CRS-18
and management institutions, where PRC representatives can learn
--
from
Chinese people in Chinese language the intricacies of modern Western
business practices. In Hong Kong, this can be done at a safe distance,
without jeopardizing Beijing's strong commitment to maintaining its socialist
system as free as possible from the "corrupting" influences of the "bourgeois"
10/ ideas of the West.
Chinese leaders also are almost certainly aware that Western busi-
ness leaders will take into account PRC handling of Hong Kong issues as
they begin consideration of possible large scale investment in the PRC
itself. Thus, a PRC policy toward Hong Kong that serves to undermine busi-
ness confidence and leads to economic decline there could serve to make
Western investors more cautious in pursuing closer ties with the PRC.
Despite these strong economic incentives encouraging a restrained PRC
approach toward Hong Kong, there are economic factors that might prompt
Beijing to take a more active and direct role in managing the territory's
affairs. Thus, PRC leaders may judge that they now have built up sufficient
expertise in working with Western business interests over the past few years
that they can now effectively manage enterprises in Hong Kong more directly,
just as they have recently managed Western style enterprises in the four
Special Economic Zones that have been set up in the PRC over the past few
years. They may also judge that profits from enterprises in Hong Kong should
be controlled and channeled more directly to the benefit of the Chinese
state, rather than having the PRC benefit only indirectly from Hong Kong's
prosperity. Meanwhile, if conditions in Hong Kong were to deteriorate --
caused perhaps by a run on the Hong Kong dollar
despite Beijing's best.
10/ See Far Eastern Economic Review, March 17, 1983.
PP. 43-74.