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China have been much lower in value, which has given the PRC a favorable
balance of trade that, along with remittances by Hong Kong Chinese to
relatives in the PRC, has recently accounted for around 30 to 40 percent
of China's overall foreign exchange earnings. A well known adage in the
region states that Hong Kong is a unique machine capable of turning PRC
pigs and chickens into U.S. dollars.
Once Great Britain withdrew most military forces east of the Suez
Canal during the 1960s, Hong Kong's security rested even more on Chinese
restraint and goodwill rather than on the very limited power of British
forces in the colony. There was considerable uncertainty over the future
of Hong Kong fifteen years ago when xenophobic violence associated with
the most radical phase of "Red Guard Diplomacy" during China's Cultural
Revolution threatened to spill over and jeopardize stability in the colony.
As Maoist influence faded, however, increasingly cordial, practical and
extensive ties developed between the colony and the PRC. Transportation
markedly improved and visits increased, encouraged by official representa- tives of both sides. The British Governor of Hong Kong made his first al
trip to the PRC in March 1979 when Chinese leader Deng Xiaoping told him
that "investors in Hong Kong should put their hearts at ease" over Chinese
intentions toward the colony.
Subsequently, British officials and Hong Kong business leaders re- peatedly sought assurances from Chinese officials regarding the future of
the territory after the scheduled lapse of the 99 year lease on the New
Territories in 1997. PRC officials freely echoed Deng's instruction and
pledged that Hong Kong's social and economic system would not be adversely
affected; they implied that China was not anxious to push the British out
and govern the territory directly.