  Walter  Kwok  while  on  the 
mainland.  But  there  was  still  no  evidence  from  the  two  high-profile 
victims;  everything  connected  with  those  crimes  rested  on  the  alleged 
confessions  of  Cheung  and  his  associates.  In  other  words,  there  would 
not  have  been  enough  evidence  for  a  case  to  have  been  brought 
under  the  law  in  Hong  Kong,  which  may  have  been  another  reason 
for  dealing  with  him  across  the  border. 

Aged  forty-three,  Cheung  stood  trial  in  a  closed  court  in 
Guangzhou  with  three  dozen  alleged  accomplices,  seventeen  of  them 
from  Hong  Kong.  As  the  hearing  opened,  the  first  of  two  hastily- 
made  films  about  Big  Spender  went  on  show  in  Hong  Kong.  On  the 
train  to  Guangzhou,  you  could  buy  a  video  on  'China's  biggest  crim- 
inal case  in  the  twentieth  century'.  Armed  paramilitaries  surrounded 
the  court.  Snipers  crouched  on  nearby  roofs.  A  barber's  shop  opposite 
the  court  was  suddenly  closed  down  'for  renovations'.  The  corridor 
leading  to  the  hall  where  the  hearing  was  held  was  curtained  off. 

On  12  November  1998,  all  the  defendants  were  found  guilty. 
Cheung,  in  an  open-necked  white  shirt,  a  mauve  cardigan  and  tan 
trousers,  stood  impassively  behind  a  metal  barrier  at  the  front  of  the 
crowded  court.  Policemen  wearing  white  gloves  held  each  of  his 
arms.  One  of  his  lawyers  flew  to  London  to  try  to  drum  up  support 
for  an  appeal,  which  was  rejected  by  a  Guangdong  judge  known  by 
the  nickname  of 'Iron  Fist'. 

Big  Spender  was  shot  at  an  execution  ground  surrounded  by  hills 
and  wild  grass  outside  the  city.  The  following  day,  ten  police  guard- 
ing the  site  turned  away  the  pregnant  widow  of  one  of  the  gang 


154  1)i:ai  i  nc;   W  i  i  !i    mm     Dragon 

members  who  had  gone  there  to  burn  paper  offerings  to  comfort  her 
husband's  soul  in  the  beyond. 

A  reporter  who  visited  the  site  wrote  that  it  was  littered  with  the 
shoes  of  dead  men,  used  cartridges,  gloves  discarded  by  the  firing 
squad  and  cardboard  signs  hung  round  the  convicts'  necks  recording 
their  names  and  crimes.  The  execution  procedure  is  simple:  one 
policeman  fires  a  single  shot  from  behind.  If  that  does  not  prove  fatal, 
a  second  shot  follows.  Inevitably,  the  story  quickly  spread  that  Big 
Spender  had  needed  two  bullets  to  finish  him  off.  His  body  was 
wrapped  in  canvas  and  taken  to  a  crematorium  close  by.  The  ashes 
were  then  placed  in  an  urn,  which  was  given  to  a  member  of  his 
family.  The  urn  had  no  lid,  and  the  relative  brought  it  back  to  Hong 
Kong  with  a  baseball  cap  on  top  to  keep  the  contents  from  flying 
away. 

Apart  from  providing  the  Hong  Kong  media  with  a  top  story,  the 
Big  Spender  case  aroused  a  number  of  concerns.  One  was  whether 
you  had  to  be  rich  and  powerful  and  well  connected  to  get  justice  in 
China.  Another  was  that  the  Lis  and  the  Kwoks  had  not  informed  the 
legal  authorities.  When  Anson  Chan  and  other  senior  officials  took 
them  to  task  for  not  at  least  reporting  the  crimes,  Li  Ka-shing  com- 
plained of 'something  like  harassment'. 

The  third,  and  greatest,  concern  was  why  Cheung  had  not  been 
brought  back  to  the  SAR  to  stand  trial.  He  might  have  planned  his 
crimes  while  on  the  mainland,  but  the  main  offences  —  the  actual  kid- 
nappings and  the  handling  of  explosives  at  the  hide-out  in  the  New 
Territories  -  had  been  committed  in  Hong  Kong  by  Hong  Kong 
criminals  against  Hong  Kong  residents.  The  Guangzhou  court  seemed 
to  recognise  the  problem:  in  delivering  its  verdict,  it  stressed  the 
explosives,  which  involved  illegal  purchase  on  the  mainland  and 
smuggling  to  Hong  Kong. 

Then  there  was  the  nagging  question  as  to  why  the  Hong  Kong 
police  who  had  videotaped  him  in  January  had  not  carried  out  an 
arrest  on  the  spot,  but  waited  until  Cheung  had  flown  the  coop 
before  nabbing  three  much  less  important  gang  members.  The  Hong 
Kong  authorities  insisted  that  they  had  not  had  enough  evidence. 
But  it  was  only  a  short  speculative  jump  to  imagining  that  somebody 


April  155 

had  decided  to  leave  him  to  the  mainland  police.  After  all,  execution 
on  the  shoe-littered  killing  field  outside  Guangzhou  would  provide  a 
much  more  conclusive  end  than  a  lifetime  jail  sentence. 

And  if  Cheung  had  been  brought  back,  just  imagine  the  circus 
which  would  have  followed,  with  Big  Spender  using  the  ransom 
money  to  buy  a  top  legal  team  to  perform  in  open  court.  Much 
better  for  Cheung  and  his  gang  to  be  shot  in  China  without  any  of 
the  embarrassment  of  a  trial  in  Hong  Kong.  But  what  does  this  mean 
at  a  deeper  level  for  the  rule  of  law,  and  the  relationship  with  the 
mainland?  Not  that  Beijing  can  be  fingered  as  the  prime  mover  in  this 
breach  of  the  autonomy  of  the  SAR.  As  is  proving  to  be  the  case 
rather  too  often,  the  initiative  came  from  Hong  Kong  itself. 

The  SAR  government  insists  that  there  is  'no  question  of  the  inde- 
pendence of  our  judicial  system  being  eroded  or  the  mainland 
interfering  with  Hong  Kong's  jurisdiction'.  But,  as  the  chairman  of 
the  Hong  Kong  Bar  observes:  'The  issue  is  whether,  putting  aside  the 
possible  kidnapping  charges,  the  fact  that  the  Hong  Kong  government 
made  no  attempt  to  seek  the  return  of  some  of  these  defendants  in 
relation  to  possible  robbery  or  firearms  charges  may  give  people  the 
false  impression  that  the  judiciary  and  the  rule  of  Hong  Kong  is 
somehow  subordinate  to  that  of  the  rest  of  China,  and  thus  indirectly 
cast  a  question  mark  over  the  concept  of  "one  country,  two  systems".' 

An  epilogue  to  Cheung's  days  of  fame  and  fortune  comes  when  his 
yellow  Lamborghini  is  put  on  sale.  Far  from  attracting  a  buyer  for  the 
notoriety  of  its  late  owner,  it  fetches  less  than  30  per  cent  of  the 
showroom  cost.  Hong  Kong  people  like  to  latch  on  to  the  latest  fash- 
ion, but  buying  dead  people's  effects  is  not  for  them.  If  it  had  been  Li 
Ka-shing's  limousine,  that  would  have  been  a  different  story. 

25-27  April 

There  are  two  sets  of  true  believers  in  Beijing  at  the  beginning  of  this 
week.  The  great  proponents  of  globalisation,  or  globality  as  it  is  now 
known,  are  at  the  China  World  Hotel  for  a  session  of  the  World 
Economic  Forum  devoted  to  China.  Up  the  avenue,  a  very  different 
event  is  taking  place  on  the  edge  of  Tiananmen  Square.  Some  10,000 


156  Dealing  Wiiii  the  Dragon 

members  of  a  mystical  deep-breathing  cult  called  Falun  Gong  have 
come  out  of  nowhere  on  a  Sunday  evening  to  demonstrate  silently 
outside  the  high  walls  of  the  Zhongnanhai  leadership  compound 
beside  the  old  imperial  Forbidden  City.  Many  are  middle-aged 
women.  They  want  to  speak  to  the  government  about  better  treat- 
ment for  their  movement.  They  do  not  get  anywhere,  and  disperse 
peacefully.  But  there  is  no  doubt  about  the  shock  they  have  caused. 

It  is  amazing  that  so  many  people  were  able  to  assemble  in  one  of 
the  most  heavily  policed  places  in  the  world  without  the  authorities 
being  aware  of  what  they  were  planning.  The  cult,  whose  members 
perform  deep-breathing  meditation,  claims  70  million  practitioners  in 
China:  if  that  sounds  like  a  big  overstatement,  even  a  movement  one- 
tenth  that  size  would  be  a  force  to  be  reckoned  with.  Explaining 
how  they  mobilise,  an  English  adherent  explains:  'A  network  of  com- 
munication forms  organically  through  the  fact  that  practitioners  know 
so  many  other  practitioners.  The  numbers  are  so  great  and  the  com- 
mitment to  their  beliefs  so  strong  that  word  spreads  very  quickly  and 
practitioners  act  very  quickly.'  That  sounds  rather  like  Mao's  peasant 
army.  No  wonder  it  spooks  leaders  who  never  forget  the  Great 
Helmsman's  warning  about  a  spark  being  enough  to  set  off  a  forest 
fire.  For  all  their  control  mania,  the  men  behind  the  walls  of 
Zhongnanhai  don't  have  any  idea  what  to  do  about  a  movement  that 
is  difficult  to  tar  with  any  of  the  usual  brushes  of  splittism,  democracy 
or  anti-party  activism  -  though  the  fact  that  the  Falun  Gong  leader 
lives  in  the  United  States  lends  the  sinister  touch  of  foreign  influence. 

At  the  Economic  Forum,  meanwhile,  participants  are  divided 
between  their  desire  to  see  China  develop  and  their  worries  about 
what  is  actually  happening  in  the  economy.  The  path  ahead  is  strewn 
with  uncertainty,  bad  debts,  corruption,  unreliable  statistics  and  the 
awesome  task  of  pulling  China  into  the  modern  era,  not  just  in  the 
showplace  cities  but  in  the  millions  of  towns  and  villages  caught  in 
rural  backwardness  where  peasants  say  that  they  can't  keep  the  size  of 
their  families  down  because,  without  electricity,  there  is  nothing  to  do 
at  night  except  have  sex. 

After  a  couple  of  days  in  the  capital,  the  Forum  moves  to  Shanghai. 
The  director  of  that  city's  Economic  Commission  says  industrial 


April  157 

output  has  risen  by  11. 6  per  cent  in  the  first  four  months  of  1999,  and 
exports  by  18  per  cent.  Another  speaker  predicts  that  Chinese  mem- 
bership of  the  World  Trade  Organisation  will  bring  a  boom  on  the 
scale  of  the  expansion  set  off  by  Deng's  initial  market  reforms. 
Nowhere  will  benefit  more  than  Shanghai;  hasn't  Zhu  Rongji  said  it 
will  be  China's  New  York? 

On  the  great  Bund  waterfront  avenue,  the  old  buildings  that  once 
housed  foreign  banks  and  the  British-administered  customs  service  are 
being  carefully  restored.  The  garish  nightlife,  the  opium  dens  and  the 
powerful  criminal  gangs  have  given  way  to  karaoke  parlours,  high- 
priced  claret  and  party  members  on  the  make;  but  local  residents  say 
there  is  still  plenty  of  vice  to  be  found  if  you  know  where  to  look. 
Those  nostalgic  for  the  heyday  of  the  Paris  of  the  East  can  still  find 
ornate  buildings  from  the  1920s  or  visit  the  hotel  from  which  the 
Green  Gang  ran  the  city.  Across  from  the  Bund,  vertiginous  towers 
sprout  in  the  new  business  area  of  Pudong.  Richard  Branson  is  sched- 
uling the  first  direct  flight  from  London,  and  Hong  Kong's  Chief 
Executive  notes  that  some  Western  companies  may  start  to  go  directly 
to  Shanghai  instead  of  using  the  SAR  as  a  staging  post.  An  American 
lawyer  who  has  worked  in  both  places  finds  Shanghai  more  go-ahead 
than  the  SAR  -  'like  Hong  Kong  used  to  be'. 

The  city  has  a  fine  new  opera  house  and  a  stunning  museum. 
Pudong  is  getting  its  own  airport.  A  branch  of  a  smart  Hong  Kong 
restaurant  high  above  the  Bund  seems  to  be  packed  every  night.  In 
what  was  the  French  concession  of  the  city  before  the  Communists 
took  over,  you  can  eat  lemon  peppered  duck  and  lobster  in  citrus 
juice  in  the  former  church  of  St  Nicholas,  built  by  White  Russians 
and  dedicated  to  the  memory  of  the  last  Tsar.  Light  streams  in 
through  the  stained  glass.  There  are  icons  under  the  majestic  dome 
and  paintings  of  naked  Western  women  in  classical  poses  on  the  walls. 
The  proprietors  are  a  Frenchman  and  a  Swiss  entrepreneur  who  serves 
wine  from  a  South  African  vineyard  he  owns. 

Back  by  the  Bund,  on  the  street  outside  the  old  Peace  Hotel  with 
its  art  deco  friezes  and  antediluvian  jazz  band,  a  young  man 
approaches  me  saying  he  wants  to  practise  his  English.  Where  are  you 
from?  he  asks.  Hong  Kong.  Ah,  Victoria  Peak,  Kowloon,  Central 


158  Dial inc   With  the    Dragon 

District,  he  says.  I  nod.  And  then  he  launches  into  a  tale  of  a  family 
art  collection  which  I  can  pick  up  at  bargain  prices  if  I  will  advance 
him  some  money  to  get  it  out  of  hock.  I  decline  this  once-in-a-life- 
time  opportunity,  and  cross  the  road.  Looking  back,  I  see  that  he  has 
already  approached  another  Western  passer-by. 

As  everywhere  on  the  mainland,  the  crust  of  prosperity  is  per- 
ilously thin.  More  than  half  the  new  office  space  in  Pudong  is  empty. 
Shanghai  Volkswagen  rolls  out  235,000  cars  annually,  but  the  city  had 
only  9,000  private  cars  at  the  end  of  last  year.  One-third  of  state 
sector  workers  are  surplus  to  requirements.  More  than  a  million  jobs 
have  disappeared  in  the  'dragon  head'  of  the  Yangtze  since  1990  as 
old  industries  contracted.  The  director  of  the  city's  Economic 
Commission  says  200,000  more  will  have  to  go  in  the  next  two  years. 
Forty  per  cent  of  displaced  workers  are  not  expected  to  find  new  jobs. 

In  such  a  world,  the  appeal  of  the  Falun  Gong  and  of  other  cults  is 
all  too  evident.  Many  Gongists  grew  up  in  the  cult  of  Mao,  assured 
that  the  iron  rice  bowl  would  never  crack,  accustomed  to  following 
predictable  orders  from  a  great  prophet.  Decisions  were  made  for 
them  from  cradle  to  grave.  Now  the  old  ways  are  vanishing,  and 
everybody  is  for  themselves,  poverty  take  the  hindmost.  Chinese  offi- 
cials, naturally,  react  with  horror  to  any  comparison  of  the  cult's 
appeal  with  old-style  communism.  'How  can  anyone  compare  trash  to 
a  huge  mountain?'  asks  the  Director-General  of  State  Administration 
of  Religious  Affairs.  But  an  uncertain  old  age  is  looming  for  many  of 
these  people.  Health  care  has  to  be  paid  for.  Jobs  are  disappearing.  The 
iron  rice  bowl  is  cracked. 

In  the  World  Economic  Forum  conference  hall,  the  brittle,  excit- 
ing vistas  opened  up  by  Deng  Xiaoping  and  Zhu  Rongji;  out  on  the 
streets  of  Beijing,  an  older  world  seeking  reassurance.  One  country, 
two  faiths. 


27  April 

At  the  reception  desk  of  the  Shangri-La  Hotel  in  Pudong  last  night, 
I  ran  into  a  member  of  Hong  Kong's  Executive  Council,  the  Chief 
Executive's  secretive  advisory  body.  Anthony  Leung  Kam-chung,  a 


April  159 

banker  who  is  the  Exco  member  responsible  for  education,  could 
hardly  contain  himself.  The  council,  he  said,  had  just  made  an  impor- 
tant decision.  He  couldn't  tell  me  what  it  was,  but  insisted  several 
times  that  the  public  reaction  would  be  vital.  Then  he  picked  up  his 
electronic  room  key  and  headed  off  for  the  lift. 

28  April 

Now  I  know  what  Anthony  Leung  was  talking  about  in  Shanghai. 
Regina  Ip,  the  Secretary  for  Security,  gives  the  Legislative  Council 
scary  figures  for  how  many  mainland  immigrants  would  be  able  to 
enter  Hong  Kong  under  the  Court  of  Final  Appeal's  ruling  - 
1,675,000,  or  a  quarter  of  the  SAR's  current  population.  That  could 
push  the  number  of  people  here  to  10  million  by  the  year  201 1.  The 
population  pressure  would  be  intolerable,  as  well  as  the  strain  on 
housing,  health,  education,  transport  and  welfare. 

It  is  enough  to  make  any  normal  person  agree  that  the  judges  were 
out  of  their  minds  to  let  those  people  in.  A  cartoon  in  the  Standard 
shows  a  Japanese  tidal  wave  labelled  'Mainlanders'  arching  over  the 
harbour  front.  It's  a  bit  reminiscent  of  the  stories  in  Britain  of  a  wave 
of  black  and  brown  migrants  about  to  swamp  the  country,  or,  indeed, 
the  fears  of  what  would  happen  if  the  people  of  Hong  Kong  were  all 
given  British  passports  before  the  handover.  Critics  point  out  that  the 
government  figure  for  illegitimate  children  is  three  times  the  total  in 
an  earlier  official  estimate.  It  means  Hong  Kong  men  have  fathered 
more  children  in  China  than  at  home.  And  then  there  is  the  question 
of  how  many  of  the  1.6  million  would  want  to  move  to  the  SAR:  the 
legislator  Margaret  Ng  points  to  'a  great  arrogance  —  and  ignorance' 
in  assuming  that  all  mainlanders  are  longing  to  come  here.  And  would 
the  mainland  authorities  allow  so  many  people  to  leave?  All  in  all,  this 
looks  like  a  dodgy  exercise.  But  it  is  politically  savvy.  Apart  from 
painting  the  judges  as  men  who  do  not  put  the  community's  interests 
first,  it  sets  the  government's  political  critics  on  the  back  foot. 

New  legislative  elections  are  due  next  year.  Which  grass-roots 
politician  would  want  to  go  to  the  voters  arguing  that  the  rule  of  law 
takes  precedence  over  keeping  1.6  million  people  from  crowding  into 


160  Dealing  Wiiii  the  Dragon 

Hong  Kong?  The  Democrats  are  caught  while  the  pro-Beijing  DAB 
will  be  able  to  combine  its  inclination  to  back  the  administration 
with  a  stance  of  saving  Hong  Kong  from  a  human  invasion.  No 
wonder  the  man  from  Exco  was  smiling  as  he  picked  up  his  room  key 
in  Shanghai. 


May 


7  May 

Nato  bombs  the  Chinese  embassy  in  Belgrade  in  its  Kosovo  campaign 
against  President  Slobodan  Milosevic.  The  building,  which  formerly 
housed  a  local  government  body,  is  destroyed.  Three  people  inside 
die.  Many  others  are  injured.  Sino-US  relations  are  already  tense  over 
the  Nato  attack  on  Yugoslavia,  which  Beijing  sees  as  a  major  challenge 
to  the  cherished  sanctity  of  national  sovereignty.  The  Foreign  Minister 
calls  it  an  ominous  precedent.  If  Washington  can  take  it  upon  itself  to 
interfere  in  the  affairs  of  a  nation  in  defence  of  an  oppressed  minority, 
might  it  be  tempted  to  help  the  Tibetans  or  the  Muslims  in  China's 
Far  West?  And  what  about  Taiwan? 

The  embassy  bombing  has  made  things  far  worse.  The  Americans 
give  various  explanations  —  the  embassy  moved  a  couple  of  years  ago; 
the  map  used  in  the  attack  was  out  of  date;  faulty  aiming  techniques 
were  employed.  Less  officially,  there  is  talk  of  electronic  transmissions 
from  the  building  which  could  have  been  taken  for  military  signals,  or 
even  of  Chinese  help  for  the  Milosevic  regime.  Beijing  waves  all  this 
aside.  Building  on  genuine  popular  anger,  the  authorities  bus  in  well- 
orchestrated  crowds  to  stone  the  US  embassy;  for  a  while,  the 
ambassador  is  trapped  inside.  China  demands  the  punishment  of  the 
guilty,  and  substantial  compensation.  Washington  wiD  pay  some  money, 
but  it  will  take  its  own  time  to  discipline  any  wrongdoers.  Conservative 


162  Dealing  Wiiii   iiii-:   Dracon 

critics  of  rapprochement  with  the  United  States  are  jubilant.  In  Hong 
Kong,  Martin  Lee  calls  the  bombing  a  'mistargeting'  and  regrets  that 
mainlanders  had  not  been  told  about  the  ethnic  cleansing  in  Kosovo.  A 
column  in  the  Oriental  Daily  says  that  'people  who  see  this  kind  of  trai- 
tor on  the  street  should  spit  on  him  and  throw  eggs  at  him'. 

As  well  as  Kosovo  and  the  bombing,  there  is  another  considerable 
shadow  over  Sino-US  relations,  in  the  shape  of  a  report  by  Congress- 
man Christopher  Cox  alleging  Chinese  spying  of  US  nuclear  secrets. 
The  report  veers  on  to  the  wild  side.  Much  of  what  it  says  Beijing 
stole  is  available  on  the  Internet  or  from  American  whistleblowers.  Its 
suggestion  that  all  Chinese  who  visit  the  United  States  should  be 
regarded  as  potential  spies  mixes  racism  and  paranoia.  The  journalist 
Lars-Erik  Nelson  writes  in  the  New  York  Review  of  Books  about  spec- 
ulation that  Beijing  might  have  provoked  the  whole  affair  to  create  a 
wave  of  anti-Chinese  feeling  which  would  lead  its  scientists  in  the 
United  States  to  return  home  with  the  secrets  in  their  heads.  Still,  for 
all  its  exaggerations,  the  Cox  report  chimes  in  with  growing 
American  suspicions  of  China,  including  accusations  about  lavish 
donations  to  political  campaigns.  Whatever  happened  to  the  relation- 
ship hymned  by  Clinton  in  China  less  than  a  year  ago? 

For  the  man  in  the  White  House,  that  may  be  a  matter  for  con- 
cern -  but  he  has  many  other  concerns  to  deal  with.  For  Zhu  Rongji, 
facing  the  Sisyphean  challenge  of  licking  into  shape  an  economy  that 
has  never  marched  to  the  modern  beat,  the  cooling  of  relations  holds 
an  even  deeper  threat,  particularly  after  the  way  he  went  out  on  a  limb 
with  the  World  Trade  Organisation  concessions  he  offered  in  April.  In 
the  intensely  political  context  surrounding  him,  he  cannot  afford  to 
see  too  many  more  things  go  wrong.  The  Prime  Minister  has  admir- 
ers, but  few  acolytes  in  a  system  which  thrives  on  such  people.  No 
wonder  he  sometimes  cuts  an  eminently  lonely  figure  as  he  follows  his 
favoured  pastime  of  walking  in  the  wooded  hills  outside  Beijing. 

15  May 

My  contract  as  editor  of  the  South  China  Morning  Post  expires  today. 
At  the  end  of  January,  I  was  told  that  the  owners  had  decided  not 


May  163 

to  renew  it.  No  reason  was  given.  The  paper  is  doing  well.  We  have 
expanded  and  redesigned  it  year  by  year.  Circulation  is  resisting  the 
recession,  and  profits  are  moving  up.  The  Post  took  nearly  all  the 
prizes  available  to  it  in  the  two  Hong  Kong  press  awards,  and  has  just 
been  named  the  best  English-language  newspaper  in  Asia  by  a 
regional  publishers'  association. 

This  might  not  seem  a  recipe  for  dropping  the  editor,  but  I  have  no 
chance  to  make  my  case.  Neither  Robert  Kuok  nor  his  son,  Ean,  who 
has  succeeded  him  as  chairman,  has  spoken  to  me.  I  am  told  that  their 
decision  is  irrevocable.  Still,  I  have  been  asked  to  stay  on  until  the  end 
of  the  year  while  a  new  editor  is  found,  preferably  a  Chinese  journal- 
ist who  'understands'  China  and  the  region.  It  was  suggested  that  I 
might  help  in  the  search. 

I  had  come  to  the  Post  in  May  1995  after  eighteen  months  editing 
the  Observer  in  London.  Inheriting  a  paper  in  a  dire  state,  we  had 
hoisted  sales  back  above  the  half-million  mark,  cut  the  losses  and 
won  a  dozen  awards,  including  Newspaper  of  the  Year.  But  Hugo 
Young,  chairman  of  the  Scott  Trust,  which  owns  the  Guardian  and 
Observer,  told  me  that  the  decision  had  been  made  to  grant  Peter 
Preston,  editor  of  the  daily,  his  long-standing  wish  to  become  editor- 
in-chief  of  both  papers,  and  to  sack  me.  The  manner  of  the  parting 
was  abrupt:  Young  ordered  me  to  leave  the  building  immediately 
without  speaking  to  any  of  my  colleagues. 

The  evening  after  Young  told  me  to  go,  I  received  a  telephone  call 
from  Andrew  Knight,  who  edited  The  Economist  when  I  worked  for 
it  in  the  1980s.  He  knew  the  South  China  Morning  Post  and  its  chief 
executive  from  his  days  as  a  top  executive  of  the  Rupert  Murdoch 
empire,  which  had  then  included  the  Hong  Kong  paper.  Now  he 
had  been  asked  if  he  knew  anybody  suitable  to  edit  the  Post.  The 
owners  who  had  bought  Murdoch's  shares  fourteen  months  earlier 
specifically  wanted  a  British  editor  to  succeed  the  Australian  incum- 
bent. 

The  next  morning,  my  wife  and  I  drove  across  London  to  go  for 
a  long  walk  in  Richmond  Park  to  discuss  the  idea.  When  we  were 
furthest  from  our  car,  cold  January  rain  came  down.  Sodden  and 
shivering,  we  went  to  Soho  and  ate  a  bad  Chinese  meal.  Let's  go 


164  Dealing  With  the   Dragon 

where  the  rain  is  soft  and  the  Chinese  food  good,  we  decided.  A 
month  later,  I  flew  to  Hong  Kong  and  was  offered  the  job  after  a  45- 
minute  conversation  with  the  chairman,  Kuok  Huok  Nien  -  more 
generally  known  as  Robert  Kuok.  A  neat  and  utterly  polite  man  in 
his  early  seventies,  he  proffered  chocolates  from  a  large  box  and 
waved  away  my  ignorance  of  Hong  Kong  and  China.  My  predeces- 
sor was  to  leave  when  I  was  fully  installed.  In  fact,  he  stayed  on  in 
Hong  Kong  for  nearly  a  year,  but  I  began  editing  almost  as  soon  as  I 
arrived. 

The  Post  was  one  of  the  most  lucrative  papers  in  the  world.  The 
peak  year  of  1997-98  saw  a  pre-tax  profit  equivalent  to  £60  million, 
with  a  profit-to-turnover  ratio  of  over  40  per  cent.  On  several  occa- 
sions, it  ran  200  pages  of  classified  advertising  in  the  Saturday  edition. 
The  main  news  section  was  awash  with  retail  and  fashion  advertising, 
and  the  business  pages  with  corporate  announcements.  When  I  was 
offered  the  job,  the  Post  had  two  English-language  rivals,  but  com- 
manded around  80  per  cent  of  the  market;  after  the  Eastern  Express 
died  a  year  later,  the  market  share  went  to  90  per  cent.  Some  readers 
talked  of 'the  paper'  as  if  there  was  no  other. 

One  factor  in  the  Post's  financial  health  was  its  attention  to  costs. 
Still,  there  were  not  many  publications  with  a  circulation  of  just  over 
100,000  that  had  an  editorial  staff  of  280,  and  four  to  five  daily  sec- 
tions. The  reassuring  thing  amid  the  blizzard  of  advertising  was  that 
the  Post  was  a  serious  newspaper  which  had  evolved  out  of  its  old 
status  as  a  colonial  gazette.  The  readership  was  split  more  or  less 
equally  between  Chinese  and  non-Chinese,  as  were  the  editorial  staff. 
It  was  the  only  Hong  Kong  newspaper  with  staff  bureaux  in  mainland 
China.  The  China  editor,  Willy  Wo-Lap  Lam,  was  a  leading  China- 
watcher  with  an  enviable  record  of  scoops  about  the  inner  workings 
of  the  regime.  Its  Beijing  bureau  was  the  best  in  the  business.  The 
paper  had  comprehensive  local  political  coverage,  a  strong  raft  of 
columnists  and  some  fine  original  writers.  An  early  user  of  editorial 
colour,  it  also  launched  on  to  the  Internet  in  time  for  the  1997  hand- 
over. 

The  chairman  and  principal  shareholder  was  a  legendary  figure  in 
Asian  and  international  business.  In  rankings  of  Asia's  rich  and 


May  165 

powerful,  Robert  Kuok  regularly  figures  well  up  in  the  top  twenty. 
The  American  business  magazine,  Forbes,  put  him  on  its  cover  with 
the  headline  'The  world's  shrewdest  businessman'.  Born  in  1923  as 
the  son  of  a  Malaysian-Chinese  businessman  in  the  town  of  Johore 
Bahru  just  across  from  Singapore,  he  was  educated  at  one  of  that 
city's  best  schools,  where  he  was  a  classmate  of  the  Asian  elder  states- 
man, Lee  Kuan  Yew.  During  the  Second  World  War,  he  worked  for 
a  Japanese  company,  rising  to  head  its  rice  department.  That  led  him 
into  commodities,  in  particular  sugar.  Trading  from  a  room  at  the 
Grosvenor  House  Hotel  in  London,  where  he  acquired  a  taste  for 
fine  claret,  he  was  said  to  have  controlled  10  per  cent  of  the  world's 
sugar  stock  at  one  point.  'I  risked  everything  without  realising  it,'  he 
told  Forbes.  'It  was  all  rhythm.  Have  you  ever  seen  [the  basketball  ace] 
Michael  Jordan  play  when  he's  on  a  rhythm  run?  It  was  exactly  like 
that.' 

While  branching  out  into  other  commodities,  Kuok  also  built  up 
Asia's  biggest  luxury  hotel  chain,  went  into  property  and  insurance, 
and  bottled  Coca-Cola  in  China.  He  was  known  equally  for  his 
discretion  and  his  wealth,  and  for  his  impeccable  business  and 
political  connections.  Despite  being  Chinese  in  a  country  which 
was  promoting  its  Malay  citizens,  he  developed  strong  links  with  the 
government,  and  went  into  Indonesia,  where  the  Chinese  are  the 
regular  target  of  racial  hostility.  As  a  leading  member  of  the  Chinese 
diaspora,  Kuok  was  one  of  the  earliest  and  biggest  investors  on  the 
mainland,  moving  from  commodity  deals  to  big  hotel  and  property 
projects.  One  of  his  lieutenants  told  me  that  few  of  these  actually 
turned  a  profit,  but  it  was  the  presence  and  commitment  that 
counted. 

A  long-term  player  wherever  he  goes,  Kuok  won  many  brownie 
points  from  the  Central  Government  when  he  did  not  let  the 
Tiananmen  Square  massacre  affect  his  investment  plans.  He  was,  as  he 
said,  a  businessman  who  went  wherever  he  could  see  a  promising 
opportunity.  He  took  the  ways  of  the  region  in  his  stride,  not  neces- 
sarily approving  but  accepting  them  as  the  way  of  life  in  this  part  of 
the  globe.  He  was  also  well  known  for  his  highly  developed  sense  of 
privacy.  When  he  complained  about  a  book  written  about  him  in 


166  Dealing  Wiiii  the  Dragon 

Malaysia  which  he  said  was  full  of  lies,  I  asked  him  if  he  would  issue 
a  rebuttal.  He  laughed  at  the  idea  of  revealing  himself  to  the  world  in 
such  a  manner. 

Kuok  and  a  Malaysian  business  associate  bought  Murdoch's  stake  in 
the  Post  at  the  end  of  1993.  Kuok's  Kerry  Media  company  (it  has 
nothing  to  do  with  Ireland,  having  simply  been  bought  as  a  shelf 
company)  had  34.9  per  cent,  the  most  you  can  own  of  a  company  in 
Hong  Kong  without  making  a  general  offer  for  the  rest  of  the  shares. 
His  partner,  a  conglomerate  called  Malaysian  United  Industries,  had 
21  per  cent.  MUI  subsequently  sold  12  per  cent  of  its  stake  to  the  US 
fund  Templeton  Franklin  to  raise  money  in  the  face  of  the  Asian 
crisis  and  its  losses  in  other  investments,  such  as  the  Laura  Ashley  busi- 
ness. With  34.9  per  cent  and  the  chairmanship  of  the  Post,  Robert 
Kuok  was  seen  everywhere  as  the  proprietor  of  Hong  Kong's  domi- 
nant English-language  newspaper. 

The  acquisition  set  plenty  of  alarm  bells  ringing.  Because  of  Kuok's 
mainland  investments  and  his  friendship  with  the  likes  of  Li  Peng,  it 
was  natural  for  observers  and  officials  round  Chris  Patten  to  jump  to 
the  conclusion  that  the  Post  would  become  a  mainland  mouthpiece. 
Hence  their  involvement  in  the  launch  of  the  Eastern  Express.  That 
paper's  first  editor,  Stephen  Vines,  later  reported  that  a  senior  main- 
land official  told  two  visiting  Hong  Kong  businessmen  shortly  after 
Kuok's  purchase  that  China  was  pleased  to  have  'got  the  Post  in  the 
bag'.  A  British  newspaper  correspondent  was  assured  by  a  source 
close  to  the  Hong  Kong  government  that  the  deal  had  been  financed 
by  the  Bank  of  China,  though  Kuok  was  quite  rich  enough  not  to 
need  any  help. 

Patten  was  right  to  see  the  Post's  new  chairman  as  an  opponent. 
He  was  a  member  of  the  Hong  Kong  business  world,  which  also 
included  a  number  of  prominent  British  figures  who  disliked  the 
political  reforms  brought  in  before  decolonisation.  For  them,  Patten's 
methods  were  bad  enough;  but  they  objected  particularly  to  his  aims. 
Hong  Kong,  they  insisted,  could  only  suffer  from  becoming  a  more 
politicised  city,  which  would  upset  its  position  as  a  business  centre 
and  lead  to  social  discord.  'These  days,  the  mood  in  Hong  Kong  is 
regrettably  neither  harmonious  nor  happy,'  Kuok  said  in  a  speech  in 


May  167 

1995.  'The  British  government's  decision  suddenly  to  launch  in 
October  1992  a  drive  for  much  fuller  democracy  in  Hong  Kong, 
without  consultation  with  China,  was  in  my  opinion  ill-timed  and 
misconceived.  China's  reaction  to  having  her  pitch  queered  in  this 
fashion  has  not  been  surprising.'  He  went  on  to  lament  the  polarisa- 
tion of  society,  the  'great  and  needless  tensions',  the  effect  on  small 
businessmen  and  entrepreneurs,  and  'the  unfortunate  tendency  of  the 
media  to  pounce  upon  and  magnify  any  display  of  acrimony  or  hos- 
tility between  the  parties'. 

Apart  from  their  political  differences,  Kuok  loathed  what  he 
regarded  as  Patten's  arrogance  and  colonial  condescension.  Whether 
the  fact  that  Kuok's  brother  was  killed  by  the  British  as  a  rebel  during 
the  insurgency  in  Malaya  fuelled  his  dislike  of  somebody  he  saw  as  a 
latter-day  imperial  representative  is  best  left  to  the  psychiatrists. 
Patten's  Westminster  wit  grated  with  the  local  grandees,  who  took  it 
for  Western  superiority.  Irony  is  not  a  quality  much  in  evidence 
among  the  Hong  Kong  establishment.  Even  some  democrats  could 
find  the  Governor  patronising  and  self-centred.  Though  it  was,  pre- 
sumably, none  of  his  doing,  the  headline  on  the  Sunday  Times 
serialisation  of  Jonathan  Dimbleby's  insider  account  of  the  Patten 
years  —  'the  last  democrat'  —  raised  more  than  a  few  hackles  among 
those  who  would  be  fighting  that  fight  in  Hong  Kong  long  after  he 
had  left. 

When  I  mentioned  the  apparent  cultural  gulf  between  the 
Governor  and  the  tycoons  to  one  of  Patten's  aides,  the  response  was 
that  people  like  Kuok  were  just  trading  on  their  supposed  irritation  as 
an  excuse  to  cover  their  opposition  to  democracy  and  their  desire  to 
be  left  free  to  go  on  making  as  much  money  as  possible.  But  watch- 
ing a  big  local  figure  who  was  a  major  Conservative  donor  being  left 
to  wander  round  a  Government  House  reception  for  John  Major,  or 
overhearing  a  bumbling  Downing  Street  official  asking  the  head  of 
another  major  conglomerate  in  Bertie  Woosterish  tones,  'Are  you  in 
business,  Mr  Woo?'  pointed  either  to  a  condescending  lack  of  prepa- 
ration or  to  yet  another  manifestation  of  the  sense  of  superiority  felt 
by  both  the  British  and  the  Chinese  which  can  make  relations 
between  them  so  difficult. 


1 68  Dealing  With    mm    Dragon 

Correct  as  he  was  to  see  Kuok  as  a  stern  critic,  I  was  determined  to 
draw  a  line  between  the  chairman's  views  and  the  newspaper's  edit- 
orial approach.  The  Post  could  not  follow  the  model  of  British 
newspapers  which  the  Governor  had  known  in  his  previous  incarna- 
tion, where  a  word  from  the  owner  was  sufficient  to  dictate  the 
editorial  policy.  This  created  a  strange  situation.  In  public,  basing 
myself  on  what  appeared  in  the  paper,  I  strongly  rejected  allegations 
that  the  new  ownership  had  made  it  sell  out  to  Beijing  or  had  turned 
it  into  a  puppet  of  China.  But  that  was  exactly  what  I  found  myself 
fighting  against.  By  its  nature,  this  tussle  had  to  remain  private.  A 
moment's  fleeting  glory  as  a  champion  of  the  freedom  of  the  press 
would  do  no  good  for  the  thing  that  mattered:  what  was  printed  in 
the  newspaper  each  day.  There  was  also  a  question  which  involved  a 
certain  degree  of  ego  on  my  part.  If  I  walked  out  or  made  my  dis- 
agreements with  the  owner  and  management  so  public  that  I  was 
sacked  or  had  to  resign,  who  would  take  my  place?  Various  names  of 
more  pliant  or  politically  reliable  successors  were  mentioned  from 
time  to  time.  I  had  to  think  that  my  departure  would  be  a  bad  thing 
for  the  Post,  and  gamble  that,  when  I  threatened  to  go  if  the  owners 
and  managers  insisted  on  doing  things  I  felt  would  be  wrong,  I  would 
win  —  and  live  to  fight  another  day,  even  if  this  meant  boxing  in  the 
shadows  and  side-stepping  questions  about  proprietorial  influence. 

My  first  tussle  came  almost  immediately  after  I  arrived  in  Hong 
Kong,  on  a  Tuesday.  The  following  day,  I  was  told  that  a  decision  had 
been  taken  the  previous  weekend  to  merge  the  editorial  operations  of 
the  daily  and  Sunday  papers,  which  had  been  run  separately  up  to 
then.  Twenty-five  jobs  would  be  cut.  The  board  wanted  to  exert 
control  over  editorial  spending  now  that  the  Eastern  Express  had 
proved  no  challenge  to  the  Post. 

As  part  of  the  changes,  my  predecessor  set  off  a  storm  by  dropping 
a  cartoon  strip  called  'Lily  Wong',  which  regularly  lampooned  the 
mainland  and  forecast  the  worst  after  the  handover.  The  cartoonist,  an 
American  called  Larry  Feign,  had  just  done  a  set  of  strips  on  alle- 
gations that  Chinese  officials  were  selling  the  organs  of  executed 
prisoners.  Feign,  who  was  not  on  the  staff,  was  well  paid,  and  an 
economic  reason  for  dropping  him  was  given.  But,  naturally,  the 


May  169 

charges  of  political  censorship  flared  up.  Not  having  been  involved  in 
the  decision,  I  cannot  deliver  a  definitive  judgement.  My  own  feeling 
was  that  finance  certainly  counted,  but  that  my  predecessor  had  fallen 
out  of  love  with  the  strip  and  found  the  cartoonist  highly  irritating. 
Sometimes,  editors  simply  decide  they  don't  like  something  in  their 
paper  and  drop  it. 

The  list  of  the  twenty-five  staff  journalists  who  were  to  go  in  the 
merger  of  the  editorials  was  sent  to  the  deputy  chairman,  Roberto 
Ongpin,  a  former  member  of  the  Marcos  government  in  the  Philip- 
pines who  was  a  business  associate  of  Robert  Kuok.  When  it  came 
back,  on  Friday  afternoon,  the  name  of  a  leading  journalist  at  the 
paper  had  been  added.  He  would  have  been  a  grievous  loss.  The 
only  possible  reason  for  dropping  him  would  have  been  to  curry 
favour  with  China,  where  the  Post  was  involved  in  a  project  for  a  busi- 
ness paper. 

On  Saturday  morning,  I  met  the  paper's  chief  executive,  Lyn 
Holloway,  for  coffee  in  the  deserted  bar  of  the  Hong  Kong  Club.  I 
told  him  that  if  this  individual  sacking  went  through,  I  would  pack  my 
bags  and  return  to  London  immediately.  If  this  was  how  the  paper  was 
to  be  run,  I  would  not  take  up  the  editorship.  The  decision  was 
abandoned.  The  journalist  worked  for  the  Post  throughout  my  time  as 
editor  though  Ongpin,  in  particular,  kept  coming  back  to  his  sup- 
posedly negative  effect. 

This  was  the  first  of  a  series  of  such  incidents  over  the  following 
years  as  I  received  instructions  which  could  only  be  refused.  I  was 
told  that  Kuok  and  his  son,  who  succeeded  him  as  chairman  in 
1998,  were  particularly  annoyed  by  the  way  the  paper  described 
political  figures  who  backed  the  mainland  government  as  'pro- 
China'  or  'pro-Beijing'.  One  afternoon  in  1998,  at  a  weekly 
meeting  with  senior  managers,  I  was  asked  how  I  was  feeling.  Fine, 
I  said.  You'd  better  be,  they  replied;  the  Kuoks  had  blown  up  yet 
again  about  the  paper  having  called  somebody  'pro-Beijing'.  This 
practice  must  stop,  they  insisted.  Wearily,  I  said  that  this  was  ridicu- 
lous, and  I  was  surprised  it  was  still  being  brought  up.  Did  the 
Kuoks  think  there  was  something  wrong  with  being  pro-China  or 
pro-Beijing?  Did  they  regard  friendship  with  the  mainland  as  a 


170  Dealing  Wmii   ini-,   Draoon 

badge  of  shame?  There  was  no  way  I  was  going  to  ban  the  phrase 
from  the  Post.  All  right,  said  the  managers  equally  wearily,  we  will 
tell  them  that  is  your  view. 

At  one  point,  I  was  advised  to  submit  editorials  about  Malaysia  and 
the  Philippines  so  that  they  could  be  vetted  by  Kuok  and  Ongpin  - 
even  if  it  had  been  acceptable,  this  was  a  highly  impractical  suggestion 
given  the  amount  of  travel  they  did.  On  half  a  dozen  occasions,  I  was 
told  to  sack  or  move  staff  journalists  whose  writing  displeased  the 
owners.  Sometimes  I  refused  outright;  on  a  couple  of  occasions,  I  tap- 
danced  round  the  edge  of  a  problem  until  the  storm  passed.  On  one 
occasion,  I  let  myself  be  boxed  into  a  corner. 

In  the  spring  of  1997,  a  Saturday  morning  telephone  call  from 
Robert  Kuok  as  he  drove  to  China  ordered  the  dismissal  of  a 
columnist  who  had  referred  to  the  publisher  Jimmy  Lai  having 
called  the  former  Prime  Minister,  Li  Peng,  a  'turtle's  egg'.  I  said  no, 
as  I  had  to  previous  suggestions  that  the  man  in  question  should  be 
fired.  But  a  few  months  later,  urged  on  by  senior  colleagues,  I 
decided  to  move  the  writer  from  his  column  because  I  felt  it  was  not 
good  enough,  and  was  full  of  items  that  did  not  fit  in  its  place  in  the 
business  pages.  Just  before  he  was  to  be  moved,  he  wrote  a  column 
containing  two  items  which  I  thought  were  particularly  silly,  and 
fully  justified  shifting  him.  One  linked  the  new  SAR  regime  to  the 
murderous  military  dictatorship  in  Nigeria;  the  other  said  that  Tung 
Chee-hwa  and  his  colleagues  should  go  round  with  condoms  on 
their  heads  because  they  acted  like  'male  appendages'.  Sod's  law 
dictated  that  Robert  Kuok  was  having  lunch  that  day  with  a  visitor 
from  Singapore.  Kuok  vaunted  the  merits  of  the  Post  compared  to 
the  other  city's  Straits  Times.  His  visitor  pointed  to  the  'male 
appendages'  item  and  asked  if  that  was  what  Kuok  regarded  as 
quality  journalism.  The  lunch  over,  the  chairman  called  the  paper's 
chief  executive  and  demanded  that  the  columnist  be  fired  from  the 
paper  immediately. 

As  in  the  past,  I  refused  to  do  so.  But  there  was  a  problem,  since  I 
was  going  to  move  him  a  week  later  in  any  case.  So  I  told  the  chief 
executive  that  he  would  no  longer  be  doing  the  column,  but  that  I 
was  planning  to  move  him  to  a  lighter  column  elsewhere  in  the  paper. 


May  171 

He  was  duly  replaced  as  previously  planned,  but  I  was  then  told  that 
Kuok  still  insisted  he  was  sacked.  A  new  column  was  out  of  the  ques- 
tion. After  several  weeks  of  stalemate,  the  journalist  came  to  my  office 
and  said  he  had  a  solution:  we  should  pay  him  six  months'  money,  and 
he  would  leave  the  staff  and  write  as  a  contributor  on  a  monthly 
retainer.  That  was  done  —  though  he  didn't  get  six  months'  pay.  He 
wrote  two  columns  at  the  weekend  for  eighteen  months  before  leav- 
ing the  paper,  joining  the  opposition  Standard  and  setting  himself  up 
as  an  avenging  angel  to  denounce  the  evils  of  the  Post.  This  seemed 
somewhat  bizarre  since  he  had  taken  management  guidance  on  the 
contents  of  his  column  at  a  time  when  I  was  insisting  on  editorial 
independence,  had  sent  me  an  unbidden  and  unwanted  message  assur- 
ing me  that  he  would  be  a  'flexible  friend'  in  sensitive  matters,  and 
had  written  to  me  congratulating  me  on  our  defence  of  press  freedom 
and  saying  how  'superb'  our  front  pages  had  been.  Hell  hath  no  fury 
like  a  columnist  scorned. 

The  main  battle  at  the  time  of  the  handover  in  1997  involved  a 
Monday  political  column  written  by  the  pro-democracy  passionaria 
Emily  Lau,  a  former  journalist  and  popularly  elected  legislator  who 
led  a  political  group  called  The  Frontier.  Robert  Kuok  was  adamant 
that  she  must  go;  I  was  equally  adamant  that  she  must  stay.  This  had 
its  ironic  side,  given  her  recurrent  expressions  of  concern  that  the  Post 
was  exercising  self-censorship  and  a  bias  against  the  democratic  camp. 

Although  she  had  been  a  journalist,  her  columns  were  rarely  pearls 
of  editorial  writing,  and  occasionally  recycled  her  radio  talks  or 
speeches.  Still,  whatever  my  reservations  about  her  writing,  or  her 
economy  with  the  truth,  I  could  not  think  of  dropping  Lau's  column. 
The  abolition  of  the  elected  legislature  on  1  July  meant  that  repre- 
sentatives of  the  democratic  camp  like  her  lost  their  main  platform. 
They  had  not  been  defeated  by  the  electorate,  but  had  been  arbitrar- 
ily deprived  of  their  seats  in  favour  of  a  provisional  legislature  selected 
by  a  committee  chosen  by  another  pro-Beijing  body  without  the 
voters  having  a  chance  to  express  their  views,  and  in  defiance  of  the 
findings  of  every  opinion  poll.  In  my  view,  this  rolling-back  ot 
democracy  gave  the  press  a  special  role  to  play,  and  made  it  essential  to 
go  on  running  columns  by  Lau  and  two  other  pro-democracy 


172  Dealing  With  the   Dragon 

legislator-columnists,  Christine  Loh  and  Margaret  Ng.  We  also 
approached  the  Democratic  Party  chairman,  Martin  Lee,  to  write 
for  the  paper  regularly,  but  he  said  he  preferred  to  reserve  himself  for 
big  occasions. 

Later,  when  a  new  legislature  gave  popularly  chosen  members  a 
chance  of  getting  back  in,  I  changed  our  line-up  of  regular  columnists 
to  avoid  giving  electoral  advantage  to  any  of  them.  But  in  1997-98, 
Emily  Lau  had  to  stay  in  defiance  of  the  angry  telephone  calls  from 
Robert  Kuok  to  the  paper's  chief  executive,  which  were  duly  passed 
on  to  me. 

I  was  told  that  somebody  was  employed  at  Kerry  Holdings  to  go 
through  the  paper  for  anything  that  the  chairman  might  find  objec- 
tionable. But  Robert  Kuok  rarely  spoke  to  me  directly.  Since  his 
views  were  more  often  expressed  through  his  subordinates,  it  was 
not  always  clear  whether  they  represented  his  full  and  considered 
opinions  or  were  the  work  of  executives  operating  like  Henry  II 's 
knights  rushing  off  to  do  their  master's  bidding  on  Thomas  a 
Becket. 

On  one  occasion,  the  approach  was  considerably  more  direct.  One 
evening  in  June  1997  when  I  was  out  of  the  office  for  a  couple  of 
hours,  the  chief  executive,  Lyn  Holloway,  called  my  deputy  up  to  his 
office  and  told  him  to  issue  an  instruction  that  the  Tiananmen  Square 
crackdown  should  no  longer  be  described  as  a  'massacre'.  When  I  got 
back  to  the  paper  and  was  told  of  this,  I  rescinded  the  order.  Later  that 
night,  I  faxed  a  letter  saying  I  would  resign  if  the  instruction  was 
allowed  to  stand.  The  next  day,  I  was  asked  if  I  could  keep  the  word 
out  of  headlines  at  least.  No,  I  said.  That  was  that,  for  the  moment.  I 
never  knew  if  a  call  from  Robert  Kuok  had  been  behind  the  whole 
thing  or  if  this  had  been  the  initiative  of  an  underling:  I  doubted, 
however,  that  it  contravened  the  chairman's  wishes.  Some  time  later, 
the  issue  came  up  again,  but  was  not  pursued  when  I  recalled  what 
had  happened  in  1997. 

That  did  not  stop  correspondents  and  press  freedom  bodies  stating 
as  a  matter  of  fact  that  'massacre'  had  been  banned  from  the  Post.  In 
fact,  as  anybody  reading  the  paper  could  see,  the  M  word  kept  appear- 
ing -  168  times  in  one  twelve-month  period.  But  such  things  never 


May  173 

go  away.  Some  time  later,  I  was  presented  with  a  list  of  do's  and 
don'ts  typed  in  a  series  of  numbered  points  on  one  side  of  a  sheet  of 
A4  paper.  They  included  the  prohibition  of  'massacre'  and  sanctions 
against  out-of-favour  staff.  Once  again,  I  declined  to  carry  them  out. 
Once  again,  the  order  was  not  pressed  —  and  the  pressure  later  eased 
after  the  appointment  of  a  new  senior  manager  who,  though  a  loyal 
Kuok  man,  also  knew  the  importance  of  democracy  and  the  rule  of 
law. 

In  the  spring  of  1997,  Kuok  appointed  a  man  called  Feng  Xiliang 
as  a  consultant  to  the  Post.  White-haired  and  self-effacing,  Feng  was 
the  offspring  of  a  well-to-do  family  in  Shanghai.  Born  in  the  1920s, 
he  attended  that  city's  most  famous  school  of  the  pre-communist  era, 
St  Joseph's.  After  the  war,  he  went  to  the  United  States  to  study  jour- 
nalism at  the  University  of  Missouri.  Returning  to  China,  he  worked 
on  English-language  propaganda  magazines,  and  is  said  to  have  suf- 
fered badly  during  the  Cultural  Revolution. 

Rehabilitated,  he  became  the  first  editor  of  the  mainland's  English- 
language  newspaper,  China  Daily,  in  the  early  1980s.  Later,  he  went 
back  to  the  United  States  as  its  representative  in  New  York.  He  was 
not  in  Beijing  at  the  time  of  the  Tiananmen  demonstration,  when  a 
delegation  from  China  Daily  marched  to  the  square  wearing  hats 
emblazoned  with  the  newspaper's  masthead.  There  are  differing 
accounts  of  when  he  returned  to  Beijing  and  how  he  behaved  when 
he  got  back.  But  in  1991,  Feng  went  off  again  as  a  Mass  Media  Fellow 
at  the  East- West  Center  in  Hawaii.  He  developed  a  liking  for 
California,  acquiring  a  house  in  ultra-right-wing  Orange  County. 
But  he  then  came  to  Hong  Kong  to  advise  a  pro-Beijing  magazine 
called  Window,  set  up  by  T.  S.  Lo,  a  sad-faced  lawyer  who  wanted  to 
become  Chief  Executive  and  nurtured  a  deep  dislike  for  the  Post. 

Lo's  feelings  cannot  have  been  warmed  by  the  polls  we  were  print- 
ing at  the  time.  In  the  absence  of  a  popular  election,  I  felt  they  were 
the  only  way  of  letting  opinion  be  articulated,  even  if  the  choice  of 
candidates  was  severely  limited.  For  T.  S.  Lo,  they  were  a  killer.  He 
hardly  managed  to  scrape  up  1  per  cent  support,  and  duly  dropped 
out,  closing  his  magazine  and  depriving  his  adviser  of  a  job. 

Survivors  don't  stay  unemployed  for  long,  and  Feng's  name  was 


174  Dealing  Wiiii  the   Dragon 

mentioned  as  a  deserving  case  to  Robert  Kuok,  supposedly  by  Lu 
Ping,  the  head  of  China's  Hong  Kong  and  Macau  Affairs  Office, 
who  had  been  a  classmate  in  Shanghai.  Kuok  took  Feng,  now  well 
into  his  seventies,  under  his  wing,  and  decided  that  he  was  just 
what  the  Post  needed.  Like  officials  I  met  in  Beijing,  the  chairman 
said  that  the  paper  should  'understand'  China  better.  And  who 
better  to  enable  us  to  'understand'  the  mainland  than  Feng  Xiliang, 
a  man  who  had  earned  himself  a  seat  in  the  upper  house  of  China's 
parliament? 

I  was  told  of  Feng's  appointment  after  it  had  been  signed  and 
sealed.  As  it  happened,  I  was  going  to  Thailand  for  a  week's  holiday 
the  following  day.  I  spent  some  time  walking  up  and  down  the  beach 
trying  to  decide  if  this  was  the  break  point.  The  timing  was  acute: 
there  was  less  than  three  months  to  go  to  the  handover.  Somewhere 
along  the  sand,  I  decided  to  take  Feng's  position  literally.  He  had 
been  taken  on  as  a  consultant.  So  I  wouldn't  consult  him. 

News  of  the  appointment  hit  the  headlines  in  London,  Paris  and 
New  York.  I  could  insist  till  I  was  blue  in  the  face  that  a  consultant 
is  a  consultant  is  a  consultant,  and  that  I  was  still  the  editor.  To  no 
avail,  'big  brother  keeps  an  eye  on  the  media  underlings'  warned 
the  Independent.  In  France,  Liberation  called  Feng  'the  man  para- 
chuted in  by  Beijing'.  The  International  Herald  Tribune  ran  the  story 
on  the  front  page  under  the  banner  'new  hong  kong  editor:  he 
edits  what,  exactly?'.  When  I  telephoned  the  Herald  Tribune  to  ask 
why  it  had  promoted  Feng  to  an  editor's  job,  the  reply  was  that 
'consultant  isn't  a  headline  word'.  Going  a  step  further,  the  New 
York  Times  described  Feng  as  'senior  editor'.  The  Asian  Wall  Street 
Journal  noted  that  'suspicion  that  the  76-year-old  Mr  Feng  is  a  real- 
life  political  commissar  is  sending  shivers  up  the  spines  of  journalists 
all  over  Hong  Kong,  who  are  asking  themselves:  what  if  this  is 
only  the  thin  end  of  the  wedge?'.  In  London,  The  Times  linked 
fears  about  Feng  with  'concerns  from  Hong  Kong's  pro-democracy 
faction  that  the  Post  is  shying  away  from  extensive  coverage  of  the 
territory's  political  issues'.  The  Times  correspondent  could  not 
have  been  reading  the  paper  too  closely:  in  the  previous  three 
days  we  had  run  twenty-four  pieces,  including  three  front-page 


May  175 

splashes  and  two  editorials,  on  proposed  changes  to  civil  rights 
legislation. 

Feng's  location  became  a  particular  cause  for  comment.  I  had 
installed  him  in  a  windowless  room  opposite  my  own  office.  I  put  him 
there  precisely  so  that  I  could  keep  an  eye  on  what  he  was  doing.  If 
he  called  in  journalists  to  tell  them  how  to  'understand'  the  mainland 
better,  I  wanted  to  know.  But  the  foreign  correspondents  reported 
that  Feng  had  been  put  in  a  'specially  built  office'  to  keep  watch  on 
me.  The  Financial  Times  had  him  'set  to  take  a  desk  alongside  Jonathan 
Fenby'.  The  Guardian  went  a  step  further:  Feng  was  taking  over  my 
office  as  I  was  moved  to  new  premises  -  presumably  in  a  mainland 
thought-reform  institute. 

As  if  it  makes  a  difference  where  anybody  sits  in  this  electronic  age. 
Only  one  person,  a  journalist  at  the  Post,  asked  me  the  key  question: 
was  Feng  going  to  be  logged  on  to  the  editorial  computer  system? 
The  answer  was  no.  Without  that,  he  had  no  access  to  copy.  There 
were  some  other  relevant  questions  that  were  never  asked.  Would  he 
attend  editorial  conferences?  (No.)  Would  I  talk  to  him  about  the 
contents  of  the  paper?  (No.)  Would  he  be  involved  in  discussions  of 
coverage  of  mainland  China  or  Hong  Kong?  (No.) 

Of  course  there  were  fears  about  what  the  appointment  meant.  I 
felt  them  more  keenly  than  anybody  else.  I  had  made  it  clear  that  if 
Feng  did  try  to  interfere,  and  was  backed  up  by  the  chairman  or  the 
paper's  management,  I  would  go.  Still,  as  a  journalist  with  thirty-five 
years  in  the  trade,  I  was  hardly  surprised  if  those  fears  took  precedence 
in  the  reporting  over  my  account,  even  if  it  was  personally  wounding 
that  some  correspondents  now  ranked  me  as  an  editor  willing  to 
work  under  a  political  Big  Brother.  Around  this  time,  a  leading  British 
business  figure  in  Hong  Kong  said  after  dinner  at  his  house  high  on 
the  Peak  that  I  seemed  to  be  having  a  hard  time  with  the  foreign  press 
corps.  Yes,  I  agreed:  you  told  them  the  truth,  but  they  wouldn't 
believe  it.  My  host,  who  had  sometimes  taken  issue  with  our  cover- 
age of  his  company,  patted  me  on  the  knee  and  said  with  a  smile:  'You 
see  what  it's  like,  Jonathan.' 

If  consultant  Feng  had  been  meant  to  whip  us  into  line,  he  did  a 
lousy  job.  Soon  after  his  appointment,  we  devoted  the  front  of  our 


176  Dealing  With  the   Dragon 

Saturday  Review  section  to  the  letters  smuggled  out  of  prison  over 
the  years  by  dissident  Wei  Jingsheng.  Reporting  and  comment  in  the 
Post  went  on  just  as  before.  On  handover  day,  my  front-page  editor- 
ial stressed  the  importance  of  democracy  and  freedom.  The  Beijing 
bureau  continued  to  file  hard-hitting  reports  from  the  mainland. 
Emily  Lau  wrote  her  columns,  as  did  other  pro-democracy  politicians 
who  lost  their  seats  at  the  handover.  Post  correspondents  visited  Tibet 
and  other  sensitive  areas  of  China,  and  filed  straightforward  reports  of 
what  they  saw  and  were  told  by  locals.  In  Hong  Kong,  the  paper 
revealed  how  the  government  planned  to  put  Chinese  state  bodies 
above  the  law,  and  reported  on  secret  Chinese  arms-dealing  through 
the  territory.  We  were  regularly  banned  from  distribution  on  the 
mainland  when  we  ran  photographs  of  dissidents,  the  Dalai  Lama  or 
President  Lee  Teng-hui  of  Taiwan.  And  Tiananmen  was  still  a  mas- 
sacre. 

But  some  people  stuck  to  the  party  line,  continuing  to  see  Feng 
Xiliang  as  a  censor  and  me  as  a  man  who  dared  not  tell  the  tuth. 
Asked  in  a  radio  discussion  about  my  insistence  that  the  consultant 
was  not  influencing  the  contents  of  the  paper,  Jonathan  Mirsky  o£The 
Times  replied,  'He  would  say  that,  wouldn't  he?  If  he  said  that  this 
man  is  that  kind  of  person,  he'd  be  out  of  a  job.' 

Throughout  all  this,  Feng  padded  discreetly  in  and  out  of  his 
office,  took  trips  to  California,  and  made  arrangements  for  occa- 
sional visits  to  Beijing  by  senior  executives.  The  controversy  stirred 
up  by  his  appointment  had  clearly  shaken  him.  'There's  so  much 
talk,'  he  told  an  Australian  journalist,  Alan  Knight.  'I  begin  to 
wonder  why  I  am  doing  this.'  Some  of  the  hundred  or  so  corre- 
spondents who  came  to  interview  me  during  the  handover  peered 
across  the  passage  outside  my  office  to  catch  a  glimpse  of  Big 
Brother.  His  room  was  usually  empty.  When  Feng  was  there,  he  sat 
alone  reading  newspapers  and  making  telephone  calls.  To  begin 
with,  one  or  two  members  of  the  editorial  staff  dropped  in  to  speak 
to  him  and  to  try  to  take  the  measure  of  the  newcomer.  Feng 
seemed  grateful  for  the  company,  but  the  visits  soon  tailed  off.  I 
started  to  feel  almost  sorry  for  the  small  elderly  man  with  well- 
combed  white  hair  and  a  quietly  courteous  manner.  I  wondered 


May  177 

what  he  would  do  if,  just  once,  I  invited  him  to  an  editorial  con- 
ference, or  asked  what  he  thought  of  a  column  criticising  the 
central  leadership. 

Feng's  most  useful  role  was  in  helping  to  set  up  a  meeting  shortly 
before  the  handover  with  China's  Foreign  Minister,  Qian  Qichen, 
who  was  overseeing  Hong  Kong  policy.  Before  the  interview  in  an 
official  guest  house  in  a  garden  in  Beijing,  Qian  greeted  Feng  as  an 
old  friend.  The  Minister's  answers  to  my  questions  came  as  if  by  rote 
until  I  asked  about  some  hard-line  statements  he  had  made  on  the 
freedom  of  expression  after  the  handover.  How  could  they  be 
reconciled  with  the  promise  that  the  Hong  Kong  system  would 
continue  unchanged  after  1  July?  I  wondered.  Oh,  the  Minister 
replied,  he  had  just  been  expressing  a  personal  opinion.  As  a 
member  of  the  Chinese  government,  he  naturally  did  not  approve  of 
criticism.  But  so  long  as  the  law  was  not  broken,  people  in  Hong 
Kong  could  say  whatever  they  liked.  Martin  Lee  called  the  interview 
the  most  important  statement  by  a  mainland  official  before  the 
handover. 

Eventually,  in  the  autumn  of  1998,  Feng  packed  up  his  belongings 
and  left  for  the  management  floor  above  to  pursue  purposes  unknown 
to  me.  His  departure  from  the  editorial  and  his  total  lack  of  any  effect 
on  the  paper  was  not  mentioned  by  any  of  the  correspondents  who 
had  reported  his  arrival  so  breathlessly.  But  the  penny  had  dropped 
with  one  man.  'You've  sidelined  Feng,'  Robert  Kuok  remarked  one 
day  with  a  notable  lack  of  pleasure  in  his  voice. 

This  was  far  from  being  the  tycoon's  first  expression  of  disquiet. 
When  we  met  for  the  first  time  in  1995,  he  had  said  that  the  Post 
should  be  independent,  and  could  criticise  the  government  in  Beijing 
by  all  means.  But  he  did  not  want  it  to  be  anti-Chinese  in  the  sense 
of  being  against  the  Chinese  as  a  people  or  a  race.  Over  the  following 
years,  it  became  clear  that,  for  him,  the  Chinese  people  and  the 
Chinese  authorities  were  increasingly  lumped  together.  To  begin 
with,  he  objected  to  what  he  saw  as  our  pro-Patten  slant,  which 
might  have  amused  the  Governor.  Given  the  passage  of  events,  this 
eventually  faded  into  insignificance  beside  other  concerns  -  the 
paper's  reporting  and  comment  on  mainland  China,  its  attitude 


178  Dealing  Wiiii   1  1  j  1  -.   Dkacon 

towards  the  new  administration  and  the  business  community  in  Hong 
Kong,  and  its  support  for  democratic  politicians.  Even  more  funda- 
mental, I  believe,  was  Kuok's  complaint  that  the  paper  was  out  of  his 
control. 

He  did  not  keep  his  views  to  himself,  asking  why  couldn't  the  Post 
toe  the  line?  Why  didn't  it  do  what  it  was  told?  Why  was  it  so  anti- 
China?  Why  was  this  the  only  asset  he  owned  which  he  could  not 
control?  His  position  was  delicate.  As  a  leading  member  of  the  Hong 
Kong-Beijing  establishment,  he  had  sat  on  the  Preparatory 
Committee  set  up  by  China  to  map  out  the  future  of  the  former 
British  colony.  The  head  of  the  mainland's  Hong  Kong  and  Macau 
Affairs  Office,  Lu  Ping,  went  golfing  at  a  Kuok-owned  country  club 
across  the  border.  When  leading  politicians  from  the  north  visited 
Hong  Kong,  they  saw  Kuok.  But  there  was  his  newspaper  criticising 
the  Preparatory  Committee,  urging  Lu  to  change  his  tune,  laying  in 
to  the  new  administration  in  Hong  Kong,  and  writing  about  problems 
on  the  mainland  which  Beijing  denied  existed.  To  people  from  a 
system  where  the  media  follow  orders,  this  must  have  been  distinctly 
puzzling. 

The  billionaire  head  of  a  major  conglomerate  of  his  own  creation, 
Robert  Kuok  was  used  to  having  his  way.  As  a  non-executive  direc- 
tor remarked  to  me  one  evening:  'The  Kuoks  have  34  per  cent  of  the 
company  but  they  act  as  though  they  own  it.  They  don't.  But  who's 
going  to  remind  them  of  that?'  The  problem  was  that  the  Post  edito- 
rial had  a  life  of  its  own,  and  this  had  to  be  maintained.  If  that  was  the 
case  before  the  handover,  it  became  even  more  so  after  1  July,  partic- 
ularly when  the  democratically  elected  legislators  were  deprived  of 
their  seats  and  the  rule  of  law  was  brought  into  question.  Kuok 
insisted  that  he  did  not  want  the  Post  to  become  a  party-lining  organ, 
like  the  Straits  Times  in  Singapore,  which  he  regularly  lambasted.  But 
the  instructions  I  received  would  have  led  it  to  go  that  way  and  would 
have  undermined  its  spirit.  Kuok  liked  the  idea  of  a  paper  that  was 
independent,  but  was  uncomfortable  with  the  prickliness  which  this 
inevitably  aroused. 

What  is  surprising  is  that  I  was  not  fired  much  earlier,  as  certainly 
would  have  happened  under  a  Western  press  baron.  But  now  the 


May  179 

yellow  light  is  flashing  with  the  non-renewal  of  my  contract.  Given 
this,  should  I  stay  on  till  the  end  of  the  year  as  suggested,  or  leave 
immediately?  I  have  no  doubt.  Apart  from  wanting  to  remain  in 
Asia  a  while  longer,  this  is  turning  out  to  be  an  extremely  important 
time  in  the  short  history  of  the  SAR.  Two  years  on  from  the  hand- 
over, the  real  game  is  beginning:  not  in  the  stark  terms  predicted  in 
1997  but  on  a  more  subtle  plane.  That  is  not  attracting  much  atten- 
tion outside  Hong  Kong:  tanks  in  the  streets  are  much  easier  to 
comprehend  than  the  steady  advance  of  weak-kneed  consensus,  the 
over-riding  exercise  of  authority  by  the  executive  and  the  erosion  of 
the  rule  of  law.  Western  governments  are  anxious  not  to  let  problems 
in  Hong  Kong  get  in  the  way  of  a  good  relationship  with  Beijing.  As 
was  apparent  from  before  the  handover,  the  SAR  is  on  its  own  in 
dealing  with  the  dragon  it  joined  in  1997.  In  these  circumstances, 
editing  the  Post  has  taken  on  a  special  edge,  and  I  want  to  go  on  for 
as  long  as  I  can. 

18  May 

A  prime  example  of  what  is  happening  comes  when  the  government 
of  Hong  Kong  makes  it  known  that  it  is  going  to  ask  the  Standing 
Committee  of  China's  parliament,  the  National  People's  Congress 
(NPC),  to  issue  its  interpretation  of  what  the  Basic  Law  says  on  the 
right  of  abode  case  which  the  SAR  administration  lost  at  the  Court  of 
Final  Appeal.  The  government's  argument  is  that  the  interpretation  by 
the  court  was  not  in  accordance  with  the  'legislative  intent'  of  the 
framers  of  the  Basic  Law.  Determining  what  that  intent  was  nine 
years  later  is  a  tricky  question,  particularly  since  some  sources  say  that 
the  mainland  was  keen  at  the  time  for  all  Chinese  to  be  treated 
equally,  thus  implying  that  it  might  well  have  wanted  a  wide  defini- 
tion of  who  could  come  to  Hong  Kong. 

One  recalls  a  remark  by  Chris  Patten  about  China's  desire  to  have 
a  mechanism  for  a  'post-remedial  verdict'  on  Court  of  Final  Appeal 
decisions:  the  Governor  characterised  this  as  'if  we  don't  like  the 
result  we've  got  to  find  some  way  to  overturn  it'.  Now  that  is  being 
done  not  by  Beijing  directly,  but  by  the  administration  here. 


i8o  Diaiinc;   Willi    Mil-    Dkacion 


19  May 


There  is  a  debate  in  the  Legislative  Council  today  about  the  govern- 
ment's decision  to  go  to  the  NPC.  The  democratic  camp  tries  to  get 
more  time  for  discussion.  It  fails.  So  19  members,  headed  by  Martin 
Lee,  walk  out  of  the  chamber.  They  have  dressed  in  black  for  the 
occasion.  Lee  speaks  of 'a  dagger  striking  at  the  heart  of  the  rule  of 
law'.  Margaret  Ng  of  the  legal  constituency  warns  of  the  beginning  of 
the  end  of  the  rule  of  law.  But  the  pro-Beijing  DAB  party  insists  that 
the  rule  of  law  will  be  strengthened,  and  Liberals  say  the  government 
has  public  support.  After  the  walk-out,  the  motion  backing  the  gov- 
ernment is  passed  by  35  votes  to  2. 

I  remember  the  time  I  asked  Martin  Lee  what  he  would  do  if  his 
electoral  victory  brought  him  no  more  influence  and  he  replied, 
'Make  noise.'  That's  the  way  it  has  become.  But  who  is  listening? 

20  May 

The  Post's  strong  criticism  of  the  government  for  going  to  Beijing  to 
over-rule  the  Court  of  Final  Appeal  earns  us  a  visit  from  Anson  Chan. 
The  Chief  Secretary's  office  calls  in  the  late  morning  and  says  she  has 
to  see  me  before  the  day  is  out.  She  argues  that  we  must  realise  that 
this  is  an  exceptional  case  and  must  trust  the  administration.  There  has 
been  a  thorough  debate,  with  very  strongly  held  views  on  both  sides. 
Some  may  see  referral  to  the  National  People's  Congress  as  an  erosion 
of  the  independence  of  the  judiciary  and  the  high  degree  of  auton- 
omy promised  to  Hong  Kong.  But  the  rule  of  law  underpins 
everything  here  and  has  not  been  undermined.  Yes,  there  is  legitimate 
concern  about  the  mechanism  by  which  judicial  decisions  could  be 
referred,  but  the  Central  Government  has  made  it  clear  it  does  not 
wish  to  interfere.  'It  would  prefer  for  Hong  Kong  to  sort  it  out  but, 
if  we  could  not  do  that,  they  were  ready  to  help,'  as  one  official  says. 
Thank  you  very  much. 

When  questioned,  officials  say  no  guarantee  that  this  will  be  a 
one-off  event  could  be  promised  —  'just  watch  this  space'.  The 
Chief  Executive  and  his  administration  are  not  likely  to  act  in  an 


May  181 

arbitrary  way,  we  are  assured.  And  then  comes  a  return  to  a  famil- 
iar mantra  of  trust. 

Trust  us,  but  don't  observe  how  we  finessed  last  year's  electoral 
arrangements  to  handicap  the  democrats,  or  how  we  treat  the 
legislators  or  the  Court  of  Final  Appeal.  Forget  about  the  decision 
not  to  prosecute  Sally  Aw,  and  how  we  put  the  muscle  on  func- 
tional constituency  members.  Don't  regard  the  award  of  the 
Cyberport  project  as  anything  untoward,  and  turn  a  blind  eye  to 
how  hard  we  find  it  to  defend  Hong  Kong  people  arrested  on  the 
mainland. 

As  I  accompany  Anson  Chan  to  her  green  BMW,  I  ask  her  if  this 
is  the  first  of  a  series  of  visits  to  newspapers  which  have  criticised  the 
government.  'No,'  she  says  with  her  trademark  smile.  'You  are  the 
only  one  who  matters.' 

I  do  not  write  a  recanting  editorial.  In  fact,  there  is  very  little  news 
on  the  whole  reinterpretation  issue.  After  having  given  it  pages  one, 
two  and  three  for  the  last  two  days,  the  story  goes  inside  tonight. 

22  May 

The  paper  which  appears  the  day  after  Anson  Chan's  visit  is,  I  am 
told,  taken  by  the  weekly  meeting  of  senior  brass  as  a  sign  that  a 
sudden  descent  by  a  top  official  can  shut  the  Post  up.  My  informant, 
who  is  well  versed  in  the  ways  of  government  and  the  media, 
chuckles  as  he  tells  me  this  at  a  lunchtime  party  for  the  departing 
head  of  the  Swire  conglomerate,  Peter  Sutch,  a  man  who  knows 
how  to  enjoy  himself  as  a  human  being  while  rising  at  dawn  to  do 
his  job,  and  who  gave  British  business  a  good  name  after  the  hand- 
over. 

It  is  a  hot  and  steamy  day,  and  some  people  drink  too  much  out 
on  the  lawn  of  the  Swire  residence,  Taikoo  House,  high  on  the 
Peak.  Since  I  am  working  that  day,  I'm  on  mineral  water.  A  society 
lady  with  a  red  face  upbraids  me  for  the  paper's  attention  to  the 
right  of  abode  issue.  Is  anybody  really  interested  in  that,  she  asks. 
Face  it,  we  don't  want  all  those  people  from  the  mainland  to  come 
here,  do  we? 


182  Dealing  With  the   Dragon 

23  May 

Civil  servants  take  to  the  streets  in  the  biggest  labour  demonstration 
seen  in  Hong  Kong  since  the  handover.  Waving  bright  yellow  banners 
and  wearing  yellow  headbands,  an  estimated  10,000  of  them  -  the 
organisers  say  26,000  -  march  through  the  centre  of  Hong  Kong 
Island  to  the  Central  Government  offices. 

In  the  courtyard  where  the  mainland  overstayers  camped,  they 
chant  denunciations  of  plans  to  reform  their  working  conditions  and 
make  them  subject  to  efficiency  criteria,  with  fixed-term  contracts  in 
place  of  lifetime  employment  and  performance-related  pay  instead  of 
automatic  annual  increases.  'Fake  reform,  real  exploitation,'  they  cry. 

There  is  talk  of  strikes  if  the  government  does  not  back  off.  Hong 
Kong's  civil  service  may  be  admirable  in  many  ways,  but  it  has  lived 
a  protected  life  for  much  too  long.  Salaries,  allowances  and  condi- 
tions are  out  of  step  with  the  times.  Private  sector  companies  have 
cut  wages  and  bonuses  and  laid  off  staff.  But  the  civil  service  has 
remained  immune.  Now  the  pressures  are  catching  up  with  them. 
The  recession  is  real,  even  for  the  men  and  women  in  the  bureau- 
cratic Rolls-Royce. 

24  May 

Dinner  with  a  generally  pro-government  member  of  the  Legislative 
Council.  Surprisingly,  our  host  lays  into  the  administration.  He  is  no 
radical,  and  voted  to  save  Elsie  Leung  from  the  no-confidence 
motion.  But  tonight  he  unsparingly  criticises  the  Chief  Executive  for 
lack  of  leadership,  and  backs  the  concern  we  have  expressed  in  the 
Post  about  the  rule  of  law.  Foreign  businessmen  he  meets  are  starting 
to  wonder  how  solid  Hong  Kong  is,  he  adds.  Who  would  have 
thought  that  a  test  case  for  mainland  migrants  could  have  ended  up 
having  such  an  effect? 

26  May 

I  am  handed  a  letter  setting  out  the  company's  plans  for  the  Post.  It  has 


May  183 

been  decided  that,  after  I  leave,  an  editorial  director  will  be  appointed 
as  well  as  a  new  editor.  The  new  arrangement  is  to  be  announced 
next  week.  If  I  stay  on  as  editor  till  the  end  of  the  year,  as  agreed  ear- 
lier, I  would  be  the  longest  lame  duck  in  newspaper  history.  I  have  to 
go  right  away.  Anyway,  the  new  editorial  director  is  sitting  in  the 
office  opposite  mine  -  an  American  former  editor  of  the  Asian  Wall 
Street  Journal  in  both  Asia  and  Europe,  who  was  hired  by  the  Kuoks 
and  the  Post's  management  as  my  deputy  the  previous  summer,  with- 
out my  being  consulted.  When  I  had  objected,  I  was  informed  that 
the  management  had  the  right  to  do  as  it  liked  in  editorial  appoint- 
ments, and  that  the  hiring  of  Robert  Keatley  was  a  no-go  area.  This 
meant  there  had  been  a  Kuok  laying-on  of  hands,  with  which  nobody 
should  presume  to  argue.  Still,  when  I  dug  my  heels  in,  my  manage- 
ment colleagues  'implored'  me  to  'try  to  find  a  way  of  making  this 
thing  work'.  I  flew  to  Washington  to  see  Keatley  and  we  agreed  that 
he  would  join  the  paper  as  senior  associate  editor,  but  would  not 
replace  my  extremely  effective  deputy. 

Keatley  arrived  in  Hong  Kong  in  October  1998,  and  moved  into 
Feng  Xiliang's  old  office.  We  got  on  well  enough,  but  the  Kuoks' 
back-channel  contacts  soon  sprang  into  life.  Robert  Kuok's  son,  who 
had  become  chairman,  discussed  editorial  matters  with  Keatley  with 
no  reference  to  me.  At  the  instigation  of  the  management,  Keatley 
canvassed  in  New  York  for  a  new  business  editor  without  my  being 
informed  —  the  search  ended  in  fiasco  after  the  existing  incumbent  of 
the  job  was  tipped  off  about  the  approach  and  I  kicked  up  another 
stink.  Throughout,  Keatley  assured  me  that  he  did  not  want  my  job, 
but  now  he  is  to  become  editorial  director.  Although  he  is  not  due  to 
take  up  the  post  till  the  end  of  the  year,  the  announcement  has  -  for 
some  inexplicable  reason  -  to  be  made  right  away.  Do  the  Kuoks  want 
to  nail  things  down  this  time,  and  make  sure  there  is  no  slip-up  in 
getting  their  man  into  the  job?  Anyway,  I  clearly  have  to  resign  as 
editor,  though  I  will  stay  in  the  job  until  3 1  July  and  then  serve  out 
the  agreed  six  months'  notice  as  a  writer  and  consultant.  There  is  a 
final  ironic  twist  in  September  when  I  am  asked  to  go  back  to  edit  the 
paper  half  a  dozen  times.  More  farewell  performances  than  Frank 
Sinatra. 


1 84  Dealing  With  the   Dracon 

29  May 

Arriving  at  the  Shangri-La  Hotel  for  a  website  competition  cere- 
mony at  which  he  and  I  are  to  present  the  prizes,  the  Financial 
Secretary  looks  at  me  and  says:  'Jonathan,  I  don't  want  you  to  think 
that  I  necessarily  agree  with  my  colleagues  who  think  you  have  gone 
bonkers.'  Presumably  he  is  referring  to  our  criticism  of  the  Tung 
administration.  But  he  also  insists  that  he  never  reads  the  Post  except 
for  one  columnist  whom  he  likes.  His  press  secretary  stands  behind 
him  with  a  perspex  folder  filled  with  newspaper  clippings,  many  of 
which  are  from  the  Post. 

At  lunch,  after  the  awards  have  been  handed  out,  Tsang  appears 
rather  more  familiar  with  the  contents  of  the  newspaper  as  he  takes 
me  to  task  over  an  editorial  criticising  the  government's  economic 
forecasting.  'Nobody  blames  the  Observatory  if  a  typhoon  hits'  he 
says:  I  bet  they  would  if  it  predicted  a  calm  and  sunny  day. 

Tsang,  who  looks  much  younger  than  his  fifty-four  years,  has  had 
an  interesting  political  career  since  1997.  Before  the  handover,  he 
called  in  our  political  editor  to  give  a  brave  interview  defending  the 
Bills  of  Rights  that  the  incoming  regime  was  going  to  emasculate. 
The  general  conclusion  was  that  Hong  Kong's  first  Chinese  Financial 
Secretary  was  about  to  lose  his  job.  But  he  hung  on,  and  spent  the 
early  stages  of  the  economic  crisis  insisting  on  the  need  to  maintain 
Hong  Kong's  traditional  low-spending,  budget-surplus  policies,  even 
if  the  results  caused  him  considerable  personal  anguish. 

After  that,  Tsang  seemed  to  be  fighting  an  increasingly  difficult 
battle,  since  the  Chief  Executive  and  some  of  his  advisers  clearly 
thought  it  was  time  to  let  out  the  fiscal  belt.  Now  this  has  been  done, 
and  he  has  used  the  crisis  to  introduce  some  significant  changes  which 
he  hopes  will  contribute  to  making  Hong  Kong  the  premier  financial 
centre  in  its  time  zone.  Last  year's  stock  market  intervention  followed 
by  this  year's  Disneyland  deal  -  which  he  lists  as  a  'project  of  hope'  - 
gave  a  fresh  fillip  to  Tsang,  another  of  Hong  Kong's  excellent  ball- 
room dancers  who  has  taken  to  wearing  a  red  lapel  badge  depicting 
the  Hong  Kong  and  Chinese  flags.  He  finds  Beijing's  sovereignty 
'benign'  and  is  one  of  those  senior  civil  servants  who  likes  to  illustrate 


May  185 

the  point  by  contrasting  the  colonial  hours  spent  reading  and  drafting 
telegrams  from  and  to  London  with  the  absence  of  any  messages  from 
the  Central  Government.  For  a  short  while  there  was  speculation 
that  his  star  was  riding  so  high  that  Tung  was  toying  with  the  idea  of 
promoting  him  to  succeed  Anson  Chan  as  Chief  Secretary  for 
Administration  and  number  two  in  the  government.  But  the  story  is 
that  Beijing  came  down  for  Chan  to  continue  driving  the  adminis- 
tration's Rolls-Royce. 

Tsang's  standing  with  the  public  is  good,  though  he  insists  that  he 
will  always  chose  patriotism  over  popularity.  But  he  has  times  when 
he  tires  of  life  at  the  top.  And  the  combination  of  criticism  from 
politicians  with  little  grasp  of  economics  and  the  need  to  play  to  the 
gallery  cannot  sit  too  easily  with  a  man  who  finds  it  endearingly  hard 
to  hide  his  human  side  and  whose  skin  can  be  reassuringly  thin. 


June 


2  June 

Dinner  at  the  official  residence  of  the  Chief  Secretary  on  the  Peak.  It 
is  one  of  a  round  of  farewells  for  Peter  Sutch,  the  gregarious  chairman 
of  the  British  Swire  group,  which  owns  Cathay  Pacific  Airlines.  His 
departure  coincides  with  a  dispute  with  the  pilots,  who  are  resisting 
new  working  terms.  As  a  negotiating  tactic,  they  have  hit  on  the 
device  of  calling  in  sick  just  before  they  are  due  to  go  on  duty,  using 
doctors'  certificates  saying  the  stress  of  the  dispute  makes  them  unfit 
to  fly.  The  Post  takes  a  dim  view  of  this,  provoking  furious  e-mails 
from  anonymous  pilots  on  their  website. 

The  Post  'is  no  more  a  real  paper  than  Pravda  was  in  the  eighties', 
says  one.  Its  journalists  have  been  bought  by  big  business  and  'must 
live  with  the  shame  of  having  sold  out'.  'For  them,  money  is  more 
important  than  facts,'  says  another.  A  third  warns  that  the  editor's 
'legacy  will  follow  him  wherever  he  goes  (we  will  make  sure  of  that), 
but  maybe  his  upcoming  job  in  Russia,  Libya,  Chile  or  Saudi  Arabia 
will  further  increase  his  financial  gain'.  Could  I  find  myself  one  day  in 
a  Cathay  plane  with  a  pilot  who  remembers  my  name  ordering  me  to 
be  ejected  without  a  parachute? 


June  187 

3  June 

Hong  Kong  may  be  deep  in  recession,  but  the  rich  are  still  spending. 
James  Tien,  leader  of  the  Liberal  Party,  is  a  very  wealthy  man  who 
moved  at  the  right  moment  from  the  family  business  of  making 
clothes  to  property  and  finance.  Tonight  he  and  his  wife,  Mary,  throw 
another  goodbye  dinner  for  the  Sutches  at  their  new  home  just  down 
the  road  from  Anson  Chan,  with  a  spectacular  view  over  Hong  Kong 
harbour.  The  Tiens  are  proud  of  their  plantation-style  mansion  with 
its  huge  wide-open  rooms,  wooden  panels,  mahogany,  tiled  floors 
with  inlaid  patterns,  sofas  and  chairs  scattered  about,  a  terraced  garden 
and  an  illuminated  swimming  pool.  They  have  spent  three  years  doing 
the  house  up,  building  a  road  down  to  it,  having  a  US$i  million 
security  system  installed  and  setting  up  a  wine  cellar,  which  houses 
2,000  bottles  including  some  1947  clarets. 

A  slim,  sharp  man  who  looks  much  younger  than  his  sixty  years, 
Tien  is  yet  another  offspring  of  Shanghai,  whose  parents  made  their 
money  in  the  garment  trade  after  moving  down  to  Hong  Kong.  His 
mother  watched  the  business  like  a  hawk,  going  into  the  factory 
seven  days  a  week  to  check  on  the  work  rate.  In  the  early  1990s,  Tien 
and  his  brother  decided  not  to  join  the  exodus  to  southern  China. 
Instead  they  went  into  property,  the  export  business,  a  big  marina  and 
other  higher-margin  avenues  of  profit.  Tien  became  chairman  of  the 
General  Chamber  of  Commerce  and  a  legislator  for  its  functional 
constituency.  After  the  leader  of  the  Liberals  failed  to  win  a  popularly 
elected  seat  in  the  Legislative  Council  in  1998,  he  took  over  as  leader 
of  the  party  which  has  10  members  in  the  legislature,  none  of  them 
chosen  by  a  geographical  constituency. 

The  Post  has  been  steadily  critical  of  the  party  over  its  lack  of  con- 
sistency, and  regularly  takes  Tien  to  task.  But  he  stays  friendly,  and  asks 
nothing  in  return  for  his  hospitality.  We  are  far  apart  in  our  beliefs,  not 
to  mention  our  ways  of  life  and  the  wine  we  drink.  But  it  is  still  pos- 
sible to  have  a  civilised  relationship  even  if  he  once  said  he  believed 
Hong  Kong  should  be  run  by  a  natural  elite  of  a  couple  of  hundred 
people. 


[88  Dealing  Wmi  the  Dragon 

4  June 

'I  just  want  her  to  know  about  history,'  says  a  middle-class  Hong 
Kong  mother  looking  down  at  her  three-year-old  daughter.  The  child 
has  no  idea  what  is  going  on.  But  for  the  mother,  and  tens  of  thou- 
sands of  other  people,  this  is  the  day  on  which  the  difference  between 
Hong  Kong  and  the  rest  of  China  is  most  tangible,  and  most  moving. 

Today  marks  the  tenth  anniversary  of  the  Tiananmen  Square  mas- 
sacre, and  the  annual  vigil  is  being  held  in  Victoria  Park  amid  the 
skyscrapers  of  Causeway  Bay.  Last  year  was  a  test  occasion,  the  first 
commemoration  since  Hong  Kong  rejoined  China.  As  such,  it  was  an 
opportunity  for  people  to  assert  themselves,  but  nobody  really 
believed  the  claim  by  the  organisers  that  40,000  turned  out  (the  police 
have  refused  for  some  time  to  give  their  estimate).  The  tenth  anniver- 
sary gives  the  vigil  a  special  significance.  But  maybe  Hong  Kongers 
are  growing  bored,  and  will  heed  the  advice  of  the  Chief  Executive  to 
relegate  Tiananmen  to  the  baggage  of  history. 

Tung  Chee-hwa  is  going  to  be  disappointed.  Seventy  thousand 
people  gather,  sitting  on  concrete  football  pitches  and  holding  candles 
in  paper  triangles  to  remember  the  dead.  A  statue  of  the  Goddess  of 
Liberty  modelled  on  one  which  stood  in  Tiananmen  Square  rises 
from  one  section.  In  the  middle  of  the  crowd,  Queen  Victoria  sits  on 
her  plinth. 

Black  flags  with  white  inscriptions  flutter  in  the  air.  On  the  stage  at 
one  end  of  the  park,  bands  and  singers  perform  in  front  of  more  ban- 
ners and  a  giant  video  screen  where  images  of  1989  play  over  and  over 
again.  Police  mingle  with  the  crowd,  but  there  is  no  aggravation. 
Everybody  gets  to  their  feet  as  a  flowered  wreath  with  a  black  and 
white  ribbon  is  carried  through  the  throng.  The  veteran  pro-democ- 
racy campaigner  and  legislator,  Szeto  Wah,  walks  beside  it.  With 
other  leaders  of  the  remembrance  movement,  the  bespectacled, 
elderly  Szeto  mounts  to  the  platform  as  a  stringed  lament  arches 
through  the  warm  air.  A  teenager  carrying  a  burning  torch  moves  to 
join  them,  and  the  torch  is  used  to  light  a  commemorative  flame  in  a 
large  urn.  The  line  of  men  on  the  platform  lead  the  singing  of  a  dirge. 
Modern  synthesiser  music  takes  over.  The  dissident  Wan  Dan  talks  to 


June  189 

his  mother  in  Beijing  on  a  hook-up  from  the  USA  through  Hong 
Kong. 

Tonight,  this  is  the  only  place  in  China  where  the  truth  about 
1989  is  being  told  in  public.  But  the  vigil  does  not  stop  life  going  on 
around  it.  Trams  rumble  by,  the  passengers  peering  out  at  the  scene. 
Tennis-players  keep  up  their  game  on  the  courts  in  another  part  of  the 
park.  Shoppers  pile  into  late-night  stores  on  adjoining  streets.  There 
is  a  scuffle  outside  a  night  spot  called  STIX,  and  the  usual  rush  for 
taxis. 

'This  is  what  China  could  be  like,  if  only  they  would  let  it,'  the 
mother  says.  The  crowd  is  mourning  for  what  might  have  been,  for  a 
brief  spark  of  hope  extinguished,  as  so  often  in  China's  history,  by 
autocrats  for  whom  life  can  only  be  lived  on  their  terms.  In  Beijing, 
Hong  Kong  reporters  ask  Zhu  Rongji  about  the  anniversary. 
Mockingly,  he  thanks  them  for  reminding  him  of  the  date:  he  says  he 
had  forgotten  what  day  it  was.  Police  arrest  a  lone  man  who  tries  to 
wave  a  banner  in  Tiananmen  Square.  The  People's  Daily  says  the 
army's  action  in  1989  had  been  very  timely  and  very  necessary,  to  pro- 
tect China's  independence,  dignity,  security  and  stability.  The  central 
authorities  have  ordered  the  Bank  of  China  to  freeze  donations  sent 
by  Chinese  students  in  Germany  for  the  families  of  victims. 

To  jolly  along  mainland  punters,  a  series  of  measures  has  been 
announced  to  pump  up  the  stock  market,  which  has  duly  risen  by  40 
per  cent  in  two  weeks.  Such  action  might  strike  a  bell  with  one  of  the 
leaders  of  the  protest  ten  years  ago.  On  the  eve  of  the  massacre,  a 
young  woman  called  Chai  Ling  was  filmed  telling  a  Western  reporter 
that  blood  would  have  to  be  shed,  though  not  hers.  When  the  tanks 
rolled  into  the  square,  she  was  gone.  After  hiding  in  China,  she  was 
smuggled  out  through  Hong  Kong.  Now  established  in  Boston,  she  is 
launching  an  Internet  software  company  calledjenzabar.com.  A  press 
release  recalls  how  she  led  'thousands  of  students  against  a  Communist 
government  more  ruthless  than  Microsoft'.  Chai  Ling,  it  adds,  is  'a 
dynamic  personality  who  has  found  many  similarities  between  run- 
ning a  revolution  and  an  Internet  start-up'.  She  has  'used  the 
techniques  and  charisma  of  a  true  revolutionary  to  impress  CEOs  to 
back  Jenzabar'. 


190  Dealing  Wiiii  the   Dragon 

Later,  I  hear  that  the  Central  Government  was  none  too  pleased 
with  the  way  foreign  and  Hong  Kong  media  remarked  on  the  unique 
nature  of  the  vigil  in  the  park,  and  on  the  space  given  to  it  here.  The 
Post  ran  the  usual  big  photograph  of  the  occasion  on  page  one  with  a 
descriptive  story,  and  I  wrote  an  editorial  and  a  column  arguing  that 
Tiananmen  should  not  be  relegated  to  the  baggage  of  history  what- 
ever the  Chief  Executive  might  say. 

Sjune 

The  website  'Not  The  South  China  Morning  Post'  has  a  capitalised 
headline,  'LATEST  POST  EDITOR  FENBY  TO  BE  REPLACED 
BY  WALL  STREET  JOURNAL  MAN  SAY  SOURCES'.  Maybe  I 
have  underrated  Dr  Adams. 


10  June 

The  legal  saga  over  the  right  of  abode  rolls  on.  The  State  Council  in 
Beijing  accepts  Hong  Kong's  request  for  an  interpretation  from  the 
National  People's  Congress.  The  Secretary  for  Justice  makes  it  plain 
that  local  courts  will  have  to  abide  with  whatever  the  NPC  decides. 
Whatever  the  'trust  us'  officials  may  say,  the  dragon's  breath  is  getting 
hotter. 


ii  June 

Press  matters. 

At  the  annual  gala  of  the  Journalists'  Association,  Anson  Chan 
does  a  karaoke  song  on  stage  in  return  for  donations  of  tens  of  thou- 
sands of  dollars  to  the  organisation  from  the  guests.  The  Association's 
chairperson  delivers  a  lecture  on  falling  press  standards.  'Reading 
newspapers  is  no  longer  an  enjoyable  exercise,'  he  tells  us.  'Bloody 
explicit  pictures  displayed  prominendy  are  challenging  our  level  of 
tolerance  every  day.  Sex  and  violence  seem  to  be  the  only  activities 
worth  mentioning  in  Hong  Kong.  This  undesirable  trend  poses  a 
grave  danger  to  the  standard  of  professionalism  of  journalism.'  The 


June  191 

audience  snickers  in  the  knowledge  that  he  has  just  left  his  job  on  the 
editorial  page  of  the  respectable  Economic  Times  to  join  the  sensational 
Apple  Daily. 

The  next  day,  the  Post  wins  eleven  of  thirteen  English-language 
prizes  in  awards  organised  by  Amnesty  International,  the  Journalists' 
Association  and  the  Foreign  Correspondents'  Club. 

Two  days  later,  the  paper's  directors  are  told  that  I  am  going.  I  had 
informed  two  of  them  whom  I  met  socially  in  the  last  few  weeks. 
They  both  expressed  shock  and  regret.  One  tells  me  he  understands 
the  Kuoks  were  'under  a  lot  of  pressure'.  He  does  not  say  who  from, 
but  it  isn't  hard  to  guess. 

17— 21  June 

The  South  China  Morning  Post  enjoys  a  great  advantage  as  the  only 
Hong  Kong  newspaper,  except  for  those  funded  by  Beijing,  allowed 
to  have  staff  correspondents  on  the  mainland.  That  is  a  relic  of  colo- 
nial days,  when  it  was  regarded  as  British  and  its  reporters  were  put  on 
a  par  with  foreign  correspondents  in  China.  As  a  result,  it  comes 
under  the  Foreign  Ministry,  and  the  Ministry  is  regarded  as  being 
somewhat  more  flexible  than  the  Hong  Kong  and  Macau  Affairs 
Office  or  the  official  Xinhua  news  agency  which  oversee  the  main- 
land access  of  other  Hong  Kong  publications. 

But  now  an  official  calls  in  one  of  our  Beijing  correspondents  to  say 
some  people  are  unhappy  with  this  state  of  affairs:  not  because  of  our 
coverage  of  the  mainland  but  because  of  our  attitude  towards  the 
Hong  Kong  government.  Before  the  handover  the  Post  had  supported 
the  Hong  Kong  government,  she  adds.  But  now  it  is  an  opposition 
paper.  The  mainland  Hong  Kong  and  Macau  Affairs  Office 
(HKMAO)  and  Xinhua  are  angry  about  this.  They  say  the  Post  should 
not  oppose  what  is  being  done  in  the  SAR,  and  want  to  take  it  under 
their  wing. 

There  is  also  word  from  Beijing  that  the  paper's  coverage  of^  the  4 
June  vigil  in  Hong  Kong  came  in  for  criticism  in  the  capital.  My 
column  arguing  that  the  history  of  Tiananmen  Square  must  not  be 
buried  is  seen  as  having  'gone  too  far'.  When  I  bump  into  a  mainland 


192  Di-Ai.iNG  Wrin   nil'.  Dragon 

official  in  Hong  Kong  and  he  asks  if  I  will  still  write  for  the  paper  after 
stepping  down  as  editor,  I  wonder  if  it  is  an  entirely  innocent  question. 


24  June 

The  first  thing  most  post-colonial  governments  do  is  to  rename  build- 
ings that  reek  of  imperial  days.  But  not  only  has  the  SAR  left  Victoria 
Park  and  Queen's  Road  unchanged,  it  has  also  taken  an  eternity  to 
decide  what  to  call  the  former  home  of  the  British  proconsuls.  Finally 
it  has  been  determined  that  the  residence  of  twenty-five  governors 
since  1855  will  become  Heung  Kong  Lai  Bun  Fu,  meaning  a  place  for 
greeting  guests.  The  new  name  was  chosen  from  more  than  2,300 
submissions.  The  legislator  representing  the  travel  industry  says  it  is 
less  attractive  than  the  old  name;  he  predicts  that  tour  guides  will  still 
call  it  by  the  Chinese  term  for  'former  Governor's  house'. 

The  Chief  Executive  will  not  move  into  the  white  mansion,  with 
its  tower  built  by  the  Japanese  during  the  Occupation,  the  grass  tennis 
courts  where  Chris  Patten  used  to  play  in  the  morning,  and  the 
kitchens  which  have  recently  undergone  an  .£800,000  renovation. 
Tung  Chee-hwa  has  occasional  lunches  there,  and  the  house  is  used 
for  receptions  and  formal  gatherings.  But  the  twenty-eight  domestic 
staff  have  relatively  little  to  do,  and  the  heavy  metal  gates  remain 
closed  most  of  the  time. 

Government  House  was  the  scene  of  two  memorably  symbolic 
events  at  the  end  of  colonial  days.  In  the  first,  the  Chief  Executive- 
designate  paid  a  visit  to  Chris  Patten.  After  their  meeting,  the  two 
men  exchanged  platitudes  for  the  press  outside.  As  Patten  walked 
back  inside,  Tung  stayed  to  talk  more  to  the  reporters.  The  photo- 
graph -  of  the  Governor's  back  and  Tung's  face  smiling  to  the 
cameras;  of  the  old  and  the  new  -  made  the  front  page. 

And  then  on  the  last  afternoon  of  colonial  rule,  the  mansion  on 
Upper  Albert  Road  was  the  backdrop  for  what  I  found  the  most 
moving  single  moment  of  the  handover.  Although  his  final  speech  in 
the  rain  that  evening  had  a  simple  grandeur,  it  was  Patten's  departure 
from  Government  House  which  brought  the  tears  to  my  eyes.  As  he 
stood  in  front  of  the  building,  the  Union  flag  was  hauled  down, 


June  193 

neatly  folded  and  handed  to  him.  The  last  Governor  blinked  back  his 
emotion.  Then  he  went  inside  to  escort  his  family  out  to  a  big  black 
car  flying  his  standard.  The  Daimler  had  been  due  to  make  three  turns 
round  the  driveway  to  signify  an  eventual  return.  It  did  not. 


25  June 

On  the  mainland,  more  than  100  people  are  executed  to  mark  United 
Nations  anti-drug  day.  Calls  for  the  abolition  of  the  death  penalty  cut 
no  ice  in  Beijing.  China  sees  a  lot  of  bullets  in  the  head  as  the  best  way 
to  deal  with  its  mushrooming  narcotics  problem.  And  it  is  quite  a 
problem.  Seizures  of  heroin  on  the  mainland  rose  by  one-third  last 
year.  Police  reported  arresting  34,200  drug  suspects;  27,000  were 
found  guilty.  Drug-related  crimes  have  soared.  The  number  of  regis- 
tered addicts  is  almost  600,000.  Seventy  per  cent  of  the  400,000  HIV 
carriers  have  been  infected  through  needles. 

26  June 

The  National  People's  Congress  delivers  its  verdict  on  the  migrants' 
case  today.  As  expected,  it  reverses  the  decision  of  the  Court  of  Final 
Appeal.  This  means  that  only  mainlanders  born  after  one  of  their  par- 
ents became  a  permanent  resident  of  Hong  Kong  will  be  eligible  for 
the  right  of  abode  here.  A  senior  NPC  official  takes  the  Court  of  Final 
Appeal  to  task  for  not  having  consulted  the  Chinese  parliament  in  the 
first  place. 

The  government  exults.  The  Secretary  for  Justice  castigates  those 
who  have  expressed  concern  about  the  whole  procedure  as  scare- 
mongers out  to  'destroy  their  own  fortress'.  Such  critics  should  drop 
their  'arrogance'  and  'open  their  eyes  and  learn  more  about  the  main- 
land systems',  she  adds.  They  must  accept  that  there  is  now  a  new 
constitutional  order.  An  NPC  deputy  from  Hong  Kong  invites  his 
friends  to  tea  'to  celebrate  as  Hong  Kong  is  about  to  rid  itself  of  a  dis- 
aster'. A  senior  British  official  from  the  Department  of  Justice  says  the 
administration  can  ask  for  an  interpretation  from  the  NPC  whenever 
it  wishes  -  before,  during  or  after  a  court  hearing. 


194  Dealing  Wiiii  THE   Dragon 

By  coincidence,  a  seminar  on  the  common  law  is  being  held  in  the 
Shangri-La  Hotel  today  with  local  lawyers  and  bigwigs  from  London. 
The  Chief  Justice,  Andrew  Li,  makes  a  brief  appearance,  but  is  clearly 
anxious  not  to  discuss  anything  to  do  with  the  NPC.  A  red-faced  legal 
eagle  from  London  says  heartily  during  the  tea  break  that  he's  happy 
to  see  how  well  everything  is  going.  Reacting  to  the  decision  is  a 
tricky  matter  for  London  and  Washington.  They  know  how  sharply 
Beijing  will  object  if  they  are  seen  to  be  interfering  in  SAR  internal 
affairs.  The  US  State  Department  worries  about  the  potential  of  the 
NPC  ruling  'to  erode  the  independent  authority  of  the  Hong  Kong 
judiciary'.  The  British  statement  is  diplomatic,  but  clear  that  'the 
principles  of  independent  judicial  power  and  of  final  adjudication  are 
integral  to  Hong  Kong's  high  degree  of  autonomy'. 

Not  being  bound  by  the  niceties  of  diplomacy,  I  write  an  editorial  for 
the  next  day's  paper  headed  'Much  more  than  interpretation  at  stake': 

What  happened  yesterday  is  as  simple  as  it  is  important.  If  it  means 
anything,  the  rule  of  law  means  the  law  is  above  politics.  The  law 
may  be  changed  by  politicians  operating  through  a  legislature.  But 
those  politicians  cannot  act  as  judges  in  interpreting  it.  Nor  can  they 
appeal  to  a  political  body  for  redress  when  the  decision  of  the  high- 
est court  goes  against  them. 

But  that  is  what  the  Hong  Kong  government  has  done.  The 
National  People's  Congress  is  a  political  body.  The  Hong  Kong  gov- 
ernment has  chosen  not  to  seek  to  change  the  law,  as  would  have 
been  the  normal  common  law  process.  Instead,  it  decided  to  ask  the 
NPC  to  hand  down  an  interpretation  of  the  Basic  Law  in  order  to 
overturn  a  Court  of  Final  Appeal  verdict. 

The  administration  here  will  now  invoke  that  interpretation  to 
define  the  Hong  Kong  law  on  mainland  migrants,  clearly  placing  the 
supreme  court  in  Hong  Kong  in  a  subservient  position  to  the  NPC. 
Equally,  the  ruling  given  in  Beijing  today  will  no  doubt  be  chal- 
lenged in  a  string  of  law  suits.  At  the  end  of  that  process,  the  Court 
of  Final  Appeal  will  have  to  decide  whether  it  accepts  the  reversal  of 
its  own  judgment  -  and  agrees  that  it  was  wrong  not  to  seek  prior 
interpretation.  If  it  does  accept  that,  it  will  have  recognised  the 


June  195 

supremacy  of  the  NPC  and  invalidated  its  own  arguments;  if  it  does 
not,  a  further  crisis  will  follow. 

The  air  is  full  of  assurances  from  the  government  that  the  rule  of 
law  remains  inviolate.  Naturally,  officials  will  downplay  the  signifi- 
cance of  what  has  happened.  But  nobody  in  the  administration  will 
rule  out  a  similar  procedure  being  followed  in  other  cases.  Indeed,  a 
senior  legal  official  has  said  the  government  may  seek  intervention  on 
any  provisions  in  the  Basic  Law  it  sees  fit  to  raise  before,  during  or 
after  a  trial. 

So,  two  years  after  the  handover,  the  major  challenge  to  Hong 
Kong's  system  has  come  not  in  the  political  arena,  as  many  had 
expected,  but  in  the  legal  field.  In  a  sense,  this  makes  what  has  hap- 
pened all  the  more  serious. 

Politics  are  a  relatively  recent  phenomenon  in  Hong  Kong,  and 
the  Basic  Law  lays  down  a  timetable  for  moving  towards  democracy. 
The  preservation  of  the  legal  system  acted  as  a  counterweight  to 
that  slow  process,  with  the  courts  enjoying  backing  across  the  polit- 
ical spectrum  -  including,  crucially,  the  business  community,  which 
may  take  a  leery  view  of  democracy  but  knows  the  importance  of 
maintaining  the  status  of  the  law  in  Hong  Kong. 

But  now  what  had  appeared  to  be  a  bedrock  of  Hong  Kong's  way 
of  life  as  guaranteed  under  the  Joint  Declaration  and  the  one  coun- 
try, two  systems  concept  has  become  subject  to  an  essentially  political 
process.  The  NPC  ruling  was  a  stark  statement  of  where  power  lies. 
By  taking  the  court  to  task  for  not  requesting  an  interpretation  by  the 
NPC  before  issuing  its  verdict,  it  laid  down  another  benchmark 
which  undermines  the  court's  independence  and  authority. 

Within  Hong  Kong  itself,  there  is  a  very  real  danger  that  applica- 
tion of  the  rule  of  law  is  becoming  a  partisan  issue.  Being  for  or 
against  the  interpretation  route  will  be  seen  as  a  gauge  of  being  for  or 
against  the  government.  On  Friday,  the  Secretary  for  Justice  branded 
those  who  make  a  link  between  interpretation  and  the  rule  of  law  as 
scaremongers  who  were  destroying  their  own  fortress.  That  way  lie 
witch  hunts  that  would  do  Hong  Kong  gre.it  damage  and  add  to  the 
polarisation  of  society.  As  Elsie  Leung  Oi-sie  rightly  said,  foreign 
investors  believe  that  a  sound  legal  system  is  a  great  advantage  of 


iy6  Dealing  Wiih   iiii    Dragon 

Hong  Kong.  But  this  does  not  mean  everybody  has  to  tamely  accept 
whatever  the  government  ordains.  Indeed,  the  Chief  Executive  has 
spoken  positively  of  the  contribution  that  the  noise'  of  debate  makes 
to  Hong  Kong. 

The  legal  arguments  will  continue  for  months,  if  not  years.  But 
the  basic  point  cannot  be  evaded.  At  the  time  of  the  handover,  there- 
was  an  understandable  tendency  here  to  put  the  emphasis  on  the 
preservation  of  the  Hong  Kong  system  under  Deng  Xiaoping's  cel- 
ebrated formula.  Now,  the  Secretary  for  Justice  has  made  it  plain  that 
the  one  country  comes  first  followed  by  the  two  systems.  This  has  led 
the  government  to  apply  for  legal  interpretation  to  a  'one  country' 
political  body  which  is  used  to  supervising  the  mainland  courts  in  a 
completely  different  legal  system  from  ours,  and  to  humiliate  the 
supreme  judicial  body  in  Hong  Kong  in  the  process. 

The  administration  may  deploy  strong  practical  arguments  for 
what  it  has  done.  It  may  bring  out  legal  advice  filled  with  learned  ref- 
erences to  sections  of  the  Basic  Law.  But  it  cannot  pretend  that  there 
has  not  been  a  major  political  shift  with  potentially  far-reaching 
implications  for  the  autonomy  of  Hong  Kong  and  the  relationship 
with  the  Central  Government  as  the  SAR  enters  its  third  year. 

28  June 

I  am  invited  to  join  a  South  China  Morning  Post  directors'  lunch 
after  a  board  meeting.  It  is  held  in  a  private  room  of  an  excellent 
Chinese  restaurant  on  the  harbour  front.  The  chopsticks  are  gold- 
plated.  Before  the  eating  starts,  the  chairman  says  a  single,  short 
sentence  of  appreciation  for  my  work  as  editor  which  is  lost  in  the 
general  chit-chat  round  the  table.  Then  he  leans  forward,  takes  a 
dim  sum  dumpling  from  the  dish  in  front  of  us  and  places  it  on  my 
plate. 

30  June 

A  successful  surveyor  and  rising  politician,  C.Y.  Leung,  takes  over  the 
significant  post   of  convenor   of  the   secretive,   thirteen-member 


June  197 

Executive  Council  which  advises  Tung  Chee-hwa  on  policy  issues. 
His  predecessor,  an  elderly  man  with  thick  glasses,  was  a  pillar  of  the 
old  regime  and  received  a  knighthood  before  adapting  to  the  new 
order  in  the  seamless  manner  of  so  many  members  of  the  Hong  Kong 
establishment. 

Tall  and  self-assured,  Leung  is  seen  as  a  face  of  the  future.  His 
well-groomed  head  rising  above  the  crowd  of  much  shorter 
Cantonese  reporters  as  he  fends  off  their  questions  is  a  familiar  sight  at 
official  occasions.  He  is  thought  to  have  ambitions  to  become  Chief 
Executive.  At  forty-five,  he  can  wait  out  two  Tung  terms.  Leung  has 
managed  to  balance  making  money  with  political  correctness.  Unlike 
his  predecessor,  he  kept  well  clear  of  the  British  and  concentrated  on 
building  up  connections  with  the  Central  Government. 

Though  few  people  would  bet  against  him  being  at  the  helm  of  the 
SAR  in  the  next  century,  his  performance  so  far  has  not  been  exactly 
impressive.  In  particular,  he  was  the  main  force  behind  a  government 
pledge  to  build  85,000  housing  units  a  year  which  has  had  to  be 
watered  down.  Given  his  involvement  in  property,  some  opposition 
politicians  raised  conflict  of  interest  questions,  but  as  one  Liberal  Party 
member  remarked,  any  prominent  figure  chosen  as  Exco  convenor  by 
the  present  administration  is  likely  to  have  business  connections. 


July 


i  July 

The  second  anniversary  of  the  handover.  Last  year,  Jiang  Zemin  came 
to  mark  the  occasion  and  to  open  the  new  airport.  He  and  his 
entourage  occupied  141  rooms  in  one  of  Li  Ka-shing's  hotels,  and 
were  ferried  around  in  six  armour-plated  Mercedes-Benz  limousines. 
This  year,  Jiang  contributes  some  verses  to  a  commemorative  pillar 
inscribed  with  Chinese  poetry,  but  does  not  make  the  trip  south 
himself.  Instead,  he  sends  a  protege,  Vice-President  Hu  Jintao,  who 
declares  that  'The  previous  social  and  economic  systems  as  well  as  the 
way  of  life  in  Hong  Kong  remain  unchanged.'  As  usual,  politics  is  left 
out  of  the  list.  There  are  some  small  protest  demonstrations.  When 
Hu  takes  a  boat  trip,  he  is  shadowed  by  a  group  angry  at  having  been 
bilked  in  a  mainland  property  deal. 

A  poll  by  Hong  Kong  Chinese  University  shows  the  percentage  of 
people  happy  with  the  government  has  fallen  to  25  per  cent.  The  pro- 
portion who  are  dissatisfied  has  risen  from  12  per  cent  in  1997  to  20 
per  cent  in  1998  and  now  to  46  per  cent.  Forty-three  per  cent  say  that 
the  rule  of  law  has  deteriorated  and  democracy  has  been  eroded, 
around  double  the  figure  of  a  year  ago. 

The  head  of  the  main  pro-Beijing  political  party  refuses  to  join 
other  party  leaders  in  contributing  his  thoughts  on  the  anniversary  to 
the  Post  because  of  the  way  we  have  handled  the  right  of  abode 


July  199 

controversy.  And  on  a  social  note,  the  editor  has  been  dropped  from 
the  invitation  list  to  the  anniversary  ceremonies.  Last  year,  there  was 
a  card  for  them  all,  including  the  opening  of  the  new  airport.  Today, 
nothing.  My  social  acceptability  seems  to  be  about  as  low  as  in  Patten's 
last  days.  Or  maybe  the  fact  that  I  am  on  my  way  out  speaks  sufficient 
volumes  in  this  status-conscious  town. 

On  page  one,  we  run  a  photograph  from  an  anniversary  occasion 
showing  the  Secretary  for  Justice,  Elsie  Leung,  who  has  been  stressing 
the  importance  of  the  one  country,  and  the  Chief  Secretary,  Anson 
Chan,  who  insists  on  the  two  systems.  The  two  women  wear  very 
similar  blue  suits,  but  look  in  opposite  directions.  My  handover  day 
editorial  starts  from  there. 

The  evident  differences  of  views  between  the  Chief  Secretary  for 
Administration  and  Secretary  for  Justice  about  the  balance  between 
one  country  and  two  systems  could  not  have  come  at  a  more  appo- 
site time.  Their  divergence  may  be  awkward  for  the  administration  in 
which  they  both  sit,  but  it  points  up  more  sharply  than  ever  the  cru- 
cial issue  facing  Hong  Kong  two  years  after  the  handover. 

On  July  1,  1997,  this  newspaper  wrote  in  a  front-page  editorial 
that  Tung  Chee-hwa  had  to  keep  reminding  Chinese  leaders  that 
they  must  respect  the  two  systems.  Now,  two  years  on,  the  question 
is  whether  the  Chief  Executive  himself  and  some  of  his  senior  col- 
leagues are  the  ones  who  need  reminding. 

It  was,  after  all,  the  administration  which  Mr  Tung  heads  that 
decided  to  ask  the  National  People's  Congress  to  over-rule  the  Court 
of  Final  Appeal.  The  remarks  by  the  Secretary  for  Justice  before  the 
NPC  handed  down  its  judgment  underlined  fears  that  it  is  senior  fig- 
ures here  who  will  undermine  the  preservation  of  the  system  we 
were  promised  two  years  ago. 

Having  been  on  a  visit  to  North  and  Central  America  at  the  time 
of  the  NPC"  decision  and  the  rule  of  law  controversy,  Anson  Chan 
Fang  On-sang  was  particularly  well  placed  to  judge  the  extent  of 
international  concern  at  the  erosion  of  Hong  Kong's  autonomy  th.it 
is  implicit  in  the  administration's  approach.  The  government  may 
argue  with  all  the  force  at  its  command  that  the  rule  of  law  remains 


200  Dealing  With  the  Dragon 

unaffected;  that  is  not  the  way  many  overseas  observers  see  things. 
Some  of  them  are  businessmen  for  whom  one  great  attraction  of 
Hong  Kong  was  that  its  legal  system  was  not  subject  to  vagaries  of 
interpretation  by  a  political  body  outside  its  control.  As  Mrs  Chan 
noted,  Hong  Kong  cannot  take  the  goodwill  which  it  has  earned 
since  the  handover  for  granted. 

The  problem  is  compounded  by  the  way  in  which  the  govern- 
ment has  been  ready  to  put  expediency  -  or  its  own  interests  - 
ahead  of  some  of  the  long-standing  principles  on  which  the  Hong 
Kong  system  has  been  based.  This  is  not  to  decry  change.  The  SAR 
should  not  be  a  static  society,  and  a  process  as  unique  as  the  one 
launched  in  1997  is  bound  to  bring  diversions  from  the  road  map  laid 
down  in  the  Joint  Declaration  and  the  Basic  Law.  But  those  changes 
need  to  be  spelled  out  clearly  and  to  be  connected  to  the  broad 
thrust  of  policy  to  explain  where  the  government  is  heading. 

The  present  danger  is  one  of  drift  interspersed  with  sudden  shocks 
to  the  system.  Two  years  on  from  the  handover,  there  are  some  basic 
questions  which  need  to  be  addressed.  How  is  the  economy  to  be 
diversified  from  its  dependence  on  property  and  the  stock  market?  Is 
more  government  intervention  necessary  in  more  complex  times?  Does 
the  executive  have  any  real  desire  to  improve  relations  with  the  legisla- 
ture? Is  democracy  just  window  dressing  to  keep  Western  opinion 
happy?  Is  all  the  talk  about  improving  the  environment  just  that  -  talk? 

In  a  sense,  the  undemocratic  administration  which  rules  Hong 
Kong  has  shown  itself  much  more  responsive  to  public  feelings  than 
might  be  expected  from  such  an  essentially  conservative  executive. 
Measures  such  as  the  stock  market  intervention  or  the  halting  of  a 
tide  of  mainland  migrants  have  undoubtedly  been  popular. 

What  has  been  lacking  has  been  a  broad  policy  theme  to  make 
clear  where  the  administration  and  the  SAR  are  heading.  The  gov- 
ernment spokesman  gives  the  administration  credit  for  taking  difficult 
decisions,  but  the  reality  is  that  it  has  usually  sought  the  pragmatic 
way  out,  almost  as  though  it  actually  had  to  run  for  election. 

This  does  not  mean  such  decisions  are  necessarily  wrong  —  prag- 
matism can  be  a  valuable  quality.  Reliance  on  pragmatism  does, 
however,  mean  that  when  the  big  tests  come  -  notably  over  one 


July  201 

country,  two  systems  -  the  experience  is  that  the  administration 
finds  it  hard  to  stand  on  principle. 


2  July 

Three  people  from  Hong  Kong  are  in  Inner  Mongolia  hoping  to 
bring  home  a  63 -year-old  businessman  from  the  SAR.  Lok  Yuk-sing 
has  been  held  in  prison  without  proper  charges  by  the  Public  Security 
Bureau  in  the  town  of  Dingsheng  since  12  June  last  year.  He  was 
detained  at  gunpoint  in  a  hotel  restaurant  in  southern  China  because 
of  debts  to  a  mainland  company  owed  by  a  cashmere  firm  for  which 
he  used  to  work.  When  he  saw  the  armed  men,  he  thought  he  was 
being  kidnapped.  In  many  ways,  he  was.  Lok's  former  boss  has  disap- 
peared. The  ultimate  owner  of  the  firm,  a  big  Hong  Kong  group 
called  Lai  Sun,  washes  its  hands  of  him.  So  Lok  remains  locked  up, 
suffering  from  ill  health  and  extremes  of  climate,  and  subsisting  on  the 
mainland  prison  diet. 

I  became  aware  of  the  case  when  his  son-in-law  sent  me  an  e-mail 
about  Lok's  plight.  We  led  the  Sunday  edition  with  the  story,  and  then 
sent  a  reporter,  Cynthia  Wan,  to  Inner  Mongolia  with  Lok's  relatives 
in  the  spring,  when  they  were  allowed  only  a  brief  meeting  with  him. 
Now  the  family  has  been  told  by  its  legal  representative  that  Lok  is 
going  to  be  freed  for  the  second  anniversary  of  the  handover.  Two 
family  members  have  gone  to  collect  him.  Cynthia  Wan  is  with  them. 

Lok's  former  firm  owed  its  mainland  creditor  HK$4  million.  Two 
security  officials  tell  his  relatives  that  they  will  have  to  pay  a  HK$4-7 
rnillion  bail  to  get  him  out  of  prison.  You  people  in  Hong  Kong  are 
rich,  the  officials  explain.  They  also  denounce  the  family  for  telling  the 
press  about  the  case,  and  produce  clippings  from  the  Post.  Some  have 
Cynthia's  picture  byline.  Fortunately,  the  officials  do  not  recognise  her. 

Cases  like  this  obviously  cause  more  concern  than  the  fate  of  gang- 
sters and  murderers.  A  growing  number  of  Hong  Kong  people  are 
involved  in  cross-border  business,  and  fear  being  locked  up  without 
trial  because  of  commercial  problems.  Another  man  has  been  held 
since  March  in  Guangzhou  over  a  customs  declaration  for  ten  lifts.  He 
has  been  denied  bail.  His  company  has  paid  legal  fees  of  HK$  100,000, 


202  Dealing  Wiiii  the  Drac.on 

but  sacked  him  in  May.  His  wife  says  their  five-year-old  son  calls  out 
in  his  sleep  for  his  father. 

Apart  from  cases  involving  Hong  Kong  people,  an  Australian-Chinese 
businessman,  who  was  grabbed  from  Macau  in  a  disagreement  with  a 
relative  of  Deng  Xiaoping,  has  been  held  for  more  than  five  years.  A  city 
councillor  from  Taiwan  and  her  boyfriend  were  kidnapped  last  year  in 
northern  China  over  a  business  row.  After  being  kept  for  two  days 
bound  and  sedated,  the  man  escaped,  but  the  woman  died  when  she  was 
overdosed  with  sleeping  pills.  Another  Taiwanese  who  disappeared  in 
Shenzhen  is  thought  to  have  been  murdered  by  business  associates. 

The  SAR  government  is  moving  with  extreme  caution  in  Lok's  case. 
This  is  in  striking  contrast  to  its  attitude  towards  the  boss  of  Lai  Sun,  the 
ultimate  owner  of  the  trading  firm  for  which  Lok  had  worked.  When 
the  84-year-old  chairman  was  accused  of  bribery  in  Taiwan,  Hong 
Kong's  Chief  Executive  used  his  influence  to  get  the  old  man  freed  on 
bail  to  return  home  before  sentence  was  passed.  When  it  is  a  matter  of 
the  mainland  and  an  ordinary  Hong  Konger,  concern  seems  a  lot  less. 

The  government  also  seems  to  take  what  it  is  told  by  mainland 
police  at  face  value.  In  Lok's  case,  the  Secretary  for  Security  says  she 
has  been  assured  by  the  Beijing  authorities  that  no  bail  request  was 
made,  though  Cynthia  Wan  witnessed  the  demand.  On  his  return  to 
Hong  Kong,  Lok's  son-in-law,  John  Wong,  sends  me  another  e-mail, 
saying  'At  least  HK  SAR  government  now  treats  it  more  seriously 
than  before  .  .  .  We  need  media  who  are  able  to  speak  out  and  fight 
for  justice  for  the  HK  citizen,  particularly  post-handover.' 

3  July 

In  the  city  of  Chengdu,  a  sperm  bank  has  been  set  up  which  will 
accept  only  donors  who  have  at  least  a  master's  degree.  A  philosophy 
professor  called  Yu  Ping-zhe  objects  that  sperm  from  well-educated 
people  may  not  be  any  better  than  that  of  ignorant  folk.  Anyway, 
clever  people  are  often  ugly,  so  good  looks  should  be  a  criterion,  too. 
The  bank  responds  that  it  can  charge  high  prices  for  sperm  from 
intellectuals  who  can  provide  'intelligent  and  healthy  sperm'.  'Our 
sperm  is  vintage,'  a  spokeswoman  says. 


July  203 

Sjuly 

Farewell  reception  for  the  departing  US  Consul-General  and  a  one- 
day-late  4  July  party  at  his  residence  on  the  Peak.  The  low  level  of 
attendance  from  the  government  is  striking.  Tung  Chee-hwa  has 
made  it  known  that  he  is  going  to  leave  most  foreign  national-day 
celebrations  to  Anson  Chan  and  Donald  Tsang.  He  gave  the  Consul- 
General  a  dinner  a  few  days  ago,  but  he  might  also  have  turned  out 
tonight,  given  the  importance  of  the  US  for  Hong  Kong.  Chan 
comes  early,  but  does  not  stay  to  make  the  speech,  which  is  delivered 
by  the  Secretary  for  Financial  Services,  hardly  a  top  figure.  Only  a 
handful  of  other  officials  attend. 

That  is  in  interesting  contrast  to  a  seventh  anniversary  party  for  the 
pro-Beijing  Democratic  Alliance  for  the  Betterment  of  Hong  Kong 
(DAB)  this  week  at  a  hotel  in  Central.  The  Chief  Executive's  presence 
is  enough  to  ensure  that  a  flock  of  top  bureaucrats  attend.  Tung  joins 
the  party  bigwigs  in  cutting  an  anniversary  cake. 

Led  by  an  earnest,  intelligent  head  teacher,  Tsang  Yok-sing,  who 
says  he  gained  his  Chinese  patriotism  on  a  trip  across  the  border  as  a 
teenager,  the  DAB  aims  to  become  the  ruling  party  in  Hong  Kong. 
The  party  leader's  brother,  who  was  imprisoned  by  the  British  for 
involvement  in  anti-colonial  protests  and  then  edited  a  newspaper 
financed  from  the  mainland,  is  joining  the  government's  think-tank. 
Having  done  well  at  the  legislative  elections  last  year,  the  DAB  is 
establishing  itself  as  a  populist  rival  to  the  Democrats.  Like  them  it  has 
internal  strains,  though  of  a  very  different  nature.  On  the  one  hand, 
it  wants  to  profit  from  increased  democratisation,  but  it  also  owes  loy- 
alty to  Beijing,  which  backs  the  drawn-out  development  of  the 
political  system  laid  down  in  the  Basic  Law.  Equally,  it  is  torn  between 
the  temptation  to  become  the  government's  most  potent  ally  in  the 
legislature,  and  the  benefits  to  be  had  from  criticising  an  administra- 
tion that  is  fast  shedding  its  initial  popularity. 

There  can,  however,  be  little  doubt  that  the  DAB  will  strengthen  its 
position  as  the  year  goes  on.  Membership  of  Hong  Kong  parties  is 
tiny,  so  with  1,300  signed-up  adherents,  it  can  already  claim  to  be  the 
biggest  political  group  in  the  SAR.  It  aims  to  boost  its  numbers  to 


204  Di-ai.inc;   Willi   THE    Dracon 

30,000  by  2006,  and  to  become  the  Labour  Party  of  Hong  Kong: 
whether  old  or  new  style  is  not  yet  clear. 


7  July 

In  Los  Angeles,  Chinese  football  players  face  the  might  of  the  United 
States  in  the  final  of  the  women's  World  Cup. 

China  has  done  well,  hitting  home  nineteen  goals  and  crushing  the 
reigning  champions,  Norway,  5-0  in  the  semi-final  to  face  the  home 
team  for  the  title.  Their  goal-scoring  knack  evaporates  in  a  nil-nil 
draw  in  the  final.  The  United  States  win  the  penalty  shoot-out  5-4. 
Some  of  the  Chinese  are  in  tears  as  they  receive  runners-up  medals. 

Vice  Premier  Li  Lanqing  telephones  the  team  to  tell  them,  'I  hope 
you  can  learn  from  the  experience  and  make  a  new  contribution  to 
our  country's  sport.'  The  White  House  spokesman  talks  of  a  tradition 
of  sport  helping  to  build  bridges  stretching  back  to  the  ping-pong 
diplomacy  before  Richard  Nixon  recognised  the  mainland.  China's 
propaganda  department  warns  the  media  not  to  politicise  the  game  for 
fear  of  sparking  off  anti-American  demonstrations.  But  newspapers 
quickly  show  that  suspicions  about  US  skulduggery  are  not  confined 
to  the  bombing  of  the  embassy  in  Belgrade. 

Indeed,  one  mainland  press  report  draws  a  direct  link  between  the 
two  events.  It  notes  that  the  Chinese  team  was  put  up  in  Los  Angeles 
at  the  Ambassador  Suite  Hotel,  whose  name  amounted  to  'spiritual 
torture'  for  the  players  by  reminding  them  of  the  bombing.  A  Beijing 
soccer  fan  is  quoted  as  pointing  out  that  the  Chinese  team  was  at  a 
disadvantage  because  the  final  was  held  in  the  afternoon,  and  they  had 
not  played  any  afternoon  games  before. 

Ignoring  the  pollution  back  home,  the  Sports  Daily  newspaper 
writes  that  the  fumes  from  vehicles  in  Los  Angeles  would  have  tired 
the  visitors.  The  Beijing  Morning  Post  notes  that  the  Chinese  flew 
20,400  kilometres,  crossing  from  coast  to  coast  four  times,  whereas  the 
home  team  covered  less  than  half  that  distance.  When  video  film 
shows  that  the  US  goalkeeper  moved  off  her  line  too  early  for  a  vital 
save  during  the  shoot-out,  China's  sporting  ire  soars. 


July  205 

8  July 

The  Chief  Executive  says  he  is  determined  to  do  something  about  the 
worsening  air  pollution.  Leaders  of  political  parties  say  they  will  make 
it  a  big  issue.  We  all  know  that  exhaust  fumes  from  diesel  vehicles  are 
a  major  cause  of  foul  air.  But  today  the  Legislative  Council  votes  by 
47  to  7  to  back  a  government  proposal  that  will  block  attempts  to 
increase  the  fine  for  smoky  vehicles  from  the  present  paltry  HK$450 
(£35),  which  is  just  one  tenth  of  the  fine  for  smoking  inside  a  taxi. 

The  argument  against  boosting  the  fine  is  that  it  would  be  unfair  at 
a  time  when  other  official  fees  and  charges  are  frozen  because  of  the 
recession.  Fear  of  antagonising  the  powerful  taxi  and  transport  lobby 
is  more  germane  to  the  way  the  Democrat  and  DAB  parties  line  up 
with  the  administration. 


9  July 

For  half  a  century,  the  island  of  Taiwan,  to  which  Chiang  Kai-shek 
fled  as  head  of  the  Republic  of  China  in  1949,  has  been  a  running  sore 
for  the  mainland.  Today,  its  President,  Lee  Teng-hui,  makes  himself 
even  more  of  a  'criminal  for  a  thousand  years'  in  Beijing's  eyes. 

After  the  Kuomintang  arrived  across  the  Taiwan  Strait  and  consol- 
idated its  power  with  a  massacre  of  the  local  inhabitants,  the  island 
became  a  tightly  controlled  fortress  that  the  mainland  could  not  con- 
quer, holder  of  China's  seat  in  the  United  Nations,  defended  by 
Washington,  shot  through  with  corruption.  Then,  as  the  old  KMT 
dictatorship  crumbled,  it  grew  into  the  most  democratic  part  of 
greater  China,  and  the  home  of  a  bustling  high-tech  economy.  With 
21  million  inhabitants,  it  built  a  gross  national  product  of  US$271  bil- 
lion, and  foreign  exchange  reserves  of  US$100  billion.  Its  economy 
has  been  relatively  less  hard  hit  than  others  in  the  region  by  the  Asian 
economic  crisis,  maintaining  annual  growth  of  6  per  cent  and  increas- 
ing exports  by  almost  10  per  cent.  Its  political  culture  has  grown 
increasingly  vibrant.  Money  politics  are  still  important,  but  locally 
born  politicians  have  supplanted  the  ruling  class  that  accompanied  the 
Generalissimo  across  the  Strait  fifty  years  ago.  Though  Chiang's 


206  Di-Ai.iNG  Wnn  the   Dragon 

dreams  of  reconquering  the  mainland  evaporated  long  ago,  it  is  not 
surprising  if  many  Taiwanese  see  their  island  as  a  model  for  China  in 
the  twenty-first  century,  or  as  a  place  that  should  simply  be  left  to  get 
on  with  its  own  life.  One  economist  at  a  big  Japanese  research  insti- 
tute observes:  'If  you  asked  the  Taiwanese  where  they'd  like  to  be 
located,  they'd  probably  say  off  California.' 

The  irony  is  that  as  Taiwan  has  grown  and  prospered  and  become 
more  democratic,  so  it  has  become  more  isolated  as  the  world  commits 
itself  to  a  'one  China'  policy  ushered  in  by  Richard  Nixon's  recog- 
nition of  Beijing.  Taipei  is  reduced  to  paying  large  amounts  of  money 
for  recognition  from  small  states,  and  staging  gimmicky  exercises  to 
assert  its  existence  which  usually  end  up  annoying  the  international 
community.  As  it  made  clear  by  sending  its  fleet  to  the  Taiwan  Strait  in 
reaction  to  mainland  war  games  in  1996,  the  US  is  not  going  to  allow 
an  invasion  of  the  island.  Nor,  despite  the  fortune  Taiwan  spends  on 
lobbying  in  Washington,  does  it  want  Taipei  to  upset  the  Sino- 
American  relationship.  Balancing  those  two  objectives  is  a  major 
problem.  Clearly  Taiwan  is  not  going  to  give  up  what  it  has  achieved. 
Equally  clearly  Beijing  is  not  going  to  blink  first.  So  all  Washington  can 
do  is  to  pray  that  the  two  will  not  step  over  the  brink. 

That  prayer  is  not  aided  by  President  Lee  Teng-hui's  habit  of  cut- 
ting through  the  fudge  which  the  rest  of  the  world  would  like  to  pour 
over  his  island.  Having  been  brought  up  in  the  Japanese  system  during 
the  occupation  of  the  island,  Lee  is  the  subject  of  deep  suspicion  in 
Beijing.  Officials  there  tell  you,  as  proof  of  his  perfidy,  that  when  he 
dozes  off  at  a  dinner  he  sometimes  comes  round  speaking  Japanese. 
Not  that  Lee  does  much  to  exclude  the  idea  that  his  real  agenda  is 
independence.  His  latest  sally  is  to  say  that  relations  between  Taiwan 
and  the  mainland  should  be  on  a  'special  state-to-state  basis'.  In  fact, 
the  island  does  have  all  the  attributes  of  a  state  except  for  international 
recognition.  Inevitably,  however,  Lee's  remark  enrages  China. 

A  Beijing-funded  newspaper  in  Hong  Kong  reports  that  fighting 
against  Taiwan's  independence  has  been  listed  as  the  main  task  of  the 
Chinese  army,  and  quotes  a  mainland  expert  as  saying  that  the  PLA 
always  undertakes  military  action  once  an  objective  has  been  set.  'A 
war  will  surely  break  out  if  Lee  Teng-hui  continues  to  act  wilfully,'  the 


July  207 

expert  goes  on.  To  which  a  member  of  the  Chinese  Academy  of 
Military  Sciences  adds  his  opinion  that  the  Taiwanese  President  is  'an 
abnormal  test-tube  baby  bred  by  international  anti-China  forces  in 
their  political  lab'. 


10  July 

An  Internet  stock  called  China.com,  which  was  listed  on  the  Nasdaq 
stock  market  in  New  York  this  week,  has  trebled  its  share  price  in  a 
single  day.  The  company,  whose  owners  include  a  Hong  Kong  prop- 
erty firm,  China's  official  Xinhua  news  agency  and  America  Online, 
offers  Internet  access  in  China,  Taiwan  and  Hong  Kong.  There  is  not 
much  there  at  present,  and  it  only  ranks  as  the  seventeenth  most  pop- 
ular website  on  the  mainland.  But  put  the  words  China  and  Internet 
together  and  you  have  a  goldmine. 

14  July 

The  World  Economic  Forum  places  Hong  Kong  in  third  place  in 
world  competitiveness,  behind  the  United  States  and  Singapore.  But 
when  the  report  moves  from  government  policy  and  the  big  picture 
to  the  microeconomic  ways  in  which  firms  actually  work,  the  SAR 
slips  down  to  twenty-first  place.  The  analysts  have  noticed  aspects  of 
the  economy  which  are  usually  concealed  by  the  sheen  of  small  gov- 
ernment and  low  taxes,  such  as  the  array  of  non-competitive  practices, 
cartels  and  antiquated  management. 

Then  Standard  and  Poor's  rating  agency  weighs  in  with  a  negative 
verdict  on  Hong  Kong's  long-term  outlook.  It  says  the  SAR  is  vul- 
nerable to  loss  of  confidence  because  of  regional  developments, 
potential  political  mismanagement  and  the  government's  appeal  to  the 
NPC. 


16  July 

A  further  sign  of  Beijing's  view  of  the  proper  role  of  the  Hong  Kong 
media.  The  Deputy  Director  of  the  Hong  Kong  and  Macau  Office, 


2o8  Dealing  With  the  Dragon 

Liu  Mingqi,  tells  a  visiting  party  of  journalists  from  the  SAR  that  the 
Tung  government  deserves  support.  There  is,  he  notes,  a  suggestion 
that  the  Chief  Executive's  popularity  has  dropped.  But  'public  opin- 
ion has  been  misled.  Over  the  past  two  years,  Mr  Tung  has  shown 
good  leadership.  Hong  Kong  people  should  feel  lucky  they  have  a 
good  Chief  Executive.' 

In  the  past,  mainland  officials  avoided  commenting  on  the  Hong 
Kong  press  in  deference  to  one  country,  two  systems.  But  now  Liu 
Mingqi  shows  no  inhibitions.  Speaking  about  the  right  of  abode  issue, 
he  says  that  'Some  people,  including  some  newspapers,  have  fuelled 
the  row  and  caused  all  the  controversy.'  He  singles  out  the  faithfully 
pro-Beijing  newspapers,  Ta  Kung  Pao  and  Wen  Wei  Po,  as  having  done 
well.  'They  helped  explain  government  policies.  News  media  should 
explain  government  policies  .  .  .  Some  people  have  taken  to  the 
streets  to  say  "Down  with  this  or  that."  It's  like  the  behaviour  of 
some  people  during  the  Cultural  Revolution.' 

20— 22  July 

The  authorities  in  Beijing  have  launched  a  major  campaign  against  the 
Falung  Gong  sect.  Thousands  of  practitioners  are  rounded  up  as  they 
demonstrate  for  better  treatment  for  their  movement,  or  carry  out 
their  deep-breathing  exercises  in  public.  Most  are  released  after  short 
detention.  Some  undergo  what  one  mainland  newspaper  calls  'per- 
suasion tactics'  by  police. 

Sects  and  secret  societies  have  a  long  history  in  China.  The  two 
major  figures  of  the  Kuomintang  regime,  Sun  Yat-sen  and  Chiang 
Kai-shek,  were  both  associated  with  such  shadowy  movements,  which 
often  merged  into  the  world  of  the  Triads.  There  is  no  way  the 
authoritarians  in  Beijing  will  allow  the  deeply  suspect  Falun  Gong  to 
continue. 

One  adherent  who  was  detained  for  two  weeks  with  ten  others  in 
the  northern  industrial  city  of  Dalian  reports  that  when  they  did  their 
exercises  in  jail,  'the  guards  took  our  trousers  down  and  gave  each  of 
us  fifteen  lashes  with  a  leather  whip.  Our  buttocks  were  covered  in 
blood.'  He  says  they  were  also  hit  in  the  face,  beaten  with  rubber 


July  209 

truncheons  and  handcuffed  to  window  frames  for  hours.  In  Shandong 
province,  a  woman  farmer  arrested  while  working  in  the  fields  died  in 
prison.  The  Falun  Gong  website  says  she  was  tortured  with  electric 
batons  and  rubber  clubs  and  'electrified  with  old-style  rotary  tele- 
phones'. The  semi-official  China  News  Service  blames  her  death  on 
a  heart  attack  after  falling  in  a  toilet. 

China  has  issued  instructions  for  the  arrest  of  the  sect's  founder,  Li 
Hongzhi,  who  lives  in  the  New  York  suburb  of  Queens.  It  asks 
Interpol  to  help  bring  him  in,  but  gets  a  negative  response.  The  state 
media  put  out  stories  about  a  practitioner  who  cut  himself  open  with 
a  penknife  believing  that  he  had  the  sacred  wheel  of  the  law  in  his 
stomach,  another  who  killed  his  wife  because  of  the  Falun  Gong's 
teaching,  and  743  people  whose  deaths  are  blamed  on  the  cult.  Li  is 
vilified  as  a  charlatan  who  has  milked  his  followers  for  money;  the 
mainland  media  say  the  only  thing  anybody  remembers  about  his 
childhood  was  that  he  played  the  trumpet  -  badly. 

A  former  low-level  employee  of  a  state  grain  enterprise  in  Jilin 
province  which  adjoins  North  Korea,  Li  developed  a  big  following 
with  his  lectures  during  the  1990s.  The  authorities  say  he  was  born  in 
1952,  but  Li  dates  his  birth  a  year  earlier,  coinciding  with  the  birthday 
of  Buddha.  He  left  China  for  the  US  in  the  spring  of  1998,  a  year 
before  the  Falun  Gong  staged  its  sudden  protest  outside  the  leadership 
compound  in  Beijing.  The  Youth  Daily  newspaper  reports  that  when 
police  raided  his  former  two-bedroom,  two-bathroom  flat  in  Jilin 
they  found  a  big  television  set,  an  audio  and  video  system,  a  leather 
sofa  and  a  safe  containing  seven  imported  watches,  rings,  bracelets, 
jade  earrings  and  gold-plated  pens.  In  an  adjoining  office,  beside  a  fax, 
a  copying  machine  and  a  shredder,  was  a  receipt  for  a  Volkswagen 
Jetta.  All  of  which  is  used  to  back  up  the  charge  that  Li  was  sucking 
in  money  from  the  practitioners,  who  were  said  to  have  paid  92,520 
yuan  (.£7,400)  for  a  three-hour  talk  he  gave  in  1994.  It  certainly 
couldn't  have  all  been  paid  for  from  his  salary  at  the  grain  office  and 
his  wife's  earnings  from  her  work  at  a  public  baths. 

The  creed  which  Li  propagates  involves  deep-breathing  and  med- 
itation exercises  that  claim  to  raise  consciousness  and  to  harness 
natural  forces  to  the  human  body.  It  draws  on  a  long  tradition  of  Asian 


210  Dealing  With  the   Dragon 

mysticism:  one  of  the  founder's  portraits  shows  him  in  a  dark  suit, 
standing  in  front  of  the  inverted  swastika  used  in  Zoroastrianism  and 
other  ancient  religions.  Li  says  it  promotes  good  health  and  morality. 
There  are  also  some  more  unusual  claims  associated  with  the  move- 
ment, such  as  the  ability  to  reverse  the  menstrual  cycle  and  to  enable 
followers  to  see  out  of  the  back  of  their  heads,  though  it  is  not  clear 
if  they  are  put  forward  by  the  Falun  Gong  itself  or  associated  with  it 
by  those  who  wish  to  discredit  the  sect.  Li  is  said  to  have  offered 
ardent  practitioners  the  prospect  of  being  able  to  fly  to  heaven  by 
transforming  the  molecular  make-up  of  their  bodies.  Asians  will  go  to 
one  heaven,  Caucasians  to  another.  A  video  made  by  Li  and  shown  by 
Chinese  authorities  has  the  founder  describing  the  earth  as  a  rotten 
apple  which  has  been  destroyed  81  times,  and  asserting  that  he  is  the 
only  person  left  in  China  who  can  save  it. 

A  former  follower  from  Hong  Kong  has  circulated  a  report  saying 
that  the  founder  claims  to  be  the  Supreme  Buddha  of  the  Cosmos, 
with  a  status  superior  to  that  of  all  other  deities,  who  is  now  presid- 
ing over  the  final  'clean-up'  of  the  planet.  After  which,  a  new  human 
race  will  appear,  made  up  mainly  of  Falun  Gong  adherents.  In  the 
meantime,  according  to  this  report  as  published  in  the  South  China 
Morning  Post,  Li  has  revealed  that  he  helped  the  Virgin  Mary  to  reach 
Heaven  after  she  spent  2,000  years  going  through  various  reincar- 
nations on  earth.  He  is  also  said  to  attribute  the  progress  of  computers 
to  intervention  by  aliens,  who  have  given  a  serial  number  to  all 
human  users. 

Alien  intervention  or  not,  Li  and  followers  have  shown  themselves 
adept  at  using  computerised  communications.  They  have  set  up  web- 
sites, and  operate  by  e-mail  through  servers  outside  China  which  are 
beyond  the  reach  of  the  authorities.  It  is  a  very  end-of-century  meet- 
ing of  an  old  Chinese  cult  of  spiritual  healing  and  modern 
information  technology,  and  one  which  frightens  a  regime  that  faces 
a  major  problem  in  trying  to  extend  its  control  to  cyberspace.  This  is 
still  a  country  where  a  businessman  in  Shanghai  was  recently  impris- 
oned for  supplying  e-mail  addresses  to  a  Chinese-language  electronic 
newsletter  based  in  Washington. 

One  particular  governmental  worry  about  the  Falun  Gong  is  that 


July  211 

it  has  practitioners  in  the  administration  and  armed  forces.  The  Beijing 
Daily  says  a  former  deputy  director  at  the  Ministry  of  Public  Security, 
who  is  among  those  recently  detained,  protected  Li  from  arrest  when 
he  was  still  in  China,  and  helped  him  leave  for  the  United  States.  A 
retired  officer  who  was  deputy  director  of  the  military's  general  health 
department  has  been  identified  as  an  adherent.  Sources  quoted  by  the 
Washington  Post  say  a  retired  major-general  on  the  general  staff  depart- 
ment was  a  practitioner.  Thousands  of  soldiers  are  believed  to  have 
joined  in  its  activities  in  the  Dalian  area  of  the  north. 

As  well  as  trying  to  suppress  the  Gongists,  the  regime  is  maintain- 
ing its  crackdown  on  political  dissent  this  summer.  Liu  Xianbin,  a 
3 1 -year-old  organiser  for  the  tiny  China  Democracy  Party,  from 
Sichuan  province,  has  been  charged  with  'subverting  state  power'  and 
will  get  thirteen  years  in  prison.  One  piece  of  evidence  used  against 
Liu  were  letters  he  wrote  to  President  Jiang  and  Prime  Minister  Zhu 
calling  for  the  release  of  other  members  who  had  been  jailed.  A 
founder  of  the  group  who  requested  that  it  should  be  made  legal  the 
day  Bill  Clinton  arrived  in  China  for  his  visit  in  1998  was  sent  down 
on  a  similar  sentence.  Two  other  members  have  received  eleven-year 
terms.  A  dissident  in  Sichuan  got  twelve.  In  all,  over  200  democracy 
activists  have  been  taken  in  this  summer,  and  thirty-five  are  still  held, 
according  to  the  Hong  Kong-based  Information  Centre  of  Human 
Rights  and  Democratic  Movement  in  China. 

The  Central  Government  is  anxious  to  deal  with  opponents  before 
the  celebrations  of  the  fiftieth  anniversary  of  the  Communist  victory 
on  1  October,  counting  on  protests  from  the  West  being  muted  by 
embarrassment  over  the  bombing  of  the  Chinese  embassy  in  Belgrade. 
But  it  doesn't  like  its  crackdown  to  become  too  widely  known:  a  rail- 
way employee  has  been  sent  to  jail  for  ten  years  for  'illegally  providing 
intelligence  to  foreign  organisations'  about  labour  unrest  -  that  is, 
telling  foreign  journalists  about  protests  by  workers  complaining 
against  not  being  paid  or  about  corruption. 

The  fiftieth  anniversary  is  also  the  occasion  for  a  more  general 
anti-crime  campaign.  Strike  Hard  is  its  name.  The  official  press 
announces  35,000  arrests  injury.  China  Daily  says  the  aim  is  to  'elim- 
inate latent  threats  to  social  stability'  and  to  create  a  safer  environment 


212  Dealing  Wiiii  the  Dragon 

for  the  celebrations.  The  Public  Security  Ministry  calls  on  citizens  to 
denounce  suspects  and  offers  rewards  for  information  leading  to 
arrests. 

Still,  angry  workers  are  reported  to  have  blocked  more  train  lines 
after  not  getting  their  pensions  or  pay.  There  have  been  fresh  rallies 
against  corruption  and  bad  local  government.  One  of  those  stories 
which  probably  isn't  true  but  should  be  goes  as  follows.  Instructions 
have  been  sent  from  Beijing  to  station  masters  in  the  industrial  north 
of  the  country.  If  they  see  groups  of  workers  heading  for  the  capital, 
they  are  to  stop  the  trains  and  order  them  to  disembark.  So  you  will 
be  able  to  gauge  the  extent  of  industrial  unrest  by  the  number  of 
empty  trains  arriving  late  from  the  north. 

23  July 

Lunch  with  a  senior  Hong  Kong  policy-making  official.  He  asks  why 
the  media,  and  in  particular  the  Post,  are  always  so  negative  about  the 
government,  and  why  the  Post  has  become  'so  sensational'.  His  line  is: 
of  course,  the  administration  makes  mistakes,  but  a  family  should  not 
hang  out  its  dirty  washing  for  all  to  see.  Singaporean  overtones  are 
unmistakable.  We're  all  in  this  together,  so  let's  all  pull  together  for  the 
general  good. 

As  for  our  supposed  sensationalism,  I  ask  him  to  give  me  an  exam- 
ple. He  cites  a  recent  front  page  which  featured  three  stories  reporting 
government  reversals  in  the  courts.  The  main  headline  read:  'day  of 
defeats  for  tung'  and  each  of  the  cases  was  highlighted  with  a  red 
and  black  bar.  That  certainly  wouldn't  have  been  regarded  as  sensa- 
tional in  a  British  broadsheet.  Perhaps  it  just  made  its  point  about  the 
government's  discomforture  rather  too  well.  As  another  senior  official 
says:  'You  may  be  right,  but  don't  show  us  up  so  much.' 

24  July 

A  long  conversation  with  a  rising  Hong  Kong  Chinese  solicitor.  He 
had  been  doing  well  in  London,  but  had  wanted  to  come  home  to  join 
in  the  development  of  the  SAR.  Now  he  is  thinking  of  returning  to 


July  213 

Britain.  He  is  disillusioned  with  the  way  the  government  operates, 
with  the  lack  of  vision,  with  it  not  standing  up  for  Hong  Kong  and 
with  the  way  the  old  business  establishment  rules.  And  despite  the 
recession,  prices  here  are  still  so  high  that  he  reckons  he  could  live  just 
as  well,  if  not  better,  in  the  UK.  This  is  the  kind  of  voice  that  provides 
a  backdrop  to  the  political,  legal  and  economic  debate  -  and  which  the 
government  ignores  at  its  peril. 

25  July 

We  may  feel  hot  and  humid  in  Hong  Kong,  but  the  mainland  media 
reports  that  the  temperature  in  Beijing  has  gone  above  40  degrees 
Celsius.  What  is  striking  is  not  the  heat,  but  the  fact  that  it  was  accu- 
rately reported. 

For  decades,  the  temperature  on  the  mainland  never  officially  rose 
above  37  degrees.  There  was  a  general  belief  that  if  it  was  any  hotter, 
outdoor  workers  were  entitled  to  a  day  off.  So  the  official  temperature 
report  stayed  below  37  degrees.  Now  the  truth  is  out.  Officials  deny 
that  there  is  any  entitlement  to  a  day  off.  The  China  Youth  Daily  says 
the  new  veracity  is  'a  very  important  step  towards  constructing  the 
rule  of  law.' 


31  July 

Today  is  a  routine  Saturday  at  the  Post,  except  that  it  is  my  last  day  as 
editor.  The  paper  is  in  good  shape.  Though  the  sniping  will  never 
cease,  we  have  established  our  independence  in  the  post-handover 
Hong  Kong.  Pre-tax  profit  for  the  financial  year  that  has  just  ended 
was  equivalent  to  £35  million,  or  36  per  cent  of  turnover.  When 
asked  why  I  am  going,  I  reply  that  I  have  been  given  no  explanation, 
but  can  only  surmise  that  the  Kuoks  want  somebody  with  whom  they 
feel  more  comfortable. 

The  New  York  Times  runs  a  1,000- word  piece  under  the  headline  'a 
free-spoken  editor  won'  1  be  back'  and  with  a  pull-quote  declaring, 
'At  a  tense  time  in  Hong  Kong,  a  voice  is  silenced.'  The  story  says  that 
the  'murky  circumstances  of  Mr  Fenby's  exit  have  prompted  a  rash  of 


214  Dealing  Wiih  the   Dragon 

speculation  that  he  is  a  victim  of  Hong  Kong's  tightening  political 
atmosphere'.  It  quotes  the  legislator  Margaret  Ng  saying  she  'strongly 
suspects  that  this  is  motivated  by  his  wanting  to  be  more  independent 
than  the  owners  are  willing  to  be'. 

That  is  enough  for  the  government's  information  service  to  put  in 
an  urgent  weekend  call  to  the  Post  to  make  it  clear  that  it  had  noth- 
ing to  do  with  my  going.  If,  indeed,  there  was  an  agreement  that  the 
editorship  of  the  Post  should  be  changed,  it  would  have  been  done  at 
a  different  level,  or  without  any  obvious  reference  to  officialdom. 
Which  tycoon  would  talk  to  the  government  information  service 
about  repositioning  the  pieces  on  his  chess  board? 

The  Guardian  reports  that  attention  will  now  be  focused  on  the 
future  of  the  Post.  Its  correspondent  notes  how  the  paper's  indepen- 
dence 'helped  to  allay  fears  that  the  Hong  Kong  media  would  be 
muzzled  once  the  territory  returned  to  China'.  Newsweek  lists  my 
departure  as  a  sign  of  Hong  Kong's  'fading  autonomy',  and  an  edito- 
rial in  The  Economist  about  the  future  of  Hong  Kong  remarks: 
'Worryingly,  the  editor  of  a  newspaper  that  was  sharply  critical  of  the 
[legal  reinterpretation]  decision  has  since  had  his  contract  terminated.' 

As  for  myself,  I  write  a  valedictory  piece  for  the  Independent  on  my 
four  years  at  the  Post.  Later,  I  am  told  that  it  'ruffled  feathers'  with  the 
owners.  Then  it  is  time  to  do  my  weekly  editorial  page  column.  In 
the  past,  it  has  been  called  'Letter  from  the  Editor'.  Only  the  tide  need 
change. 


August 


i  August 

Whatever  one's  worries  about  the  rule  of  law  and  accountability 
and  the  executive's  power,  a  reality  of  one  country,  two  systems  is 
out  on  the  street  in  Happy  Valley,  opposite  the  main  racecourse.  On 
the  mainland,  thousands  of  Falun  Gong  practitioners  have  been 
detained  in  recent  weeks.  But  the  Hong  Kong  government  has 
authorised  a  demonstration  today  by  some  200  adherents  outside 
the  office  of  the  Chinese  news  agency,  Xinhua.  On  a  hot  summer 
afternoon,  they  stand  silently  doing  their  movements,  and  disperse 
peacefully. 

9  August 

The  South  China  Morning  Post  reveals  that  Beijing  has  rejected 
approaches  from  the  Vatican  for  Pope  John  Paul  II  to  be  allowed  to 
visit  Hong  Kong.  It  is  a  pointed  reminder  of  how  the  one  country 
part  of  Deng's  formula  works. 

Apart  from  traditional  communist  distaste  for  Catholicism,  the 
Papacy  is  in  bad  odour  on  the  mainland  because  it  maintains  a  diplo- 
matic mission  in  Taiwan.  The  idea  of  a  papal  visit  to  Hong  Kong  was 
apparently  seen  by  the  Vatican  as  a  means  of  enabling  the  Pontiff  to 
preach  on  Chinese  soil  without  needing  to  resolve  differences  with 


216  Dealing  Wiiii  the   Dkacon 

Beijing.  But  Tung  Chee-hwa  says  that  this  is  a  foreign  affairs  matter 
which  falls  under  the  authority  of  the  Central  Government.  He  adds 
that  his  own  officials  are  united  in  disapproving  of  the  idea,  including 
the  Financial  Secretary,  who  is  a  Catholic. 


15  August 

Just  in  case  anybody  thought  things  were  going  to  quieten  down  in 
Macau  as  the  return  to  China  approaches,  a  nail  bomb  kills  two  sus- 
pected Triads  as  they  drive  to  the  casino  after  a  late  night  restaurant 
meal.  A  simultaneous  arson  attack  damages  two  cars  and  a  dozen 
motorcycles  elsewhere  in  town. 

Across  the  border,  another  gang  boss,  Ip  Seng-kin,  is  tried  for  rob- 
bery and  arms-smuggling.  Known  as  Macau's  equivalent  of  Big 
Spender,  Hong  Kong-born  Ip  and  two  associates  are  led  from  the 
court  in  Zuhai  city  with  black  hoods  over  their  head  after  being  sen- 
tenced to  death.  Back  in  Macau,  the  trial  of  his  peer,  Broken  Tooth, 
opens  with  the  defence  lawyer  storming  out  of  the  courtroom  in 
protest  at  the  way  in  which  the  trial  is  conducted.  The  joke  going  the 
rounds  is  that  his  client  wants  a  quick  verdict  so  that,  if  found  guilty, 
he  can  arrange  to  escape  before  the  PLA  comes  in  and  deals  with 
him. 


18  August 

A  major  stock  market  flotation  is  being  prepared  in  Beijing. 
Managers,  consultants,  auditors,  bankers  and  lawyers  fill  a  hotel 
owned  by  the  China  National  Petroleum  Corporation  (CNPC), 
the  world's  fifth  biggest  oil  firm.  They  work  in  specially  fitted-out 
offices  on  the  lower  floors  and  sleep  in  rooms  above.  They  are  fash- 
ioning a  new  company  with  CNPC's  prize  assets,  US$i  billion  less 
in  costs  and  one-third  of  its  1.5  million  employees.  Fifteen  per  cent 
of  its  shares  will  be  floated  in  New  York  and  Hong  Kong  in 
February.  What  is  left  unsaid  is  what  happens  to  the  remaining  hulk 
of  the  old  company  with  its  million  employees  and  assets  the  world 
does  not  want. 


August  217 

22  August 

An  airliner  from  Taiwan's  China  Airlines  crashes  in  flames  while  land- 
ing at  Chek  Lap  Kok  airport  during  a  typhoon.  Investigators  find  that 
the  Italian  pilot  did  not  reduce  his  speed  sufficiently  during  the 
approach.  The  plane  turned  over  and  caught  fire.  Passengers  hung 
upside-down  in  their  seat  belts,  some  for  hours.  The  miracle  was  that 
only  three  died. 

The  typhoon,  called  Sam,  is  the  first  really  serious  storm  to  hit 
Hong  Kong  for  several  years.  It  kills  one  villager,  buried  under  three 
metres  of  mud.  Twenty-eight  people  are  hurt.  There  are  landslides  and 
flooding  in  the  New  Territories. 

27  August 

The  government  announces  second-quarter  growth  of  0.5  per  cent.  Is 
the  recession  over?  After  over-enthusiastic  forecasts  in  the  past,  the 
Financial  Secretary  is  cautious.  But  the  green  shoots  of  recovery  seem 
to  be  sprouting  all  around.  Malaysia  announces  strong  expansion. 
Retailers  in  Thailand  say  trade  was  up  20  per  cent  in  July.  South 
Korea  is  bounding  ahead.  So  is  Singapore. 

There  is,  however,  another  side  of  the  slate.  The  unravelling  of  the 
giant  chaebol  groups  in  Korea  is  taking  much  longer  than  expected; 
Malaysia  has  been  living  behind  a  wall  of  controls;  there  is  a  major 
bank  scandal  in  Indonesia;  and  changing  the  business  culture  in 
Thailand  is  going  to  take  time.  For  Hong  Kong,  there  is  the  question 
of  whether  China  can  maintain  the  growth  it  needs  to  power  its  way 
into  the  world  economy  and  to  avoid  major  social  stresses  that  could 
threaten  the  system  -  and  of  what  is  going  to  happen  with  its  stalled 
bid  to  join  the  World  Trade  Organisation. 

30  August 

Indignation  is  rising  over  a  redevelopment  scheme  for  the  waterfront 
in  Central  which  would  mean  the  end  of  the  old  Star  Ferry  piers. 
They  would  be  moved  along  the  harbour.  Nobody  could  claim  that 


/ 


2i8  Dealing  Wiiii  the   Dkacdn 

the  current  piers  are  things  of  beauty,  but  they  are  an  integral  part  of 
Hong  Kong  life,  particularly  at  rush  hours,  when  passengers  crowd  on 
to  the  squat  boats  to  cross  the  1,480  metres  between  Central  and 
Tsim  Sha  Tsui.  The  ferry  is  efficient,  practical  and  cheap  -  HK$2.20 
(17  pence)  for  the  upper  deck  and  $1.70  (13  pence)  down  below  for 
the  seven-minute  crossing.  At  any  moment  during  the  day,  one  or 
other  of  the  thirteen  boats  will  be  plying  back  or  forth  across  the 
water,  riding  on  the  wake  of  more  powerful  boats  and  making  a  crab- 
like approach  to  the  quays  on  either  side. 

The  view  from  the  water  in  mid-voyage  is  spectacular,  particularly 
at  night  when  the  lights  are  gleaming.  Set  up  by  a  Parsee  at  the  end  of 
the  last  century  and  now  run  by  a  big  conglomerate,  the  green  and 
cream  ferries  have  come  to  be  a  seminal  emblem  of  the  city,  even  if 
Richard  Branson  has  recently  taken  over  one  and  repainted  it  Virgin 
red.  'Here's  the  real  Hong  Kong,'  writes  the  journalist  and  long-time 
local  observer  Kevin  Sinclair.  'The  smell  of  salt  water  (try  not  to  look 
at  the  surface)  and  the  odour  of  wet  rope,  the  tang  of  diesel  fuel,  the 
clank  as  the  gangway  crashes  down,  the  whistle  to  tell  you  you've 
missed  the  boat  .  .  .' 

The  government  has  already  changed  its  mind  about  a  development 
and  reclamation  scheme  in  the  harbour.  Perhaps  it  can  be  persuaded 
to  think  again  one  more  time. 


September 


i—8  September 

Architecture,  culture,  the  economy,  corruption,  and  China's  great 
wild  west. 

Beijing  has  picked  a  design  by  a  French  architect  for  its  new 
national  theatre  and  opera  house.  The  glass  and  titanium  building  is 
shaped,  according  to  which  simile  you  prefer,  like  a  giant  bubble  or  a 
squashed  duck's  egg  or  a  space  ship  from  a  science  fiction  film.  It  will 
sit  in  the  middle  of  an  artificial  lake  in  a  park  alongside  the  Great  Hall 
of  the  People  and  opposite  the  Forbidden  City  in  the  centre  of  the 
capital.  Inside  the  building,  which  will  be  reached  through  a  tunnel 
under  the  lake,  will  be  a  2,700-seat  opera  hall,  a  smaller  concert  hall 
and  two  theatres.  Covering  100,000  square  metres,  the  project  will 
cost  US$360  million. 

The  news  has  been  confirmed  by  officials  to  foreign  correspon- 
dents, but  has  not  been  announced  domestically.  The  authorities 
might  find  it  a  trifle  embarrassing  to  explain  to  their  people  why 
none  of  the  twenty-four  architects  from  China  and  Hong  Kong  who 
submitted  designs  was  chosen. 

On  the  economic  front,  the  mainland  Finance  Minister  is  quoted 
as  saying  that  he  is  'not  over-optimistic'  about  halting  deflation  despite 
a  programme  of  fresh  spending.  The  government  is  pumping  in 
an  additional  54  billion  yuan  (£4  billion)  in  wages,  pensions  and 


220  Dealing  Wiih  the   Dragon 

unemployment  benefits.  All  this  means  that  the  budget  deficit  has 
nearly  doubled  to  reach  an  unprecedented  1N0  billion  yuan  (£14  bil- 
lion). 

Some  people  have  been  spending  regardless  of  deflation  or  anything 
else.  A  mainland  prosecutor  identified  only  as  'Du'  has  been  found 
dead  with  his  mistress  at  a  luxury  villa  near  the  city  of  Shenyang  in  the 
north.  It  appears  to  have  been  a  case  of  suicide.  Du  had  been  regarded 
as  a  model  puritanical  bureaucrat.  He  did  not  drink  or  smoke  or  go  to 
karaoke  bars.  He  had  been  with  the  prosecutor's  department  for  thir- 
teen years,  and  never  earned  more  than  900  yuan  (jC7S)  a  month.  But 
it  now  turns  out  that  he  had  spent  more  than  a  million  yuan  of  public 
funds  on  the  villa  and  a  luxury  car  for  his  mistress.  'The  whole  city 
was  shocked  by  the  news,'  say  the  mainland  newspapers. 

On  the  other  side  of  the  country,  the  Central  Government  is 
reported  to  be  imposing  yet  another  crackdown  on  separatists  in  the 
vast  Xinjiang  region,  on  the  frontier  with  Central  Asia,  with  its  dozen 
different  nationalities,  its  great  mineral  resources  and  its  13  million 
Muslim  Uigur  people.  It  is  an  area  of  enormous  contrasts:  the  urban 
expanse  of  Urumqi  and  the  great  Taklamakan  Desert,  where  camel 
trains  used  to  disappear  in  sandstorms;  the  painted  caves  of  the 
Flaming  Mountains  and  the  Lop  Nor  test  site,  where  Beijing  let  off  its 
nuclear  explosions.  (A  vineyard  in  a  nearby  oasis  produces  a  pleasant 
light  red  wine;  one  hopes  that  it  hasn't  been  nurtured  on  fallout.)  The 
Turpan  depression  on  the  Silk  Road  is  the  second  lowest  point  on  the 
planet,  and  a  tourist  attraction  for  ancient  sites  nearby  -  a  photograph 
in  a  hotel  lobby  of  Bill  Gates  on  a  visit  is  even  bigger  than  the  picture 
of  Jiang  Zemin.  Down  the  road,  the  Atex  restaurant  and  dance  hall  is 
crowded  with  a  bizarre  mixture  of  local  yuppies  and  increasingly  soz- 
zled old  men  in  thick  boots  and  fur  hats.  A  local  painter  in  two-tone 
shoes  executes  perfect  waltzes  and  foxtrots  with  visiting  ladies. 

To  the  west,  in  the  shadow  of  some  of  the  highest  mountains  on 
earth,  lies  the  great  trading  centre  of  Kashgar,  the  gateway  to  Central 
Asia,  with  its  mosques  and  alleyways  and  huge  Sunday  market  where 
the  carpet  traders  track  black-market  rates  for  US  dollars  on  cellular 
telephones  while  women  walk  round  with  big  brown  knitted  veils 
completely  covering  their  heads.  In  the  nineteenth  century,  this  was 


September  221 

a  key  watching  post  for  the  British  and  Russians  in  the  Great  Game 
for  influence  over  the  approaches  to  imperial  India.  For  twenty-eight 
years,  George  Macartney,  a  diplomat  with  a  Chinese  mother,  presided 
over  the  British  consulate,  immortalised  by  the  memoirs  of  his  wife, 
whom  he  plucked  from  Victorian  London  to  live  in  one  of  the  more 
isolated  of  diplomatic  posts  at  the  end  of  a  gruelling  six- week  overland 
journey  across  Russia  and  through  the  Himalayas.  Today,  the  con- 
sulate is  part  of  a  modern  hotel,  as  is  the  rival  Russian  mission  where 
Catherine  Macartney  was  taken  aback  by  the  drinking  habits  of  the 
Tsar's  representatives,  especially  when  one  poured  champagne  down 
her  dress  as  he  tried  to  make  a  toast. 

A  huge  statue  of  Mao  Tse-tung  still  points  the  way  ahead  in  the 
centre  of  the  city,  but  the  religion  here  is  Islam  not  communism.  The 
mosque  in  the  middle  of  town  is  the  biggest  in  China.  A  sign  in  the 
courtyard  advises  visitors  in  English  that  'breaking  wind  and  speaking 
loudly  is  forbidden.  The  intimate  action  is  not  welcome  in  this 
mosque.' 

Beijing  has  encouraged  Han  Chinese  from  other  parts  of  the  coun- 
try to  move  to  the  region  to  try  to  alter  the  racial  balance,  but  there 
has  been  no  assimilation  to  speak  of  and  most  of  the  newcomers  live 
in  the  capital  city  of  Urumqi  or  are  PLA  soldiers.  On  a  Sunday  after- 
noon walk  through  the  streets  of  Kashgar,  I  counted  only  half  a  dozen 
Han  among  the  thousands  of  pedestrians,  plus  two  driving  by  in  a 
People's  Liberation  Army  jeep.  If  you  ask  how  many  soldiers  are  sta- 
tioned in  the  area,  you  get  either  a  huge  number  or  a  shrug  of  the 
shoulders. 

A  Uigur  joke  goes  as  follows.  An  American,  a  Japanese,  a  Uigur 
and  a  Han  are  in  a  train  compartment.  The  American  gets  up,  opens 
the  window  and  throws  out  all  his  cigarettes,  shouting,  'Too  many 
Marlboros.'  A  bit  later,  the  Japanese  stands  up,  opens  the  window  and 
throws  out  several  Sony  tape  machines  he  is  carrying,  shouting,  'Too 
many  Walkmans.'  A  little  further  on,  the  Uigur  gets  up,  opens  the 
window  and  throws  out  the  fourth  man  in  the  compartment,  shout- 
ing, 'Too  many  Han.' 

Chinese  rulers  have  tried  to  assert  control  for  two  millennia. 
Following  Muslim  rebellions  in  the  1860s  and  1870s,  Xinjiang  became 


222  Dealing  With  the   Dragon 

an  imperial  province  in  1884,  but  broke  away  again  at  the  end  of  the 
Qing  dynasty  in  1911.  For  a  while  after  the  Second  World  War,  it 
became  the  Eastern  Turkestan  Republic.  Since  1955,  it  has  been  an 
autonomous  region  of  the  People's  Republic  of  China.  Now  there  is 
talk  of  economic  revival,  of  opening  up  the  Silk  Road  as  a  major  land 
route  between  Central  Asia  and  China.  But  a  trip  along  the  main 
Karakoram  Highway  through  the  shimmering  lakes  and  vast  open 
foothills  of  the  Pamir  mountains  shows  how  primitive  it  remains. 
Great  heaps  of  boulders  that  have  slid  down  the  slopes  reduce  the  car- 
riageway to  single  file  in  places.  The  road  surface  is  rutted  with  deep 
crevices.  Somewhere  over  the  peaks  are  the  Talibans  of  Afghanistan. 

Beijing  is  deeply  worried  at  the  prospect  that  Muslim  fundamen- 
talists could  stir  up  revolt  in  the  region  whose  600,000  square  miles 
constitute  one-sixth  of  the  country's  landmass.  There  are  stories  of 
groups  from  Afghanistan  distributing  audio  cassettes  in  Kashgar;  our 
trip  westwards  along  the  Silk  Road  in  1998  was  halted  after  three 
hours'  driving  on  the  Karakoram  towards  Pakistan  for  fear  of  terror- 
ists lying  ahead.  Last  year,  an  internal  instruction  to  China's  security 
departments  named  the  region's  pro-independence  movement  as  the 
greatest  threat  to  national  political  stability.  The  region's  Communist 
Party  secretary  worries  that  'what  happened  in  Kosovo  today  will 
happen  in  Xinjiang  tomorrow'.  Police  recently  raided  a  meeting  of 
Uigurs  alleged  to  have  been  planning  to  sabotage  China's  national-day 
celebrations  on  1  October.  Bomb  blasts  in  Beijing  have  been  blamed 
on  militants  from  the  far  west. 

This  autumn  brings  a  series  of  executions  of  Uigurs.  Some  were 
found  guilty  of  manufacturing  explosives  or  'illegal  religious  prose- 
lytism'.  Others  were  condemned  for  murder,  robbery  and  arms 
offences.  One  group  was  accused  of  having  set  up  a  'party  of  Allah' 
among  migrants  in  Guangdong  province  across  from  Hong  Kong. 
According  to  a  Xinjiang  newspaper,  this  group  carried  out  murders  in 
three  mainland  cities,  and  its  leader  was  preparing  to  transport  more 
than  260  detonators  to  Xinjiang.  A  Uigur  accused  of  having  killed 
two  policemen  and  six  civilians  died  in  hospital  this  month  after 
taking  a  three-year-old  boy  hostage  and  throwing  a  grenade  before 
being  shot  by  security  forces. 


September  223 

The  search  for  local  heroes  to  put  on  a  pedestal  as  approved  role 
models  led  the  central  authorities  to  promote  a  Uigur  woman 
called  Rebiya  Kadeer.  Born  into  a  poor  family,  she  built  a  highly 
successful  business  career,  urged  Uigur  women  to  follow  her  exam- 
ple and  became  a  member  of  a  provincial  political  body.  But  she 
married  a  former  political  prisoner  who  went  to  the  United  States. 
To  make  matters  worse,  she  let  her  sons  join  their  father.  Her  fail- 
ure to  come  out  against  her  husband  lost  her  the  political  post  last 
year.  Now  aged  fifty-three,  she  has  been  arrested  on  her  way  to  a 
meeting  with  an  American  congressional  delegation  carrying  with 
her  a  list  of  political  prisoners,  and  accused  of  revealing  state  infor- 
mation to  foreigners.  An  official  newspaper  says  one  of  her  offences 
was  to  have  sent  clippings  from  Chinese  newspapers  to  her  hus- 
band, who  is  campaigning  for  Uigur  rights  from  his  base  in 
Oklahoma. 


5  September 

Four  lonely  diplomats  are  holed  up  in  the  Wanchai  district  by  the 
waterfront  on  Hong  Kong  Island.  The  area  is  a  mixture  of  office 
buildings,  residential  blocks  and  girlie  bars.  However,  the  diplomats 
are  unlikely  to  be  visiting  the  Club  Hot  Lips,  the  Pussy  Cat  or  the 
Club  Venus.  They  have  come  to  Hong  Kong  to  open  a  consulate  for 
North  Korea. 

The  Central  Government  has  decided  to  agree  to  the  opening  of 
the  mission.  It  is  also  going  to  let  Iran  reopen  its  consulate,  which 
was  closed  after  the  fatwah  against  Salman  Rushdie.  Both  deci- 
sions, revealed  by  Post  reporter  Glenn  Schloss,  have  caused 
concern,  given  Pyongyang's  reputation  for  everything  from  drug- 
running  to  supporting  terrorism,  and  allegations  that  Iran  has  used 
Hong  Kong  as  a  channel  for  arms  shipments  from  China,  includ- 
ing parts  for  missile  and  fighter  plane  guidance  systems,  nerve-gas 
technology  and  chemical  weapons  components.  But,  as  in  Beijing's 
refusal  to  let  the  Pope  visit  the  SAR,  the  local  government  has  no 
say  in  the  matter,  and  the  Tung  administration  remains  character- 
istically quiet. 


224  Dealing  With  the   Dracon 

8  September 

A  postscript  to  the  decline  and  fall  of  the  Sally  Aw  empire,  and 
another  sign  of  how  nothing  lasts  for  long  in  Hong  Kong  if  it  can 
be  turned  into  a  property  play.  Li  Ka-shing's  Cheung  Kong  prop- 
erty firm,  which  bought  the  Tiger  Balm  Gardens  from  Aw  last 
December,  is  proposing  to  put  up  high-rise  luxury  apartments  on 
what  was  one  of  Hong  Kong's  top  tourist  attractions  a  decade  ago. 
A  small  part  of  the  old  gardens  will  be  kept  as  a  theme  park,  with 
its  temples  and  grottos  and  demon  statues.  The  rest  will  be  covered 
by  a  700,000  square  foot  residential  development.  The  gardens  had 
been  losing  their  appeal  to  tourists  in  the  face  of  more  modern 
attractions:  last  year  only  8  per  cent  of  visitors  bothered  to  see 
them. 

11  September 

Bill  Clinton  is  wearing  a  good-ole-boy  smile  as  he  greets  Jiang  Zemin 
at  a  Pacific  summit  meeting  in  New  Zealand.  For  his  part,  the 
Chinese  President  calls  his  American  counterpart  'my  good  friend' 
before  handing  him  booklets  in  Chinese  and  English  setting  out  the 
evils  of  the  Falun  Gong.  Officials  say  relations  between  Washington 
and  Beijing  are  back  on  track.  Jiang  speaks  of  a  strategic  partnership. 
Clinton  reiterates  support  for  China's  membership  of  the  World  Trade 
Organisation.  On  the  diplomatic  front,  Beijing's  approval  of  a  new  US 
ambassador  is  taken  as  a  sign  that  the  deep  freeze  in  relations  after  the 
Belgrade  embassy  bombing  is  thawing. 

Still,  you  have  to  ask  how  much  has  really  changed.  The  two  pres- 
idents clash  on  Taiwan.  Pro-democracy  activists  are  still  being  locked 
up  in  China.  And  as  for  the  strategic  partnership,  Jiang  keeps  inveigh- 
ing against  Washington  for  seeking  to  create  a  'unipolar  world'  over 
which  it  will  hold  sway.  Last  month,  he  attended  a  meeting  in  Central 
Asia  at  which  he  exchanged  bear  hugs  with  Boris  Yeltsin  despite  his 
dim  view  of  the  way  Russia  has  gone  since  the  fall  of  communism. 
China  is  to  buy  thirty  Russian  jet  fighters.  The  Russian  and  Chinese 
leaders  are  said  to  have  agreed  that  Yeltsin  will  try  to  stop  Nato 


September  225 

moving  further  eastwards  while  Jiang  will  attempt  to  prevent  the 
formation  of  an  'Asian  Nato'  based  on  strengthened  defence  agree- 
ments between  Japan  and  the  US.  China  is  also  busy  developing 
relations  with  oil-rich  nations  in  Central  Asia  to  assure  itself  of  energy 
supplies,  and  to  try  to  counter  the  spread  of  fundamentalism  across  its 
western  borders.  Jiang  is  about  to  pay  visits  to  South-East  Asia  and 
Europe.  China  is,  clearly,  stepping  out  on  the  world  stage,  and  is  not 
going  to  depend  on  US  approval. 

12  September 

Margaret  Ng,  the  legal  constituency  representative  in  the  Legislative 
Council  and  the  hammer  of  the  Secretary  for  Justice,  is  turned  back 
at  Hong  Kong  airport  when  she  tries  to  fly  to  Beijing  to  attend  a  legal 
conference  there.  She  put  her  name  down  for  the  meeting  last  month, 
but  the  airline  has  been  shilly-shallying  all  week  about  confirming  her 
flight.  Today,  arriving  at  the  Dragonair  counter  in  her  black  legal 
suit,  white  shirt  and  pearls,  she  is  told  that  her  visa  has  been  revoked. 
The  mainland  frontier  police  have  sent  word  that  she  will  not  be 
allowed  in.  As  usual  in  visa-refusal  cases,  no  reason  is  given.  Ng  holds 
a  British  passport,  but  that  does  not  help  her. 

Around  thirty  other  pro-democracy  figures  have  been  barred  in  the 
past.  Two  were  stopped  from  flying  to  Beijing  to  talk  to  mainland 
authorities  about  the  right  of  abode.  In  July,  a  Democratic  legislator 
had  his  permit  to  enter  the  mainland  confiscated  and  was  detained  for 
ninety  minutes  as  he  tried  to  cross  the  frontier  for  a  weekend  with  his 
wife  and  daughter.  Ng's  case  seems  to  be  the  most  serious  to  date.  The 
conference  is  not  a  political  occasion.  As  well  as  sitting  in  the  legis- 
lature, Ng  is  a  practising  barrister  and  a  member  of  the  executive 
committee  of  the  Hong  Kong  Bar  Association.  Seventy  other  local 
lawyers  have  had  no  trouble  getting  to  Beijing,  and  there  is  no  ques- 
tion of  the  organisers  having  turned  down  Ng's  application  to 
participate.  It  is  not  clear  where  the  ban  originated.  One  report  says 
that  the  State  Security  Bureau  was  in  favour  of  allowing  her  in,  but 
that  the  Hong  Kong  and  Macau  Affairs  Office  was  against  the  idea 
and  carried  the  day. 


226  Dealing  With   mm.   Dragon 

The  decision  raises  obvious  concern  about  Beijing's  attitude 
towards  its  Hong  Kong  critics.  There  are  those  who  think  that  the 
terrier-like  Ng  goes  too  far.  But,  under  the  Hong  Kong  system,  she 
has  the  right  to  say  what  she  thinks,  to  table  a  no-confidence  motion 
against  the  Secretary  for  Justice  or  to  lead  a  silent  march  against  the 
decision  to  go  to  the  National  People's  Congress  for  a  reinterpretation 
of  the  Basic  Law.  A  prominent  American  expert,  Joseph  Cohen  of 
New  York  University,  who  backs  the  reference  to  the  NPC,  says  he 
considered  not  giving  his  speech  at  the  conference  to  protest  at  the 
banning  of  Ng.  The  Bar  Association  calls  on  the  government  to  'allay 
any  fear  that  might  arise  that  people  in  Hong  Kong  cannot  express  an 
opinion  on  a  rule  of  law  issue  without  fear  of  attracting  some  adverse 
reaction  from  the  central  or  the  Hong  Kong  SAR  governments'. 

On  the  other  hand,  a  local  NPC  deputy  says  he  thinks  the  problem 
is  Ng's  'overall  political  stance'.  The  pro-Beijing  newspaper,  Ta  Kung 
Pao,  goes  further.  'Those  who  hold  different  views  and  those  who  have 
acted  to  oppose  "one  country,  two  systems"  and  undermine  the  rule 
of  law  in  the  SAR  are  different  in  nature,'  it  writes.  As  Professor 
Cohen  observes,  however,  a  good  application  of  one  country,  two 
systems  would  be  to  allow  those  who  have  been  blacklisted  by  main- 
land immigration  to  cross  the  border.  The  legislator  herself  wonders  if 
her  case  means  'the  opening  of  a  new  phase  of  more  naked  and  relent- 
less attack  on  people  like  me.  Once  the  kid  glove  is  off,  the  rest  will 
follow'  The  episode  casts  an  ironic  light  on  the  urgings  of  the  Secretary 
for  Justice  that  people  like  Ng  should  get  to  know  the  mainland  legal 
system  better:  if  they  can't  even  get  there,  how  can  they  gain  a  better 
understanding  of  the  way  things  are  done  over  the  border? 

From  the  summit  in  New  Zealand,  the  Chief  Executive  observes 
blandly  that  travel  arrangements  to  and  from  the  mainland  are  at  the 
discretion  of  the  Central  Government,  and  have  to  be  respected. 
Tung  Chee-hwa  certainly  has  no  reason  to  want  to  help  Ng  as  a 
politician.  But  as  a  citizen  of  the  SAR,  does  she  not  have  the  right  to 
expect  the  government  to  go  in  to  bat  for  her?  The  list  of  Hong  Kong 
people  who  find  themselves  without  open  official  backing  in  matters 
involving  the  mainland  is  growing  all  the  time. 

Evidently  sensing  the  growing  disquiet,  Anson  Chan  telephones 


September  227 

Ng  and  then  says  publicly  that  she  understands  the  concerns.  She  is 
sure  that  Tung  will  pursue  the  case  at  the  first  opportunity  after  he 
returns  to  Hong  Kong.  It  is  another  case  of  the  Chief  Secretary  step- 
ping into  the  breach.  But  Ng  says  she  is  told  by  the  Chief  Executive's 
office  that  he  is  'too  tired  and  too  busy'  to  see  her  when  he  gets  back. 
She  writes  to  him  twice,  but  is  told  by  the  private  secretary  to  the 
Chief  Executive's  private  secretary  that  he  will  not  be  available  for  at 
least  three  weeks. 

Matters  are  not  improved  when  a  mainland  professor  advises  the 
NPC  that  even  though  the  Court  of  Final  Appeal  is  entitled  to  inter- 
pret sections  of  the  Basic  Law  relating  strictly  to  the  SAR,  'this  does 
not  mean  that  it  has  the  final  interpretation'.  Indeed,  he  adds,  China's 
parliament  has  a  duty  to  supervise  Hong  Kong  courts,  and  to  step  in 
if  it  considers  a  verdict  not  to  be  in  accordance  with  what  it  takes  to 
have  been  the  original  intentions  of  the  framers  of  the  Basic  Law.  As 
a  judge  says  after  hearing  this:  'So,  all  that  will  be  left  for  us  is  to  do 
what  we  are  told.' 

Amid  all  this,  Anson  Chan  lines  up  to  raise  her  glass  with  Tung  in 
front  of  a  large  heroic  painting  of  Mao  at  the  first  of  many  celebrations 
of  China's  impending  national  day.  The  Chief  Secretary  stands  on  one 
side  of  the  platform;  Tung,  the  head  of  the  Xinhua  news  agency  and 
Li  Ka-shing  on  the  other.  The  placing  carries  its  own  symbolism, 
intended  or  otherwise. 


14  September 

Willy  Lam,  the  Post's  China  editor,  reports  that  Jiang  Zemin  has  taken 
over  top-level  responsibility  for  reform  of  state-owned  enterprises 
from  Zhu  Rongji.  One  of  the  President's  long-time  associates  from 
Shanghai,  Wu  Bangguo,  will  run  the  restructuring  on  a  day-to-day 
basis.  Wu  is  likely  to  be  less  forceful  than  the  Prime  Minister.  On  a  trip 
to  the  provinces  last  week,  he  proclaimed  that  state  enterprises  were 
actually  doing  rather  well.  In  another  move  to  divert  power  from  Zhu, 
a  rising  star  in  the  government,  Vice-Premier  Wen  Jiabao,  is  to  look 
after  development  of  the  stock  market  and  regional  development. 
Willy  Lam's  source  says  the  Prime  Minister  is  still  in  charge  of 


228  Dealing  Wrni  the   Dragon 

'macro-economic  adjustments  and  controls'.  But  it  looks  like  a  big 
setback  after  a  dreadful  year.  First  Clinton  let  him  down  on  member- 
ship of  the  World  Trade  Organisation.  Then  there  was  the  bombing 
of  the  Chinese  embassy  in  Belgrade,  and  the  row  over  allegations 
about  nuclear  spying  in  the  United  States.  All  the  while,  deflation  at 
home  sapped  the  zeal  for  reform.  Zhu  can  bang  heads  in  the  state 
sector  till  the  cows  come  home.  He  can  crusade  against  corruption, 
and  announce  plans  to  slash  the  ranks  of  the  bureaucracy.  He  can 
receive  the  plaudits  of  the  world  for  not  revaluing  the  yuan.  What  he 
cannot  do  is  to  make  Chinese  consumers  spend  to  provide  the  growth 
the  regime  so  badly  needs  -  or  prevent  booming  harvests  lowering  the 
price  of  agricultural  goods  on  the  market. 

How  different  from  five  years  ago,  when  retail  sales  were  rising  by 
30  per  cent  a  year,  and  iron  man  Zhu  was  called  in  to  clamp  down  on 
inflation.  Once,  consumer  goods  were  such  a  novelty  that  nobody 
who  could  afford  them  cared  too  much  about  the  price.  Now  the 
novelty  has  worn  off  and  people  shop  around  for  bargains.  Prices 
have  fallen  for  two  years,  creating  the  belief  that  they  will  go  down 
even  further.  The  Chinese  are  also  hoarding  for  the  day  when  their 
iron  rice  bowl  cracks,  and  they  have  to  pay  for  services  they  used  to 
get  for  free. 

So  the  economy  remains  bogged  down,  and  the  inventories  in 
warehouses  build  up.  The  number  of  unsold  television  sets  was  put  at 
15  million  earlier  in  the  year.  In  the  boom  city  of  Shenzhen,  big 
household  appliance  stores  are  virtually  empty.  Signs  proclaim  the 
bargains  on  offer.  A  saleswoman  tries  to  interest  me  in  a  video 
recorder.  When  I  shake  my  head,  she  points  hopefully  towards  a 
washing  machine. 

After  cutting  interest  rates  seven  times  in  three  years,  the  Central 
Government  is  now  about  to  slap  a  special  tax  on  earnings  from  bank 
deposits  to  try  to  dissuade  saving.  There  is  even  an  ironic  suggestion 
that  the  best  way  out  would  be  to  create  a  scare  about  an  impending 
currency  devaluation:  fearing  higher  prices  as  a  result,  people  would 
start  buying. 

The  Asian  Development  Bank  forecasts  growth  will  fall  below  the 
target  of  7  to  8  per  cent  this  year,  and  drop  to  6  per  cent  next  year, 


September  229 

when  it  expects  the  trade  surplus  to  be  cut  in  half.  Meanwhile,  the 
huge  problem  of  the  black  hole  in  lending  looms  over  the  financial 
system.  Although  the  head  of  the  Central  Bank  spent  a  lot  of  time  in 
an  interview  drawing  distinctions  between  really  terrible  and  less 
awful  debts,  the  bottom  line  is  that  25  per  cent  of  loans  are  non-per- 
forming, and  many  more  are  questionable. 

On  top  of  which,  the  Prime  Minister's  policies  are  being  criticised 
for  their  internal  contradictions.  Reduce  corruption,  and  you  reduce 
spending  by  the  corrupt,  which  feeds  deflation.  Cut  the  civil  service, 
and  you  cut  the  spending  power  of  bureaucrats.  Ban  time-wasting 
banquets  paid  for  from  public  funds,  and  you  reduce  the  earnings  of 
restaurants  and  hotels. 

Zhu  has  always  appeared  as  a  solitary  figure  without  any  power  base 
other  than  his  own  policies.  Now  his  isolation  seems  to  be  growing. 
One  of  his  business  proteges,  who  ran  a  go-ahead  company  called 
China  Everbright,  has  been  sacked.  Rumours  that  the  Prime  Minister 
had  himself  offered  to  resign  swept  through  the  markets  in  the 
summer.  Stories  are  doing  the  rounds  that  he  has  been  ill,  and  had  to 
go  to  a  provincial  city  to  recuperate  during  the  summer.  Zhu-watch- 
ers  note  that  on  a  recent  trip  to  the  provinces,  he  restricted  himself  to 
talking  about  such  general  subjects  as  the  environment,  with  no  more 
of  his  'kill,  kill,  kill'  exhortations.  His  wife  accompanied  him,  which 
is  unusual.  She  was  photographed  with  him,  gazing  up  at  trees  by  the 
Yangtze  River.  This,  the  watchers  say,  is  a  sign  that  she  needs  to  be 
close  by  her  husband  because  of  his  poor  health. 

Jiang  must  know,  however,  that  his  increasingly  cherished  place 
in  history  alongside  Mao  and  Deng  can  only  be  achieved  as  a 
reformer.  That  means  he  needs  Zhu,  however  many  protective 
measures  he  may  take  on  a  temporary  basis  to  placate  the  conserv- 
atives. So  when  the  President  returned  from  the  Pacific  summit  in 
New  Zealand  this  week,  the  official  state  photographic  agency  put 
out  a  colour  shot  of  him  and  the  Prime  Minister  in  smart  dark  suits, 
white  shirts  and  pale  ties,  shaking  hands  as  if  to  tell  everybody  that 
they  are  as  one. 

Still,  sources  in  Beijing  say  Jiang  has  singled  out  Vice-President  Hu 
Jintao,  whom  he  sent  to  attend  the  second  anniversary  celebrations  of 


230  Dealing  With  the  Dragon 

the  SAR  in  July,  as  the  coming  man.  Hu,  trained  as  an  engineer,  made 
his  mark  when  he  was  dispatched  to  help  run  affairs  in  Tibet.  After 
holding  a  series  of  senior  positions  in  Beijing  from  1992  onwards,  he 
became  Vice-President  last  year.  As  befits  a  Jiang  lieutenant,  he  looks 
more  of  an  apparatchik  than  a  man  with  clear  policy  views  of  his  own. 
He  has  taken  a  significant  step  up  the  ladder  by  being  appointed 
Vice-Chairman  of  the  Central  Military  Commission,  which  Jiang 
heads.  Hu  is  also  reported  to  be  acting  as  a  mediator  between  Zhu  and 
his  conservative  predecessor,  Li  Peng.  At  the  same  time,  the  propa- 
ganda department  has  told  the  media  that  coverage  of  fifty  years  of 
Communist  rule  should  not  let  the  achievements  of  the  past  two 
decades  'refute'  the  first  thirty  years  under  Mao.  Editors  have  been 
instructed  to  mention  the  'vigorous  development'  of  the  1960s, 
notably  China's  atom  bomb  and  long-range  rockets. 

This  is  all  part  of  Jiang's  characteristic  spider's  web,  with  himself  sit- 
ting in  the  middle,  minimising  the  risks  and  holding  the  strands.  At  a 
Central  Committee  meeting,  for  instance,  he  speaks  the  language  of 
reform,  but  the  communique  notes  the  need  to  maintain  'dominant' 
state  control  over  major  industries.  The  constitution  bars  the  President 
from  serving  a  third  term,  so  one  line  of  speculation  is  that  Jiang  will 
hand  over  to  Hu  Jintao  when  his  mandate  ends  in  2003  but  will  try  to 
hang  on  to  his  command  of  the  Communist  Party  for  another  five 
years.  That  prospect  arouses  opposition  from  both  the  more  liberal 
and  the  hardline  conservative  factions.  But  the  slogans  about  Jiang 
being  at  'the  core'  of  the  leadership  carry  with  them  an  implication 
that,  whoever  holds  the  presidency,  the  'chief  engineer'  will  remain  at 
the  heart  of  the  regime.  It  is  against  such  a  background  of  personal 
ambition  and  scheming  that  the  autumn  and  winter  will  be  played 
out,  with  all  the  consequences  this  brings,  not  only  for  the  mainland 
but  also  for  the  administrative  region  down  south  and  for  the  wider 
relationship  between  China  and  the  world. 

15  September 

A  star  of  Hong  Kong's  boom  years  is  stepping  down.  Having  lost  his 
own  firm,  Peregrine,  a  couple  of  years  ago,  Philip  Tose  is  leaving  the 


September  231 

American  investment  company,  Templeton,  where  he  found  employ- 
ment after  the  crash.  At  its  height,  Peregrine  was  a  glamour  finance 
house,  working  with  Li  Ka-shing  and  pioneering  the  floating  of 
mainland  'red  chip'  companies  on  the  local  stock  market.  A  dapper 
former  racing  driver  with  a  glamorous  wife  and  appropriate  lifestyle, 
Tose  appeared  in  the  company  portrait  beside  a  big  golden  sculpture 
of  the  bird  that  gave  his  firm  its  name.  He  was  a  tough,  fast  operator 
who  didn't  like  my  newspaper  at  all.  Twice  he  went  after  us  for  sto- 
ries he  insisted  were  libellous,  once  screaming  so  loudly  on  the 
telephone  to  a  reporter  that  you  could  hear  his  voice  from  yards  away. 
In  each  case,  Peregrine  failed  to  sustain  its  complaint,  but  left  us  with 
legal  bills. 

At  one  point  after  the  economic  crisis  had  broken,  we  held  a  lunch 
with  Tose  and  his  senior  colleagues  to  get  their  views.  They  served  up 
nothing  but  gloom  and  doom.  Eventually  I  asked  if  there  was  any- 
where that  one  could  invest  one's  grandmother's  savings  in  the  region. 
A  Korean-American  called  Andre  Lee  to  whom  Tose  had  bounced 
many  of  our  questions  said  yes,  there  was  a  taxi  company  in  Indonesia 
called  Steady  Safe,  a  good  business  with  connections  to  the  ruling 
Suharto  regime  and  plenty  of  potential.  At  that,  Lee  got  up  to  go  to 
the  airport,  and  the  lunch  broke  up. 

A  bit  later,  Steady  Safe  turned  into  a  US$250  million  black  hole.  In 
October  1997,  Peregrine  ran  newspaper  advertisements  denying 
rumours  of  potential  losses.  In  December,  Tose  assured  shareholders 
that  'the  directors  were  not  aware  of  any  material  adverse  changes  in  the 
financial  or  trading  position  of  the  group'.  But  after  a  deal  with  a  big 
insurance  company  fell  through  at  the  last  moment,  Peregrine  collapsed. 

Tose  went  to  work  for  Templeton,  which  had  held  10  per  cent  of 
his  company.  Minority  shareholders  began  legal  action  against 
Peregrine  over  the  reassuring  statements  issued  before  it  crashed.  The 
government  hired  a  former  member  of  Britain's  Financial  Services 
Authority  to  investigate  the  collapse. 

I  bumped  into  Tose  recently  at  the  opening  of  a  Louis  Vuitton  shop 
in  Central.  He  looked  pale  and  was  positively  restrained  compared  to 
his  bullish  days;  he  even  laughed  thinly  when  I  said  that,  given  the 
legal  bills  we  had  to  pay  from  Peregrine's  litigation,  the  paper  should 


232  Di-aiinc;   Willi    mi.    Dracon 

be  listed  among  the  firm's  creditors.  Andre  Lee  is  punting  an  Internet 
company  in  Korea.  Other  Peregrine  executives  are  scattered  round  the 
financial  world.  Nobody  is  burdened  with  self-doubt.  That  is  not  the 
Hong  Kong  way,  which  is  one  strong  reason  why  it  bounces  back  so 
quickly  from  adversity. 


1 6  September 

The  worst  typhoon  for  sixteen  years,  called  'York',  hits  Hong  Kong. 
The  sky  grows  dark;  debris  flies  through  the  streets;  flat-owners  batten 
down  their  balconies,  scaffolding  comes  crashing  down.  There  is 
widespread  flooding.  Four  cargo  ships  sink  or  run  aground.  A  hun- 
dred windows  are  punched  out  at  immigration  and  tax  headquarters, 
but  officials  insist  there  are  no  confidential  papers  among  the  docu- 
ments blown  out  on  to  the  street.  Four  thousands  trees  are  uprooted. 
More  than  14,000  homes  lose  electricity.  Thousands  of  container 
trucks  back  up  at  the  port  terminals.  Two  hundred  fish  farms  report 
serious  damage.  Yachts  are  overturned  and  washed  up  on  to  the  shores 
of  marinas.  Schools  shut,  but  the  airport  stays  open;  however,  after  the 
China  Airlines  crash  last  month,  operators  cancel  all  scheduled  flights. 
A  few  crazy  windsurfers  go  out  for  the  thrill,  and  one  doesn't  come 
back.  Plucky  villagers  in  the  New  Territories  refuse  to  leave  their 
homes;  one  old  woman  dons  a  construction  worker's  hard  hat  to  sit  it 
out  in  her  home. 

The  cost  will  be  tens  of  millions  of  dollars.  But  apart  from  the 
surfer,  only  one  person  is  killed  -  a  security  guard  hit  by  flying 
debris  -  though  nearly  500  are  injured.  By  the  next  morning,  most 
things  are  back  to  normal.  Vegetable  and  fish  prices  are  up  by  20  per 
cent.  If  you  want  choi  sum  greens  or  kale,  you  pay  double  the  usual 
rate.  Normal  enough  in  a  traders'  town. 

17  September 

No  sooner  has  York  moved  away  than  another  storm  touches  Hong 
Kong.  The  Taiwan  Strait  tension  has  spilled  over  on  to  us. 

The  idea  of  the  SAR  being  attacked  from  Taiwan  in  the  event  of 


September  233 

conflict  between  the  island  and  the  mainland  may  seem  outlandish. 
But  Hong  Kong  is  part  of  the  People's  Republic  now,  and  President 
Lee  Teng-hui  warns  that  if  there  is  a  mainland  attack  on  his  island,  the 
consequences  would  be  disastrous  not  just  for  Beijing  and  Shanghai  - 
but  also  for  Hong  Kong. 

The  People's  Liberation  Army  troops  stationed  here  have  been  put 
on  alert.  Their  commander  says  his  men  are  'ready  in  full  battle  array' 
in  case  the  city  comes  under  attack.  He  tells  the  Post  that  the  alert  is 
like  a  typhoon  signal:  'it  will  go  up  according  to  the  situation'. 
Armoured  personnel  carriers  have  carried  out  target  shooting  exer- 
cises with  live  ammunition,  according  to  a  mainland  army  newspaper. 

The  garrison  consists  of  an  infantry  brigade  and  naval  and  air  force 
units  which  are  said  by  the  Liberation  Army  Daily  to  be  able  to  fight  a 
'high-technology  regional  war'.  They  have  half  a  dozen  cruise  mis- 
siles, ship-to-ship  missiles  and  shore-to-ship  missiles.  Their  helicopters 
conduct  regular  'city  patrols',  and  troops  practise  landing  exercises 
from  them.  General  Xiong  Ziren  defines  the  priority  for  his  men  as 
'ideological  cultivation,  the  continuous  strengthening  of  military  skills, 
the  requirement  of  abiding  by  the  law,  and  maintaining  the  brave  and 
majestic  image  of  the  army'.  To  celebrate  its  role,  the  garrison  is 
opening  a  museum  devoted  to  itself.  At  the  inauguration,  Tung  Chee- 
hwa  is  photographed  with  his  arm  outstretched  pointing  a  pistol  at  an 
unseen  target.  China  Daily  says  the  museum  aims  'to  deepen  Hong 
Kong  people's  understanding  of  the  motherland's  military  defence 
forces  and  the  role  of  the  PLA  in  the  SAR'.  But  visits  are  only  by 
prior  arrangement. 

The  sparring  across  the  Taiwan  Strait  has  become  sharper  with 
news  that  more  than  100  PLA  officers  on  the  mainland  are  being 
investigated  on  charges  of  spying  for  Taipei.  A  major-general  from  the 
Logistics  Department  has  been  shot  for  selling  secrets  to  Taiwan.  The 
conflict  has  also  moved  into  cyberspace.  Taipei  says  mainland  hackers 
have  broken  into  government  networks  on  the  island.  One  report  puts 
the  number  of  attacks  at  72,000  in  one  month,  of  which  only  165 
were  successful.  Going  the  other  way,  hackers  from  Taiwan  have  got 
into  mainland  tax  and  railway  networks.  According  to  the  Liberty 
Times  newspaper,  Taiwan's  army  has  developed  1,000  viruses  to  use 


234  Dealing  With  the   Dracon 

against  the  PLA  if  necessary.  The  Economist  says  the  Pentagon  reckons 
two  computer  viruses  which  damaged  mainland  computers  at  a  cost 
of  US$120  million  originated  from  across  the  Strait. 

China's  former  Foreign  Minister,  Qian  Qichen,  who  remains  an 
influential  figure  in  the  mainland's  dealings  with  Hong  Kong,  turns 
the  spotlight  back  to  the  SAR  by  warning  the  media  here  not  to 
advocate  the  Taiwanese  cause.  This  is  an  issue  which  senior  mainland 
officials  have  raised  from  time  to  time  in  the  past.  As  it  happens,  no 
newspaper  or  broadcasting  station  in  Hong  Kong  backs  independence 
for  the  island,  but  the  Central  Government  cannot  shed  the  fear  of  its 
newest  region  becoming  a  seedbed  for  pro-Taiwanese  sentiment,  pro- 
paganda and  'splittism'. 

Naturally,  the  Tung  administration  is  most  anxious  to  avoid  any 
such  thing  happening.  The  Chief  Executive  periodically  warns  against 
his  domain  turning  into  a  base  for  anti-mainland  subversion.  Last  year, 
immigration  officers  began  to  stamp  the  travel  documents  of  visitors 
arriving  from  Taiwan  with  a  warning  that  they  should  not  embarrass 
the  SAR  during  their  time  here.  Now  a  storm  has  been  set  off  by  the 
appearance  on  Radio-Television  Hong  Kong  (RTHK)  public  radio  of 
the  island's  de  facto  representative  here  who  masquerades  as  the  head  of 
its  travel  bureau,  just  as  the  mainland's  representatives  and  controllers  of 
the  underground  Communist  Party  used  to  masquerade  in  colonial 
days  as  members  of  a  news  agency. 

In  the  broadcast,  Taipei's  man  repeats  the  call  by  Lee  Teng-hui  for 
'state-to-state'  relations.  This  brings  a  rejoinder  from  the  Hong  Kong 
government  spokesman  that  he  would  do  better  to  confine  himself  to 
tourism  matters,  and  a  blast  from  a  pro-Beijing  politician  that  RTHK 
should  not  give  a  platform  to  'splittist  views'.  As  for  the  Chief 
Executive,  he  believes  the  activities  of  Taiwanese  bodies  here  'must  be 
regulated  by  Vice-Premier  Qian  Qichen's  guidelines'  since  it  is  a 
matter  for  Beijing,  not  the  SAR. 

That  still  leaves  a  large  grey  area  as  far  as  the  media  are  concerned. 
If  reporting  is  okay  but  advocacy  is  not,  where  does  the  first  end  and 
the  second  start?  Editors  here  may  make  a  clear  distinction  between 
the  news  columns  and  the  opinion  pages.  But  for  those  brought  up  in 
a  system  where  the  choice  of  stories  and  the  placing  of  photographs 


September  235 

are  political  matters,  the  distinction  may  be  less  evident.  The  Post  has 
not  been  distributed  on  the  mainland  when  it  has  run  Lee  Teng-hui's 
picture  on  page  one. 

18  September 

China  Daily  says  115,000  people  have  been  arrested  on  bribery  and 
embezzlement  charges  since  1997.  Over  3,000  of  the  corruption  cases 
involve  sums  equivalent  to  £75,000  or  more.  Nearly  12,000  smug- 
gling cases  have  been  brought  to  light  this  year. 

This  information  appears  in  a  story  which  leads  with  the  case  of 
a  senior  official  in  the  coastal  city  of  Ningbo  who  has  been  expelled 
for  having  helped  his  son  and  his  wife  in  a  series  of  illicit  schemes 
running  to  a  billion  yuan.  Xu  Yunhong,  an  alternate  member  of  the 
Communist  Party's  Central  Committee,  is  the  highest-ranking  party 
functionary  to  have  been  excluded  since  Beijing  mayor  Chen 
Xitong.  Ningbo,  one  of  the  original  foreign  Treaty  Ports  in  the 
nineteenth  century,  seems  to  be  quite  a  den  of  thieves.  Prosecutors 
have  also  uncovered  a  multi-million-yuan  racket  there  involving 
forty  local  officials.  An  even  bigger  corruption  ring  is  being  probed 
in  Fujian  province,  elsewhere  on  the  commercially  driven  eastern 
coast,  involving  up  to  200  people  and  takings  of  up  to  10  billion 
yuan. 

In  Shaanxi  province,  meanwhile,  officers  have  made  a  pre-emptive 
strike  against  the  government's  instruction  to  the  army  to  get  out  of 
business  by  turning  PLA  firms  into  private  enterprises  under  their 
control.  They  then  used  the  firms  to  raise  large  amounts  of  money. 
Some  of  this  was  funnelled  into  property  development  in  China  and 
some  was  sent  abroad  illegally. 

19  September 

Today,  an  extraordinary  general  meeting  of  the  Democrat  Party  lead- 
ership in  Hong  Kong  votes  on  whether  to  back  the  introduction  of  a 
minimum  wage.  In  the  past,  such  an  idea  would  have  run  contrary  to 
the  Hong  Kong  tradition.  But  the  economic  crisis  has  changed  that, 


236  Dealing  With  the   Dracon 

and  makes  the  debate  a  test  of  strength  in  the  SAR's  most  popular 
political  party. 

The  Young  Turks  who  want  the  Democrats  to  take  a  more  radical 
stance  and  shed  their  middle-class  inhibitions  see  a  minimum  wage  as 
both  necessary  and  a  vote-winner.  They  lose,  but  only  by  114  to  94. 
They  will  be  back.  They  say  the  party's  mainstream  group  is  trying  to 
suppress  them  in  'June  4  Massacre'  fashion.  It  is  not  a  comparison 
Martin  Lee  can  relish. 


21  September 

A  huge  earthquake  kills  nearly  2,500  people  in  Taiwan.  More  than  a 
thousand  buildings  collapse,  some  toppling  over  intact  on  their  sides. 
Some  had  been  built  by  contractors  who  stuffed  'torn'  walls  with 
empty  plastic  bottles  and  newspapers  instead  of  concrete  and  bricks. 
Ninety  per  cent  of  electricity  supplies  are  cut  off.  Corpses  rot  in  the 
heat.  The  prices  of  high-tech  electronic  components  rise  inter- 
nationally as  factories  in  Taiwan  stop  working.  Manufacturers 
elsewhere  in  Asia  rush  to  gear  up  extra  production. 

International  aid  teams  fly  in  from  round  the  world.  Hong  Kong's 
contribution  is  an  unhappy  one.  Its  sixteen-man  rescue  team  takes 
three  days  to  make  the  hour-long  journey  to  Taipei.  When  it  arrives, 
it  is  told  it  is  not  needed;  and  its  equipment  is  not  what  is  required. 
Why  did  it  take  so  long  to  be  mobilised?  Was  it  simply  a  matter  of 
bureaucratic  delay  or  was  there  some  political  hesitation  given  the 
state  of  cross-Strait  relations? 

When  it  comes  to  the  mainland,  those  relations  intrude  with  a 
vengeance.  China  offers  aid.  President  Jiang  Zemin  says  the  people  on 
either  side  of  the  Taiwan  Strait  are  'as  close  as  flesh  and  blood'.  But 
Beijing  also  instructs  overseas  Red  Cross  bodies  to  notify  it  before 
sending  aid  to  the  island.  Taiwan  says  this  holds  up  desperately  needed 
help.  China  then  takes  it  upon  itself  to  thank  foreigners  for  their 
assistance  on  Taipei's  behalf,  and  compounds  matters  by  asking  the 
Taiwanese  if  they  want  the  mainland  to  petition  the  United  Nations, 
whose  Secretary-General  offers  condolences  to  the  people  of  'the 
Taiwan  Province  of  China'. 


September  237 

The  Foreign  Ministry  in  Beijing  says  that,  however  great  its  sym- 
pathy for  the  victims,  the  disaster  will  not  lessen  its  hostility  to  Lee 
Teng-hui  and  his  'two  states'  policy.  For  its  part,  Taiwan  insists  that  all 
it  will  accept  from  the  mainland  is  financial  help,  not  medical  staff.  Its 
message  to  the  Chinese  Red  Cross  is  short  and  simple:  'Thank  you. 
Please  pass  this  on:  "Don't  bother."  ' 

22  September 

A  meeting  takes  place  at  the  United  Nations  in  New  York  which 
many  people  in  Hong  Kong  would  have  wagered  against  seeing.  On 
one  side  of  a  gleaming  table  sit  China's  Foreign  Minister,  Tang 
Jiaxuan,  and  his  staff.  On  the  other  side  are  three  senior  officials  from 
Europe.  One  of  them  is  the  new  Foreign  Affairs  Commissioner  of  the 
European  Commission,  Chris  Patten. 

The  photographs  of  the  encounter  show  the  former  Governor 
grinning  as  the  Foreign  Minister  sits  back  and  looks  at  him  with  a 
half-smile.  They  are  discussing  reopening  discussions  on  China's 
membership  of  the  World  Trade  Organisation,  which  the  European 
Union  has  always  been  anxious  should  not  become  a  purely  American 
concern.  The  meeting  ends  with  expressions  of  optimism  that  the 
black  period  after  the  Belgrade  embassy  bombing  is  past.  Unlike  the 
time  he  wore  a  tie  with  dinosaurs  on  it  to  show  what  he  thought  of 
the  Chinese  rulers,  Patten  sports  red  neckwear. 

But  the  Foreign  Minister  shows  some  things  haven't  changed. 
While  Patten  hopes  China  will  move  forward  on  human  rights, 
Tang  says  that  putting  human  rights  above  sovereignty  is  a  hege- 
monistic  ploy  amounting  to  'a  new  interventionism'.  Addressing 
the  General  Assembly  later,  he  insists  that  any  violation  of  the  prin- 
ciples of  sovereignty  and  non-interference  would  amount  to  a 
'gunboat  policy'  which  would  endanger  international  peace  and 
stability.  President  Jiang  may  be  out  to  cut  an  international  figure  for 
himself  and  his  country,  but  Beijing  will  go  on  locking  up  dissidents 
and  keeping  its  tight  grip  on  Tibet  or  Xingjiang  for  as  long  as  it  sees 
fit. 


238  Dealing  With  the   Dragon 

23  September 

The  economic  recovery  is  further  confirmed  when  the  International 
Monetary  Fund  predicts  that  Hong  Kong  wiD  grow  by  1.2  per  cent  in 
1999  and  3.6  per  cent  next  year.  The  SAR  is  on  its  way  to  posting  its 
first  monthly  trade  surplus  since  the  beginning  of  1998.  As  officials 
keep  reminding  us,  it  is  early  days  yet,  but  the  figures  are  pointing  the 
right  way.  The  question  is  when  the  feel-better  factor  will  percolate 
through  to  a  population  shaken  by  the  first  recession  most  of  them 
have  known,  and  the  first  interruption  of  a  prosperity  which  many 
thought  was  inviolable. 

24  September 

Tung  Chee-hwa  does  a  U-turn  and  agrees  to  see  the  lawyer-politician 
Margaret  Ng  about  the  ban  on  her  going  to  the  mainland.  His  deci- 
sion comes  as  162  lawyers  and  legal  academics  send  him  an  open 
letter  describing  the  barring  as  'a  blatant  example  of  political  perse- 
cution and  the  Central  Government's  intolerance  of  dissenting  voices'. 
The  letter  urges  the  Chief  Executive  to  dispel  fears  that  legitimate  and 
lawful  activity  in  Hong  Kong  could  bring  political  retaliation  from 
Beijing. 

Not  that  the  meeting  does  much  good.  Tung  issues  a  statement 
afterwards  saying  that  he  told  the  legislator  that  Hong  Kong  was  a 
pluralistic  society,  and  that  the  government  'welcomes  different  opin- 
ions on  issues  of  common  concern'.  He  adds  that  he  is  committed  to 
safeguarding  rights  and  freedoms  contained  in  the  Basic  Law.  As  for 
the  point  at  issue,  he  says  that  the  authorities  in  Beijing  have  given 
him  to  understand  that  the  decision  'was  made  in  accordance  with 
mainland  laws'. 

Ng  says  Tung  told  her  that  he  believed  the  ban  was  not  connected 
with  her  opposition  to  the  overturning  of  the  Court  of  Final  Appeal's 
verdict.  So  why  was  she  kept  out?  'I  got  the  impression  .  .  .  that  he 
rather  thought  I  should  re-examine  myself  as  to  whether  I  could 
become  a  different  person,'  she  adds.  'I  found  that  rather  chilling'  -  an 
echo  of  the  Cultural  Revolution,  when  people  were  not  told  why 


September  239 

they  were  being  punished  but  were  advised  to  reflect  on  their  crimes 
themselves. 


25  September 

An  interesting  insight  into  the  administration's  standards  of  represen- 
tativity.  The  SAR  is  sending  a  200-strong  delegation  to  Beijing  for 
China's  national  day  on  1  October.  A  list  of  names  has  gone  to  the 
central  authorities  for  a  decision  on  who  should  be  included.  The 
Secretary  for  Justice  says  those  on  the  list  were  chosen  'not  because  of 
their  political  affiliation  but  [according  to]  whether  they  are  repre- 
sentative of  the  Hong  Kong  community'.  Many  of  them  sat  on  the 
committees  set  up  by  Beijing  to  dismantle  Patten's  democratic 
reforms.  Among  nineteen  current  legislators  invited,  there  are  no 
pro-democracy  politicians.  Democrats  who  came  out  even  before 
the  Joint  Declaration  of  1984  in  favour  of  China  regaining  sover- 
eignty do  not  get  a  look-in.  But  locals  who  accepted  knighthoods 
from  Britain  and  cosied  up  to  the  colonial  establishment  are  there  as 
'instant  noodle  patriots'  who  changed  tack  as  1997  loomed. 

Naturally,  the  biggest  single  group  in  the  party  comes  from  business. 
Several  of  the  Chief  Executive's  personal  favourites  are  along  for  the 
ride.  So  is  a  representative  of  Jardines,  which  moved  its  domicile  from 
Hong  Kong  in  late  colonial  days  and  has  not  returned.  The  British  law 
officer  who  played  a  leading  role  in  the  over-ruling  of  the  Court  of 
Final  Appeal  is  invited.  Whatever  sophistry  may  be  employed,  it  is  hard 
to  maintain  that  they  are  more  representative  of  the  community  than 
politicians  who  win  70  per  cent  of  the  popular  vote. 

Though  there  are  eighteen  members  of  the  media,  including  my  suc- 
cessor as  editor  of  the  Post,  neither  of  the  two  biggest-circulation 
Chinese-language  newspapers  is  represented.  Nor  is  the  Director  of 
Radio-Television  Hong  Kong  among  the  ten  broadcasting  figures  in  the 
group,  who  include  the  chairman  of  Rupert  Murdoch's  Phoenix  satel- 
lite channel.  It's  like  the  heads  of  commercial  broadcasting  organisations 
in  Britain  being  invited  to  join  an  official  delegation,  and  the  Director- 
General  of  the  BBC  being  absent.  The  speculation  is  that  RTHK's 
recent  decision  to  allow  the  Taiwanese  de  facto  representative  to  defend 


240  Dealing  With  the  Dragon 

Lee  Teng-hui's  'state-to-state'  policy  on  the  airwaves  has  made  it  persona 
non  grata.  Whether  Beijing  would  actually  have  said  anything  on  this 
score  is  beside  the  point.  Tung  Chee-hwa's  self-defence  mechanism  is 
tuned  finely  enough  to  avoid  any  prospect  of  a  gaffe. 


28  September 

Five  hundred  company  bosses,  mainly  from  the  United  States,  fly 
into  Shanghai  for  Fortune  magazine's  conference  of  chief  executive 
officers  of  major  world  companies.  Fleets  of  locally  made  Buicks 
meet  them  at  the  new  airport  and  whisk  them  to  the  smart  new 
hotels  of  the  Pudong  business  district  along  streets  decked  with  red 
lanterns.  In  the  £50  million  conference  centre,  Jiang  Zemin  gives 
a  twenty-minute  address,  saying  Chinese  enterprises  'must  go  out 
and  temper  themselves  in  the  winds  and  storms  of  economic  glo- 
balisation'. He  stoutly  defends  China's  human  rights  record,  and 
says  Beijing  will  not  renounce  the  use  of  force  over  Taiwan  — 
unconfirmed  reports  say  the  State  Council  has  set  aside  funds  to 
build  two  aircraft  carriers  to  match  the  US  Seventh  Fleet  in  the 
Strait. 

That  does  not  stop  this  being  a  gathering  of  China  bulls.  'I  love 
China  and  I  love  the  Chinese  people,'  proclaims  one  long-term 
enthusiast,  Maurice  Greenberg,  of  the  insurance  giant  American 
International  Group.  But  the  backdrop  is  hardly  encouraging.  A 
report  by  the  State  Taxation  Administration  shows  that  only  one-third 
of  mainland  enterprises  with  foreign  investors  reported  profits  in  1998, 
a  drop  of  5.5  per  cent  on  the  previous  year.  On  government  orders,  a 
telecommunications  group,  China  Unicom,  has  cancelled  contracts 
with  40  foreign  firms  amounting  to  US$1.4  billion.  Power  contracts 
have  been  renounced  because  demand  is  too  low  to  fund  the  pay- 
ments due  to  the  foreigners.  Even  Western  consumer  goods 
companies  which  have  marched  in  like  Protestant  missionaries  of  the 
past  bearing  brand  names  instead  of  bibles  may  be  given  pause  for 
thought  by  a  Gallup  poll  showing  the  Chinese  prefer  domestic  brands 
by  a  margin  of  four  to  one. 

Ma  Yu,  a  senior  research  fellow  at  the  Academy  of  International 


September  241 

Trade  and  Economic  Co-operation,  worries  about  the  'severe  chal- 
lenge' of  keeping  up  the  inflow  of  funds  which  have  gone  to  more 
than  150,000  enterprises,  creating  jobs  for  over  20  million  people  and 
importing  much-needed  technology  and  equipment  -  as  well  as  pro- 
viding a  fast-growing  source  of  tax  revenue.  Now,  he  calculates, 
contracts  for  overseas  investments  have  fallen  by  20  per  cent  in  the  first 
half  of  the  year  compared  with  1998. 

Speak  to  many  on-the-ground  managers  of  foreign  investments  in 
China  and  you  will  hear  a  litany  of  the  problems  of  operating  joint 
ventures,  from  simple  red  tape  to  outright  fraud.  Products  are  ripped 
off  by  Chinese  partners.  Lucrative  sub-contracts  are  handed  out  to 
friends  and  relations.  One  overseas  Chinese  I  know  had  a  promising- 
looking  agreement  to  build  warehouses  in  a  development  zone.  But 
his  partners  in  the  local  city  authorities  did  not  link  an  agreed  road  to 
the  site,  so  the  warehouses  remained  empty.  Eventually  he  sold  his 
share  to  locals  with  friends  in  high  places,  after  which  the  road  mate- 
rialised and  the  warehouses  were  in  business.  'Officials  have  made  it 
clear  that  China  now  has  no  shortage  of  every  type  of  fraud  imagin- 
able: distribution  fraud,  bank  fraud,  forex  fraud,  tax  fraud,  customs 
fraud,  letter  of  credit  fraud,  intellectual  property  fraud,  grey  market 
and  parallel  import  scams,'  the  chief  mainland  representative  of  the 
investigators  Kroll  Associates  writes  in  the  Wall  Street  Journal.  'There 
is  hardly  a  significant  foreign  company  in  China  that  has  not  been  the 
victim  of  one  of  these  types  of  fraud.' 

It  is  not  only  individual  companies  that  suffer.  Singapore  has  just 
had  a  nasty  surprise  over  a  business  park  in  which  it  invested  heavily 
in  Suzhou  near  Shanghai.  The  foreigners  thought  they  were  assured  of 
President  Jiang's  personal  backing,  but  the  local  authorities  favoured  a 
development  of  their  own,  and  undermined  the  Singapore  project, 
which  has  virtually  collapsed.  Probably  with  that  in  mind,  the  city 
state's  Senior  Minister,  Lee  Kuan  Yew,  takes  to  the  platform  at  the 
Shanghai  meeting  to  warn  that  unless  the  Chinese  system  can  adjust, 
its  legitimacy  will  be  brought  into  question.  'The  most  pernicious 
problem  of  all  is  corruption  that  has  become  embedded  in  the  admin- 
istrative culture;  hard  to  eradicate,'  he  adds.  'Not  only  will  corruption 
severely  impede  economic  progress,  but  more  dangerously  it  is  a 


242  Dealing  Wiiii  the   Dragon 

political  powder  keg,  a  grievance  around  which  anti-government 
sentiment  can  easily  coalesce.' 

There  is  an  embarrassing  reminder  of  mainland  realities  for  the 
organisers  of  the  conference,  Time  Warner.  Two  of  its  magazines, 
Time  and  Asiaweek,  are  banned  from  China  as  the  meeting  opens  (so 
is  Newsweek).  Apparently  the  authorities  do  not  appreciate  the  way 
their  latest  issues  on  the  fiftieth  anniversary  of  the  Communist  victory 
include  articles  by  the  Dalai  Lama  and  dissidents  Wei  Jingsheng  and 
Wang  Dan,  and  accounts  of  prison  camp  life,  the  Great  Famine  and 
the  unrest  in  the  Far  West.  The  chairman  of  Time  Warner  seeks  to 
put  a  brave  face  on  it.  The  company  points  out  that  its  magazines  are 
still  available  in  Shanghai,  on  the  conference's  own  Internet  site. 

One  of  the  chief  executives  at  the  meeting  boasts  that  his  firm  is  'an 
ambassador  for  China  .  .  .  much  more  effective  than  any  diplomats'.  He 
counsels  global  media  companies  to  be  aware  of 'the  politics  and  atti- 
tudes of  the  governments  where  we  operate',  such  as  in  China. 
Journalistic  integrity  must  prevail  in  the  final  analysis,  'but  that  doesn't 
mean  that  journalistic  integrity  should  be  exercised  in  a  way  that  is 
unnecessarily  offensive  to  the  countries  in  which  you  operate'.  It  all 
depends  what  you  mean  by  'unnecessarily':  Beijing's  definition  would 
hardly  be  the  same  as  that  of  a  US  editor.  What  lends  the  remarks  spe- 
cial resonance  is  that  the  speaker  is  Sumner  Redstone,  boss  of  the 
entertainment  group  Viacom,  which  claims  to  reach  43  million  homes 
in  China  with  its  MTV  music  channel.  Redstone's  company  hopes  to 
bring  the  Nickelodeon  children's  channel  and  a  second  music  service  to 
China.  It  is  also  in  the  process  of  acquiring  the  CBS  television  network. 

So,  naturally  the  question  arises  of  whether  a  Viacom-owned  CBS 
would  follow  the  pattern  set  by  Rupert  Murdoch  dropping  Chris 
Patten's  book  on  Asia  a  couple  of  years  ago  for  fear  of  offending 
Beijing.  Would  CBS  have  to  weigh  up  whether  reports  about  dissi- 
dents being  jailed  or  the  Falun  Gong  being  oppressed  or  about  the 
jockeying  for  power  below  Jiang  Zemin  might  give  'unnecessary' 
offence?  If  a  Hong  Kong  media-owner  had  made  a  statement  like 
Redstone's,  the  cry  of  self-censorship  would  have  rung  from  the 
rooftops.  But  such  is  the  business  sex  appeal  of  American  media  mag- 
nates that  his  remark  evokes  only  passing  attention. 


October 


i  October 

National  day  in  China.  Time  for  Jiang  Zemin  and  a  finely  tuned 
crowd  of  half  a  million  to  mark  the  fiftieth  anniversary  of  the  day  on 
which  Mao  Tse-tung  stood  on  a  dais  looking  out  over  Tiananmen 
Square  to  proclaim  the  People's  Republic  of  China.  A  giant  portrait 
of  Jiang  making  a  speech  is  borne  through  the  streets  of  Beijing  on  top 
of  a  lorry,  setting  him  alongside  Mao  and  Deng  Xiaoping.  In  a  gesture 
of  sartorial  symbolism,  Jiang  is  the  only  member  of  the  leadership  to 
wear  a  Mao  jacket  at  the  ceremony.  And  he  alone  stands  in  the  car 
which  drives  past  the  troops  drawn  up  for  review  -  a  very  conscious 
evocation  of  a  celebrated  one-man  inspection  by  Deng  at  the  last  mil- 
itary parade  in  Beijing  back  in  1984.  As  he  passes  the  troops,  he  calls 
out,  'Comrades,  are  you  well?'  and  'How  hard  you  are  working!' 
They  chant  in  unison,  'Hello,  Comrade  Chairman.  We  are  serving 
the  people.' 

The  television  commentaries  go  as  far  as  to  say  that  Jiang  has 
moved  ahead  of  Deng  and  Mao  in  maintaining  stability,  achieving 
economic  growth,  accelerating  national  unity,  strengthening  the 
PLA  and  establishing  an  activist  foreign  policy.  Still,  there  is  one 
obvious  contrast  to  be  noted.  The  classic  painting  of  Mao  address- 
ing the  crowd  in  1949  depicts  him  in  full  oratorical  flood,  the 
Great  Helmsman  urging  his  people  on  to  a  new  dawn.  The  portrait 


244  Dealing  Wiiii  the   Dragon 

of  Jiang  on  top  of  the  lorry  shows  him  in  a  dark  suit,  white 
shirt  and  red  tie,  holding  a  sheet  of  paper  from  which  he  is  read- 
ing a  report  to  the  microphones  of  the  1997  Communist  Party 
Congress. 

Echoing  the  Soviet  Union's  parades  in  Red  Square,  China's  mili- 
tary might  is  wheeled  out.  There  is  a  fresh  generation  of  nuclear 
missiles,  a  new  fighter-bomber,  surface-to-air  rockets  and  recently 
developed  artillery.  PLA  soldiers  goose-step  past  the  reviewing  stand, 
followed  by  massed  ranks  of  machine-pistol-bearing  women  from  the 
capital's  civilian  militia  in  red  outfits  with  short  skirts  and  black  boots. 
To  make  sure  calls  of  nature  do  not  interfere  with  the  parade,  some 
of  the  paraders  are  kitted  out  with  adult-sized  nappies.  After  the 
military,  the  civilians  have  their  moment  of  glory.  Children  file  by 
bearing  boards  proclaiming,  'Our  motherland  will  be  more  glorious 
tomorrow.'  Fashion  models  strut  their  stuff.  Agricultural  workers 
march  by  got  up  to  look  like  wheat  or  sunflowers.  And  there  is  a 
bevy  of  brides  and  grooms  in  formal  Western  wedding  gear.  At  the 
end,  more  children  rush  towards  Jiang  releasing  red  balloons  and 
doves  into  the  air. 

One  unnoticed  sideshow  takes  place  among  the  foreign  guests. 
After  hosting  the  Fortune  conference  in  Shanghai,  the  boss  of  the 
Time  Warner  media  empire,  Gerald  Levin,  has  travelled  to  the 
Chinese  capital  with  a  number  of  fellow  American  businessmen. 
Among  them  is  Stephen  Case  of  the  Internet  giant  AOL.  'We  stood 
together  watching  the  tanks,  the  planes,  and  the  fireworks,'  Case 
recalls  later.  The  next  month,  he  telephones  Levin  to  propose  buying 
Time  Warner  in  the  biggest-ever  takeover.  The  Beijing  backdrop  to 
the  deal  fits  in  neatly  with  China's  new  appreciation  of  the  world  of 
business. 

The  fiftieth  anniversary  celebrations  reflect  the  robotic  attitude  of 
the  leadership.  Nothing  spontaneous  is  permitted.  The  crowds  are 
carefully  drilled.  The  intense  rehearsals  with  tanks  rolling  through 
Tiananmen  Square  conjure  up  chilling  memories  of  1989.  The  veneer 
of  the  occasion  extends  to  the  city  itself.  Apart  from  a  general  clean- 
up of  buildings,  a  handful  of  Falun  Gong  adherents  were  dragged  from 
Tiananmen  yesterday  as  they  tried  to  perform  their  exercises.  Three 


October  245 

hundred  thousand  unregistered  workers  have  been  cleared  out  of  the 
city,  and  18,000  vagrants  detained.  Tens  of  thousands  of  trusted  in- 
habitants have  been  enrolled  into  neighbourhood  watch  squads, 
complete  with  red  armbands. 

Despite  all  the  refurbishment  along  the  main  avenues,  it  is  going  to 
take  a  superhuman  effort  to  turn  Beijing  into  an  attractive  place. 
There  are  still  pleasant  parks  and  some  fine  relics  of  another  age.  The 
official  guest  houses  and  the  leadership  compound  beside  the 
Forbidden  City  are  extremely  agreeable  so  long  as  you  can  put  up 
with  the  rhetoric  served  up  by  your  hosts.  In  a  pavilion  by  a  lake, 
attendants  in  white  gloves  serve  French  wine  while  the  breeze  ripples 
through  the  trees  and  a  minister  discourses  about  the  non-negotiability 
of  mainland  sovereignty  over  Taiwan.  In  a  courtyard  complex  reno- 
vated by  the  Hong  Kong  businessman  David  Tang  as  the  Beijing 
version  of  his  Hong  Kong  China  Club,  one  may  admire  the  architec- 
ture and  peer  at  the  manuscripts  on  the  shelves  as  an  official  from  the 
State  Council  tells  you  that  a  giant  container  ship  being  launched  by 
a  Japanese  firm  is  in  fact  a  secret  warship  which  can  be  converted  into 
an  aircraft  carrier  at  a  moment's  notice  with  planes  hidden  below 
decks. 

Some  interesting  alleys,  lakes  and  gardens  and  small  shops  survive, 
along  with  the  Forbidden  City.  There  is  the  overwhelming  expanse  of 
Tiananmen  Square,  and,  an  hour's  drive  away,  the  Great  Wall  and  the 
Ming  Tombs.  But  this  is  an  imperial  city  that  reflects  the  character  of 
its  emperors,  and  the  most  recent  breed  has  been  more  interested  in 
power  and  material  progress  than  in  preserving  the  past.  Mao 
destroyed  much  of  its  old  character,  tearing  down  historic  districts, 
rearranging  the  city  to  fit  his  vision  of  communist  modernity  and 
installing  smoke-belching  factories.  Fumes  from  a  vast  old-fashioned 
steel  plant  to  the  south  add  to  the  exhaust  of  huge  traffic  jams.  Rows 
of  featureless,  shabby  blocks  of  flats  line  the  ever-expanding  circles  of 
ring  roads.  The  destruction  of  the  old  continues  relentlessly.  Social 
and  economic  divisions  grow  wider  by  the  year.  Hordes  of  migrant 
workers  collect  garbage  as  upwardly  mobile  Beijingers  crowd  into  the 
Hard  Rock  Cafe  or  take  chauffeur-driven  limos  to  play  golf  in  the 
surrounding  hills. 


246  Dealing  With   ihi.  Dracon 

2  October 

Canadian  newspapers  are  running  a  story  about  an  operation  that 
'tracked  a  myriad  of  companies  linked  to  Asian  tycoons  to  determine 
whether  they  were  fronts  for  Chinese  espionage  activities'.  The  papers 
report  that  the  study,  carried  out  by  Canada's  Security  Intelligence 
Service  and  the  police  between  1994  and  1996,  also  looked  at  'hun- 
dreds of  thousands  of  dollars'  said  to  have  been  pumped  into  political 
parties  to  see  if  lawmakers  were  being  influenced.  As  so  often  with 
such  reports,  there  was  no  answer  to  the  question  it  posed.  One 
Canadian  newspaper  quoted  sources  as  saying  that  'political  influence 
nixed  the  project'.  The  story  was  picked  up  by  international  news 
agencies  and  sent  to  Hong  Kong,  but  no  local  paper  used  it  despite  - 
or  because  of-  the  presence  of  so  many  well-known  names. 

4  October 

A  Hong  Kong  man  called  Eric  Ho  from  Shatin  in  the  New 
Territories  crossed  the  border  to  Shenzhen  today.  In  a  letter  to  the 
Hong  Kong  Standard,  he  tells  of  what  happened  as  he  and  three  friends 
walked  back  to  the  frontier  train  station  at  Lo  Wu. 

We  were  suddenly  surrounded  by  six  men  claiming  to  be  mainland 
police.  One  of  them  showed  his  warrant  card  and  said  we  were 
involved  in  a  gang  fight  in  Shenzhen  the  previous  night. 

They  demanded  we  go  to  a  particular  restaurant  for  an  identity 
parade.  I  was  suspicious  and  we  refused. 

They  shouted  at  us  that  they  only  wanted  money  and  would  stab 
us  to  death  if  we  did  not  go. 

At  a  VIP  room  in  the  restaurant,  they  searched  us  and  forced  us  to 
tell  them  our  credit  card  passwords.  I  was  punched  by  one  of  them  in 
the  chest. 

Unfortunately,  my  password  was  not  correct  and  one  guy  with  a 
northern  Chinese  accent  hit  me  twice  in  the  back  with  an  iron 
hammer.  He  asked  me  for  the  password  again.  I  could  only  tell  him 
a  possible  one  and  let  God  decide  my  fate. 


October  247 

The  robbers  warned  us  that  we  would  die  if  the  password  was  still 
wrong.  My  friend  was  also  beaten.  One  of  the  men  went  out  to 
withdraw  cash  from  my  account. 

A  call  was  then  received  indicating  that  my  bank  password  was 
correct. 

After  the  call,  two  robbers  indicated  that  we  would  be  released  as 
long  as  we  had  handed  over  all  our  money  and  belongings. 

We  handed  over  cash  and  mobile  phones,  and  they  let  us  go.  We 
got  to  Lo  Wu  train  station  about  11.30  p.m.  We  were  in  a  hurry  to 
run  to  the  Hong  Kong  side  and  report  this  brutal  crime  to  the  police. 

We  were  told  that  our  case  was  not  unusual  and  that  this  sort  of 
thing  happened  frequently  across  the  border. 

We  were  very  lucky  to  have  escaped  greater  injury  compared 
with  other  cases. 

The  truth  of  that  last  sentence  was  shown  a  month  later.  A  press 
photographer  and  a  reporter  who  went  across  the  border  for  a  night 
out  met  a  nineteen-year-old  girl  in  the  street.  She  gave  them  her 
pager  number.  They  invited  her  to  join  them  in  a  nightclub.  She 
turned  up  with  a  female  friend.  The  two  women  took  the  men  to  a 
flat  in  a  village  on  the  outskirts  of  town. 

Waiting  inside  were  three  men  with  knives  and  iron  bars.  They 
told  the  Hong  Kongers  to  hand  over  their  money  and  valuables. 
When  the  photographer  resisted,  he  was  stabbed  and  left  to  bleed  to 
death.  The  reporter  was  tied  up,  and  forced  to  give  his  bank  code 
number  before  the  attackers  fled  with  the  two  women.  Two  weeks 
later,  they  were  arrested  in  a  city  up  the  coast  when  the  nineteen- 
year-old's  identity  document  was  checked  and  found  to  be  a  fake. 
They  still  had  the  credit  cards  and  jewellery  belonging  to  the  dead 
man. 

6  October 

Today  is  the  Chief  Executive's  big  day.  Like  British  governors,  he  goes 
to  the  Legislative  Council  to  deliver  his  programme  for  the  coming 
twelve  months  in  his  Policy  Address.  This  is  Hong  Kong's  equivalent 


248  Dealing  With   mm.   Dragon 

to  the  Queen's  Speech.  Chris  Patten's  final  address  was  notable  for  set- 
ting down  a  set  of  benchmarks  by  which  the  SAR  was  to  be  judged. 
The  colonialist  overtones  of  this  rubbed  some  democrats  up  the 
wrong  way  and  the  Council  refused  to  pass  the  traditional  vote  of 
thanks.  Not  that  this  made  any  difference:  what  might  be  a  resignation 
matter  elsewhere,  or  at  least  cause  for  embarrassment,  cuts  little  ice  in 
executive-led  Hong  Kong,  then  or  now. 

As  expected,  Tung  Chee-hwa  sets  out  an  environmental  pro- 
gramme as  his  main  theme.  Having  campaigned  in  the  Post  for 
four  years  for  effective  measures  against  pollution,  I  can  only  say 
that  it  is  about  time.  Apart  from  the  high  health  costs  of  bad  air, 
businesses  have  become  increasingly  concerned  at  the  deterrent 
effect  on  foreign  executives  they  want  to  hire.  There  is  a  distinct 
illogicality  in  promoting  Hong  Kong  as  an  attractive  tourist  centre 
while  letting  the  environment  deteriorate  so  badly.  Tung's  ten-year 
programme  involves  spending  the  equivalent  of  £2.5  billion.  The 
target  is  to  raise  air  quality  to  the  levels  of  London  and  New  York. 
The  import  of  diesel  cars  is  to  stop;  owners  of  polluting  diesel 
vehicles  —  mainly  taxis  and  minibuses  —  will  get  financial  incentives 
to  fit  cleaner  engines;  smoky  vehicles  are  to  face  higher  fines;  there 
will  be  more  pedestrian  zones;  cross-border  co-operation  is  to  be 
expanded;  and  work  will  start  on  improving  the  water  of  the  Pearl 
River. 

Tung's  142-minute  speech  also  puts  forward  proposals  to  improve 
education,  create  sports  and  performance  venues  and  enhance  the 
look  of  the  harbour.  He  will  set  up  an  urban  renewal  body  that  would 
be  able  to  acquire  old  real  estate  and  get  it  redeveloped  without 
having  to  pay  the  large  premiums  currently  levied;  this  could  have  a 
major  effect  on  the  property  market  and  lead  to  the  renovation  of 
jam-packed  inner  urban  tenements  where  living  conditions  are 
unworthy  of  a  city  as  rich  as  Hong  Kong.  Looking  across  the  border, 
he  wants  to  explore  ways  of  tapping  into  the  potential  of  the  Pearl 
River  delta  region. 

Overall,  the  aim  is  to  make  the  SAR  into  a  'world  class  city'  and  'an 
Ideal  Home'.  This  would  mean  fostering  pride  and  confidence  in  the 
place,  something  the  administration  appears  to  consider  achievable  by 


October  249 

gauche  slogans  rather  than  by  encouraging  civil  society  to  develop. 
Improving  the  environment  will  certainly  make  Hong  Kong  a  more 
pleasant  place  in  which  to  live  and  work.  But  if  its  people  feel  that 
their  home  is  losing  its  individuality  as  one  country  encroaches  on 
their  system,  all  the  cleaning  up  of  the  air  will  not  make  them  walk  tall 
in  the  new  century. 


7  October 

In  an  ideal  world,  the  Chief  Executive  could  expect  his  Policy  Address 
to  dominate  the  agenda  for  a  while.  But  twenty-four  hours  later,  he 
finds  himself  embroiled  in  a  row  with  the  Democrats  on  that  most 
sensitive  of  issues  -  the  4  June  vigil  for  the  dead  of  Tiananmen  Square. 
Tung  has  nobody  but  himself  to  blame.  His  taste  for  walking  into 
minefields  is  a  source  of  wonder. 

The  incident  starts  as  he  appears  in  the  Legislative  Council  today 
for  the  traditional  question-and-answer  session  after  the  Policy 
Address.  The  chubby-faced  vice-chairman  of  the  Democrats,  Albert 
Ho,  raises  the  matter  of  the  mainland  ban  on  various  legislators, 
including  himself.  He  asks  the  Chief  Executive  if  he  feels  he  has  a 
duty  to  put  their  case  to  Beijing.  Tung  replies  that  he  is  'very  willing 
to  try  in  that  respect'.  Instead  of  stopping  there,  he  can't  refrain  from 
delivering  a  little  lecture. 

'I  hope  the  Democratic  Party  and  the  democratic  camp  will 
improve  their  understanding  of  the  country,'  he  says.  'I  have  men- 
tioned my  hope  that  you  can  prove  your  worth  in  every  respect,  but 
I've  looked  again  and  again  and  seen  nothing.'  When  another 
Democrat  asks  what  Beijing  is  looking  for,  Tung  digs  himself  deeper 
into  a  hole.  'I  haven't  talked  to  Beijing  leaders  about  the  issue  in  this 
way,'  he  says.  'But  I've  talked  to  several  of  your  leaders  and  I  specifi- 
cally mentioned  that  I  hoped  there  could  be  a  demonstration  .  .  .  I'm 
still  waiting  for  that.'  What  does  he  mean  by  'demonstration'?  'Perhaps 
you  should  ask  your  colleagues,'  Tung  replies. 

This  enables  Ho  to  reveal  to  reporters  that  the  Chief  Executive  had 
a  secret  lunch  meeting  earlier  in  the  year  with  the  veteran  democracy 
leader,  Szeto  Wah,  the  key  figure  in  the  Tiananmen  vigil  and  in  the 


250  Dealing  With  the   Dragon 

Hong  Kong  Alliance  in  Support  of  Patriotic  Democratic  Movements 
in  China.  According  to  Ho,  Tung  told  Szeto  the  4  June  commem- 
orations should  be  stopped  if  pro-democracy  politicians  wanted  to 
improve  relations  with  Beijing.  In  particular,  he  asked  Szeto  not  to 
hold  this  year's  tenth  anniversary  event. 

The  revelation  sets  all  the  old  alarm  bells  ringing  about  freedom  of 
expression,  and  Tung's  obeisant  attitude  towards  those  who  chose 
him  for  his  post.  'If  that  is  what  he  meant  by  proving  our  worth  and 
we  did  as  he  requested  in  return  for  permission  to  visit  the  mainland, 
I  think  Hong  Kong's  reputation  as  one  of  the  freest  cities  in  the  world 
would  be  badly  tarnished,'  Ho  says.  In  keeping  with  a  recent  pattern, 
the  Chief  Secretary  jumps  in  to  try  to  pour  some  oil  on  the  waters.  'I 
am  sure  the  Chief  Executive  does  not  mean  to  imply  there  ought  to 
be  self-criticisms,'  Anson  Chan  says.  'Improving  relationships  by 
common  definition  is  a  two-way  thing.' 

But  the  Democrats  have  the  bit  between  their  teeth.  The  chance  to 
steal  Tung's  thunder  a  day  after  his  speech  is  irresistible.  They  grab  the 
headlines.  Which  newspaper  is  going  to  rake  over  the  details  of  the 
environment  programme  when  presented  with  a  story  that  has  it  all: 
secret  contacts,  freedom,  kowtowing,  and  the  most  emotional  event  of 
the  year?  Even  then,  Tung  can't  stop  digging  a  hole  for  himself.  He 
insists  he  wasn't  telling  Szeto  to  stop  the  vigils,  only  repeating  his 
theme  of  it  being  time  to  put  down  the  baggage  of  4  June.  But  how 
could  the  organisers  of  the  vigil  put  down  the  baggage  of  the  massacre 
and  go  ahead  with  the  commemoration? 

The  whole  episode  shows  either  a  startling  naivete  or  simple  bull- 
headedness  on  Tung's  part.  The  idea  of  the  austere,  dedicated  Szeto 
Wah  agreeing  to  stop  the  vigils  in  the  hope  of  being  allowed  to  visit 
the  mainland  is  laughable.  The  whole  lunch  must  have  been  a  major 
exercise  in  non-communication.  Szeto,  who  prides  himself  on  his 
patriotism  to  China,  if  not  to  its  current  regime,  didn't  even  like  the 
Western  food  he  was  served. 

The  deeper  danger  of  all  this  is  that  it  will  further  worsen  the 
already  frosty  relations  between  the  administration  and  the  major 
popularly  elected  political  party.  The  Chief  Executive's  link-man  with 
the  Democrats,  Paul  Yip  Kwok-wah,  says  talks  between  them  will  go 


October  251 

on.  He  insists  that  the  Tung-Szeto  conversation  was  merely  about 
'conceptual  and  philosophical  aspects  of  ruling  Hong  Kong'.  But  the 
reaction  from  the  Democrats  is  unyielding.  Martin  Lee  says  he  guesses 
Tung  would  like  them  to  'behave  in  such  a  way  that  the  Beijing 
leaders  will  believe  we  are  obedient  children'.  This  sums  up  the 
administration's  approach  pretty  well,  but  Hong  Kong  is  not  a  place 
that  got  where  it  is  today  by  keeping  its  head  down  in  class.  The  trou- 
ble is  that  those  who  are  running  the  class  don't  seem  to  realise  this. 

8  October 

Apart  from  the  alarm  about  being  swamped  by  new  mainland 
migrants,  there  is  already  quite  a  problem  in  coping  with  the  existing 
influx  of  children  from  China,  which  averages  sixty  a  day.  A  survey  by 
the  Education  Department  reports  that  between  15  and  20  per  cent  of 
these  children  are  behind  in  mathematics  and  Chinese.  The  figure 
soars  to  60  per  cent  where  English  is  concerned.  The  government 
offers  grants  for  sixty  hours  of  tutoring  for  young  immigrants.  But  as 
the  principal  of  a  school  with  one-third  of  its  pupils  from  the  main- 
land says:  'How  can  a  student  from  a  rural  school  who  doesn't  even 
know  his  ABC  catch  up  with  the  rest  of  the  class  in  sixty  hours?' 

10  October 

Today  is  the  eighty-eighth  anniversary  of  the  overthrow  of  China's 
imperial  dynasty.  The  Double  Tenth,  as  it  is  known,  is  a  day  of  cele- 
bration in  Taiwan,  though  this  year's  ceremonies  have  been  truncated 
because  of  the  earthquake.  In  Hong  Kong,  200  people  go  to  a  former 
Kuomintang  centre  to  pay  their  respects  to  the  father  of  republican 
China,  Sun  Yat-sen,  and  1,300  gather  in  a  hotel  to  mark  the  occasion. 
In  the  Mongkok  district  in  Kowloon,  police  take  down  a  Taiwanese 
flag  in  the  street.  A  spokeswoman  says  this  is  'to  protect  the  principle 
of  one  China'.  The  Chief  Executive's  special  adviser  adds  that  the 
decision  is  following  the  guidelines  for  relations  with  Taiwan  set  out 
by  Vice-Premier  Qian  Qichen.  Before  the  handover,  hundreds  of 
Taiwanese  flags  flew  on  the  Double  Tenth,  but  now  one  China  rules. 


252  Dealing  Wiih  the   Dragon 

i  i  October 

A  mainland  newspaper  reports  that  a  vice-mayor  in  Guangdong 
province  has  been  tried  for  siphoning  off  the  equivalent  of  ^800,000 
to  buy  Hong  Kong  and  Macau  properties.  He  must  have  invested  well 
as  he  more  than  doubled  his  money  —  which  does  not  save  him  from 
a  suspended  death  sentence. 

13  October 

Despite  urgings  from  both  the  Democrats  and  the  pro-Beijing  DAB 
party,  which  increasingly  fancies  its  chances  at  the  polls,  the  Secretary 
for  Constitutional  Affairs  makes  it  plain  that  there  will  be  no  speeding- 
up  of  the  long  march  towards  full  democracy,  which  will  be 
considered  -  no  more  -  in  the  year  2007.  It  is  all  a  bit  reminiscent  of  the 
verdict  of  a  spokesman  for  the  foreign  Treaty  Ports  in  China  in  the 
1920s,  who  declared  that  elected  assemblies  and  democratic  institutions 
had  no  place  because  the  Chinese  were  'manifestly  incapable  of  self- 
government'.  Then  it  was  the  foreigners  who  delivered  such  verdicts; 
now  it  is  the  masters  of  China  and  their  chosen  officials  in  Hong  Kong 
who  do  so,  maintaining  that  one  of  Asia's  most  advanced  societies  will 
not  be  sufficiently  mature  to  face  the  issue  for  another  eight  years. 

Inevitably,  there  are  some  sour  comparisons  with  what  is  happen- 
ing in  Indonesia.  There,  to  general  acclaim,  parliamentary  elections 
have  been  held,  East  Timor  has  been  able  to  vote  on  its  future  and  a 
president  will  soon  be  chosen  by  the  new  legislature.  Apparently  the 
rulers  of  Hong  Kong  regard  their  people  as  being  politically  less 
mature  than  the  inhabitants  of  Java,  Sumatra  or  Timor.  Nor  is  there 
any  mechanism  for  amending  the  Basic  Law  drawn  up  at  a  time  when 
politics  in  Hong  Kong  were  in  their  infancy,  the  memory  of 
Tiananmen  Square  was  fresh  in  China's  mind  and  democracy  had 
not  begun  to  unfurl  itself  over  South-East  Asia.  The  SAR  is  stuck  in 
a  time  warp.  This  may  be  a  source  of  comfort  for  both  Beijing  and  the 
Chief  Executive,  but  one  can  only  agree  with  the  legislator  Christine 
Loh  when  she  asks  if  Tung  takes  the  people  of  the  SAR  and  their  rep- 
resentatives for  simpletons. 


October  253 

19  October 

A  prominent  pro-Beijing  politician  began  to  raise  complaints  eighteen 
months  ago  about  the  way  the  government  was  being  criticised  on  the 
SAR's  public  broadcaster,  Radio-Television  Hong  Kong  (RTHK). 
He  said  at  the  time  that  the  Chief  Executive  assured  him  the  matter 
would  be  handled  'slowly,  slowly'.  Today,  the  slow  movement  goes 
into  overdrive.  An  announcement  is  made  that  the  Director  of 
Broadcasting  for  the  past  thirteen  years,  Cheung  Man-yee,  is  to  leave 
the  station  to  become  Hong  Kong's  trade  representative  in  Tokyo. 
The  government  insists  there  is  nothing  political  in  the  move.  It  is 
indeed  true  that  the  Tokyo  post  carries  with  it  a  higher  ranking, 
taking  her  annual  salary  to  the  equivalent  of  ^162,000.  The  Director, 
who  is  in  Northern  Ireland  visiting  one  of  her  predecessors  from 
British  days,  says  she  has  been  assured  editorial  independence  will 
continue.  The  Chief  Executive  declares  that  this  is  fundamental  gov- 
ernment policy.  Cheung's  deputy  will  be  appointed  to  succeed  her  as 
soon  as  the  appropriate  boards  can  meet. 

Why  then  does  the  New  York  Times  run  a  big  story,  and  the 
Committee  to  Protect  Journalists  in  New  York  call  on  the  Chief 
Executive  to  act  quickly  to  allay  fears  about  the  station  being  com- 
promised? It  is  not  just  that  Cheung  Man-yee  is  a  high-profile, 
popular  figure  whose  looks  belie  her  fifty-three  years  and  who  was 
part  of  the  formidable  'handbag  gang'  round  Anson  Chan.  After  the 
handover,  she  came  to  personify  media  independence  in  a  way  that 
was  all  the  more  striking  because  of  RTHK's  status.  A  framework 
agreement  with  the  government  drawn  up  in  1993  gives  its  Director 
responsibility  for  fair,  balanced  and  objective  programming  —  editor- 
ial independence  was  added  two  years  later.  But  its  employees,  up  to 
the  Director,  are  all  civil  servants. 

Not  surprisingly,  hardliners  in  the  pro-Beijing  camp  have  long  dis- 
liked the  way  that  these  government  staff  give  air  time  to  democrats 
and  to  critics  of  the  administration.  They  wonder  why  RTHK  is  not 
whipped  into  line,  shedding  its  BBC  inheritance  as  the  baggage  of 
colonialism.  In  March  last  year,  an  old  leftist  called  Xu  Simin  kicked 
up  a  storm  by  attacking  the  station  for  being  anti-government  and  a 


254  Dealing  Wiiii   1111    Dracon 

'remnant  of  British  rule'.  Recently,  pressure  has  been  building  up.  In 
August,  a  Hong  Kong  member  of  the  National  People's  Congress 
called  for  RTHK  to  avoid  propagating  'splittist'  views.  Soon  after- 
wards came  the  appearance  of  Taiwan's  representative  to  put  forward 
his  government's  'state-to-state'  view  of  relations  with  the  mainland. 
After  that,  the  local  NPC  delegate  suggested  it  might  be  time  to 
bring  in  anti-subversion  legislation.  As  for  Tung  Chee-hwa,  well- 
placed  sources  say  he  was  irked  by  the  extensive  RTHK  coverage  of 
the  4  June  Tiananmen  vigil.  It  was  also  noticed  that  he  took  two  years 
to  accept  an  invitation  to  appear  on  RTHK  radio  to  answer  listeners' 
questions;  he  did  a  similar  programme  for  a  commercial  station  eight 
months  earlier.  And  Cheung  Man-yee  was  not  among  the  guests  at 
the  national  day  celebrations  in  Beijing. 

All  the  while,  Tung  and  his  colleagues  were  passing  on  the  criticism 
they  heard  to  the  station,  and  suggesting  new  jobs  for  its  Director. 
Cheung  turned  them  down,  and  seemed  intent  on  seeing  out  the  last 
two  years  of  her  term.  Apparently  she  counted  on  a  combination  of 
her  own  status  and  reputation,  her  long-standing  association  with 
Anson  Chan,  and  an  awareness  of  the  negative  reaction  at  home  and 
abroad  if  she  was  seen  to  have  been  pushed  out.  But  now  she  has 
clearly  accepted  a  deal,  if  only  to  ensure  that  her  deputy  succeeds  her. 
She  remains  a  civil  servant  and  so  cannot  speak  out,  even  if  she  wishes 
to.  Politics  apart,  some  wonder  if  the  days  of  old-style  BBC  rectitude 
are  numbered,  as  broadcast  sensationalism  and  show  business  march 
forward  hand  in  hand.  A  Chinese-language  television  station  has  just 
taken  on  a  former  Miss  Hong  Kong  with  no  journalistic  experience 
to  present  its  main  evening  news  programme. 

There  is  talk  of  Cheung  having  been  sent  into  'internal  exile'. 
Martin  Lee  declares  'the  beginning  of  the  end  of  freedom  of  expres- 
sion'. To  which  the  leftist  Xu  Simin,  who  started  the  row  in  1998, 
expresses  his  hope  that  the  station  will  now  transmit  'constructive 
opinions'  about  the  government.  'It  should  assist  the  SAR  govern- 
ment and  Hong  Kong  people,  but  has  not  done  that,'  he  adds.  'There 
is  an  end  to  every  banquet.'  For  RTHK,  the  proof  will  he  in  what  it 
puts  out.  Sudden  changes  are  unlikely.  The  new  boss  is  a  good  man, 
and  a  broadcasting  professional.  But  will  his  reporters  now  think 


October  255 

twice  before  asking  piercing  questions,  and  will  producers  find  them- 
selves forgetting  to  invite  troublemakers  on  to  the  airwaves? 


20  October 

A  story  in  the  New  York  Times  spotlights  the  price  of  following  your 
religious  beliefs  in  China  if  you  happen  to  stray  from  the  official  path. 

Seven  weeks  ago,  a  37-year-old  Christian  called  Gou  Qinghui  gave 
birth  to  a  son.  She  lost  her  job  as  a  bible  teacher  at  a  government- 
controlled  theological  seminary  in  1994,  and  has  been  involved  with 
'house  churches'  consisting  of  Christians  who  meet  privately  instead 
of  joining  officially  approved  religious  organisations.  The  regime  is 
cracking  down  on  them.  An  underground  Catholic  bishop  was 
arrested  this  summer.  Seven  Catholics  have  been  jailed  for  threatening 
social  order. 

Gou's  husband  is  also  a  devout  Christian  and  a  pro-democracy 
activist.  In  the  mid-1990s,  he  was  detained  for  three  years;  he  now 
lives  in  what  the  couple  call  'soft  imprisonment'  under  police  scrutiny 
and  deprived  of  the  identification  papers  needed  to  get  a  job  or  to 
travel.  In  April,  when  Gou  was  five  months  pregnant,  police  arrived 
at  her  home  with  an  arrest  warrant,  but  her  husband  managed  to  dis- 
suade them  from  taking  her  away. 

Now,  Gou  tells  Eric  Eckholm  of  the  New  York  Times  that  hospital 
officials  in  Beijing  are  refusing  to  provide  a  birth  certificate  for  her 
seven-week-old  son.  That  means  the  child  cannot  be  registered,  and 
will  not  be  eligible  to  go  to  school  or,  later,  to  get  legal  employment. 

'He's  an  innocent  victim,'  Gou  says.  'I'm  not  really  a  political 
activist,  I'm  just  interested  in  spreading  the  Gospel.' 

21  October 

The  change  in  leadership  at  RTHK  does  nothing  to  prevent  a  half- 
hour  panel  discussion  on  the  station  about  the  right  to  demonstrate 
in  the  SAR,  in  which  even  pro-Beijing  politicians  come  out  in 
favour  of  free  expression  in  the  streets.  Generally,  protests  in  the 
SAR  are  small  and  well-behaved.  Skirmishes  on   1   October  at  the 


256  Dealing  Wiiii  the   Dragon 

flag-raising  ceremony  for  Chinese  national  day  led  to  nothing  more 
than  two  slight  injuries  to  the  forces  of  law  and  order  and  the  loss  of 
loudhailers  confiscated  from  the  demonstrators.  Police,  who  meet  the 
organisers  of  rallies  in  advance  to  agree  the  guidelines  and  the  plac- 
ing of  the  protest,  usually  turn  out  in  force.  On  1  October,  a  site  was 
agreed  100  metres  away  from  the  ceremony.  Around  100  police  were 
deployed  for  sixteen  activists. 

Hong  Kong's  champion  demonstrator,  a  pigtailed  Trotskyite  who 
single-handedly  keeps  the  Che  Guevara  T-shirt  tradition  alive  in  this 
temple  of  market  capitalism,  has  had  to  work  hard  to  get  arrested.  He 
succeeded  after  standing  up  and  shouting  from  the  public  gallery  in 
the  Legislative  Council.  Even  then,  the  court  only  gave  him  a  sus- 
pended sentence.  So  he  went  out  for  some  more  demonstrating  and 
may  end  up  in  jail  as  a  result.  When  I  joined  him  in  a  television  dis- 
cussion, he  smiled  and  said,  'It's  become  a  way  of  life.'  A  secretary 
commented,  'He's  like  a  little  boy.' 

The  contrast  between  the  freedom  to  demonstrate  here  and  the 
clampdown  in  democracies  when  Jiang  Zemin  goes  visiting  them  is 
ironic  given  the  handover-era  fears  that  freedom  to  protest  would  be 
scaled  back  in  the  SAR.  Even  the  firebrand  legislator  Emily  Lau 
admits  that,  in  this  respect,  'maybe  we  are  a  little  bit  better  than  the 
United  Kingdom'.  The  Assistant  Commissioner  who  speaks  for  the 
police  on  tonight's  panel  might  surprise  those  who  imagine  that  law 
and  order  here  has  become  a  Chinese  matter  since  1997.  His  name  is 
Mike  Dowie.  He  speaks  with  a  broad  Scottish  accent. 

22  October 

The  demonisation  of  Hong  Kong  as  a  front  for  mainland  China  is 
racing  ahead  in  Senate  hearings  in  Washington  on  the  Panama  Canal. 
Li  Ka-shing,  it  appears,  is  a  threat  to  US  security.  A  quarter  of  a  mil- 
lion people  have  signed  a  petition  delivered  to  Capitol  Hill  expressing 
their  disquiet. 

The  outrage  runs  as  follows.  Li's  Hutchison  Whampoa  company 
controls  a  firm  called  Panama  Ports,  which  has  beaten  several 
American  companies  to  win  fifty-year  leases  to  run  container  ports  at 


October  257 

either  end  of  the  canal  when  the  US  withdraws  on  31  December.  As 
a  result,  Republicans  are  talking  darkly  about  the  waterway  falling 
under  Beijing's  influence. 

Li  Ka-shing's  links  with  the  mainland  are  no  secret;  he  has  just 
opened  a  huge  shopping  plaza  in  the  capital.  From  there,  it  is  an  easy 
jump  for  some  in  Washington  to  see  him  as  the  front  man  for  the 
PLA.  The  Republican  majority  leader  in  the  Senate,  Trent  Lott, 
thunders  that  'US  Naval  ships  will  be  at  the  mercy  of  Chinese-con- 
trolled pilots  and  could  even  be  denied  passage  through  the  canal  by 
Hutchison,  an  arm  of  the  People's  Liberation  Army'  Ronald  Reagan's 
Defence  Secretary,  Caspar  Weinberger,  warns  that  China  has  acquired 
a  'beachhead'  in  Panama,  and  calls  for  constant  vigilance  over  the 
activities  of  the  Hong  Kong  firm.  While  Beijing  doesn't  interfere 
with  Hutchison  on  a  daily  basis,  he  adds,  'If  there  was  something  it 
wanted  to  do,  this  company  would  not  be  able  to  survive  without 
doing  just  those  things.'  A  former  chairman  of  the  Joint  Chiefs  of 
Staff,  Admiral  Thomas  Moorer,  says:  'My  specific  concern  is  that  the 
company  is  controlled  by  the  communist  Chinese.  And  they  have  vir- 
tually accomplished,  without  a  single  shot  being  fired,  a  stronghold  on 
the  Panama  Canal.'  Later,  he  predicts  a  China-US  clash  over  the  canal 
which  'will  need  to  be  rectified  with  the  blood  of  brave  young  sol- 
diers, sailors  and  marines  some  day  in  the  future'. 

The  smell  of  US  domestic  politics  is  in  the  air,  with  a  Red  Peril 
scare  as  a  convenient  weapon.  The  presidential  hopeful,  Steve  Forbes, 
warns  that  'having  Chinese  companies  managing  both  ends  of  this 
strategic  chokepoint ...  is  simply  unacceptable  to  American  security'. 
A  Republican  congressman,  Dana  Rohrabacher,  intones:  'If  we  do 
nothing,  I  can  guarantee  you  that  within  a  decade  a  communist 
Chinese  regime  that  hates  democracy  and  sees  America  as  its  primary 
enemy  will  dominate  the  tiny  country  of  Panama  and  the  Panama 
Canal.' 

Another  undercurrent  is  that  Panama  recognises  Taiwan,  not 
Beijing.  The  island's  Evergreen  group  is  also  involved  in  the  canal.  But 
the  mainland  is  wooing  Panama,  and  one  can  imagine  the  reaction  if 
this  leads  to  diplomatic  recognition.  On  top  of  which,  sources  not  a 
million  miles  from  Hutchison  note  that  Caspar  Weinberger,  who  is 


258  Dealing  Wrui   j  hi.  Dragon 

chairman  of  Steve  Forbes'  eponymous  family  magazine,  used  to  work 
for  the  American  company  Bechtel,  which  failed  to  get  the  Panama 
licences.  Bechtel  denies  any  continuing  link  with  Weinberger.  Still, 
the  suspicion  in  Hong  Kong  is  that  a  touch  of  commercial  sour  grapes 
may  be  at  work. 

Li  Ka-shing  calls  it  all  'a  very,  very  funny  story'.  Imagine,  he  goes 
on,  that  you  owned  an  apartment  at  either  end  of  the  main  tunnel 
under  Hong  Kong  harbour.  'Can  people  say  you  are  controlling  the 
tunnel?  How  can  we  control  the  canal?'  Anyway,  he  is  on  a  roll, 
Hutchison  having  just  made  US$14.5  billion  from  selling  its  stake  in 
the  British  mobile  telephone  operator,  Orange,  to  Mannesmann  of 
Germany. 

There  is  a  footnote  when  a  member  of  the  Forbes  family  pays  a 
visit  to  Li.  In  the  lift,  he  hands  a  copy  of  the  latest  issue  of  the  maga- 
zine to  one  of  Superman's  lieutenants.  It  contains  a  piece  by 
Weinberger  raising  questions  about  Hutchison  and  the  canal.  The 
embarrassment  is  entirely  on  the  Forbes  side.  Li  is  photographed  smil- 
ing even  more  widely  than  usual.  With  critics  like  that,  who  needs 
friends? 

23  October 

Lok  Yuk-shing,  the  63-year-old  man  from  Hong  Kong  held  in  jail  in 
China  for  487  days  without  trial  or  being  properly  charged,  is  released 
and  flies  home.  In  the  summer  he  was  moved  from  prison  to  a  guest 
house  run  by  the  Public  Security  Bureau  where  conditions  were 
better.  His  family  have  paid  HK$50,ooo  to  gain  his  release,  far  less 
than  the  $4  million  demanded  by  the  Inner  Mongolia  officials  when 
they  went  there  to  try  to  get  him  freed  in  the  summer.  Lok's  former 
company,  whose  debts  were  responsible  for  his  arrest,  says  it  will  con- 
sider reimbursing  the  family.  But  it  declines  any  responsibility  for 
what  happened  to  its  former  employee. 

Over  dinner  in  a  Shanghainese  restaurant  in  Central,  Lok  tells  of  his 
months  in  handcuffs  and  leg  chains  in  a  cell  with  ten  others  on  the 
edge  of  the  Gobi  Desert.  'A  fellow  inmate  who  was  a  northern  gang- 
ster encouraged  me  to  stay  tough,'  he  adds.  'If  I  had  given  up  or  died 


October  259 

in  jail,  my  name  would  never  have  been  cleared.  The  SAR  govern- 
ment should  speak  up  more  for  us.' 

But  the  government,  which  said  it  would  be  'inappropriate  and 
impossible'  for  it  to  intervene  on  his  behalf,  remains  as  unforthcoming 
on  the  case  as  ever.  'We  understand  the  mainland  authorities  acted  in 
accordance  with  mainland  laws,'  a  spokesman  says.  The  government 
adds  that  it  'followed  the  case  closely  and  related  the  family's  requests 
to  the  mainland  authorities'.  For  his  part,  Lok  doesn't  know  what,  if 
anything,  the  authorities  here  did  to  help  him.  Instead  he  says  that  if 
it  hadn't  been  for  the  Post's  reporting  and  campaigning  on  his  case,  he 
would  still  be  in  prison.  'Although  the  police  didn't  say  anything 
about  it,  the  way  they  behaved  showed  me  they  knew  that  your  news- 
paper and  later  other  media  were  reminding  people  about  my 
situation,'  he  adds. 

As  he  returns  and  relaxes  by  looking  after  his  plants  and  cooking, 
Lok  sounds  a  true  Hong  Kong  note.  Would  he  go  back  to  the  main- 
land? asks  our  journalist  Cynthia  Wan,  whose  outstanding  reporting 
brought  the  case  to  public  attention.  'It  all  depends  if  there  are  any 
business  opportunities  there,'  he  replies.  'I'm  not  afraid  to  go  back.' 
Still,  he  needs  a  bladder  operation  as  the  result  of  the  poor  diet  he  was 
fed  in  prison.  To  make  sure  the  homecoming  is  not  disturbed,  his 
family  lights  a  fire  in  a  metal  container  at  the  door  of  his  apartment  to 
ward  off  bad  luck  and  evil  spirits. 

The  number  of  Hong  Kong  people  detained  on  the  mainland  over 
commercial  matters  is  a  matter  of  some  dispute.  The  government  put 
it  at  forty-five  earlier  in  the  year,  but  now  says  twenty  have  been 
released.  Of  the  forty-five,  it  reports  that  twenty  had  been  in  custody 
for  more  than  six  months.  Other  sources  place  the  total  as  high  as 
eight-five.  One  woman  says  her  husband  has  been  locked  up  since 
April  in  Henan  province  over  a  debt  owed  by  his  former  company. 
She  says  mainland  authorities  asked  for  $2  million  in  bail  for  his 
release.  The  Hong  Kong  Inland  Revenue  threatened  to  slap  a  sur- 
charge on  her  husband's  unpaid  tax  bill,  she  adds. 

The  SAR  Security  Bureau  says  it  is  drawing  up  plans  for  ;i  notifi- 
cation system  so  that  it  will  know  when  Hong  Kong  people  are 
arrested  on  the  mainland.  But  will  that  enable  it  to  do  anything  about 


260  Dealing  Wiih    im.   Dragon 

their  treatment,  or  to  ensure  that  they  are  either  charged  or  released 
according  to  Chinese  law?  The  answer  seems  evident  from  the 
Bureau's  insistence  that  the  Hong  Kong  authorities  cannot  'interfere 
with  the  mainland's  judiciary  system  and  procedures  under  the  prin- 
ciple of  one  country,  two  systems'  -  even,  it  appears,  when  its  citizens 
are  being  treated  in  defiance  of  mainland  law. 


24  October 

Dressed  in  a  long  blue  raincoat,  his  head  thrown  back  in  a  broad  grin, 
Jiang  Zemin  takes  the  blonde  woman  in  front  of  him  by  the  hand  and 
sweeps  her  into  an  impromptu  dance.  Her  husband  smiles.  The  accor- 
dionist beside  them  concentrates  on  playing  a  local  folk  tune.  The 
assembled  officials  laugh,  and  Jiang's  dancing  partner  expresses  her 
delight. 

The  scene  is  a  small  local  museum  near  the  country  chateau  of 
President  Jacques  Chirac  of  France.  Jiang  is  his  weekend  guest. 
Arriving  at  the  museum,  the  Chinese  leader  was  presented  with  a 
'China  blue'  accordion  on  which  a  few  notes  of  a  Chinese  tune  were 
played  before  the  accordionist  went  into  the  song  that  got  the  visitor 
dancing  with  Bernadette  Chirac.  At  a  model  farm  later  in  the  day, 
Jiang  feeds  a  lamb  from  a  bottle,  noting  the  warmth  of  the  milk  as  he 
does  so.  Clearly  he  is  enjoying  himself,  though  Chirac  is  attacked  by 
human  rights  groups  for  coddling  a  dictator. 

Jiang  is  on  a  lengthy  tour  of  Europe,  North  Africa  and  Saudi 
Arabia.  Many  contracts  are  signed,  or  promised.  The  Chinese 
President  outlines  his  vision  of  a  multi-polar  world,  and  damns  the 
evils  of  the  Falun  Gong.  At  a  state  banquet  in  Lisbon,  he  sings  a 
Chinese  song  without  musical  accompaniment. 

Before  crossing  to  France  Jiang  had  been  in  London,  where  he 
stayed  at  Buckingham  Palace  and  exchanged  numerous  toasts  with 
the  Queen.  They  are  the  same  age,  but  how  much  else  they  have  in 
common  is  a  matter  for  doubt.  The  Economist  remarked  that:  'Britain 
has  to  deal  with  the  China  that  exists,  not  the  China  it  would  like  to 
exist.  But  does  that  really  mean  honouring  Mr  Jiang  with  a  state 
visit?  .  .  .  For  once  it  makes  you  feel  sorry  for  the  Queen,  for  being 


October  261 

used  in  this  way.'  Heavy-handed  policing  to  ensure  that  demon- 
strators did  not  inconvenience  the  visitor  went  down  badly,  even  if 
they  were  taken  for  granted  by  the  Chinese.  'For  the  past  few  days 
the  world  has  been  treated  to  the  bizarre  spectacle  of  the  British 
police  tearing  the  banners  out  of  the  hands  of  demonstrators  who  are 
there,  after  all,  to  protest  at  the  inability  of  the  Chinese  people  to 
stage  just  such  demonstrations,'  as  the  Daily  Telegraph's  Christopher 
Lockwood  noted. 

The  Chinese  spokesman  observed  that  Free  Tibet  demonstrators 
in  London  had  'long  noses',  an  observation  roughly  on  a  par  with  the 
Duke  of  Edinburgh's  remark  on  a  visit  to  China  about  the  natives' 
slitty  eyes.  But  this  being  a  time  when  everybody  wants  to  avoid  any 
unpleasantness  with  Beijing,  nobody  objected  to  the  spokesman's 
characterisation,  or  to  his  blaming  British  imperialism  for  problems 
in  Tibet.  There  was  also  royal  controversy  when  the  Prince  of  Wales 
preferred  a  private  dinner  engagement  to  a  banquet  given  by  the 
Chinese. 

Still,  the  visit  to  Britain,  like  the  rest  of  the  trip,  was  counted  a 
success,  another  Jiang  step  on  to  the  world  stage.  Yet  he  drew  no 
crowds.  If  Mao  had  gone  to  London  or  Paris,  the  streets  would  have 
been  lined  with  true  believers  or  those  who  were  appalled  with  the 
carnage  he  had  wreaked  -  or  simply  those  who  wanted  to  see  a  his- 
toric figure.  Jiang  aspires  to  similar  status  but  his  constituency  is 
business-minded  politicians.  Though  he  insisted  at  one  point  in  Paris 
on  the  importance  of  maintaining  communism,  this  tour  is  as  good 
a  sign  of  the  death  of  ideology  as  you  could  wish  for  -  on  both  sides. 

27  October 

The  Chief  Executive  can  heave  a  sigh  of  relief.  The  Legislative 
Council  has  passed  the  motion  of  thanks  for  his  Policy  Address.  But 
the  vote  is  not  quite  as  straightforward  as  government  backers  would 
like  to  present  it.  The  motion  was  passed  due  to  the  votes  of  repre- 
sentatives of  the  functional  constituencies  and  of  the  hand-picked 
election  committee.  A  big  majority  of  members  elected  by  popular 
vote  came  out  against  it.  No  wonder  the  administration  is  so  opposed 


262  Dealing  Wiih  the  Dragon 

to  any  speeding-up  of  democratisation  in  Hong  Kong.  Much  safer  to 
be  able  to  count  on  the  representatives  of  business  and  the  pro-Beijing 
lobby. 


29  October 

China  can  be  very  prickly  over  what  it  sees  as  interference  in  the 
affairs  of  Hong  Kong  by  other  countries.  Or  it  can  be  completely 
laid-back.  The  degree  of  reaction  depends  a  lot  on  who  is  talking. 

The  Chinese  Foreign  Ministry  Commissioner  in  the  SAR,  who 
used  to  be  ambassador  in  London,  is  very  het-up  about  a  speech  by 
the  new  American  Consul-General  which  included  mild  remarks 
about  democratisation,  the  rule  of  law  and  media  freedom.  This,  says 
the  Commissioner's  Office,  against  a  background  of  deteriorating 
relations  with  Washington,  was  inappropriate,  irresponsible  and  unjus- 
tifiable. 

Earlier  in  the  week,  another  speaker  from  a  foreign  government 
told  a  dinner  here  that  Hong  Kong's  political  system  should  be 
changed  to  give  politicians  running  in  elections  responsibility  for  ful- 
filling their  campaign  pledges.  That  would  be  the  biggest  upheaval 
seen  since  the  establishment  of  the  SAR,  requiring,  as  the  speaker 
said,  an  adaptation  of  the  Basic  Law. 

Strangely  enough,  this  speech  drew  no  criticism  from  the  Chinese, 
though  it  could  be  seen  as  a  plain  interference  in  Hong  Kong's  inter- 
nal affairs.  But  the  second  speaker  was  the  Senior  Minister  of 
Singapore,  Lee  Kuan  Yew,  whom  the  Chief  Executive  greatly  admires. 
One  can  only  imagine  the  reaction  if  such  remarks  had  been  made  by 
the  US  Consul-General.  It  ain't  what  you  say,  it's  the  person  you  are 
that  counts.  One  place,  two  reactions. 

30  October 

China's  parliament,  the  National  People's  Congress,  passes  legislation 
outlawing  the  Falun  Gong  movement,  which  the  China  Daily  has 
described  as  a  'devil  cult'.  Penalties  start  at  three  years  for  demon- 
strating or  disrupting  social  order,  and  run  all  the  way  up  to  execution 


October  263 

for  using  cult  activities  to  attempt  to  subvert  the  socialist  system  or 
split  the  nation. 

It  is  now  six  months  since  members  of  the  movement  suddenly 
materialised  outside  the  leadership  compound  in  Beijing.  Despite  the 
subsequent  crackdown,  police  say  the  Gongists  have  staged  300 
protests  since  April.  The  authorities  allege  that  practitioners  have 
breached  national  security  by  being  in  possession  of  twenty  'top 
secret'  documents  and  thirty-nine  others  ranked  as  'classified',  some  of 
which  had  been  passed  on  to  people  abroad.  But  the  definition  of 
national  security  in  China  is  so  wide  that  almost  anybody  who  knows 
anything  can  be  accused  of  being  a  spy. 

Nearly  eight  million  books  and  five  million  videotapes  produced  by 
the  sect  have  been  seized  in  just  two  cities.  Ten  managers  of  printing 
presses  have  been  arrested  for  turning  out  Gongist  texts.  The  State 
Council  has  warned  civil  servants  and  workers  at  state-owned  enter- 
prises that  they  will  be  'severely  penalised'  if  they  are  practitioners. 
Inveighing  against  an  'anti-society,  anti-science  and  anti-human- 
being'  movement,  Jiang  Zemin  compares  it  to  the  Branch  Davidians 
of  the  United  States  and  the  Aum  Shinri  Kyo  in  Japan,  and  blames  it 
for  the  deaths  of  more  than  1 ,400  people,  for  driving  others  insane 
and  for  ruining  families. 

Broadening  their  campaign,  the  authorities  have  generally  banned 
people  from  carrying  out  slow-moving,  deep-breathing  qi  gong  exer- 
cises in  streets,  railway  and  bus  stations,  government  and  military 
establishments,  ports,  schools  and  other  'important  public  places'.  Qi 
gong  groups  must  register  with  the  authorities,  and  can  only  operate 
in  small  local  units. 

Officials  say  they  are  just  after  Falun  Gong  leaders,  and  will  be 
lenient  with  the  rank-and-file.  Though  the  authorities  in  one  part  of 
Guangdong  province  have  adopted  a  gentle  approach  by  encouraging 
elderly  practitioners  to  take  up  traditional  dance  and  shadow  boxing 
instead,  police  behaviour  elsewhere  shows  what  leniency  means  in 
Chinese  terms.  Three  thousand  practitioners  have  been  detained  in 
Beijing  alone  this  week.  Hundreds  of  police,  in  uniform  and  plain 
clothes,  are  patrolling  Tiananmen  Square.  Some  of  those  taken  away 
in  police  buses  have  been  kept  in  custody;  some  have  been  handed 


264  Dealing  With  the   Dragon 

over  to  provincial  security  forces  who  have  come  to  the  capital  to 
move  them  to  regional  detention  centres.  Still  others  have  been  driven 
to  the  outskirts  of  town  and  dumped  there  after  being  told  never  to 
return. 

About  100  women  have  been  punished  in  the  north;  according  to 
a  Hong  Kong  human  rights  group,  twelve  school  teachers  in  the 
founder's  home  province  of  Jilin  have  been  sent  to  labour  camps.  In 
neighbouring  Liaoning  province,  a  former  senior  housing  official 
hanged  himself  after  fasting  in  protest  at  the  clampdown;  his 
Communist  party  membership  was  removed  posthumously. 
Elsewhere,  functionaries  have  been  told  their  performances  will  be 
judged  on  how  well  they  wipe  out  the  influence  of  sects. 

In  the  capital,  police  are  busy  raiding  shops  for  subversive  Falun 
Gong  literature,  and  combing  small  lodging  houses  for  practitioners. 
Hotel  operators  who  put  them  up  are  fined.  Falun  Gong  practitioners 
report  that  a  hostile  article  from  the  People's  Daily  has  been  posted  on 
their  websites  in  Europe.  One  man  in  New  York  says  hacking  has 
been  traced  back  to  the  Public  Security  Bureau.  In  Shandong 
province,  police  stage  a  street  bonfire  of  Gongist  books  and  posters, 
while  railway  authorities  in  the  south  have  taken  to  searching  the  lug- 
gage of  passengers  for  sect  literature  or  tapes. 

The  rhetoric  from  the  official  media  reaches  a  frenzied  volume. 
Beijing  television  warns  that  if  Falun  Gong  had  been  allowed  to  con- 
tinue freely,  all  the  economic  reforms  would  have  been  stopped.  The 
Xinhua  news  agency  calls  the  sect's  challenge  'unprecedented  in  the 
history  of  the  People's  Republic  in  terms  of  the  size  of  its  organis- 
ation, its  influence,  number  of  illegal  publications  as  well  as  the 
damages  it  brought  to  the  society'. 

A  small  group  of  practitioners  bravely  holds  a  clandestine  press 
conference  in  Beijing,  and  insists  that  China's  leaders  would  realise  the 
merits  of  their  beliefs  if  they  only  knew  the  truth.  'We  just  want  a 
peaceful  place  in  which  to  practise,'  says  a  man  from  Fujian  province. 
Two  of  those  giving  the  press  conference  are  former  policemen.  They 
say  they  were  forced  to  choose  between  keeping  their  jobs  and  fol- 
lowing the  Falun  Gong. 

The  American  media  report  widely  on  the  crackdown,  and  a  row 


October  265 

erupts  when  police  question  five  reporters,  including  two  Americans, 
who  attended  the  press  conference.  Their  credentials  and  residence 
permits  are  confiscated  on  the  grounds  that  they  violated  regulations. 
President  Jiang  is  angry:  more  than  1,000  police  have  been  deployed 
to  track  the  conference's  location  to  a  small  Buddhist  temple  in  the 
suburbs  of  the  capital. 

Whatever  the  truth  about  the  Falun  Gong,  there  is  no  doubt  that 
China  is  home  to  more  than  its  share  of  charlatans,  nor  of  the  extent 
of  their  appeal.  Another  group  hit  by  police  this  month  was  founded 
by  a  former  peasant  who  claimed  to  be  able  to  see  through  solid 
objects  and  hear  heavenly  voices.  He  is  said  to  have  run  sixty  centres 
in  twenty-two  provinces,  including  an  outfit  called  the  China  School 
of  Supernatural  Powers  in  Sichuan  with  more  than  10,000  students. 
Then  there  is  a  newspaper  report  about  the  founder  of  a  different  sect, 
with  a  mere  900  followers,  who  promised  he  could  help  adherents 
reach  enlightenment  if  they  had  sex  with  him,  and  raped  at  least  four 
women.  In  Hunan  province,  a  court  has  sentenced  to  death  a  self-pro- 
claimed resurrected  god  who  presented  himself  as  a  supreme  being 
able  to  lead  his  followers  to  salvation.  Disciples  from  fifteen  provinces 
gathered  for  a  congress  he  held  in  1997.  'Nowadays,  people  blindly 
believe  in  gods  and  spirits,'  he  was  quoted  as  saying.  'If  you  flaunt  a 
divine  banner,  people  believe  in  you  and  are  willing  to  dedicate  every- 
thing they  have  to  you.'  Growing  rich,  he  bought  expensive  suits,  a 
motorcycle  and  several  mobile  telephones.  He  also  took  some  young 
women  followers  to  bed.  In  his  confession,  he  ruminated:  'If  I  were  a 
god,  would  I  be  here  today?' 

Hong  Kong  is  drawn  into  the  repression  of  the  Falun  Gong  in  a 
minor  but  unexpected  way.  Like  many  other  SAR  firms,  paging  com- 
panies have  moved  a  lot  of  their  operations  across  the  border  where 
staff  are  cheaper.  But  it  emerges  that  one  paging  outfit  is  not  passing 
on  messages  which  mention  the  Falun  Gong.  A  company  supervisor 
says  that  may  be  due  to  human  error,  transmission  failure  or  reception 
problems.  Or  perhaps  to  staff  on  the  mainland  having  heard  about  the 
ban  on  the  sect  and  deciding  that  discreet  censorship  is  the  better  part 
of  valour. 

The  whole  saga  is  adding  to  complaints  about  China's  human  rights 


266  Dealing  Wiih  the   Dracon 

record  and  its  persecution  of  the  home  church  movement.  The 
Clinton  administration  makes  its  concern  known,  and  the  Senate 
Foreign  Affairs  Committee  has  adopted  a  resolution  calling  for  an 
immediate  end  to  repression  of  religious  groups.  Naturally,  that  brings 
a  rejoinder  from  Beijing  expressing  'strong  resentment  and  firm  oppo- 
sition' to  such  a  'flagrant  interference  in  China's  internal  affairs'.  What 
a  strange  turn  of  events  if  a  deep-breathing  movement  started  by  a 
clerk  in  a  grain  organisation  now  living  in  Queens  ends  up  by  caus- 
ing more  havoc  for  the  regime  than  all  the  dissidents  in  China. 


November 


i  November 

Mou  Qizhong,  once  a  star  of  the  mainland  business  world,  is  on  trial 
in  the  city  of  Wuhan.  Ten  years  ago,  he  shot  to  fame  by  bartering  500 
railway  wagons  full  of  food,  clothes,  shoes,  thermos  flasks  and  other 
products  for  four  Russian  passenger  planes  which  he  sold  to  China's 
Sichuan  Airlines  in  a  p£ioo  million  deal.  His  motto  was  'There  is 
nothing  in  the  world  that  can't  be  done,  only  that  which  can't  be 
thought  of  Forbes  magazine  named  him  as  the  fourth  wealthiest  man 
in  the  mainland.  He  was  going  to  blow  a  48-kilometre-wide  gap 
through  the  Himalayas  to  change  the  climate  in  north-west  China  so 
that  arid  land  would  sprout  crops,  dam  great  rivers  to  provide  water 
supplies,  lease  Russian  rockets  to  Western  communications  firms,  and 
develop  the  fastest  computer  chip  in  the  world.  He  claimed  to  be  able 
to  raise  enormous  sums  in  the  West  to  buy  into  13,000  state  compa- 
nies, and  was  going  to  build  a  'Hong  Kong  of  the  north'  on  the 
Russian  border. 

Now,  Mou  is  accused  of  having  used  phoney  documents  to 
obtain  US$75  million  in  foreign  currency.  He  is  alleged  to  have  got 
the  money  through  a  state  import-export  company  in  Hubei 
province  which  pretended  to  have  imported  goods  and  presented 
a  local  state  bank  with  thirty-three  credit  documents.  The  bank 
issued  foreign  currency  against  the  certificates.  The  import-export 


268  Dealing  Wuii    rHE   Dragon 

firm  passed  the  money  to  Mou,  with  suitable  greasing  of  palms  in 
return. 

His  career  epitomises  the  mainland's  get-rich-quick  tycoons  who 
use  political  connections  and  bribery  to  borrow  large  sums  from  state 
banks  and  companies.  Born  beside  the  Yangtze  in  1941  to  the  maid  of 
his  father's  third  wife,  Mou  was  sentenced  to  death  for  a  book  he 
wrote  during  the  Cultural  Revolution,  but  was  saved  from  execution 
by  Mao's  death  and  the  subsequent  policy  switches.  After  building  up 
a  business  by  buying  and  selling  clocks  from  the  military,  he  spent 
another  year  in  prison  for  speculative  activities,  but  was  able  to  borrow 
7  million  yuan  m  1984  to  launch  the  investment  company  that 
clinched  the  airliner  barter. 

In  1989,  the  bombastic  Mou,  a  short  man  with  a  round  head  and 
deep  forehead  who  bears  more  than  a  passing  resemblance  to  Mao, 
denounced  the  demonstrators  in  Tiananmen  Square  before  the  out- 
come of  the  confrontation  was  evident.  That  won  him  points  with  the 
regime.  He  was  singled  out  for  praise  in  the  official  media  and  pho- 
tographed with  national  leaders:  like  American  executives,  upwardly 
mobile  Chinese  love  to  show  off  snaps  of  themselves  with  those  in 
power.  Apart  from  anything  else,  it  makes  getting  loans  from  state 
banks  so  much  easier. 

Mou  traded  on  his  connections  for  a  US$75  million  letter  of  credit 
from  the  Bank  of  China  branch  in  Wuhan  to  import  computers.  In  fact, 
the  money  went  to  finance  a  scheme  to  launch  satellites  on  rockets  from 
China's  Central  Asian  neighbour  of  Kazhakstan.  Mou  does  not  seem  to 
have  made  anything  from  the  project.  In  fact,  he  was  plunging  further 
and  further  into  debt.  Eventually,  three  lieutenants  welshed  on  him. 
Although  his  passport  was  confiscated,  he  tried  to  leave  the  country  but 
was  stopped  at  Beijing  airport  and  charged  with  fraud. 

According  to  one  newspaper,  Mou  wrote  a  letter  to  the  authorities 
after  his  arrest  proclaiming  that  he  and  he  alone  could  'do  in  the  East 
what  oil  barons  and  steel  kings  did  in  the  West  this  century'.  He  also 
claimed  to  have  an  agreement  to  sell  5,000  tonnes  of  gold  for  a  British 
company  that  would  have  earned  him  £15  million.  A  best-selling 
book  entitled  Great  Swindler  of  the  Mainland  quoted  some  of  his 
business  tips,  among  them:  'Use  one  daughter  to  marry  eight  men 


November  269 

[i.e.  borrow  from  eight  banks  for  the  same  project]'  and  the  more 
familiar  'If  you  owe  the  bank  10,000  yuan,  you  are  their  grandson.  If 
you  owe  them  10  million,  you  are  their  grandfather.'  The  fraud 
charges  could  land  him  in  jail  for  life. 


2  November 

Hong  Kong's  Disneyland  agreement  is  signed.  The  Chief  Executive 
poses  with  people  in  Mickey  and  Minnie  Mouse  costumes  at 
Government  House.  'I  wish  it  was  Confucius  he  was  embracing,'  says 
the  businessman  and  socialite,  David  Tang.  The  government  hopes 
the  125-hectare  site  will  boost  economic  activity  by  as  much  as  1  per 
cent,  and  attract  crowds  of  tourists.  But  the  taxpayers  will  foot  most 
of  the  bill.  The  deal  is  undoubtedly  popular.  Still,  it  is  being  presented 
as  an  infrastructure  project  just  in  case  anybody  gets  the  idea  that  the 
government  is  switching  to  an  interventionist  course. 

4  November 

Small  and  doll-like,  with  a  helmet  of  black  hair,  Nina  Wang  could  be 
a  figure  from  a  tableau.  Standing  in  the  middle  of  a  reception  given  by 
a  French  bank  tonight,  she  says  her  aluminium  handbag  is  very  useful 
for  beating  off  attackers.  Dressed  in  a  bright  red  and  green  designer 
Chinese  outfit  with  pointed  shoes  and  a  red  clip  in  her  hair,  she 
laughs  at  her  own  joke.  The  crowd  in  the  ballroom  of  the  J.  W. 
Marriott  hotel  gives  her  the  celebrity-look  once-over.  She  is  one  of 
those  Hong  Kong  people  everybody  has  heard  of,  but  few  have  actu- 
ally seen  in  the  flesh.  'Is  that  Nina  Wang?'  says  one.  'I  thought  she 
wore  plastic  mini-skirts.' 

That  was  the  Nina  of  old.  In  the  days  when  she  was  ranked  as  the 
fourth  richest  woman  in  the  world,  she  was  famous  for  her  short  red 
vinyl  skirts  and  bobby  socks.  In  those  days,  with  her  hair  in  plaits,  she 
bore  more  than  a  passing  resemblance  to  a  late-middle-aged  version  of 
the  Icelandic  songstress  Bjork.  Short  and  feisty,  rejoicing  in  the 
Cantonese  nickname  of  Little  Sweet  Sweet,  Nina  has  always  cut  an 
unusual  figure  in  the  buttoned-down  male  business  world.  Tonight, 


270  Dealing  With   mi:   Dracon 

attended  by  a  silent,  smiling  director  of  her  company,  she  giggles  a  lot, 
but  is  no  longer  the  tearaway  who  was  photographed  disco-dancing, 
and  told  her  husband,  Teddy  Wang  Teh-huei,  that  she  would  only 
join  the  board  of  his  family  firm  if  she  could  bring  along  her  German 
shepherd  dog. 

Nina  has  built  up  quite  an  empire,  not  only  in  Hong  Kong,  but  also 
in  the  mainland,  the  United  States,  Taiwan  and  Britain,  where  she 
owns  a  golf  course  and  was  involved  in  an  unsuccessful  pub  game 
scheme.  At  one  point,  she  planned  to  build  a  522  metre-high  Nina 
Tower  in  Kowloon.  In  America,  she  gave  US$50,000  to  the  Clinton 
Birthplace  Foundation  to  help  restore  the  President's  boyhood  home 
in  Hope,  Arkansas.  She  also  donated  US$7  million  to  the  Kennedy 
School  of  Government  at  Harvard  to  pay  for  courses  for  Chinese  of- 
ficials and  soldiers.  But  she  has  just  failed  in  a  major  cause  -  preventing 
her  father-in-law  from  declaring  her  husband  dead. 

The  Wang  fortune  was  based  on  a  business  called  Chinachem 
which  her  father-in-law  started  in  Shanghai  before  the  Communist 
victory.  Moving  to  Hong  Kong,  Chinachem  grew  into  the  territory's 
biggest  privately  held  property  concern.  In  1983  her  husband  hit  the 
headlines  for  a  different  reason  when  he  was  grabbed  by  kidnappers 
and  stuffed  into  a  refrigerator  in  a  flat  near  the  old  airport.  Nina 
handed  over  a  ransom  of  HK$85  million.  Teddy  was  freed.  The  kid- 
nappers were  arrested  and  jailed. 

Nina's  husband  went  back  to  business,  and  made  himself  Hong 
Kong's  fifteenth  richest  man,  with  a  fortune  estimated  at  HK$i5  bil- 
lion. Despite  the  kidnapping,  he  didn't  bother  to  employ  bodyguards. 
There  were  those  who  said  he  was  too  mean  to  spend  the  money. 
Instead,  according  to  a  story  I  was  told  by  somebody  who  had  known 
him,  he  had  a  radio  transmitter  embedded  into  the  heel  of  his  shoe  so 
that  he  could  always  be  traced.  But  he  was  grabbed  again  in  1990.  The 
transmitter  was  useless:  the  kidnappers  made  him  take  off  his  fancy 
footwear  before  they  forced  him  on  to  a  fishing  boat  that  headed  out 
to  sea.  Had  they  been  tipped  off,  my  informant  asked  breathlessly;  was 
this  an  inside  job  of  some  kind? 

On  the  boat,  Teddy  was  trussed  up  in  a  net  with  a  metal  weight 
attached  to  his  feet.  The  kidnappers  contacted  Nina,  who  paid  over 


November  271 

some  HK$26o  million  as  a  first  instalment.  She  never  saw  her  husband 
again. 

So  long  as  Teddy  was  not  declared  dead,  his  last  known  will  could 
not  be  executed.  This  was  a  matter  of  some  importance  for  Nina  since 
she  did  not  figure  in  it.  To  prevent  her  father-in-law  gaining  control 
of  his  son's  estate,  Nina  had  to  disprove  the  idea  that  her  husband  was 
dead.  This  was  a  bit  tricky,  since  a  member  of  the  kidnap  gang  had 
testified  that  over  tea  one  day,  a  man  he  called  'the  chief  had  told  him 
that  the  captive  had  been  thrown  overboard  while  the  boat  was  being 
chased  in  Chinese  waters  by  mainland  froritier  guards.  But  Nina 
insisted  that  Teddy  had  contacted  her  after  the  second  kidnapping. 
She  also  claimed  that  he  had  given  her  power  of  attorney  back  in 
1963,  and  had  drawn  up  a  new  will  after  a  riding  accident.  She  spoke 
of  a  sealed  envelope  which  might  contain  this  fresh  will.  But  nobody 
has  found  the  envelope  or  the  new  will. 

Now,  after  a  hearing  in  chambers,  Teddy's  father,  a  frail  old  man 
wearing  a  beret,  who  has  to  be  helped  into  court  by  two  aides,  is 
given  authority  to  declare  his  son  dead.  So  the  will  which  does  not 
name  Nina  can  be  executed.  When  I  mention  this  to  her  at  tonight's 
reception,  she  laughs  and  says  something  about  the  story  not  being 
over  yet.  Whatever  happens,  Nina  is  another  of  Hong  Kong's  high- 
level  survivors,  aluminium  handbag  and  all. 

5  November 

Colonial  days  may  have  gone,  but  even  the  best  known  of  the  main- 
land 'princelings'  in  Hong  Kong  can  get  caught  up  in  controversies  in 
the  former  sovereign  power.  Larry  Yung  is  quite  a  figure  in  the  SAR, 
a  well-built,  immaculately  dressed  man  with  greying  hair  who  is  a 
prominent  racehorse  owner  and  keen  golfer.  More  important,  he  is 
the  son  of  a  former  Vice-President,  Rong  Yiren,  who  may  be  the 
richest  man  in  the  mainland  at  the  head  of  a  business  empire  called 
China  International  Trust  and  Investment  Company,  or  Citic.  The 
family  were  rich  industrialists  before  the  Communists  won  power,  and 
decided  to  remain  in  China.  Rong  Yiren  worked  with  Deng 
Xiaoping  to  open  up  the  mainland  market.  He  set  up  Citic  in  [978. 


272  Dealing  With  the   1)ka<;on 

His  son  runs  its  local  offshoot,  Citic  Pacific,  which  is  one  of  the 
biggest  investors  in  the  SAR.  Among  many  other  things  it  has  a  large 
stake  in  Cathay  Pacific  and  Dragon  Air  airlines.  In  a  rare  interview 
before  the  handover,  Yung  said  that  the  danger  for  Hong  Kong  was 
that  greedy  people  would  come  down  from  the  north  and  try  to  grab 
Hong  Kong's  wealth.  That  has  not  happened,  but  Citic  has  put  up  a 
shiny  building  by  the  harbour  on  the  site  of  an  old  British  naval  base 
to  show  that  it  is  here  to  stay.  The  South  China  Morning  Post's  biggest 
shareholder,  the  Kuok  group,  has  a  substantial  holding  in  Yung's  firm, 
and  occupies  floors  20  to  22  of  Citic  Tower. 

Yung's  19  per  cent  stake  in  Citic  is  worth  US$i  billion.  He  has  a 
spread  in  Vancouver,  and  spent  an  estimated  £5  million  buying 
Harold  Macmillan's  335  acre  estate,  Birch  Grove,  in  East  Sussex,  com- 
plete with  its  own  golf  course  and  shooting  grounds,  where  he  slips 
on  the  mantle  of  a  country  gentleman  for  a  few  weeks  each  year. 
What  would  be  more  normal  than  for  such  a  man  to  contribute 
money  to  a  British  rural  organisation?  Last  month,  Nick  Rufford  of 
the  Sunday  Times  reported  that  Yung  had  given  up  to  £650,000  to  the 
Countryside  Alliance,  which  is  challenging  plans  to  ban  fox  hunting. 
The  South  China  Morning  Post  picked  up  the  story.  Yung  was  not 
pleased.  Senior  executives  from  the  newspaper  were  called  to  the 
Citic  offices  to  be  told  that  the  story  was  incorrect.  As  though  Yung 
couldn't  speak  for  himself,  the  Jockey  Club  wrote  a  letter  to  the  Post 
saying  that  this  prominent  member  denied  having  given  money  to  the 
Alliance.  Today  the  Post  runs  an  item  on  page  two  noting  that  Yung 
has  stated  that  he  has  not  contributed  to  the  Countryside  Alliance  and 
has  not  been  involved  in  promoting  its  activities.  The  Sunday  Times 
makes  no  apology. 

6  November 

The  Hong  Kong  government  has  started  to  unload  its  shares  in  the 
territory's  biggest  public  offering.  After  a  major  publicity  blitz,  more 
than  HK$22  billion  has  been  subscribed  to  a  fund  called  TraHK, 
known  as  the  Tracker,  which  contains  a  slice  of  the  shares  bought  by 
the  administration  fourteen  months  ago  to  defend  the  currency.  The 


November  273 

offer  has  been  sweetened  with  discounts  and  a  loyalty  premium. 
Pundits  worry  that  it  will  draw  liquidity  out  of  the  market,  and  that 
it  does  not  include  soaraway  technology  stocks.  But  the  public  has 
scented  a  bargain,  and  that  is  enough.  After  Disneyland,  another  boost 
to  public  confidence. 

9—16  November 

A  thirteen-year  saga  is  reaching  its  moment  of  truth  in  a  huge,  bleak 
building  in  Beijing.  A  ten-strong  team  from  Washington  sits  behind  a 
long  brown  wooden  table  at  the  Ministry  of  Foreign  Trade  and 
Economic  Cooperation  (Moftec).  Opposite,  the  Chinese  delegation  is 
at  an  identical  brown  wooden  table.  Between  them  stands  a  row  of 
potted  plants.  The  two  delegation  leaders,  sitting  in  the  middle  of 
their  teams,  are  a  study  in  physical  contrast  -  the  thin,  intense 
Charlene  Barshefsky  with  her  trademark  scarf  round  her  neck,  and  the 
rotund,  balding  trade  minister,  Shi  Guangsheng.  Bill  Clinton's  eco- 
nomic adviser,  Gene  Sperling,  is  in  the  US  delegation  as  a  sign  of  how 
deeply  the  President  is  committed.  At  Shi's  side  is  a  serious-looking 
bespectacled  man  with  a  neat  parting  in  his  jet  black  hair:  Long 
Yongtu  has  been  involved  in  these  negotiations  from  the  start. 

The  subject  at  issue  is  American  backing  for  China's  membership 
of  the  World  Trade  Organisation,  the  body  that  sets  the  rules  of  inter- 
national commerce.  On  the  table  are  issues  such  as  access  to  mainland 
markets,  US  quotas  on  imports  of  textile  goods  and  how  many  years 
China  can  continue  to  be  treated  as  a  developing  country.  The  impli- 
cations go  much  deeper.  China's  economic  reformers  see  WTO 
membership  as  a  key  element  in  pushing  their  programme.  As  well  as 
forcing  major  changes  in  the  financial  and  industrial  structure  to 
accord  with  what  are  essentially  American-dictated  ways  of  running 
an  economy,  membership  would  mean  the  mainland  becoming  sub- 
ject to  regulations  set  elsewhere,  and  to  the  rule  of  law.  The  Chinese 
would  want  to  start  availing  themselves  of  freedoms  granted  to  for- 
eigners while  competition  from  more  advanced  economies  would 
lead  to  millions  more  workers  being  thrown  out  of  jobs,  initially  at 
least.  So  conservatives  like  former  Premier  Li  Peng  take  a  leery  view 


274  Dealing  Wiih  the  Dragon 

of  joining  the  high  church  of  globalisation,  not  only  for  its  economic 
effects  but  for  the  threat  it  poses  to  the  power  structure  built  up  since 
1949.  For  its  part,  the  United  States  could  live  without  Beijing  getting 
a  seat  at  the  WTO.  But  the  benefits  for  American  companies  of  a 
major  opening-up  of  the  Chinese  market  would  be  enormous,  and 
agreement  would  be  a  great  foreign  policy  prize  for  a  president  who 
needs  as  many  laurels  as  he  can  gather  in  his  last  year  in  the  White 
House.  So  the  outcome  of  the  Barshefsky-Shi  talks  at  Moftec  will 
mean  much  more  than  the  easing  of  textile  quotas  or  the  lifting  of 
limits  on  how  many  Hollywood  films  can  be  shown  in  Beijing  or 
Shanghai. 

This  is  not  simply  a  Sino-US  matter:  the  other  members  of  the 
WTO  will  have  to  sign  up  to  any  agreement  to  let  China  enter  the 
organisation.  But  if  the  Americans  get  a  deal  for  themselves,  and 
establish  normal  trading  relations  with  the  mainland,  nobody 
believes  the  Europeans  or  anybody  else  would  scupper  a  compre- 
hensive arrangement  for  Chinese  membership.  Time  presses  because 
ministers  from  the  WTO  nations  meet  in  Seattle  at  the  end  of  this 
month  to  draw  up  the  guidelines  for  a  new  round  of  world  trade 
talks. 

It  has  been  a  rough  seven  months  since  Bill  Clinton  pulled  the  rug 
from  under  Zhu  Rongji  in  April.  The  President's  regrets  for  what  he 
had  done  were  swamped  by  Kosovo,  the  bombing  of  the  Chinese 
embassy  in  Belgrade  and  the  tension  over  Taiwan  and  human  rights, 
plus  the  allegations  of  Chinese  spying  on  US  nuclear  secrets.  In  the 
late  summer,  however,  Clinton  sent  Senator  Diane  Feinstein  of 
California  to  deliver  a  handwritten  letter  to  Jiang  Zemin  suggesting 
the  resumption  of  WTO  talks.  A  Chinese  delegation  visiting 
Washington  gave  a  positive  response.  The  President  wrote  again,  and 
again  got  a  good  reply.  When  he  and  Jiang  met  in  the  early  autumn 
at  the  Asia-Pacific  summit  in  New  Zealand,  Clinton  pressed  the  case 
for  new  WTO  talks.  Jiang  agreed  that  the  negotiators  should  convene. 

The  Chinese  leader  played  a  characteristically  careful  and  calculat- 
ing game,  edging  forward  but  avoiding  giving  the  conservatives  in 
Beijing  a  stick  with  which  to  beat  him.  Zhu  had  put  himself  out  on 
a  limb  in  the  spring  and  suffered  badly  as  a  result.  It  is  not  in  Jiang's 


November  275 

nature  to  take  any  such  risk,  even  if  he  can  see  that  an  agreement 
could  burnish  his  place  in  history. 

So  when  the  negotiators  Barshefsky  and  Shi  met  in  Auckland  the 
day  after  the  session  between  their  two  presidents,  the  Chinese  took 
a  harsh  line,  halving  the  offers  made  by  Zhu  in  some  vital  areas. 
Barshefsky  ruled  out  any  easing  of  Washington's  demands:  'It's  all  up 
to  China  now,'  she  said. 

Beijing  went  silent.  Undeterred,  Clinton  telephoned  Jiang  on  16 
October  to  draw  attention  to  the  looming  WTO  deadline.  The 
Chinese  leader  said  he  was  about  to  embark  on  a  trip  to  Europe, 
North  Africa  and  Saudi  Arabia,  and  would  reply  when  he  returned. 
But  he  did  not  do  so,  playing  hard-to-get  like  any  object  of  desire. 

Showing  his  persistence  as  a  suitor,  Clinton  took  the  unusual  step 
of  sending  a  set  of  position  papers  to  Beijing  outlining  six  concessions 
which  the  US  was  ready  to  make.  There  was  still  no  response.  At  the 
end  of  October,  the  new  Treasury  Secretary,  Lawrence  Summers, 
travelled  to  Lanzhou,  capital  of  northern  Gansu  province,  where  a  ses- 
sion of  the  Sino-US  economic  committee  was  being  held.  At  a 
meeting  with  Zhu,  Summers  said  Washington  did  not  regard  China's 
huge  trade  surplus  with  the  US  as  an  immediate  problem,  but  that 
China  really  did  need  to  open  up  its  markets  before  long  and  that 
there  was  only  a  month  left  for  WTO  agreement. 

On  6  November,  Clinton  was  back  on  the  telephone  for  a  45- 
minute  conversation.  Jiang  indicated  that  an  agreement  should  be 
possible.  He  is  said  to  have  got  Politburo  agreement  that  a  deal  could 
be  made  on  three  conditions:  that  China  should  enter  the  WTO  as  a 
developing  nation  with  all  the  accompanying  advantages  of  such 
status,  that  foreign  access  to  finance  and  service  industries  would  be 
gradual,  and  that  the  US  would  open  its  textile  market  and  reject 
quotas. 

Two  days  after  Clinton's  second  call,  Barshefsky's  team  fly  to 
Beijing.  They  tell  reporters  they  aim  to  wrap  up  the  talks  in  a  couple 
of  days.  They  arrive  amid  some  good  omens  for  Sino-US  relations:  a 
new  American  ambassador  has  been  approved  and  Beijing  has  agreed 
that  the  command  ship  of  the  Seventh  Fleet  can  visit  Hong  Kong  in 
December.  But  the  planned  two  days  turn  into  an  epic  knife-edge 


276  Dealing  With   mm    Dragon 

marathon  of  tough  talking  and  shadow  boxing  during  which  neither 
side  gets  much  sleep  -  one  of  the  American  team  is  said  not  to  have 
closed  his  eyes  throughout,  though  the  Chinese  have  the  bonus  of 
being  able  to  relax  in  sitting  rooms  at  the  ministry.  The  US  delegation 
also  has  to  contend  with  the  thirteen-hour  time  difference  with 
Washington.  But  no  sign  of  weakness  can  be  allowed.  At  one  point, 
Barshefsky  is  seen  to  be  nodding  off  over  a  meal.  When  a  waitress  jogs 
her  elbow,  she  retorts:  'I'm  awake.'  She  and  Clinton's  adviser,  Sperling, 
seek  solace  in  music,  beginning  each  day  by  deciding  on  a  song  for  the 
day.  Among  those  they  choose  are  'Please  Release  Me',  'Ain't  No 
Mountain  High  Enough'  and  'Oklahoma'.  They  might  have  done 
better  with  'The  Long  and  Winding  Road'. 

Day  One:  At  the  opening  session,  Sperling  refers  to  his  own  presence 
as  a  sign  o(  the  historic  nature  of  the  opportunity  ahead  of  them.  In 
April,  he  had  been  among  those  who  counselled  Clinton  not  to 
accept  Zhu's  offers.  For  China,  Shi  Guangsheng  repeats  the  cliche 
about  this  being  'a  win-win  situation'  for  all  concerned.  After  open- 
ing pleasantries,  the  two  sides  turn  to  financial  markets  and  services. 

Day  Two:  Sperling  tells  reporters  that  the  talks  are  more  substantial  and 
more  detailed  than  before.  China  has  accepted  the  six  concessions 
which  Clinton  sent  in  October.  But  it  wants  more.  The  negotiations 
are  extended  for  an  additional  day.  Everybody  feels  happy.  Stock  mar- 
kets rise.  In  Hong  Kong,  a  rumour  spreads  that  a  pro-Beijing 
newspaper  has  reserved  a  full  page  for  the  next  clay's  edition  for  an 
important  announcement.  The  guessing  is  that  it  will  be  about  a 
WTO  deal.  It  turns  out  to  be  a  property  advertisement. 

Day  Tluee:  The  climate  changes  abruptly  as  journalists  stamp  in  the 
winter  cold  outside  the  Moftec  building  and  the  US  embassy.  A  meet- 
ing scheduled  for  the  morning  is  put  off  till  the  afternoon  at  Chinese 
request.  The  embassy  tells  reporters  Barshevsky  is  'discouraged'.  At 
the  ninety-minute  afternoon  session,  the  Chinese  produce  a  new  set 
of  demands.  Barshefsky  looks  grim  as  she  rides  off  in  an  imported 
Lincoln  limousine. 


November  277 

The  vital  telecommunications  sector  is  one  sticking  point:  China 
insists  on  limiting  foreign  ownership  to  49  per  cent,  but  the 
Americans  want  to  be  entitled  to  51  per  cent,  as  offered  by  Zhu. 
Another  major  difficulty  concerns  video  and  audio  entertainment:  the 
Americans  want  a  much  freer  ride  for  Hollywood  and  US  music 
companies  than  China  is  willing  to  concede.  The  two  sides  are  also 
some  way  apart  on  mainland  exports  of  textile  goods. 

'We  came  here  hoping  to  make  progress,'  says  Barshefsky.  'We  are 
discouraged  that  progress  has  not  been  made  at  this  point.'  A 
spokesman  says  she  will  fly  home  in  the  morning.  The  White  House 
spokesman  briefs  reporters  that  the  talks  are  over.  Still,  the  lights 
remain  on  into  the  night  at  the  Moftec  building,  and  Trade  Minister 
Shi  stays  in  his  office.  All  is  not  quite  as  it  appears:  sources  say  a  draft 
agreement  has  been  shown  to  President  Jiang  who  has  approved  it. 
Barshefsky  asks  to  see  Zhu  Rongji.  If  this  is  refused,  the  US  side  will 
take  it  as  a  sign  that  the  main  proponent  of  a  deal  on  the  Chinese  side 
has  been  sidelined,  and  so  they  might  as  well  leave. 

Day  Four.  Shi  telephones  Barshefsky  at  the  Palace  Hotel  at  3  a.m.  He 
urges  her  not  to  leave.  An  hour  later,  she  is  at  Moftec.  Then  she  is 
invited  to  meet  Zhu  in  the  leadership  compound.  This  is,  in  Sperling's 
word,  'pivotal'.  Barshefsky  asks  for  a  clear  indication  that  China  wants 
an  agreement.  Zhu  says  he  wishes  the  negotiations  to  go  on,  that  time 
is  not  limited,  and  that  he  seeks  progress  which  will  not  put  too  great 
a  penalty  on  the  Chinese  people. 

Day  Five:  In  the  morning,  it  is  all  frowns.  Both  sides  lay  on  the  atmos- 
pherics, if  only  to  let  the  world  know  the  hill  they  are  climbing. 
Neither  the  hardliners  in  Beijing  nor  the  Republicans  in  Washington 
will  be  able  to  say  that  their  side  was  a  push-over.  At  one  point,  the 
US  team  leaves  an  Italian  restaurant  through  the  kitchen,  going  out  of 
the  back  door  to  avoid  the  media.  Their  mobile  telephones  are 
switched  off,  and  they  let  it  be  known  that  they  are  packing  their  bags 
for  the  second  time.  China  Daily  reports  that  the  problem  is  the  US  is 
demanding  too  much. 

Barshefsky  and  Shi  have  three  meetings  lasting  a  total  of  four  and  .1 


278  Dealing  W1111    nil'.    Dragon 

half  hours.  After  each,  the  Americans  drive  back  to  the  embassy  to 
confer  with  Washington.  At  one  point,  seven  pizzas  are  brought  round 
on  delivery  scooters.  'I  feel  like  an  expectant  mother,'  says  Clinton, 
who  has  left  the  US  for  a  visit  to  Turkey.  In  Hong  Kong,  Martin  Lee 
writes  to  him  backing  China's  membership,  saying  it  would  help  the 
development  of  the  legal  system  on  mainland.  His  letter  is  distributed 
to  Republicans,  who  regard  him  as  a  guiding  light  of  freedom. 

Day  Six:  The  Americans  cancel  their  breakfast  booking  to  arrive  early 
at  Moftec.  The  Chinese  are  still  obdurate.  Barshefsky  gives  them  'an 
exceptionally  strong  response'.  China's  former  Trade  Minister,  Wu  Yi, 
a  key  Zhu  ally,  approaches  her  to  say,  'Premier  Zhu  is  here  and  he 
wants  to  talk.'  Vice-Premier  Qian  Qichen  is  also  on  hand.  The 
Chinese  are  ready  to  deal. 

Barshefsky  and  Sperling  see  Zhu.  Agreement  is  reached.  On 
telecommunications,  they  meet  halfway.  There  is  also  a  compromise 
on  video  and  audio  entertainment.  China  gets  an  offer  it  can  accept 
on  textiles.  The  Americans  go  to  the  women's  toilet  to  call  Clinton  in 
Turkey.  It  is  the  most  secure  place  they  can  think  of.  But  there  is  a 
problem  at  the  other  end.  The  President  is  in  the  shower.  His 
National  Security  Adviser,  Sandy  Berger,  goes  into  the  bathroom  to 
tell  him  a  deal  has  been  struck.  Clinton  takes  the  telephone.  'We 
were  talking  bathroom  to  bathroom,'  Barshefsky  says  later. 

At  1.40  p.m.  the  semi-official  China  News  Service  puts  out  a  story 
saying  that  a  bilateral  agreement  was  signed  ten  minutes  earlier. 
Moftec  issues  a  denial.  In  fact,  the  Chinese  still  made  a  last  effort,  call- 
ing on  Barshefsky  in  her  hotel  room  to  try  to  wring  out  some  final 
concessions.  She  tells  Time  magazine  she  replied:  'Oh  please.  Too 
complicated.  Can't  possibly  deal  with  it.  What  time  is  the  signing?' 

Back  at  Moftec,  Barshefsky,  Sperling,  Shi  Guangsheng  and  Long 
Yongtu  put  their  names  to  the  document  as  reporters  rush  into  the 
room.  An  attendant  tells  the  cameramen  to  get  down  off  the  chairs. 
Barshefsky  and  Shi  clasp  hands  and  smile  contentedly.  Their  aides  clap. 
Barshefsky  calls  Shi  'my  all-time  friend'.  They  are  like  two  boxers 
who  pummel  the  hell  out  of  one  another  in  the  ring  and  then  throw 
their  arms  round  each  other's  shoulders  in  a  display  of  camaraderie.  To 


November  279 

the  television  cameras,  Sperling  calls  Barshefsky  a  'most  skilled  and  an 
excellent  and  smart  trade  negotiator'.  To  which  she  replies:  'I  hope 
my  mother's  watching.' 

Jiang  receives  Barshefsky  in  the  leadership  compound.  They  are 
pictured  grinning  broadly,  sitting  on  dark  brown  wooden  chairs  with 
red  flowers  on  the  table  between  them.  The  formal  signing  cere- 
mony in  a  pavilion  at  the  Zhongnanhai  leadership  compound  is 
attended  by  Jiang,  Qian  Qichen,  Wu  Yi  and  Barshefsky.  From  Turkey, 
Clinton  says  that  China  'embraces  principles  of  economic  openness, 
innovation  and  competition  that  will  bolster  economic  reforms  and 
advance  the  rule  of  law'. 

Clearly,  much  of  the  drama  of  the  past  days  has  been  orchestrated 
at  a  high  level.  One  report  says  that  when  a  White  House  official  told 
the  reception  desk  at  the  delegation's  Palace  Hotel  early  on  that  the 
team  would  be  leaving  the  following  day,  he  was  told  by  the  Chinese 
that  the  reservation  was  for  six  days  -  exactly  how  long  it  took  to 
clinch  an  agreement.  But  now  the  tension  and  the  playing  to  the 
gallery  evaporates.  Jiang  is  all  smiles  as  he  takes  Barshefsky  on  a  little 
tour  to  show  her  the  view  of  the  lake  outside  the  pavilion.  Zhu 
Rongji  is  nowhere  to  be  seen. 

The  deal  gets  a  euphoric  reaction  in  Hong  Kong,  even  though  the 
opening-up  of  China  could  pose  major  problems  for  the  territory  in 
the  long  term.  If  the  mainland  adopts  modern  commercial  and  indus- 
trial practices,  builds  up  a  twenty-first  century  financial  system, 
develops  its  services  and  accepts  the  rule  of  law,  the  SAR's  raison  d'etre 
could  be  gravely  compromised.  That,  however,  is  for  the  day  after 
tomorrow.  Right  now,  shares  boom,  everybody  feels  happy  and  few 
wait  to  see  the  small  print. 

It  is  plain  that  China  will  not  join  the  WTO  in  Seattle;  the  nego- 
tiating process  over  this  year  has  taken  too  long  for  that,  and 
agreements  still  have  to  be  made  with  the  Europeans.  But  it  should  be 
in  the  organisation  in  good  time  to  join  in  the  process  of  hammering 
out  any  new  world  trade  deal  which  will  go  well  into  the  opening 
decade  of  the  twenty-first  century.  At  the  annual  Central  Economic- 
Work  Conference  in  Beijing  this  week,  Jiang  talks  of  using  foreign 
capital  to  boost  progress.  Government  departments  are  lined  up  in 


280  Dealing  Wriii  the   Diucon 

support,  including  the  formerly  recalcitrant  telecommunications  and 
agriculture  ministries.  The  National  Statistics  Bureau  produces  an 
amazing  instant  poll  to  show  that  93  per  cent  of  urban  residents  fol- 
lowed the  negotiations,  94  per  cent  say  China  deserves  membership 
and  80  per  cent  think  it  will  improve  their  standard  of  living. 

Still,  there  are  already  discordant  notes.  Government  departments 
are  studying  the  deal  for  the  possible  infiltration  of  'bourgeois-liberal 
ideas'.  China  Business  Information  Times  notes  that  technical  standards, 
anti-subsidy  and  anti-dumping  methods  could  be  used  to  restrict 
imports  in  several  industries.  The  bumps  on  the  road  to  the  market 
were  shown  last  month  when  the  China  National  Offshore  Oil 
Corporation  was  forced  to  withdraw  a  share  offer  because  foreign 
banks  thought  the  price  was  too  high.  One  day  after  the  agreement, 
the  US  Commerce  Department  approves  retroactive  anti-dumping 
duties  on  imports  of  Chinese  apple  juice  concentrate.  The  AFL-CIO 
labour  organisation  says  it  will  'wage  a  full  and  vigorous  campaign' 
against  the  agreement  because  of  the  threat  to  American  jobs  from 
more  Chinese  imports. 

After  their  six  days  on  the  treadmill,  the  participants  in  the  nego- 
tiations scatter,  like  rival  gangs  of  cowboys  who  fight  and  then  make 
up  and  ride  out  of  town  to  their  next  port  of  call.  The  thirteen-year 
veteran  of  the  WTO  beat,  Long  Yongtu,  heads  south  to  Guangzhou 
to  address  a  set  of  seminars.  Tickets  cost  1,500  yuan,  but  the  demand 
is  such  that  they  change  hands  for  2,500  (£200).  When  he  speaks  at 
the  Sun  Yat-sen  memorial  hall  in  the  city,  3 ,000  people  attend:  busi- 
ness is  the  new  song  of  China  and  he  is  one  of  its  stars.  Shi,  the  Trade 
Minister,  goes  to  Canada  to  wrap  up  WTO  negotiations  with  Ottawa. 
Zhu  Rongji  starts  an  official  visit  to  Malaysia,  swearing  that  Beijing 
'will  unswervingly  stick  to  its  programme  of  reform  and  opening  up, 
and  keep  to  the  road  that  suits  its  national  conditions'.  Barshefsky  and 
Sperling  fly  to  Washington  and  launch  into  briefings  to  laud  the  deal, 
which  will  require  Congress  to  grant  China  Normal  Trading 
Relations  (NTR)  status  before  it  can  come  into  effect.  Republicans 
are  already  making  links  with  human  rights.  The  administration 
clearly  has  a  fight  on  its  hands  in  an  election  year  when  relations 
with  Beijing  may  be  a  factor  in  the  race  for  the  White  House. 


November  281 

Though  the  detailed  text  of  the  agreement  is  not  yet  available,  the 
broad  lines  commit  China  to  cut  tariffs  progressively  on  both  indus- 
trial and  farm  goods.  Most  changes  are  staged,  but  there  is  no  escaping 
the  magnitude  of  what  the  mainland  has  agreed  to.  Non-tariff  quotas 
are  to  be  abolished  within  five  years.  The  duty  on  imported  cars  will 
fall  from  the  current  80-100  per  cent  to  25  per  cent  by  2006.  The  oil 
and  petrol  market  will  be  opened  up.  Foreign  firms  will  be  able  to 
conduct  local  currency  business.  They  will  be  allowed  50  per  cent 
stakes  in  telecommunications  two  years  after  China  joins  the  WTO. 
Foreign  securities  will  be  able  to  take  49  per  cent  stakes  in  joint  ven- 
ture fund  management  companies  three  years  after  accession. 
Investment  in  mainland  Internet  services  will  be  allowed.  In  return, 
Washington  has  shown  understanding  on  China's  developing  nation 
status  and  has  given  concessions  on  textiles. 

There  are  some  twists  in  the  tale  that  may  be  less  palatable  to  for- 
eign investors  and  go-go  mainland  entrepreneurs.  As  a  result  of  the 
agreement,  preferential  tax  arrangements  for  overseas  firms  and  for 
special  development  zones  like  Shenzhen  will  be  phased  out.  That 
will  create  a  level  playing  field,  but  the  effect  could  be  devastating  as 
all  those  overseas  Chinese  investors  find  they  have  to  pay  as  much  to 
the  state  as  domestic  industries. 

The  big  question  is  enforcement.  Will  China  live  up  to  its  side  of 
the  bargain,  or  will  it  slide  into  non-compliance  which  will  make  a 
mockery  of  the  past  week?  As  sceptics  point  out,  China  has  been  the 
target  of  many  more  dumping  complaints  from  the  WTO  than  any 
other  country. 

After  the  signing  ceremonies,  Jiang  is  keeping  his  counsel.  Perhaps 
he  knows  that  the  deal  represents  more  concessions  to  the  foreigners 
than  China  has  known  since  the  days  of  the  Treaty  Ports.  There  is  no 
great  speech  to  mark  the  occasion,  no  symbolic  visit  to  a  foreign 
joint  venture  factory.  Even  if  he  has  played  his  hand  brilliantly,  the 
President  remains  profoundly  risk-averse.  Given  the  politics  involved, 
he  needs  to  box  clever  to  keep  his  position  on  top  of  whatever  tran- 
spires. So  the  great  weathervane  of  the  People's  Republic  makes  a 
contradictory  statement,  insisting  that  reform  will  continue  but 
extolling  communist  orthodoxy  as  he  seeks  to  limit  the  dangers  of  this 


282  Dealing  Wiiii  the  Dragon 

huge  leap  into  the  dark.  Still,  in  the  end,  the  leap  has  been  made,  and 
if  it  is  carried  through,  China  will  never  be  the  same  again. 


12  November 

As  a  sign  that  economic  reform  does  not  signify  any  let-up  in  the  con- 
trol of  the  party  and  the  state,  trials  of  Falun  Gong  practitioners  have 
started  in  Hainan  province.  A  local  sect  leader  who  is  accused  of 
using  the  cult  to  violate  the  law,  instigating  protests  and  escaping 
from  police  custody  gets  twelve  years.  Three  others  are  sent  to  prison 
for  between  two  and  seven  years.  The  trial  is  televised  in  prime  time. 
The  presenter  warns  that  'anybody  who  violates  the  interests  of  the 
masses  will  certainly  face  the  legal  consequences'.  One  of  the  accused, 
wearing  a  short-sleeved  blouse  and  with  her  hair  pulled  back  severely, 
stares  at  the  judges  with  a  deeply  sad  expression,  like  a  medieval 
martyr  contemplating  her  fate. 

13  November 

More  signs  of  recovery  in  the  SAR.  Over  5,000  people  turn  out  for 
the  sale  of  a  new  block  of  550  flats,  the  biggest  buying  crowd  seen  for 
two  years.  Police  have  to  use  barricades  to  control  them. 

16  November 

Elsewhere  in  Hong  Kong,  police  are  confronting  a  different  kind  of 
crowd,  using  tear  gas  against  demonstrators  armed  with  iron  bars  and 
a  machete.  One  of  the  protestors  holds  a  cigarette  lighter  to  a  gas  can- 
ister and  threatens  to  blow  himself  up.  Others  ignite  barricades  of 
flaming  furniture  and  lob  Molotov  cocktails.  Three  of  the  300  black- 
helmeted  police  are  set  on  fire  despite  their  protective  Perspex  shields 
and  riot  gear. 

This  rare  instance  of  a  violent  confrontation  is  over  the  clearing  of 
a  village  up  towards  the  mainland  border  as  part  of  an  anti-flooding 
scheme.  The  villagers  think  they  are  not  getting  enough  compen- 
sation or  good  enough  alternative  housing.  One  complains  that  the 


November  283 

quality  of  the  paintwork  on  the  door  of  his  new  flat  is  not  up  to 
scratch.  After  the  police,  bulldozers  go  in  and  most  of  the  houses 
come  down.  Villagers  who  were  not  arrested  spend  the  night  sleep- 
ing in  the  remains  of  their  destroyed  houses. 


18  November 

Another  Hong  Kong  man  held  on  the  mainland  is  released.  Peter 
Leung  Wing-sum,  forty-two,  was  kidnapped  in  Henan  province  in 
April  after  his  former  Hong  Kong  employer  failed  to  pay  a  debt  to 
a  mainland  ceramics  firm.  The  assumption  is  that  workers  from  the 
state-owned  enterprise  grabbed  him.  Leung  says  he  was  tortured, 
and  fed  once  every  two  days  as  he  was  moved  between  different 
locations.  'It  seemed  like  a  movie,'  he  adds.  'I  thought  I  might  be 
killed  if  the  mainland  police  failed  to  arrest  the  person  they  wanted 
[the  former  mainland  manager  of  the  company].'  After  four  months, 
the  manager  was  caught,  and  Leung  was  handed  over  to  the  local 
public  security  bureau,  which  held  him  for  three  months  until  an 
investigation  cleared  him,  and  a  mainland  businessman  put  up 
HK$  100,000  bail. 

The  Hong  Kong  government  says  his  release  is  a  tribute  to  'effec- 
tive communication'  between  the  SAR  authorities  and  the  mainland. 
It  claims  Leung  was  found  in  September  thanks  to  its  contacts  with 
the  mainland.  But  by  that  time,  his  wife  had  persuaded  the  Chinese 
authorities  to  allow  her  to  see  her  husband.  Leung  says  he  is  now  rel- 
ishing the  taste  of  Coca-Cola  and  coffee.  As  he  does  so,  a  36-year-old 
Hong  Kong  woman  tells  of  the  plight  of  her  husband,  a  partner  in  a 
mainland  joint  venture  to  produce  parts  for  television  sets,  who  has 
been  held  for  a  year  accused  of  deception.  She  has  been  asked  to  pay 
HK$27  million  for  his  release.  'I  phoned  the  government  and  the 
Chief  Executive's  office  and  asked  for  help,'  she  says.  'But  they  just 
told  me  there  wasn't  much  they  could  do.' 

In  another  case,  a  Hong  Kong  man  has  been  arrested  because  of 
complaints  about  the  failure  of  a  bankrupt  employment  agency  called 
Superwealth  for  which  he  worked.  He  was  held  in  the  late  summer  in 
a  town  in  Guangdong  province.  Police  there  asked  his  relatives  in 


284  Dealing  Wiiii  the  Dragon 

Hong  Kong  to  pay  HK$8 00,000  for  his  release.  They  reduced  this  to 
$600,000,  which  his  wife  raised  by  selling  a  house  they  owned  across 
the  border  and  borrowing  from  a  finance  company.  Instead  of  freeing 
the  man,  police  took  him  to  a  prison  in  another  town  where  another 
$1  million  was  demanded.  His  wife  says  there  is  no  question  of  raising 
more  cash:  she  is  having  to  borrow  money  just  to  support  the  family. 
A  Public  Security  Bureau  official  on  the  mainland  tells  the  South 
China  Morning  Post:  'We  are  acting  according  to  the  law'  In  Hong 
Kong,  the  Security  Bureau  says  it  is  contacting  the  mainland  authori- 
ties, but  an  official  there  repeats  the  line  that  'We  are  acting  according 
to  the  law' 

There  is  a  happier  outcome  in  a  long-running  case  involving  a 
Chinese-Australian  called  James  Peng  who  has  just  been  freed  from  a 
mainland  jail  after  being  held  for  six  years.  Peng  was  abducted  from  a 
hotel  in  Macau  in  1993,  taken  to  Shanghai  and  sentenced  to  sixteen 
years.  His  lawyers  say  the  charges  were  trumped  up  as  part  of  a  dispute 
with  his  business  partner,  a  niece  of  Deng  Xiaoping.  His  release 
comes  soon  after  a  visit  to  Australia  by  President  Jiang.  The  rumour 
in  Hong  Kong  is  that  in  order  not  to  embarrass  either  the  Portuguese 
or  the  Chinese,  Peng  signed  a  statement  that  he  had  crossed  the 
border  from  Macau  voluntarily. 

Beside  these  businessmen  who  got  into  trouble,  Wu  Man  is  a  more 
equivocal  figure.  His  case  is  causing  some  friction  between  Britain, 
China  and  Thailand,  with  the  SAR  keeping  its  head  down.  A  Hong 
Kong  resident,  he  is  wanted  on  the  mainland  for  crimes  allegedly 
connected  to  the  Big  Spender  gang.  Like  some  three  million  other 
people  in  the  SAR,  Wu  holds  a  travel  document  called  a  British 
National  (Overseas)  pass,  a  device  used  by  London  when  it  wanted  to 
avoid  granting  citizenship  but  felt  it  had  to  save  a  bit  of  face  by  pro- 
viding Hong  Kong  residents  with  something  to  use  when  they  left 
home.  Wu  was  travelling  on  his  BNO  papers  in  Thailand  when  police 
there  picked  him  up  and  handed  him  over  to  the  Chinese.  He  is  cur- 
rently in  jail  in  Guangdong,  where  Big  Spender  was  shot  a  year  ago. 

John  Battle,  the  British  minister  with  special  responsibility  for 
Hong  Kong,  who  happens  to  be  in  town  today,  says  the  Thai  immi- 
gration authorities  have  admitted  they  made  a  mistake  in  not  telling 


November  285 

the  embassy  in  Bangkok  of  the  arrest.  The  Chinese  contend  that 
Battle  is  'completely  wrong'.  Everything  is  in  order,  they  insist.  All 
Battle  can  respond  is  that  he  will  ask  the  British  embassy  in  Beijing  to 
make  enquiries. 

If  he  goes  the  same  way  as  Big  Spender  and  the  Telford  Gardens 
poisoner,  nobody  in  Hong  Kong  is  going  to  shed  a  tear  for  Wu.  But 
the  legislator  Emily  Lau,  a  staunch  critic  of  Britain  on  the  passports 
issue,  has  written  to  Tony  Blair  about  the  case.  As  she  says:  'It  is  wor- 
rying if  Hong  Kong  residents  travelling  on  BNO  passports  are 
assumed  to  be  Chinese  and  can  be  picked  up  in  third  countries.'  The 
problem  for  Britain  is  that  its  fudge  to  give  Hong  Kong  people  a 
figleaf  after  deciding  to  slam  the  door  on  most  of  them  leaves  it  with- 
out a  leg  to  stand  on  in  dealing  with  the  unyielding  mainland  defence 
of  its  legal  sovereignty. 

And  what  about  the  Hong  Kong  government?  Nothing  is  being 
heard  from  that  quarter.  Even  a  local  deputy  to  the  National 
People's  Congress  says  the  SAR  authorities  have  not  done  enough 
to  help  those  detained  on  the  mainland.  But  the  head  of  the 
Security  Bureau  hits  back  by  having  lunch  with  my  former  col- 
leagues to  tell  them  that  the  Post's  publicity  about  the  detained 
grandfather,  Lok  Yuk-sing,  and  others  hindered  their  release.  Lok's 
own  view  that  the  media  reports  were  more  helpful  than  the  gov- 
ernment is  waved  aside.  Still,  his  son-in-law  e-mails  me:  'I  am  glad 
to  read  news  on  Mr  Leung's  return  to  HK.  SCMP  helped  not  only 
ours  &  Mr  Leung's  families,  it  actually  raised  the  public  &  govern- 
ment attention  to  this  kind  of  unfair  treatment  to  HK  citizens. 
Hopefully  we  can  see  more  HK  citizens  to  be  released  in  the 
coming  future.'  Regina  Ip,  the  tough-cookie  Secretary  for  Security, 
and  I  look  past  one  another  when  our  paths  cross  at  a  couple  of 
receptions  and  dinners. 

19  November 

The  Christmas  decorations  are  up  at  Ocean  Centre  in  Kowloon  and 
Christmas  songs  are  on  the  muzak  in  Central.  For  the  past  four  years, 
I  have  been  a  guest  at  the  launch  of  a  big  Christmas  charity  drive.  The 


286  Dealing  Wiih  the   Dracon 

occasion  is  broadcast  live,  and  I  once  got  to  sing  a  few  bars  on  the  air 
in  company  with  some  Cantopop  stars  and  the  Director  of  Radio- 
Television  Hong  Kong.  Last  year  we  did  it  with  the  Chief  Executive  s 
wife,  who  much  enjoys  such  occasions.  The  ceremony  is  always  a 
touch  surreal  as  a  children's  choir  sings  of  crisp  and  even  snow  in  a 
shiny  office  plaza  in  the  warm  Hong  Kong  night.  This  year,  no  longer 
being  editor  of  the  Post,  I'll  miss  the  pleasure,  and  so  will  the  RTHK 
boss,  who  is  off  to  her  new  trade  job  in  Tokyo.  I  doubt  if  the  listen- 
ers will  mind  not  hearing  my  out-of-tune  carolling. 


20  November 

Another  spectacular  step  in  China's  modernisation  -  the  launching  of 
an  unmanned  spacecraft.  The  dome-shaped  Shenzhou,  or  'Magic 
Vessel',  went  up  on  a  Long  March  rocket  from  a  satellite  launch 
centre  in  north-western  Gansu  province.  It  landed  twenty-one  hours 
later  in  Inner  Mongolia  after  orbiting  the  earth  fourteen  times. 
Among  the  objects  inside  was  the  future  flag  of  Macau,  dark  green 
with  a  white  floral  design  and  light  stars  in  the  centre.  Mainland 
newspapers  were  delayed  to  bring  readers  the  news.  President  Jiang, 
who  gave  his  personal  stamp  to  the  development  of  a  manned  space 
programme  in  1992,  chose  the  craft's  name.  He  dons  his  military  uni- 
form to  inspect  the  vessel  when  it  is  brought  to  Beijing.  The  next  big 
step  will  be  to  send  up  cosmonauts:  that  seems  on  the  cards  for  next 
year. 

21  November 

This  being  Sunday,  Central  is  packed  with  maids.  Today  is  Migrants' 
Day,  and  the  weekly  gathering  is  enlivened  by  a  show  in  the  bright 
winter  sunshine.  There  are  dances,  singing,  and  sketches  about  the 
amahs'  lives.  One  starts  by  acting  out  the  saga  of  a  young  woman 
going  through  the  formalities  before  leaving  the  Philippines.  'Birth 
certificate,  identity  certificate,  death  certificate,'  says  the  commen- 
tary, to  laughter  from  the  crowd.  After  she  arrives  in  Hong  Kong, 
her  employer  puts  her  to  work  immediately,  scolds  her  mercilessly 


November  287 

and  then  sacks  her  for  being  five  minutes  late  when  her  bus  was 
delayed. 

Another  sketch  begins  with  a  woman  tearfully  handing  over  her 
daughter  to  a  member  of  her  family  before  flying  to  Hong  Kong  to 
become  a  maid;  she  puts  on  a  piece  of  cardboard  inscribed  with  the 
words  'Domestic  Helper'.  Her  pantomime  of  cooking  and  cleaning 
draws  fresh  laughter  from  the  crowd.  There  is  particular  merriment  as 
she  mimes  the  evening  chore  of  taking  out  the  dog  with  a  newspaper 
in  which  to  collect  the  animal's  droppings.  When  she  has  finished  her 
day,  two  companions  join  her.  One  wears  a  strip  of  cardboard 
inscribed  'Child  Bride'.  The  other  brings  the  house  down  by  doing  a 
raunchy  bump-and-grind  dance  from  the  girlie  bars  of  Wanchai. 
Then  a  fourth  woman  appears  with  the  name  of  an  employment 
agency  on  her  piece  of  cardboard.  They  all  grab  placards  from  the 
ground  and  parade  around  to  uproarious  applause.  On  the  placards  are 
written  'No  to  20%  tax'  -  a  reference  to  a  proposal  to  make  the 
amahs  pay  for  cleaning  up  after  them  on  Sundays.  They  seem  likely  to 
win  on  that  one:  as  has  been  pointed  out,  if  people  in  Hong  Kong 
were  forced  to  pay  for  cleaning  up  after  them,  what  would  the 
Cantonese  have  to  contribute  for  despoiling  the  environment  and 
littering  country  parks  on  Sunday  picnics? 

22  November 

Visiting  Beijing,  Tung  Chee-hwa  hears  from  Zhu  Rongji  about  wor- 
ries over  a  loophole  in  the  mainland  anti-corruption  drive  -  Hong 
Kong.  Although  the  SAR  is  now  part  of  China,  there  is  no  extra- 
dition agreement  between  the  sovereign  power  and  its  region.  Any 
such  arrangement  would  immediately  raise  concerns  that  Beijing 
might  haul  back  dissidents  who  have  found  refuge  in  Hong  Kong. 
What  worries  Zhu  is  that  the  current  state  of  affairs  means  that  main- 
landers  suspected  of  corruption  or  fraud  may  be  skipping  across  the 
border,  and  escaping  mainland  justice.  To  prevent  that,  a  rendition 
agreement  is  being  worked  out.  However  it  may  help  the  anti-graft 
crusade,  it  is  also  likely  to  make  some  dissidents  think  about  leaving 
the  territory. 


288  Dealing  Wiiji   mm-.  Dragon 

23  November 

Not  a  good  day  for  Macau's  gangsters.  The  top  Triad  in  town,  Wan 
Kok-koi,  a.k.a.  Broken  Tooth,  is  sentenced  to  fifteen  years  in  jail  for 
belonging  to  the  underworld  organisation,  money-laundering,  loan- 
sharking  and  telephone-tapping.  Wearing  a  blue  and  white  striped 
suit,  he  smiles  and  waves  as  he  arrives  in  court.  But  when  the  sentence 
is  announced,  he  jumps  on  to  a  bench  and  shouts,  'You've  taken 
dirty  money.  All  you  guys  took  bribes.  This  is  the  worst  verdict  of  the 
century.'  Wan  puts  his  fingers  to  his  head  like  a  gun  and  swears.  Then 
he  tells  his  mother:  'Don't  cry.  Don't  be  afraid.  Steel  yourself.' 

Security  guards  click  handcuffs  on  him  and  take  Wan,  forty-five, 
away  in  a  convoy  of  vehicles  to  solitary  confinement  in  a  windowless 
cell  in  a  new  high-security  prison.  Relatives  and  associates  in  the 
crowded  courtroom  shout  abuse  when  the  judge  announces  that 
property  worth  millions  of  dollars  seized  after  his  arrest  will  remain 
confiscated.  Eight  of  Wan's  colleagues  are  sentenced  to  between  eigh- 
teen months  and  ten  years.  In  Beijing,  where  a  calligrapher  has  just 
written  the  largest-ever  Chinese  character  on  a  1,999  square-metre 
piece  of  silk  to  celebrate  the  impending  return  of  the  Portuguese 
colony,  Vice-Premier  Qian  Qichen  calls  the  verdicts  'good  for 
Macau's  stability'. 

The  following  day,  a  Eurasian  former  police  officer  called  Artur 
Chiang  Calderon,  who  is  said  to  have  been  the  consigliere  of  the  gang, 
is  sentenced  to  ten  and  a  half  years  for  criminal  association,  loan- 
sharking  and  illegal  gambling.  The  shaven-headed  Calderon,  who 
was  born  in  Peru  and  was  forced  out  of  the  Macau  police  because  of 
his  links  with  Wan,  smiles  at  the  judge  as  the  sentence  is  announced. 

At  least  Wan  and  Calderon  won't  lose  their  lives.  Another  Macau 
gang  boss  who  originated  from  Hong  Kong  is  less  fortunate.  Found 
guilty  of  murder,  armed  robbery,  kidnapping  and  illegal  possession  of 
arms  in  the  neighbouring  mainland  city  of  Zhuhai,  he  is  shot  later  in 
the  day.  A  similar  fate  may  well  await  another  alleged  Triad  from 
Macau,  arrested  in  Guangzhou  in  connection  with  the  kidnapping  of 
a  Hong  Kong  man  by  a  gang  in  the  Portuguese  enclave  last  year.  They 
are  alleged  to  have  grabbed  the  man  from  his  office,  beaten  him, 


November  289 

bound,  gagged  and  blindfolded  him  and  demanded  a  ransom  of  HK$2 
million.  They  eventually  settled  for  HK$30o,ooo  which  was  later 
stolen  by  a  member  of  the  gang.  When  the  victim  called  out  for  help, 
he  was  killed.  His  body  was  dismembered  and  left  in  a  rubbish  bin. 
Nobody  questions  why  a  Macau  gangster  who  killed  a  Hong  Kong 
man  is  being  tried  on  the  mainland.  Who  cares? 

24  November 

Hong  Kong's  richest  political  party  leader  stands  on  the  pavement  of 
Garden  Road  leading  from  the  Central  District  up  towards  the  Peak 
where  he  has  his  home,  waving  at  motorists  returning  home  this 
evening.  No,  James  Tien,  Chairman  of  the  Liberal  Party,  is  not  hitch- 
ing a  lift.  In  a  dark  suit  with  a  yellow  sash,  he  is  after  votes. 

Tien  is  seeking  election  to  Hong  Kong's  new  district  councils. 
Instead  of  relying  on  the  usual  distribution  of  leaflets,  he  is  out  on  the 
streets.  There  is  something  faintly  ridiculous  about  this  very  wealthy 
businessman  waving  at  cars  which  thunder  past  in  the  dark,  most  of 
them  unaware  of  his  presence.  But  Tien  needs  to  win  this  election.  In 
the  past,  pro-business  Liberals  have  depended  on  their  connections  to 
gain  seats  in  the  legislature  for  functional  constituencies.  But  now  they 
feel  a  need  for  a  wider  legitimacy.  Two  other  prominent  Liberals  are 
also  running  in  the  council  elections. 

The  hustings  do  not  come  naturally  to  a  party  which  has  been  the 
epitome  of  U-turns  and  cosy  deals.  But  Tien's  pitch  in  seeking  the 
Peak  seat  on  the  council  is  that  he  is  a  man  who  can  get  things  done  — 
though  many  of  the  inhabitants  of  the  constituency  are  sufficiently 
well  connected  to  get  things  done  on  their  own.  Tien  reckons  he 
knows  1,000  voters  personally,  and  has  also  been  hitting  the  tele- 
phone to  whip  up  support.  Every  vote  counts  as  the  Liberals  flirt  with 
direct  democracy. 

26  November 

We  fly  to  the  eastern  city  of  Hangzhou  for  the  opening  of  an  art 
gallery  and  to  see  the  city  whose  huge  man-made  West  Lake  makes  it 


290  Dealing  Wiih   mm.   Dracon 

one  of  China's  showplaces.  Marco  Polo  found  the  market  here  stocked 
with  'roebuck,  partridge,  quails,  fowls,  capons,  and  so  many  ducks  and 
geese  that  more  could  not  be  told'  as  well  as  red  deer,  fallow  deer, 
hares  and  rabbits,  giant  white  pears  weighing  10  pounds  each,  oranges, 
mandarins,  apricots  and  grapes.  The  city  now  has  1.5  million  perma- 
nent inhabitants  and  a  transient  population  of  800,000.  It  is  not 
industrial  or  commercial  on  the  scale  of  nearby  Shanghai,  but  it  is  one 
of  China's  richest  cities,  and  high-rise  buildings  tower  at  one  end  of 
the  lake. 

The  beauty  of  the  local  women  was  such  that  emperors  came  here 
to  select  concubines.  A  senior  official  at  the  Xinhua  office  in  Hong 
Kong  before  the  handover  used  to  punctuate  dinner  conversations  by 
assuring  us  that  there  was  no  better  city  in  China,  with  the  5.5  kilo- 
metre-long lake,  a  thirteen-storey  pagoda,  and  an  intricate  set  of 
gardens  and  temples  to  the  memory  of  an  imperial  servant  who  was 
traduced  and  executed  after  saving  his  master.  The  epitaph  on  his 
tomb  reads:  'If  the  state  officials  were  not  greedy  for  money  and  their 
military  counterparts  did  not  flinch  at  death,  the  whole  country 
would  be  at  peace.'  And,  the  man  from  Xinhua  liked  to  add  as  he 
raised  his  glass  for  yet  another  toast,  the  women  of  Hangzhou  were 
still  the  most  beautiful  in  the  land. 

An  Indian  on  the  bus  in  from  the  airport  spends  the  journey  on  his 
mobile,  conducting  an  intense  negotiation  in  his  native  language 
between  a  mainland  supplier  and  his  office  back  in  Hong  Kong  over 
goods  unknown.  English  words  -  'net  price',  'final  offer',  'best  rate'  - 
pepper  his  side  of  the  conversation.  At  one  point  he  exclaims,  'The 
price  has  gone  to  a  dollar  forty,'  and  snaps  the  telephone  off  in  exas- 
peration. At  the  hotel,  he  is  still  negotiating  on  the  telephone  as  he 
signs  in  at  the  reception  desk. 

The  weather  is  foul.  Cold  rain,  fog  and  early  dusk.  My  wife  says  it 
is  a  dry  run  for  our  return  to  London  in  January.  After  a  gallery 
opening  organised  by  Tung  Chee-hwa's  sister  for  a  show  of  paintings 
by  a  Chinese  artist,  we  walk  along  the  lakeside  to  an  official  dinner 
for  a  couple  of  hundred  guests.  A  sign  outside  a  shop  proclaims  that 
it  sells  'Antiques  and  their  imitations'.  In  the  restaurant,  snakes  lie 
sleeping  in  a  glass  case  outside  the  cavernous  main  dining  room.  The 


November  291 

meal,  served  by  waitresses  in  mauve  costumes,  moves  through  sixteen 
courses:  meats,  chicken,  lobster,  soup,  bamboo  shoots,  a  local  special- 
ity of  chunks  of  gammon  with  a  thick  layer  of  fat  baked  in  little  pots, 
rabbit  cooked  with  chillis  in  tinfoil,  crab,  noodles,  vegetables, 
dumplings,  more  lobster,  salty  and  sweet  consommes,  pastries  and 
fruit.  To  drink,  there  is  beer  and  tea  and  rice  wine  that  tastes  like 
tawny  port.  There  are  many  toasts.  An  elderly  man  in  a  dark  suit  walks 
by  our  table  and  introduces  himself  as  the  director  of  archaeological 
relics  at  the  city  museum.  He  hands  me  a  card.  It  says  he  is  a  member 
of  the  National  People's  Congress.  I  do  not  ask  him  what  he  thinks 
about  the  over-ruling  of  the  Court  of  Final  Appeal. 

The  next  morning,  we  visit  the  West  Lake  Dragon  Well  tea  plan- 
tation outside  the  city  which  produces  one  of  the  best  green  teas  in 
the  country,  sent  to  Beijing  to  be  served  for  the  leadership.  In  the 
entrance  hall,  there  is  a  photograph  of  Queen  Elizabeth  in  a  yellow 
dress  with  a  yellow  hat  looking  as  though  she  has  just  been  bitten. 
'She  is  surprised.  Why  is  the  tea  so  good,  she  asks,'  a  guide  explains. 

We  start  by  being  given  a  demonstration  of  tea-making  (use  water 
which  is  just  below  boiling  point;  put  some  leaves  in  the  bottom  of 
the  glass  and  pour  in  a  little  water  -  never  fill  it  to  begin  with  since 
that  is  like  saying  goodbye;  move  the  kettle  up  and  down  three  times 
as  you  pour;  the  guests  tap  the  table  with  two  fingers  to  express 
thanks;  the  same  leaves  can  be  used  five  times  during  the  day).  Then 
we  buy  four  extremely  expensive  tins  of  the  lightest-coloured  'im- 
perial' leaves.  The  prices  are  higher  than  at  the  hotel  and  the  airport, 
but  the  attendants  at  the  Dragon  Well  point  out  that  they  pack  the  tins 
in  front  of  us,  whereas  elsewhere  you  might  get  a  covering  of  good 
leaves  on  top  and  inferior  growths  below,  or  simply  a  counterfeit  tin 
full  of  old  rubbish.  As  usual,  beneficial  side  effects  are  mentioned:  the 
tea  acts  against  cholesterol  and  cancer,  and  dissolves  body  fat;  the 
used  leaves  can  be  mixed  with  egg  white  for  a  wrinkle-defeating  face 
cream.  Dried  leaves  put  into  a  pillow  help  with  sleep. 

That  night,  we  eat  with  two  friends  at  a  vast  multi-storey  restaurant 
which  epitomises  the  flash  of  money  in  China  today.  There  are  thirty 
tanks  in  a  side  room  from  which  to  choose  fish  and  lobsters  -  and  the 
inevitable  snake  box.  A  young  woman  in  a  long  black  dress  plays 


292  Dealing  Wiiii   mm-.   Dragon 

light  classics  at  a  white  grand  piano  on  an  island  in  the  middle  of  a 
pool  of  water  in  the  centre  of  the  room.  Before  taking  a  break,  she 
glides  through  'Auld  Lang  Syne'.  A  wedding  party  spends  the  evening 
taking  photographs  of  one  another.  When  I  put  my  jacket  on  the  back 
of  the  chair,  a  waitress  hurries  up  and  protects  it  with  a  plastic  cover. 
The  noise  is  enormous.  Everybody  seems  to  be  having  a  good  time. 
It  is  like  a  boisterous  Saturday  night  in  Kowloon. 

In  the  street  outside,  the  taxi  drives  off  while  one  of  our  friends  still 
has  a  foot  on  the  ground.  The  driver  laughs  and  says,  'No  problem.' 
Back  at  the  hotel,  an  elderly  flautist  is  playing  'Ave  Maria'  in  a  bar 
decorated  with  photographs  of  Richard  Nixon  and  lesser  luminaries 
who  have  visited  Hangzhou.  Elsewhere  in  the  city,  four  members  of 
the  China  Democracy  Party  are  reported  to  have  been  sentenced  to 
between  five  and  eleven  years  in  jail  for  subversion.  Among  their 
crimes  was  the  posting  of  information  about  their  movement  on  an 
Internet  bulletin  board. 


28  November 

In  the  elections  for  Hong  Kong's  new  district  councils,  the  Democrats 
increase  their  seats  from  75  to  83,  but  the  real  winner  is  the  pro- 
Beijing  DAB,  which  increases  its  representation  from  37  to  83.  In  a 
telephone  conversation,  Martin  Lee  says  he  was  about  to  call  the 
result  a  defeat  for  the  Democrats,  but  decided  on  second  thoughts  to 
describe  it  simply  as  'a  pass'.  After  all,  they  still  got  more  votes  than 
any  other  party. 

The  Liberal  leader,  James  Tien,  is  rewarded  for  his  waving  from  the 
pavement  by  being  elected  on  the  Peak.  However,  one  of  his  best- 
known  colleagues  is  surprisingly  defeated,  which  may  give  the  party 
second  thoughts  about  plunging  into  popular  elections. 

The  Democrats  made  some  tactical  mistakes  during  the  campaign, 
and  were  hit  by  their  stance  over  the  rule  of  law  which  made  it  seem 
as  though  they  are  in  favour  of  massive  immigration  from  the  main- 
land. Lee  also  complains  about  the  large  amounts  of  money  he  says 
the  DAB  is  getting  from  donors  who  see  it  as  a  pro-administration 
group  -  a  view  which  is  borne  out  when  the  party  indulges  in  some 


November  293 

extraordinary  voting  U-turns  in  the  Legislative  Council  to  prevent  the 
government  from  being  defeated.  It  is  clear  that  party  politics  in 
Hong  Kong  is  now  a  two-horse  race.  Not,  of  course,  that  this  reduces 
the  overwhelming  power  of  the  executive. 

The  new  councils  replace  two  separate  local  government  bodies 
which  tarnished  their  reputations  by  their  inept  handling  of  crises 
such  as  the  bird  flu  outbreak,  and  were  stigmatised  for  the  junkets 
undertaken  by  their  members.  But  the  new  system  represents  a  further 
dilution  of  democracy,  since  100  members  of  the  councils  will  be 
appointed  by  the  administration. 

A  poll  by  the  Hong  Kong  Transition  project  shows  satisfaction 
with  Tung  dropping  from  46  to  39  per  cent,  the  lowest  since  the 
handover.  Another  poll  has  him  at  56  per  cent  but  this  is  still  the 
lowest  in  the  records  of  that  survey.  Dissatisfaction  with  the  govern- 
ment rises  from  46  to  53  per  cent. 

30  November 

The  right-wing,  free-market  Heritage  Foundation  from  the  United 
States  comes  to  town  with  reassuring  news  for  Hong  Kong.  The 
SAR  is  once  again  hailed  as  the  world's  freest  economy.  Last  year, 
there  was  a  warning  that  Singapore  might  be  about  to  take  the  title. 
But  a  senior  SAR  official  at  the  award  dinner  whispers  that  Hong 
Kong  has  acquainted  the  Foundation  with  various  interventionist 
aspects  of  the  way  the  Lion  City  is  run. 

The  dinner  in  a  French  brasserie  in  the  Conrad  Hotel  is  an  oc- 
casion for  high-level  celebration.  As  well  as  Tung  Chee-hwa,  the 
Chief  Secretary  and  the  Financial  Secretary  attend.  One  understands 
their  pleasure.  Still,  there  is  something  ironic  about  the  award  after  the 
government's  intervention  in  the  stock  market,  the  decision  to  go  to 
Beijing  to  overrule  the  Court  of  Final  Appeal,  the  Cyberport  deal 
with  Li  Ka-shing's  son,  and  the  administration's  assumption  of  the 
main  role  in  financing  Disneyland.  Any  of  these  may  be  defended,  but 
when  they  are  added  to  the  government's  ownership  of  all  land  and 
the  pervasive  presence  of  cartels,  one  wonders  at  the  persuasive  power 
of  a  flat  15  per  cent  income  tax  on  the  prophets  of  economic  liberty. 


294 


Dealing  With  the   I)  a  a  (.on 


Few  local  figures  are  ready  to  touch  on  such  questions.  But  the 
night  after  the  Heritage  award,  a  thoughtful  local  businessman, 
Robert  Dorfman,  raises  the  eyebrows  of  his  audience  in  a  speech  at 
another  dinner  in  the  Mandarin  Hotel  which  enunciates  a  home 
truth  the  'freest  economy  in  the  world'  does  not  like  to  hear. 

'Hong  Kong's  domestic  marketplace  is  dominated  by  restrictive 
practices,  especially  in  areas  which  impact  on  people's  daily  lives,'  he 
says.  'Apart  from  the  well-publicised  areas  like  property,  this  is  also 
true  of  many  professional  services,  important  parts  of  the  retail  sector, 
petroleum  products  and  on  policy  on  parallel  imports.  The  reaction 
from  established  groups  to  innovators  has  often  been  to  use  their 
power  to  stifle  the  competitive  threat  rather  than  seeking  to  emulate 
and  outdo  it.  We  do  not  always  practise  the  free-market  principles  we 
preach. 

'Hong  Kong  is  a  community  that  has  thrived  on  change.  But  there 
are  formidable  obstacles  -  such  as  a  refusal  to  acknowledge  openly  that 
the  problem  of  cartelised  markets  exists.  Prominent  interest  groups  - 
including  the  government  in  the  case  of  the  property  market  -  are 
understandably  reluctant  to  change  a  system  that  has  served  them 
well.' 

But  when  I  ask  the  main  author  of  the  Heritage  Foundation  report 
about  the  less  than  free  market  developments  of  the  past  year,  and  the 
underlying  matters  of  land  ownership  and  cartels,  he  pauses  over  his 
veal  to  say  that  his  organisation  could  not  detect  a  pattern. 


December 


i  December 

On  the  mainland,  advertisements  advocating  the  use  of  condoms  fall 
foul  of  the  law.  The  cartoons  transmitted  on  state  television  show  a 
contraceptive  locked  in  combat  with  the  Aids  virus  and  other  sexually 
transmitted  diseases.  The  captions  read,  'Avoid  unwanted  pregnancies' 
and  'Use  a  condom,  no  trouble.'  The  mainland  has  some  400,000 
HIV  carriers.  But  the  State  Advertisment  Law  rules  that  sex  products 
cannot  be  advertised,  so  the  cartoons  are  withdrawn.  The  organiser  of 
the  campaign,  the  Family  Planning  Propaganda  and  Education 
Centre,  says  it  understands  the  decision. 

3  December 

The  Court  of  Final  Appeal  delivers  its  verdict  in  the  latest  case  involv- 
ing the  rights  of  migrants  to  settle  in  Hong  Kong.  As  expected,  the 
government  wins  this  time,  avenging  its  defeat  in  January.  More 
important,  bowing  to  the  verdict  from  Beijing,  the  court  recognises 
the  right  of  China's  National  People's  Congress  to  do  as  it  wishes  in 
interpreting  the  Basic  Law,  and  to  do  so  retrospectively  to  1  July 
1997.  The  rule  of  law  in  Hong  Kong  has  now  been  made  subject  to 
the  rule  of  a  political  body  made  up  of  people  approved  by  the  cen- 
tral regime.  That  is  a  bad  enough  attack  on  one  country,  two  systems, 


296  Dealing  Wiiii    iiii-.    Dragon 

but  much  worse  is  that  this  has  been  brought  about  with  the  active 
complicity  of  the  government  in  Hong  Kong.  The  United  Nations 
Human  Rights  Committee  in  its  first  report  on  the  SAR  since  the 
handover  says  it  is  'seriously  concerned'  at  the  implications  for  judi- 
cial independence  of  the  administration  going  to  the  NPC.  The 
interpretation  'could  be  used  in  circumstances  that  undermine  the 
right  of  a  fair  trial'.  Or,  as  I  write  in  a  column  in  the  Post,  the  recog- 
nition by  the  Court  of  Final  Appeal  of  the  unqualified  right  of  the 
National  People's  Congress  to  interpret  the  Basic  Law  consolidates  the 
most  fundamental  and  dangerous  shift  in  the  short  life  of  the  SAR. 
The  fact  that  it  was  widely  expected  should  not  be  allowed  to  mask  its 
significance. 

Ever  since  the  Joint  Declaration  in  1984,  there  was  a  general 
assumption  that  the  courts  of  Hong  Kong  would  continue  to  enjoy 
primacy,  with  the  Court  of  Final  Appeal  taking  the  place  of  the  Privy 
Council  at  the  apex  of  the  structure.  Article  Two  of  the  Basic  Law 
assured  the  SAR  of  'independent  judicial  power,  including  that  of 
final  adjudication'.  This  was  seen  as  key  to  the  fifty-year  guarantee  of 
Hong  Kong's  system  and  way  of  life. 

For  those  who  lamented  the  turning  back  of  the  democratic  clock 
on  1  July,  the  Basic  Law  appeared  to  provide  comfort  in  the  con- 
tinuation of  the  rule  of  the  law.  Article  Eight  specified  that  the 
maintenance  of  laws  in  force  in  Hong  Kong  meant  the  common  law. 
Now  all  this  has  been  thrown  into  jeopardy.  The  comforting  belief 
that  if  the  NPC  did  exercise  its  powers  on  interpretation  it  would  do 
so  only  on  matters  involving  the  mainland  has  been  cast  into  doubt  by 
the  unqualified  nature  of  the  authority  recognised  by  the  Court  of 
Final  Appeal  today.  A  mainland  academic,  Professor  Wang  Lei  from 
Beijing  University,  says  that  any  citizen  has  the  right  to  ask  for  inter- 
pretation. So  we  could  find  losing  parties  in  disputes  between  Hong 
Kong  companies  or  individuals  trying  to  approach  the  NPC. 

They  might  get  short  shrift.  That  is  beside  the  point.  What  matters 
is  that  the  court  meant  to  be  Hong  Kong's  supreme  judicial  organ 
now  acknowledges  itself  to  be  subject  to  appeal  to  a  mainland  politi- 
cal body.  It  is  hard  to  see  how  this  can  be  anything  less  than  a  major 
change  in  the  system  that  was  meant  to  be  maintained  until  2047. 


December  297 

That  raises  the  intriguing  thought  that  the  judgment  may  itself  be 
in  contravention  of  the  Basic  Law.  One  can  imagine  the  outcry  from 
Beijing  if  Chris  Patten  had  gone  to  the  House  of  Commons  to  over- 
rule a  Privy  Council  verdict  against  him.  That  would  not  have 
happened  under  the  pre-handover  system,  so  its  equivalent  should  not 
happen  now  if  the  Basic  Law  is  to  be  respected.  But  we  know  that  the 
government  has  driven  a  cart  and  horses  through  a  fundamental  ele- 
ment in  the  system  it  should  be  preserving  for  the  good  of  Hong 
Kong.  The  criteria  for  reference  to  the  NPC  promised  by  senior 
officials  in  the  summer  have  not  materialised  -  and  it  is  hard  to  forget 
the  assertion  by  a  senior  legal  officer  that  reference  can  be  made 
before,  during  or  after  a  case.  This  leaves  Hong  Kong  in  a  state  of 
maximum  peril,  under  arbitrary  decisions  by  the  government  and 
with  final  adjudication  no  longer,  in  effect,  in  the  hands  of  a  local 
court,  but  subject  to  the  dictates  of  Beijing's  parliament. 

The  Basic  Law  was  meant  to  remove  doubts  and  to  provide  solid 
foundations  for  vital  elements  in  Hong  Kong's  life  and  prosperity. 
Instead,  the  process  started  by  the  government  after  the  January  right 
of  abode  verdict  has  led  to  a  significant  moving  of  the  goal  posts,  with 
all  the  attendant  uncertainties.  Whatever  the  administration  says,  the 
power  of  the  executive  over  the  judicial  process  has  now  been  asserted 
and  accepted.  Is  a  change  as  fundamental  as  that  not  in  contravention 
of  the  Basic  Law? 

The  court  is  also  hearing  another  major  case  which  the  govern- 
ment's lawyer,  Gerard  McCoy,  says  'may  be  a  defining  moment  in  our 
constitutional  law'.  At  issue  is  the  action  of  two  men  who  were  con- 
victed of  desecrating  the  Chinese  and  SAR  flags  after  they  cut  a  hole 
in  the  middle  of  the  SAR  emblem,  blacked  out  the  stars  on  the 
national  flag  with  ink,  and  wrote  the  Chinese  character  for  'shame'  on 
both  during  a  procession  from  Victoria  Park  to  Central  on  1  January 
1998.  Their  conviction  was  based  on  legislation  rushed  through 
immediately  after  the  handover.  The  magistrate  said  flags  were  'sacred' 
symbols  of  a  nation  which  should  remain  respected  by  all  Chinese 
regardless  of  their  social,  political  or  philosophical  beliefs.  But  an 
appeal  court  then  found  that  the  laws  were  unconstitutional  because 
they  contravened  international  human  rights  agreements  to  which 


298  Dealing  Wiiii   iin-   Dragon 

Hong  Kong  is  a  signatory.  The  government  says  that  laws  protecting 
symbols  of  state  over-ride  the  right  to  freedom  of  speech  set  out  in  the 
Basic  Law,  and  that  the  rights  of  the  community  as  a  whole  must  be 
considered  as  well  as  the  rights  of  individuals.  Its  barrister  also  extends 
his  argument  to  claim  that  freedom  of  expression  does  not  extend  'to 
allow  you  to  be  contemptuous  of  the  Chief  Executive  in  his  existence 
as  head  of  the  SAR'.  Counsel  for  the  two  men  calls  the  government's 
argument  'the  start  to  the  road  of  destroying  freedom  of  speech  as  we 
know  it  in  Hong  Kong  because  there  is  no  limit  to  it.  Once  you  start 
by  saying  that  the  state  has  the  power  to  protect  its  symbols,  you 
don't  stop  at  the  flag.' 

Again,  the  court  finds  for  the  government.  What  takes  many 
people  aback  is  that  the  scholarly,  reasonable  Chief  Justice  quotes  at 
length  in  his  judgment  from  the  sayings  of  Jiang  Zemin.  To  which  the 
chairman  of  the  Basic  Law  Drafting  Committee  adds  that  the  five  stars 
on  the  SAR  flag  'symbolise  the  fact  that  all  Hong  Kong  compatriots 
love  their  motherland'. 

But  there  is  another  point  of  view  which  is  highly  relevant,  even  if  it 
would  be  seen  as  deeply  subversive  across  the  border.  'What  if  the  flag 
itself  is  the  message?'  asks  a  column  by  a  constitutional  law  professor, 
Yash  Ghai,  in  the  Hong  Kong  Standard.  The  Chinese  national  flag  is  the 
flag  of  the  Communist  revolution.  'One  could  say,  unkindly  but  not 
inaccurately,  that  the  Chinese  national  flag  is  the  symbol  of  a  political 
party,  one  moreover  which  has  never  been  popularly  elected  in  free  and 
fair  elections,'  Yash  Ghai  goes  on.  So  what  sanctity  does  such  a  symbol 
have  in  a  place  where  a  different  system  is  meant  to  hold  sway? 

9  December 

Hong  Kong's  Antiquities  Advisory  Board  has  decided  to  allow  an  850- 
year-old  village  in  Kowloon  to  be  razed  to  make  way  for  a  commercial 
development  by  Li  Ka-shing's  Cheung  Kong  company.  The  decision 
comes  after  a  long  fight  to  save  one  of  the  last  relics  of  the  rural  past. 
The  village  of  low  houses  and  a  red-tiled  temple  is  already  hemmed  in 
by  skyscrapers.  Apart  from  the  merits  of  preserving  history,  the  deci- 
sion flies  in  the  face  of  a  plan  by  the  Tourist  Authority  to  build  up  the 


December  299 

SAR's  heritage  appeal.  But  the  Board  decided  that  many  of  the  village 
houses  were  too  dilapidated  to  be  suitable  for  preservation.  Rather  than 
suggesting  repairs,  it  calls  for  detailed  records  to  be  kept  of  the  village 
so  that  they  may  be  used  in  a  future  development.  In  a  Disneyland 
theme  park,  perhaps. 

10  December 

The  WTO  agreement  with  Washington  has  done  nothing  to  make 
Jiang  Zemin  less  suspicious  of  the  United  States.  Today,  he  and  Boris 
Yeltsin  wind  up  a  summit  in  Beijing  with  a  ringing  declaration  against 
foreign  interference  on  human  rights.  The  Russian  president  expresses 
support  for  'China's  principled  stand  on  Taiwan'  and  Russia  is 
reported  to  have  agreed  to  sell  Beijing  fighter  jets  worth  US$i  billion. 
Jiang  says  that  the  impending  return  of  Macau  will  make  the  Taiwan 
issue  'more  pressing'. 

And  on  the  trade  front,  the  collapse  of  the  WTO's  ministerial 
meeting  in  Seattle  under  the  twin  impact  of  hostile  demonstrations 
and  yawning  differences  between  governments  raises  the  question  of 
just  what  kind  of  organisation  China  has  signed  up  to  join.  The 
demonstrators  have  got  Beijing  in  their  sights.  The  main  planner 
behind  the  Seattle  protests  warns,  'China:  we're  coming.'  Anti-WTO 
groups  are  confident  of  mustering  enough  support  in  Congress  to 
block  Normal  Trading  Status  for  Beijing.  Human  rights,  the  en- 
vironment, Tibet,  religious  freedom  —  there  is  no  shortage  of  issues  on 
which  to  hang  China  out  to  dry.  Bill  Clinton  talks  of  China  rep- 
resenting 'globalisation  with  a  human  face',  whatever  that  means. 
But  as  the  year  draws  to  a  close,  Zhu  Rongji  could  be  excused  for 
thinking  that  fate  has  got  it  in  for  him.  After  everything  else,  the 
WTO  itself  is  under  siege.  It's  enough  to  make  a  man  pack  his  bags 
and  go  home  to  Hunan. 

19—20  December 

On  the  stroke  of  midnight,  the  red  and  gold  starred  flag  of  China  rises 
over  Macau.  The  ceremony  on  the  stage  of  the  brightly  lit  conference 


300  Dealing  With  the   Dragon 

centre  by  the  waterfront  lasts  just  sixteen  minutes.  Outside,  the 
weather  is  unusually  cold.  Only  a  thousand  or  so  people  gather  for 
celebrations  in  the  main  square.  Inside  the  vast  hall,  everything  goes 
like  clockwork.  For  those  who  were  in  Hong  Kong  on  the  night  of  30 
June  two  years  ago,  there  is  a  certain  familiarity.  The  proceedings  have 
been  choreographed  by  an  American  who  organised  the  SAR  cere- 
mony, and  now  repeats  it  for  Macau. 

The  new  Chief  Executive  of  the  Macau  Special  Administrative 
Region  calls  it  a  joyous,  proud  and  glorious  moment.  Portugal's  pres- 
ident says  Macau  will  endure  as  a  meeting  point  of  Europe  and  Asia. 
Jiang  Zemin  stresses  that  the  implementation  of  one  country,  two  sys- 
tems in  Hong  Kong  and  Macau  should  pave  the  way  for  an  'early 
settlement  of  the  Taiwan  question  and  the  complete  national  reunifi- 
cation'. The  unimpressed  Taiwanese  point  out  that  they  are  not  a 
colony  to  be  handed  back. 

Tung  Chee-hwa  is  present  in  Macau  as  part  of  the  mainland  dele- 
gation. Anson  Chan  heads  the  Hong  Kong  contingent.  As  with 
China's  national  day  celebrations  eleven  weeks  ago,  nobody  from  the 
pro-democracy  camp  is  invited  to  join  the  45-strong  party.  A  couple 
of  militants  who  come  across  on  the  ferry  are  quickly  sent  back  home. 
Chris  Patten  attends  in  his  role  as  a  European  Union  Commissioner. 
The  man  described  only  recently  by  China  Daily  as  a  China-hating 
Cold  Warrior  is  photographed  shaking  hands  with  Jiang  Zemin,  both 
smiling  broadly. 

The  PLA  sweeps  across  the  border  in  armoured  cars.  Broken 
Tooth's  lawyer  tells  the  South  China  Morning  Post's  Niall  Fraser  that  his 
client,  who  is  kept  in  his  tiny  cell  for  twenty-one  hours  a  day,  is  in  a 
deep  depression.  The  lawyer  has  filed  a  150-page  appeal,  and  written 
to  the  United  Nations  Commission  for  Human  Rights.  But  nobody 
expects  him  to  get  anywhere.  A  handful  of  local  democracy  activists 
are  called  in  by  police,  and  let  go  after  they  promise  to  behave.  Police 
are  more  concerned  about  Falun  Gong  practitioners  exercising  out- 
side the  Lisboa  Hotel  and  Casino  on  Jiang's  route  in  from  the  airport. 
About  forty  are  arrested,  among  them  a  six-year-old  girl  from  Korea 
and  a  nine-year-old  boy  from  Hong  Kong.  A  man  in  a  yellow  wind- 
cheater is  carried  off  by  two  policemen  still  in  his  meditating  position. 


December  301 

Like  the  British  during  Jiang's  visit  in  the  autumn,  the  Macanese  are 
anxious  to  avoid  doing  anything  to  annoy  the  chief  engineer. 


21  December 

The  number  of  Hong  Kong  civil  servants  recommended  for  disci- 
plinary action  by  the  anti-corruption  commission  has  risen  by  61  per 
cent  so  far  this  year.  A  third  of  them  are  police.  The  total  of  300  is  not 
high  in  absolute  terms,  and  only  183  were,  in  fact,  disciplined.  But  this 
was  28  per  cent  more  than  in  1998.  The  chairperson  of  the  ICAC 
Operations  Review  Committee  thinks  the  increase  may  be  due  to  the 
recession.  Still,  the  trend  is  distinctly  worrying  for  a  place  that  has 
always  prided  itself  on  having  a  clean  civil  service. 

22  December 

An  intense  winter  monsoon  with  a  mass  of  cold  air  from  Siberia 
moving  across  China  has  sent  temperatures  plunging.  On  the  highest 
peak  in  the  New  Territories  the  thermometer  has  gone  below  freez- 
ing. Temporary  shelters  are  opened  for  street  sleepers.  Thirty-four 
people  die  as  a  result  of  the  chill.  An  84-year-old  grandmother  is  in  a 
critical  condition  with  burns  after  setting  fire  to  newspapers  in  her 
home  to  keep  warm. 

26  December 

The  mainland  crackdown  on  the  Falun  Gong  is  becoming  even 
harsher.  In  Beijing,  four  practitioners  are  sent  to  prison  for  between 
seven  and  eighteen  years.  The  sentences  are  heavier  than  those  meted 
out  to  democracy  activists,  showing  what  the  regime  perceives  as  the 
bigger  threat  to  its  authority.  The  four  were  charged  with  organising 
and  using  the  sect  to  obstruct  justice,  causing  deaths  in  the  process  of 
organising  the  cult  and  illegally  obtaining  state  secrets.  Their  trial  was 
twice  delayed  when  hundreds  of  Gong  members  gathered  outside  the 
court,  and  were  removed  on  buses  by  police.  The  sentences  are  based 
on  anti-cult  legislation  passed  in  the  autumn  by  the  National  People's 


302  Dealing  With  the  Dragon 

Congress.  At  least  some  of  the  offences  pre-date  those  laws.  But  who 
cares  about  a  bit  of  retrospective  justice  when  the  President  has 
thrown  his  full  weight  behind  the  crusades? 

The  contrast  with  Hong  Kong  remains  striking,  though  the  climate 
may  be  shifting.  Nine  hundred  practitioners  from  around  the  world 
gathered  in  the  SAR  last  week  for  a  three-day  session  in  which  they 
performed  exercises  outside  the  headquarters  of  the  Xinhua  news 
agency  and  walked  through  the  streets  with  big  yellow  banners.  They 
did  nothing  to  infringe  the  law,  but  the  nervousness  they  aroused  was 
palpable,  amid  fears  by  the  authorities  of  Hong  Kong  becoming  a  base 
for  what  the  mainland  regime  sees  as  subversion.  'What  do  they  mean 
in  getting  overseas  Falun  Gong  followers  here?'  asks  China's  Foreign 
Ministry  Commissioner  in  the  SAR,  an  urbane  diplomat  with  a  core 
of  steel.  'Their  aim  is  crystal  clear,  isn't  it?  It  is  because  Hong  Kong  is 
part  of  China  and  Hong  Kong  is  so  close  to  the  mainland.  They  can't 
deny  it.'  The  Xinhua  director  says  the  SAR  must  not  be  used  by  the 
Falun  Gong  to  infiltrate  the  mainland.  Tung  Chee-hwa  refers  to 
reports  from  Beijing  that  the  sect  had  caused  loss  of  life  and  social  dis- 
order. Practitioners  must  not  act  in  any  way  against  the  interests  of 
China,  Hong  Kong  or  one  country,  two  systems,  he  adds. 

For  all  the  repression,  Gongists  are  not  going  to  give  up.  Their  faith 
passes  all  understanding.  An  Australian-Chinese  practitioner  visiting 
Hong  Kong  tells  of  how  she  and  eight  others  were  arrested  and  taken 
to  a  detention  centre  when  they  arrived  at  the  Beijing  train  station  to 
express  their  worries  about  the  ban  on  the  sect.  The  fifty-year-old 
woman,  now  in  a  wheelchair,  tells  the  Hong  Kong  Standard  that  she 
had  suffered  from  concussion,  impaired  hearing  and  other  ailments, 
but  that  her  health  had  greatly  improved  since  she  took  up  Falun 
Gong.  She  had  gone  to  Beijing  as  a  mission  to  recognise  what  the 
sect's  founder  had  done  for  her.  After  being  held,  she  jumped  out  of 
a  second-floor  window  in  the  detention  centre,  and  says  she  lay  bleed- 
ing on  the  pavement  with  a  fractured  knee  for  half  an  hour  before 
police  came  out  to  help.  She  intends  to  return  to  the  capital  when  she 
is  well  again.  She  expects  this  to  happen  within  days  because  the 
cult's  founder  will  visit  her  in  a  dream  to  heal  her  injuries.  'That  is  the 
usual  way  he  communicates  with  his  followers,'  she  explains. 


December  303 

30  December 

One  argument  which  the  Hong  Kong  government  likes  to  use  against 
a  faster  pace  for  democracy  is  that  the  existing  institutions  represent 
the  community.  A  good  example  of  how  it  measures  such  representa- 
tivity  is  given  today  when  the  Chief  Executive  unveils  the  list  of 
ninety-eight  members  he  is  appointing  to  join  the  390  members  of 
district  councils  elected  last  month. 

The  government  says  the  ninety-eight  were  selected  in  their 
personal  capacity  for  their  'enthusiasm  and  familiarity'  with  com- 
munity affairs.  Evidently,  Democrats  and  like-minded  people  lack 
those  qualities.  Despite  having  come  top  of  the  popular  electoral  poll, 
not  one  of  them  is  on  Tung's  list.  This  means  that  the  Democrats  have 
a  chance  of  getting  the  chairmanship  of  just  one  of  the  eighteen 
councils.  On  the  other  hand,  Tung  allocates  twelve  seats  to  members 
of  the  DAB,  which  finished  second  in  the  voting.  Such  is  the  Hong 
Kong  way  with  democracy  thirty  months  after  the  handover  as  we 
move  into  the  new  year. 


The  Year   of  the   Dragon 


While  cities  from  Paris  to  Sydney  shimmer  for  the  coming  millen- 
nium, Hong  Kong  has  a  horse  race,  some  not  very  spectacular 
fireworks  and  a  show  featuring  the  singer  Sarah  Brightman.  It  is  pretty 
downbeat  compared  with  the  past  extravaganzas  on  which  the  SAR 
has  prided  itself,  for  the  handover  or  Chinese  New  Year  which  will 
bring  us  to  the  Year  of  the  Dragon  in  six  weeks'  time.  Out  of  habit,  a 
crowd  has  gathered  by  the  harbour,  expecting  the  usual  pyrotechnic 
display.  But  even  if  they  turn  their  gaze  inland,  they  can  catch  little  of 
the  Happy  Valley  illuminations  because  of  the  wall  of  skyscrapers  in 
between.  You  can  watch  it  on  television,  of  course,  but  it's  not  quite 
the  same  as  oohing  and  aahing  at  the  multicoloured  cloudbursts  and 
curtains  o£  silver  rain  that  usually  mark  festive  moments  in  Hong 
Kong.  'If  India  could  afford  a  proper  celebration,  what  excuse  does 
Hong  Kong  have?'  asks  a  reader's  letter  in  the  South  China  Morning  Post. 
The  hot  New  Year  ticket  in  town  is  not  to  join  the  Chief  Executive 
and  the  Chief  Secretary  at  the  Happy  Valley  racecourse,  but  for  the 
Convention  Centre,  where  several  thousand  people  crush  into  a  hall 
for  a  party  underwritten  by  the  younger  son  of  Li  Ka-shing,  the 
cyber-tycoon  Richard  Li.  The  star  is  the  American  pop  diva  Whitney 
Houston,  who  has  swept  into  Hong  Kong  at  the  head  of  a  fifty- 
strong  entourage.  Li  stands  staring  at  the  stage,  a  slightly  shy  smile  on 
his  lips. 


The  Year   of  the   Dragon  305 

The  hall  where  Jiang  Zemin  and  Prince  Charles  ushered  Hong 
Kong  back  to  China  is  full  to  bursting  with  the  Hong  Kong  glitterati. 
Tung  Chee-hwa  comes  on  from  Happy  Valley  and  applauds  politely  as 
Houston  swans  about  the  stage.  If  the  degree  of  security  a  person  has 
around  him  is  a  measure  of  his  importance,  Li  Ka-shing's  son  outranks 
Tung  tonight.  Ordinary  mortals  can  get  through  the  crowd  to  shake 
the  Chief  Executive's  hand;  when  you  venture  towards  Li,  a  burly 
Western  guard  in  a  dark  suit  keeps  you  at  a  safe  distance.  But  then, 
anybody  who  has  built  an  Internet  company  out  of  nothing  to  a 
HK$30  billion  valuation  within  a  year  and  is  about  to  bid  for  the 
Hong  Kong  telephone  system  deserves  all  the  protection  he  desires 

By  the  time  Houston  launches  into  a  series  of  lovestruck  duets  with 
her  husband,  the  singer  Bobby  Brown,  the  Chief  Executive  has  left, 
but  the  crowd  stays  on  till  dawn,  downing  oceans  of  champagne  and 
shouting  above  the  din.  There  are  also  the  usual  lavish  parties  in  smart 
hotels  replete  with  millennium  dinners  and  dancing.  On  top  of  the 
Jardine's  building,  the  senior  executives  are  in  their  traditional  kilts  and 
trews  as  they  eat  breakfast  and  dance  the  old  century  away.  A  couple 
of  hours'  sleep  and  then  it  is  time  to  cross  the  harbour  for  eggnogs  at 
the  Peninsula  Hotel,  accompanied  by  the  police  band  in  Scottish  tar- 
tans playing  'Auld  Lang  Syne'.  There  may  not  have  been  much  of  a 
show  for  the  people,  but  the  rich  and  famous  have  seen  in  the  mil- 
lennium with  some  style. 

At  the  same  time,  on  the  mainland,  five  Protestants  are  reported  to 
have  been  arrested  in  Beijing  as  they  prepared  for  a  New  Year  prayer 
meeting.  One,  a  doctor,  was  detained  as  he  left  the  night  shift  at  his 
hospital.  In  Fujian  province,  an  eighty-year-old  Catholic  archbishop, 
who  has  already  spent  thirty  years  in  jail  for  refusing  to  join  the  offi- 
cial Church,  is  re-arrested  -  one  of  eight  senior  prelates  being 
detained  on  the  mainland.  In  Jiangsu  province,  a  nineteen-year-old 
man  is  given  a  three-year  jail  sentence  for  writing  an  open  letter  to 
President  Jiang  urging  the  regime  to  fight  against  corruption.  In 
Wuhan,  three  organisers  of  the  China  Democratic  Party  are  sen- 
tenced to  between  eleven  and  thirteen  years  in  prison.  In  Tiananmen 
Square,  fifteen  Falun  Gong  practitioners  are  arrested  as  they  medi- 
tate; in  all,  5,000  devotees  are  now  said  to  have  been  sentenced  to 


306  Dealing  Wiih  the   Dragon 

administrative  detention  without  trial.  According  to  a  human  rights 
organisation  in  Hong  Kong,  an  official  in  central  China  who  prac- 
tised Falun  Gong  has  got  four  years  in  jail  merely  for  having  told 
other  members  of  the  cult  about  a  critical  speech  by  Jiang  Zemin. 
The  heaviest  sentence  yet  against  a  Falun  Gong  member  is  reported 
to  have  been  given  to  a  retired  air  force  general  aged  seventy-four 
who  has  been  jailed  for  seventeen  years  at  a  secret  court  martial.  Yu 
Changxin,  a  former  ace  pilot  who  had  rank  equivalent  to  a  provin- 
cial governor,  is  the  most  senior  person  sentenced  in  connection 
with  the  movement.  President  Jiang  is  said  to  have  been  personally 
involved  in  deciding  on  the  sentence  because  of  suspicions  that  Yu 
masterminded  the  April  protest  outside  Zhongnanhai  which  first 
brought  the  Falun  Gong  to  public  attention.  But  the  Hong  Kong 
human-rights  group  says  he  had  nothing  to  do  with  the  demonstra- 
tion, and  fellow  generals  are  reported  to  be  angry  at  the  verdict. 

Mainland  journalists  are  instructed  not  to  dwell  on  'the  dark  side  of 
society'.  This  is  not  always  easy.  China  Daily  tells  us  that  children  are 
getting  taller,  but  the  National  Surveillance  Network  reports  that 
'excess  weight  has  emerged  as  a  major  health  problem  for  children, 
especially  well-off  urbanites  who  eat  more  high-calorie  food'. 
Revelations  about  corruption  and  smuggling  continue  to  pour  out:  a 
report  to  the  National  People's  Congress  says  the  number  of  cases 
investigated  last  year  rose  by  9  per  cent  to  38,382,  and  that  15,700 
people  were  sentenced  as  a  result.  A  ring  which  was  uncovered  in  the 
port  of  Xiamen  on  the  eastern  Fujian  coast  is  now  said  to  involve 
goods  worth  between  US$6  and  10  billion.  As  well  as  the  usual  oil, 
cars  and  weapons,  the  smugglers  brought  in  telecommunications 
equipment  under  the  auspices  of  the  local  government,  and  managed 
to  build  up  debts  of  more  than  US$600  rnillion  to  SAR  and  mainland 
banks  with  bad  investments  in  Hong  Kong  property.  Two  hundred 
people  are  being  questioned  in  the  city;  some  have  been  held  incom- 
municado by  police  in  a  hotel  for  six  months.  Among  them  are  senior 
police  and  customs  officers  and  two  top  local  bankers.  Reports  in 
mid-January  say  the  former  wife  of  a  member  of  China's  twenty-two- 
strong  Politburo  is  also  suspected  of  having  played  a  central  role  - 
though  this  is  followed  by  a  blanket  denial  of  her  involvement.  Her 


The  Year   of  the   Dragon  307 

former  husband,  who  divorced  her  after  police  began  the  crackdown, 
is  a  major  political  figure  in  Beijing  and  a  close  associate  of  Jiang. 

Wherever  you  look  in  the  prosperous  parts  of  China,  the  new  cen- 
tury is  arriving  with  a  bang.  The  anti-smuggling  campaign  has 
boosted  state  revenue  significantly.  The  Legend  computer  firm  is 
about  to  start  selling  television  set-top  boxes  with  Microsoft  software 
to  allow  users  to  access  the  Internet  and  trade  securities  through  a 
Chinese  brokerage.  To  assuage  the  people  of  the  restive  north-west, 
spending  there  is  to  be  boosted  on  transport  links,  power,  telecom- 
munications, radio  and  television,  and  natural  gas  pipelines. 

Jiang  may  have  finessed  them  over  the  WTO,  but  the  conservatives 
will  not  give  up.  An  aged  hardliner  called  Deng  Liqun  circulates  a 
paper  warning  that  the  party  could  lose  the  basis  of  its  rule  in  under 
ten  years  if  the  private  sector  goes  on  expanding.  He  deplores  the  fact 
that  local  officials  are  becoming  more  susceptible  to  the  wishes  of  the 
private  sector  and  foreign  firms,  warning  that  the  way  in  which  they 
are  providing  more  and  more  of  the  tax  revenue  could  increase  their 
influence  over  the  administration  of  the  provinces.  As  the  new  mil- 
lennium begins,  tight  controls  are  imposed  on  China's  9  million 
Internet  users,  prohibiting  the  'publication  of  state  secrets'  on  the 
Web:  in  China  just  about  anything  can  be  classified  as  a  state  secret.  In 
another  move  to  restrict  new  technology,  some  conservatives  in  the 
leadership  suggest  that  the  Windows  system  should  be  banned  as  a 
security  threat. 

For  all  the  talk  of  reform,  the  state  still  controls  between  60  and  70 
per  cent  of  firms  with  shares  on  the  mainland  stock  exchanges.  At  a 
time  when  markets  have  been  booming  elsewhere  in  Asia,  the 
Shanghai  and  Shenzhen  indexes  have  fallen  by  20  per  cent  in  six 
months.  The  government  is  planning  to  close  half  the  country's  trust 
and  investment  companies  because  of  their  inefficiency.  The  Economic 
Daily  reports  that  local  opposition  is  delaying  a  key  plan  to  swap  the 
debts  of  state  enterprises  for  equity.  Last  year,  400  billion  yuan  was 
meant  to  have  been  transferred,  but  in  fact  the  total  only  amounted  to 
72  billion.  Two  state  companies  floated  on  the  Shanghai  stock 
exchange,  one  manufacturing  motorcycle  parts  and  the  other  tyres, 
have  been  undersubscribed  by  18  and  26  per  cent.  And  the  Minister 


308  Dealing  Wiiii   1111    Dkacon 

of  Labour  and  Social  Security  says  as  many  as  12  million  workers  in 
state-owned  enterprises  will  lose  their  jobs  in  this  year. 

Despite  an  official  growth  forecast  of  7  per  cent  for  the  new  year, 
all  this  comes  against  a  background  of  continuing  uncertainty  about 
China's  ability  to  go  on  expanding  fast  enough  to  win  Jiang's  bet  that 
the  economic  boom  will  ward  off  any  threat  to  one-party  rule.  While 
income  from  exports  rose  by  6  per  cent  to  US$194.9  billion  in  1999, 
imports  shot  up  in  value  by  18  per  cent  to  US$165.8  billion  -  the  fig- 
ures boosted  by  goods  which  were  previously  smuggled  in  now  being 
declared  instead.  As  a  result,  the  trade  surplus  fell  by  33  per  cent. 
Without  strong  demand  m  North  America,  which  took  10  per  cent 
more  exports  from  China  than  in  1998,  the  economy  would  be  head- 
ing for  serious  trouble. 

In  Washington,  Bill  Clinton  launches  an  all-out  campaign  to  get 
congressional  agreement  for  the  World  Trade  Organisation  deal,  but 
opposition  to  giving  China  Normal  Trading  Status  is  rising  from  both 
the  Republicans  and  the  trade  unions.  To  show  that  trade  is  not  its 
only  concern,  Washington  announces  that  it  will  put  forward  a 
motion  at  the  UN  condemning  China's  human-rights  record.  Early  in 
his  presidency,  Clinton  sought  to  link  economic  relations  and  human 
rights.  Now,  the  administration  is  putting  them  in  separate  boxes,  and 
crossing  its  fingers  that  domestic  critics  will  be  placated.  Beijing 
understands.  'I  think  these  are  entirely  different  things,'  a  Foreign 
Ministry  spokesman  says,  knowing  that  the  UN  motion  can  be 
blocked  by  procedural  manoeuvres.  So  the  regime  can  go  on  locking 
up  Falun  Gong  practitioners  and  Christians,  and  sending  the  Uigur 
businesswoman,  Rebiya  Kadeer,  to  jail  for  eight  years  for  sending 
press  clippings  to  her  husband  in  America  without  any  fear  that  this 
will  give  Bill  Clinton  second  thoughts  about  the  WTO  deal  -  though 
a  vocal  number  of  Congressmen  may  have  different  ideas  and  Beijing's 
harsh  line  on  Taiwan  always  risks  bedevelling  its  links  with  the  West. 

In  Hong  Kong,  the  turnout  for  the  annual  New  Year  pro-democracy 
march  is  pitifully  small,  at  under  100  people.  The  pro-Beijing  DAB 
party  joins  the  Democrats  in  pressing  for  early  discussion  of  political 
development.  The  party  leader,  Tsang  Yok-sing,  says:  'If  there  is  one 
thing  we  can  be  certain  about  our  present  system  of  government,  it  is 


The  Year   of  the   Dragon  309 

that  the  system  is  unsustainable.'  But  the  government  will  not  entertain 
any  idea  of  change,  however  unrepresentative,  unaccountable  and  inco- 
herent the  present  set-up  may  be.  On  a  phone-in  programme,  Tung 
Chee-hwa  rules  out  the  idea  of  introducing  a  ministerial  system  with 
politicians  or  recruits  from  the  private  sector  taking  on  responsibility  for 
policy.  'I  feel  the  way  forward  is  an  executive  structure  with  the  civil 
service  as  its  main  trunk,'  he  says.  'The  direction  is  not  going  to  change.' 
As  for  democratisation,  the  Chief  Executive  intones  the  mantra  of  deep 
conservatism.  Discussion  of  the  issue  can  wait  until  ten  years  after  the 
handover.  The  year  2007  will  be  the  appropriate  time  'to  consider  the 
next  step  in  accordance  with  our  development'. 

To  mark  the  New  Year,  the  Hong  Kong  branch  of  the  Chinese 
news  agency,  Xinhua,  is  renamed  the  Liaison  Office  of  the  Central 
People's  Government.  Democrats  fear  that  the  renaming  may  betoken 
more  interference  by  Beijing.  Martin  Lee  says  Tung  and  senior  of- 
ficials sometimes  ask  Xinhua  to  help  lobby  members  of  the  Legislative 
Council.  'Those  words  are  irresponsible,'  the  Chief  Executive 
responds.  'Of  course  there  is  no  such  thing.'  Xinhua's  role  in  running 
the  Communist  Party  in  Hong  Kong  remains  unacknowledged,  but  it 
has  become  known  that  it  has  acquired  a  new  senior  official  whose  job 
is  to  investigate  corruption  by  mainland  companies  here,  in  line  with 
Zhu  Rongji's  concern  that  the  SAR  has  become  a  bolt-hole  for  cor- 
rupt mainlanders  sheltering  behind  the  absence  of  an  extradition 
agreement. 

Hong  Kong's  economy  is  improving  steadily.  Retail  sales  rise  by  12 
per  cent  in  January,  the  first  increase  in  value  terms  since  the  crash  of 
1997.  Richard  Li  is  poised  to  make  a  spectacular  US$38  billion  takeover 
of  Hong  Kong  Telecom  from  Cable  &  Wireless  in  a  deal  which  will 
move  control  of  the  main  telephone  company  from  British  to  local 
ownership  -  with  Beijing's  evident  approval.  Not  to  be  outdone  by  his 
son,  Li  Ka-shing  is  marching  into  cyberspace  with  a  Chinese-language 
start-up  that  produces  scuffles  between  would-be  buyers  and  is  over- 
subscribed more  than  600  times  when  it  offers  shares  to  the  public. 

The  stock  market  boom,  fuelled  by  a  dot-com  craze,  makes  people 
feel  happier,  of  course.  Hong  Kong  is  very  good  at  bouncing  from 
depression  to  euphoria,  but  the  experience  of  recession  still  lurks  in 


310  Dhaiinc   Wnii    Mil-    Dragon 

the  popular  psychology.  The  manager  of  a  luxury  goods  store  notes 
that  clients  are  buying  more  reasonably  priced  goods  these  days  - 
HK$i  ,000  silver  chains  rather  than  $10,000  gold  ones.  A  senior  exec- 
utive at  a  big  supermarket  chain  says  price  counts  for  more  than  it  did 
a  couple  of  years  ago.  Despite  the  crisis,  adds  just  about  everybody, 
Hong  Kong  is  still  too  expensive.  Back  office  services  are  being  moved 
to  the  mainland  or  elsewhere  in  Asia.  A  sizeable  Internet  start-up 
keeps  its  headquarters  in  the  SAR  but  moves  all  its  programming 
work  to  Manila.  'I  can  get  ten  people  there  for  the  price  of  one  here,' 
explains  the  founder.  And  why,  wonders  a  pillar  of  the  business  com- 
munity, is  Hong  Kong  building  a  new  container  terminal  when 
competitors  over  the  border  offer  their  services  for  a  fraction  of  the 
price? 

For  all  the  talk  about  surfing  the  wave  into  the  new  millennium, 
and  Richard  Li's  emergence  as  the  face  of  the  future,  the  real  dynamic 
for  change  does  not  reach  very  deep,  while  the  government  has  taken 
a  paradigm  shift  away  from  its  old  rectitude.  That  has  proved  popular, 
and  the  businessmen  who  run  Hong  Kong  can  go  on  making  enor- 
mous gains  from  the  property  system  and  from  their  privileged  place 
in  a  low-tax  structure.  Politics  has  been  shoved  aside,  at  least  in  the 
sense  that  popular  votes  make  a  difference.  For  all  the  T-shirted 
appearances  at  community  occasions  by  the  Chief  Executive  and 
Chief  Secretary,  the  administration  becomes  ever  more  distant,  and  is 
now  losing  some  of  its  brightest  members  to  the  private  sector,  where 
the  money  is  even  better  and  there  is  not  the  daunting  prospect  of 
being  grilled  by  the  likes  of  Emily  Lau  and  Martin  Lee. 

The  prevailing  political  correctness  of  brotherhood  and  sisterhood 
with  the  mainland  obscures  the  reality  that  China  is  Hong  Kong's 
greatest  competitor.  The  doctrine  of  loving  the  motherland  sounds 
horribly  like  a  rerun  o{  Babes  in  the  Wood.  Officials  may  allude  to  it 
in  private,  but  nobody  in  the  administration  could  come  out  in 
public  to  say  that  if  Beijing  regards  Hong  Kong  as  a  potential  base  for 
subversion,  the  SAR  ought  to  see  Shanghai  as  a  very  real  base  for 
undermining  its  position.  Talk  to  people  on  the  mainland,  particu- 
larly away  from  the  southern  Cantonese  belt,  and  you  will  not  find 
much  love  for  Hong  Kong.  'You  did  well  from  mixing  British 


The  Year  of  the   Dragon  311 

colonialism  with  China's  opening  to  the  market,'  a  mainlander  who 
combines  official  and  private  business  said  one  night.  'Now  you  have 
lost  the  first,  and  we  control  the  second.  We  need  you  to  raise  the 
money  which  we  will  spend  for  our  future.  When  we  have  built  our- 
selves up,  we  will  not  need  you  any  more.'  Then  he  laughed,  and 
poured  us  both  another  drink.  And  then  he  laughed  again,  as  if  to 
signify  that  what  he  had  just  said  was  all  a  huge  joke.  But  it  was  not. 
In  a  sign  of  the  times,  the  big  French  telecommunications  company 
Alcatel,  which  employs  10,000  people  in  the  region,  announced  in 
January  that  it  was  putting  its  Asian  headquarters  in  Shanghai. 

As  chroniclers  of  the  Asian  collapse  and  recovery  like  to  remind  us, 
the  Chinese  character  for  crisis  contains  ideograms  for  both  danger 
and  opportunity.  The  question  is  whether  the  danger  is  for  Hong 
Kong  and  the  opportunity  for  China.  If  that  turns  out  to  be  the  case, 
it  will  be  because  of  what  Hong  Kong  and  China  each  does.  On  the 
one  hand,  a  Chief  Executive  whose  government  kowtows  at  a  time 
which  calls  for  political  leadership  and  audacity  to  match  the  leader- 
ship and  audacity  that  made  Hong  Kong  one  of  the  world's  great 
business  centres;  on  the  other,  a  Prime  Minister  in  Beijing  who  is 
riding  a  dragon  and  a  President  who  is  playing  politics  at  the  very 
highest  level. 

For  a  brief  time,  there  was  the  prospect  that  Hong  Kong  could 
become  a  world  city.  The  Chief  Executive  still  likes  to  promote  a 
vision  of  New  York  for  the  Americas,  London  for  Europe  and  Hong 
Kong  for  Asia.  That  is  not  an  impossible  dream.  But  it  involves  a  great 
deal  more  than  those  in  power  in  the  SAR  seem  able  to  envisage. 
Above  all,  it  means  creating  a  far-reaching  civil  society  that  engages  its 
citizens  and  the  rest  of  the  world.  Disneyland  and  other  palliatives  are 
not  enough.  The  chance  was  there:  the  reality  may  be  that  nobody 
wanted  to  grasp  it,  that  Hong  Kong  retreated  into  itself  after  the 
handover  and  missed  its  destiny  as  it  merely  waited  for  economic 
good  times  to  return.  What  is  left  is  still  amazing  for  a  place  with  so 
few  natural  advantages  -  and  the  taste  for  a  quiet  life  may  be  under- 
standable enough  when  the  rulers  come  from  a  family  business  or  the 
civil  service,  and  when  rocking  the  boat  could  affect  business.  But  in 
the  end,  the  turn-of-century  lesson  is  that  the  population  which 


312  Dealing  With  the   Dragon 

made  Hong  Kong  what  it  is  were  not  trusted  by  the  old  elite  to  make 
it  something  even  more  extraordinary. 

It  is  easy  to  underestimate  the  role  of  democracy  and  account- 
ability and  the  independent  rule  of  law  and  a  truly  civil  society  -  or 
to  take  them  for  granted  where  they  have  deeper  roots  than  they  do 
in  the  SAR.  It  is  also  easy  to  see  Hong  Kong  in  purely  materialistic 
terms  as  a  city  where  all  that  counts  is  financial  success  and  keeping 
out  of  trouble  with  the  sovereign  power  to  the  north.  There's  noth- 
ing to  worry  about,  is  there,  as  the  British  Foreign  Secretary  asked  me 
almost  imploringly  on  a  visit  in  1998.  No,  in  one  sense  there  is, 
indeed,  nothing  to  worry  about:  life  goes  on,  the  city  works,  money 
is  made  and  nobody  is  locked  up  for  their  beliefs.  But  the  change  of 
sovereignty  should  have  meant  more  than  the  transfer  of  a  small 
stretch  of  land  to  new  ownership.  The  meeting  of  an  essentially  free 
place  with  an  essentially  unfree  country  gave  the  handover  a  very  spe- 
cial resonance,  and  opened  up  possibilities  of  demonstrating  the 
strengths  and  benefits  of  liberty  in  a  positive  rather  than  a  passive 
manner,  even  if  that  meant  confronting  the  prospects  of  disagree- 
ment and  dispute  with  a  central  government  which  has  always  refused 
to  brook  dissent. 

The  game  would  have  been  hard  and  dangerous,  but  the  potential 
prize  was  immense,  building  on  the  positive  inheritance  of  the  colo- 
nial period  to  forge  a  new  relationship  which  would  buttress  and 
extend  Hong  Kong's  unique  place  in  the  world.  Instead,  the  way  in 
which  the  SAR  heads  into  the  new  millennium  is  a  demonstration  of 
what  happens  when  challenges  are  ducked,  corners  cut,  bulwarks 
demolished  and  coherence  abandoned.  Life  can  remain  very  pleasant 
and  exciting,  fortunes  can  be  made  and  the  stock  market  can  boom. 
But  dealing  with  the  dragon  to  the  north  has  been  allowed  to  take  its 
toll.  The  spirit  which  could  have  made  something  exceptional  out  of 
one  country,  two  systems  -  with  all  the  associated  risks  -  has  been  sti- 
fled, without  the  people  who  could  have  given  it  life  being  allowed  a 
chance  to  make  the  difference. 


4-    ■""■    " 
- 


Since  it  was  handed  over  to  China  by  Britain  on  1  July  1997,  Hong  Kong  has  been  the 

scene  of  a  unique  experiment  as  a  free  region  of  the  last  major  Communist  power  on 

earth.  This  book  charts  a  vital  year  in  the  life  of  that  experiment,  with  implications 

reaching  far  beyond  the  tiny,  immensely  rich  former  colony. 

Written  by  the  former  editor  of  the  territory's  leading  English-language  newspaper, 

Dealing  With  the  Dragon  presents  the  inside  story  of  the  crucial  political,  legal  and 

human  battles  which  followed  Britain's  departure.  It  covers  the  deals  and  policies  which 

undermined  the  hopes  of  1997,  and  highlights  the  personalities  who  make  Hong  Kong 

such  a  vivid  place  -  tycoons  and  Triads,  fixers  and  gangsters,  and  individuals  from 
Chinas  'Iron  Face  Prime  Minister  to  the  arms  dealer  embarrassed  by  the  bare  breasts  on 

display  in  the  Crazy  Horse  Saloon. 

A  fascinating  portrait  of  a  vibrant  city  which  finds  itself  in  a  position  with  no  equal  in 

the  world,  Dealing  With  the  Dragon  is  the  story  of  a  place  which  epitomises  the 
challenges  of  the  new  millennium,  and  the  age-old  conflict  between  liberty  and  control. 


Praise  for  On  the  Brink  by  Jonathan  Fenby: 

'A  wonderful  and  moving  book.  I've  learned  so  much  from  it'  Jan  Morris 

A  fascinating  account  of  modern  France,  a  mixture  of  history,  geography, 
social  analysis  and  vivid  journalism'  Roy  Jenkins 

'Fenby  brings  an  inexhaustible  curiosity  and  gift  for  telling  detail  to  an 
already  fascinating  subject.  A  superb  book'  Bill  Bry son 


150  2709001 
1  Kelly  &  walsh  ltA 

S?  $165 .00 

CAN.  $32.95' 

•RECOMMENDED  RETAIL  PRICE 


COVER  PHOTOS 

DRAGON:  PICTURES  COLOUR  LIBRARY 

HONG  KONG  SKYLINE:  CORBIS 


ISBN  0-316-85415- 


78031 6"8541 53