that, for China, such a presence would have been close to admitting the possi- bility of independence.
Under the agreement ("Joint Declaration"), Britain will administer the territory until June 30, 1997 - consulting with China on matters that go beyond 1997. Thereafter, Hong Kong will revert to China, but as a SAR with a large de- gree of autonomy in all aspects except defense and foreign affairs. The agree- ment specifically allows the present form of government with separate execu- tive, legislative, and judicial powers - and laws to continue in force; it also al- lows present contracts, based on private property rights, to continue. Thus, in prin. ciple, the agreement sets a framework for relatively smooth transition to Chinese rule, and for comparatively un- changed conditions even as part of China. However, China sees the "Basic Law', enacted in 1990 for Hong Kong, as emanating from the National People's Congress, and not as the result of a treaty. As sovereign power, Chins will appoint the executive, and it will have the final decision power over the torrtory's laws. Consequently, a variety of possible models may evolve from the agreement, depending on the degree of autonomy in Hong Kong that is acceptable to China. As a country with a traditions for political expediency, China may also intervene in Hong Kong in ways that bypass ite agreement altogether.
Hong Kong has two instititutions, the Executive Council (Exco) and the Legislative Council (Legco), roughly equivalent to the executive and legisla- tive branches of government. Exco has 15 members, 12 chosen by the governor, and 3 representing cabinet positions of the territory. Legco has 60 members, of which 21 are chosen ex officio or ap- pointed by the governor; another 21 are elected by "functional” (i.e.. corporatist) constituencies; and 18 are chosen by geographical (direct) vote. The first elec-
Economic Fundamentals
Manufacturing jebe, which accounted for 35% of total employment in 1986, have been declining at the expense of ser- vice jobs - and by mid-1992 manufac- turing's share was only 24%. At the same time, manufacturing capacity has been expanding in the Chinese province of Guandong, where it has been estimated that Hong Kong-based firms employ up to three million people. By contrast, the size of the labor pool in Hong Kong has
8 Hong Kong
tions to Legco were held in 1984. Universal suffrage, even though limited to less than one-third of Legco's seats, dates only from September 1991, but it represents a significant change in the role of Legco. A majority of members are presently elected by voters, and as a check to the executive's power, Legco is less likely to automatically accept gov. ernment proposals. Finally, more com- petitive politics has led to the emergence of political parties, roughly clustered around liberals and conservatives.
More crucially, Legco has come to embody a certain tension inherent in the move toward Chinese rule. Legco must insure a peaceful integration within China, but if it becomes a true repre- sentative of the interests of Hong Kong residents it may become the focus of any latent conflict between the residents and Chinese authorities. In this regard, the expansion of the share of direct votes in Legco from 10 to 18 was in part a re- action to the 1989 political crisis in China Tiananmen Square), as was perhaps the success in the 1991 election of the more libéral candidates. The current con- flict between China and Britain ·
a dis- pute over whether or not to expand the number of directly elected Legco mem- bers before 1995.... is a process miat wnich China does not want to lose con- trol.
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On the other hand, Hong Kong resi- dents are rather unpoliticized.
Participation in the 1991 elections was mediocre, and the electorate is generally apathetic. Because the electorate may place more value on economic stability than on political self-rule, it is unlikely to install a Legco majority that would come in conflict with China. Thus, once China opposed Mr Patten's package of reforms, public opinion soon became worried about economic uncertainty and with- drausite cuinnnat far dan mema
mo measure.
rēñaineú stabie in recent years. Population growth has slowed from 2.4% per annum in 1981 to 0.9% in 1991, in part by a drop in the birth rate, and in part by a drop in migration to Hong Kong.
In step with these trends, the struc ture of external trade has also shifted. The value of domestic exports has been stagnant in the HK$220-230 billion range since 1988. In contrast, the value of re- exports moved from HK$275 billion in
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