*APR 01 '92 16:22 AMCONGEN/HK/ADM 852 845 1598
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China comes from Hong Kong. China earns well over $20 billion per year from exports via Hong Kong. Most of its high technology is acquired in Hong Kong. And the most dynamic parts of the Chinese economy are financed and managed from Hong Kong.
In order to keep Hong Kong going as the services capital of the Chinese economy and as the regional headquarters of the Asian economic takeoff, China has to protect the prerequisite conditions for a great banking, legal, accounting and managerial headquarters: free import and export of goods; free import and export of capital; free movement of people; a convertible currency; a Western legal system; and conditions of life that are attractive to the kinds of high powered cosmopolitan executives who make such a center work.
These are the central promises China has made. It has not made them because of British pressure; China could have expelled the British and imposed its own conditions anytime in the past generation just by turning off the water. It has made them because of its own economic self-interest. Deng Xiaoping does not speak of creating more Hong Kongs and extending Hong Kong's autonomy for a full century because of any foreign pressure. China is not trying to create a new Hong Kong on Hainan Island because of foreign pressure. There has been none. Attaining economic ends through the use of special zones where the rules are different from the rest of society has become common in Asia; note the export processing zone of Kaohsiung in Taiwan and its Korean, Filipino and Indian counterparts, and China has used them for many generations.
Implications for U.S. Policy
Titles I and II. When something serves the interests of its people and the region so well, both economically and politically, it is appropriate that the U.S. government endorse it, as the "United States-Hong Kong Policy Act of 1991" does. Title I and Title II establish the legal basis for continued U.S. engagement in Hong Kong in a manner that will serve the interests of the United States, of the people of Hong Kong, of China, and of the entire Pacific Asian region.
Section 2. Findings. The Findings reiterate some of the most important points of the Joint Declaration. As such, they are unexceptionable. But there is an unfortunate context to the heavy reiteration of these points. Much of the discussion surrounding the phrasing of this section has been in the context of pressuring China to observe its promises amid a belief that China was not observing its promises, or was on the verge of breaking its promises, or was desirous of doing so, and that Hong Kong was suffering terribly from Chinese pressure. The basis for these beliefs has been a projection of Tiananmen Square onto Hong Kong, a misunderstanding of the reasons why China made the promises, and terribly inaccurate press reportage of Hong Kong.
Much of the image of Hong Kong has been formed by press reports which emphasized that 60,000 people a year were leaving Hong Kong, but somehow neglected to mention that
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