5.

1898 AND ALL THAT - A BRIEF HISTORY OF HONG KONG

From The Economist June 26th 1997
In 1839 China clamped down on the hugely profitable trade in Indian opium, conducted largely in
British ships. But the subsequent opium war of 1839-42 was about more than opium. China had a
deep suspicion of all outside barbarians; it insisted that trade with the outside world be conducted
only through Canton (modern-day Guangzhou) and only on its own, capricious terms. Britain
thought it had a right to trade freely, and a God-given right to pummel with cannon any nation that
thought otherwise. A clash between the Wests traders, led by Britain, and an inward-looking Qing
dynasty was inevitable. When it came, Chinas forces were humbled.
What surprised China, and angered the British, was that Britains Captain Charles Elliot seized the
nearly deserted, rocky island of Hong Kong instead of the larger and more strategic islands at the
mouth of the Yangzi river further north. You have obtained, fumed the British foreign secretary,
Lord Palmerston, a barren island, with hardly a house on it.
Yet Hong Kongs deep harbour provided an anchorage safe from most weather and possible attack,
and the settlement quickly grew. The three square miles of Kowloon were ceded by China in 1860
under the Convention of Peking, after another brief war. Following a further incursion by western
powers towards the end of the century, the New Territories, forming the northern, mainland swathe
of modern-day Hong Kong, were ceded in 1898 under a 99-year lease.
Hong Kong thereafter slid into gentle decline, as Shanghai became the focus of foreign-led
economic expansion in China. In the dying days of 1941 the colony fell to Japanese attack. At the
wars end Britain frustrated the attempts of America, with its anti-colonial instincts, to have Hong
Kong handed back to Chinas Chiang Kai-shek. But the colony Britain returned to was a shambles,
destitute and depopulated. It took Communist victory in Chinas civil war in 1949, and the
consequent flight to Hong Kong of Shanghais capitalist class, to set the territory on the path to
prosperity as a manufacturing and trading base. Chinas own economic advance since the late 1970s
then helped transform Hong Kong from a manufacturing to a services-led economy.
The future of Hong Kong became pressing in the early 1980s, as the expiry of the New Territories
lease in 1997 loomed. The British hoped that China would simply agree to continued British
sovereignty. They were taken aback when China - repeating its refusal to recognise any of the three
unequal treaties regarding Hong Kong - insisted on its full return. In 1982 the picture of Margaret
Thatcher stumbling down the steps of the Great Hall of the People in Beijing was widely (and
correctly) read as a measure of British disarray. A financial panic ensued in Hong Kong as it became
clear that the territorys return was inevitable.
Attempts were made by both the British and the Chinese to restore confidence, through the 1984
Joint Declaration. This unveiled the one country, two systems formula under which China was to
take possession of Hong Kong in 1997. Hong Kong was promised a high degree of autonomy and
the retention of its capitalist system. It would be governed by Hong Kong people, keep its own
currency and be in charge of its own reserves. The border with China would remain. It was also
promised an elected legislature, although the mode of election was left vague.
Britain was in no hurry to force the pace of democratic reforms. But the Tiananmen Square killings
in Beijing in June 1989 changed things. A million people came onto the streets of Hong Kong to
demonstrate against events on the mainland. Further doubts arose when China published the final
draft of its Basic Law for Hong Kong. This amplified Chinas intentions under the Joint

Declaration. But its provisions about dealing with sedition were hardened after Tiananmen, because
of fears that Hong Kong might become a base for subverting the mainland.
Hong Kongs British masters took steps which they hoped would restore public confidence. A bill of
rights was introduced in 1991, protecting individual freedoms. And ambitious plans for a new
airport were hatched to foster an air of economic confidence.
Chris Patten, the first politician to be governor of Hong Kong, arrived in 1992 with plans to match
the territorys political aspirations with a democratic framework that might, within the terms for
representation laid out in the Basic Law, remain acceptable to the Chinese after the handover.
Seventeen rounds of negotiations ended without agreement, and Mr Patten pushed through his
reform package in the face of Chinese denunciations. The calamity predicted by Beijing has not
happened - Hong Kongs economy is more robust than it has ever been and its citizens are more
orderly than ever. But China has continued to refuse to accept the Patten reforms. As a result, in the
early hours of June 1st a legislature of yes-men will replace the most representative council Hong
Kong has ever had.