Los Angeles Times,  June 7, 1989, Wednesday 

CHINA IN TURMOIL 

Hong Kong Sees its Beijing Nightmare On TV  

By KARL SCHOENBERGER, Times Staff Writer  

HONG KONG –   “Just in time for the future,” declares an advertisement in Tuesday’s issue of the South China Morning Post, amid articles chronicling Hong Kong’s angry reactions to the massacre of pro-democracy demonstrators in Beijing.  

The ad features a photograph of a matronly woman named Marie Hubbard gazing pensively through her eyeglasses. She is the mayor of Newcastle, a town near Toronto, and she is offering “insight and advice” on what is revealed to be a business/entrepreneur immigration program” in the Canadian heartland.

Uncertainty over the future of Hong Kong, the British colony that is to return to Chinese control in just eight years, is nothing new. Ever since London agreed in 1984 to surrender Hong Kong, jitters at the prospect of Communist rule over this capitalist mecca have triggered periodic spasms in the real estate and financial markets.  They have also spawned a flood of immigrants seeking investment opportunities—and passports—in places such as Canada, Australia and Belize.

This previously vague sense of dread has taken on a sharp new focus over the pasttwo days, as Hong Kong residents have glimpsed, in horror-movie scenes on television, how People’s Liberation Army troops went about slaughtering hundreds of unarmed demonstrators.

The same scenes stunned the world, but they outraged people in Hong Kong.

“The mood here isn’t panicky, it’s damn angry,” said a veteran Chinese bureaucrat in the Hong Kong government. “Emotions are running very high.”

One of the many demonstrations against the Beijing regime’s brutal crackdown erupted into violence today, as about 500 stone-throwing youths set fire to a car and smashed store fronts in the Mongkok district of Kowloon.  Police said four officers were injured and 10 people were arrested.

The All-Hong Kong Alliance in Support of the Patriotic Pro-Democracy Movement in China had planned to shut down all but the most essential of industries and services today in the colony of 5.6 million people. But, because of the violence, the organizers called off both the general strike and a related rally.

“The criminal elements in the crowd have spoiled what was a very peaceful demonstration. Most were genuine demonstrators who left as soon as it got bad,” said a senior police officer who was trapped with 15 of his men by the crowd. “We’re talking your low-life, hooligan element, the dregs of Mongkok.”

Earlier, Gov. David Wilson had appealed for restraint before departing for London, where he will hold urgent talks with Foreign Secretary Geoffrey Howe and testify before Parliament’s foreign affairs committee.

“I am appalled by what I have seen of the indiscriminate violence that has been going on,” Wilson said, referring to the events in Beijing. “And I’m sure that’s the feeling shared by all of the community here.”

He cautioned, however, that while “expressing concern about what is happening in China,” Hong Kong must not “damage ourselves in the process.”

Wilson made his remarks as the stock market was going through a second day of gyrations in response to the blood bath in Beijing. Wild price fluctuations Tuesday followed Monday’s 22% crash in the Hang Seng Index, the worst since the global securities panic of October, 1987.

Although the psychological effects of political uncertainty were clear, analysts avoided predicting the long-term impact of the crisis on the Hong Kong economy, much of which is tied to trade and investment in China.

To a degree, prosperity could depend on which faction emerges the ultimate victor in a violent power struggle now playing itself out—the hard-liners, apparently led by senior leader Deng Xiaoping, Premier Li Peng and President Yang Shangkun, or the reformers associated with the Communist Party’s General Secretary, Zhao Ziyang.

“There has been a bad jolt to confidence,” said David Gledhill, chairman of the Swire Group, a huge Hong Kong-based conglomerate whose holdings include the airline Cathay Pacific. “If they can return to anything resembling normalcy within a few weeks, the effects might be minimal. But it depends on who comes out on top.  If it’s the hard-liners, there could be more uncertainty.”

Hong Kong’s entrepreneurs accounted for more than half of the $11.52 billion in direct investment funneled into China over the past decade. Hong Kong and Macao, the nearby Portuguese colony, invested $7.94 billion during the period.

But most of the joint ventures and factories are concentrated in southern China, far away from Beijing, and have thus been relatively sheltered from work stoppages and disruption of supply lines. The border between the colony’s New Territories and special economic zones in neighboring Guangdong province remained open to commerce as of Tuesday.

“There’s no damage so far in our trade with China, and there only will be if the conflagration spreads south,” said Jimmy McGregor, a member of the Legislative Council, Hong Kong’s lawmaking body.

Even if hard-liners prevail, he said, they are likely to keep basically on course with economic reforms implemented when Deng emerged as China’s supreme leader 10 years ago.

“They will make every effort to keep the goose laying the golden egg,” said McGregor, a former head of the colonial government’s commerce and industry department and past director of the Hong Kong General Chamber of Commerce.

Climate Could Deteriorate

But McGregor conceded that the political climate could deteriorate while economic growth continues. The specter of a sudden boom in emigration is a case in point. The number of people jumping ship nearly doubled last year, to 45,000, and the brutal display of force by the Deng regime is widely expected to hasten the exodus from Hong Kong.

“Unless this government is brought down and replaced by moderates within the Communist Party, then the level of confidence in Hong Kong is going to be severely damaged,” said Martin Lee, an attorney who also serves on the Legislative Council. “Until the recent events in Beijing, there were still quite a lot of people who adopted a wait-and-see attitude. But after this, most of those who can afford to leave will leave.”

To register their displeasure with Beijing, Lee and two of his colleagues in the legislature announced early this week that they will step down from a joint committee drafting the “Basic Law” under which the Hong Kong Special Administrative Region is to be governed after 1997 in an arrangement guaranteeing economic autonomy under a “one country, two systems” rule.

“Until there is a government (in Beijing) that has the mandate of the people, we do not recognize this government as legitimate,” Lee said.

Visit Postponed

Talks on ironing out a legal code acceptable to both sides were already adrift after Ji Peng Fei, head of Beijing’s Hong Kong-Macao office, failed to appear in Hong Kong last week for a scheduled round of informal consultations. Ji’s visit was apparently postponed because of confusion in the leadership of the Communist Party, a spokesman for the Hong Kong government said.

At the center of Hong Kong’s anxiety is the nagging question of whether the Beijing regime has evolved in 40 years to where it is capable of adhering to the rule of law and reason, rather than the rule of men and force, said Andrew Wong, a political science professor at Chinese University who also serves on the Legislative Council. If not, the 1984 Sino-British joint declaration, and the soon-to-be-finalized Basic Law, would do little to protect the political and economic freedom enjoyed by Hong Kong residents.

“The fear has always been there that although we can trust the intentions of Beijing, we can’t trust their abilities,” Wong said. “We don’t believe they’ll be able to keep their hands off Hong Kong.

“And now there’s also the fear that if they can march their soldiers into Beijing, they can easily march them into Hong Kong.”