13
economic development at home; and it would undermine the
credibility of China's policy of 'good neighbourliness' in the
Asia-Pacific. Since the expansion of economic ties between the
Chinese mainland and Taiwan began in the late 1980s Hong Kong has
assumed a pivotal position linking the economic interactions
between southern China, Taiwan and the South-East Asia. Indeed
given the ever expanding reach of Hong Kong entrepreneurial
activities into China as a whole, Hong Kong has been described
as the economic capital of China. Chinese institutions and the
off-spring of many of the senior leaders have invested heavily
into Hong Kong
on a conservative estimate to the value of more
than US$ 12 bn. Taking all this into account, the Chinese
government has much more to gain from a smooth transfer of
authority than its British counterpart. Moreover it could be
argued that Hong Kong has become central to Deng Xiaoping's
strategy both at home and abroad. Although Hong Kong has become
increasingly important in the reform and the opening up of the
Chinese economy as well as in the accelerated development of the
economy since these measures were first begun in December 19782,
it has acquired even greater significance since the end of the
2
To cite but a few examples, China's current account foreign exchange earnings form Hong Kong have grown from US$ 15.8 bn. in 1979 to $47.452 bn. in 1988. Hong Kong has changed from being a consumer to a processor of Chinese goods and in 1989 it accounted for more than 42 percent of Chinese exports up from nearly 23 percent in 1979. Its share of China's imports in 1988 had grown to 31 percent. These figures include a growing proportion of re-exports. Hong Kong also provides China with as much as 65 percent of its total commercial foreign investment. These figures are drawn from Yun-Wing sung, The China-Hong Kong Connection (Cambridge University Press, 1991). See especially, the concluding chapter (pp.164-175) where it is argued that perhaps the most important role of Hong Kong is in the less tangible matters of transferring various aspects of modernity.