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The Journal of Commerce
AND COMMERCIAL
Founded in 1827
ERIC RIDDER, Publisher. HAROLD GOLD, General Manager
ALBERT L. KRAUS, Editor
THOMAS F. BUTLER, Business Manager
DONALD F. AMERMAN JR.
Managing Editor
SHELDON MEYER
ALENA WELS
Editorial Director
Exec. Editor, Special Projects
GORDON W. PLATT JR.
Assistant Managing Editor
P. ROBERT POTESKY
Advertising Director HOWARD E. SYMONDS
Production Manager
JOSEPH A. FARACI
Circulation Director JOSEPH A. HUMMELL
Assistant Managing Editor
THOMAS J. CONNORS Chief, Washington Bureau
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Phillipsburg, N.J. 08865.
Cold Comfort for Hong Kong
IT MAY BE COLD COMFORT for residents of Hong Kong as they ponder their future that the People's Republic of China is moving further away from its historic isolation in economic and political matters. A Chinese delegation has arrived in Geneva to begin negotiations in preparation for China joining the Multi- Fiber Agreement. That would provide some protection to China, the world's largest textile exporter, from some of the more capricious acts of importing governments.
From a practical point of view, membership would have no immediate impact on the volume of trade because the United States and other major importers have concluded bilateral arrangements that closely parallel the Multi-Fiber Agreement.
However, if the Chinese can be shown that the benefits outweigh the disadvantages, and that could take some doing, they may be encouraged to join the General Agreement on Tariffs and Trade as well. The United States has always been anxious that the larger developing countries subscribe to the GATT. They have been markedly unsuccessful in getting Mexico on board.
If membership in GATT would materialize, it would follow by only a few years Chinese membership in the World Bank, a step of obvious gain, and in the International Monetary Fund.
Watching these developments, the residents of Hong Kong might conclude that the more pragmatic leadership in Peking would be reluctant to choke off the very real benefits stemming from a free-wheeling Hong Kong on purely doctrinaire grounds.
The talks with the British on Hong Kong's future, which began in July, ran aground on the question of who owns Hong Kong. The Chinese refuse to accept the validity of two 19th century treaties that leased part of Kowloon and the New Territories to the British until 1997 but ceded the island center to the U.K. in perpetuity,
The British would like to set aside for the time being the difficult question of sovereignty and try to establish a set of rules for the period after 1997 that would keep the confidence of the business community. But if sovereignty is ignored, jurisdiction, cannot be. And Hong Kong residents, and foreign investors, will have to be assured about the kind of society they will be asked to live in before they decide to stay.
Reports from China in advance of the most recent round of
· talks with the British have been encouraging enough. The Chinese have been informally offering to make Hong Kong a Special Administrative Zone, which will retain its economic freedom, its laws and the issue of travel documents. The British governor would be replaced by an elected local resident.
If such an arrangement were to be made to work and Hong Kong remains prosperous, this might prove to be a lure for Taiwan to rejoin the mainland, in the Chinese view. But nobody in Hong Kong has too much confidence in promises that can easily be taken away by any more doctrinaire factions that might emerge in Peking. Most Hong Kong residents would clearly prefer to take care of their own interests than to have China do it for them. After all there will be trade issues on which they might conflict, most notably in textiles and electronics.