ENG-1992 — Page 20

THE HONG KONG-CHINA PHENOMENON

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Despite this, word of the impressive economic gains that were transforming Hong Kong society and lifestyles spread steadily.

Trade was also a victim of this mutual hostility and suspicion. The imposition of a United Nations trade embargo following China's entry into the Korean war struck a serious blow to Hong Kong's traditional entrepôt role. The meagre level of trade that continued in those years was attributable to Hong Kong's need for food imports. With little arable land or natural resources, Hong Kong has long relied on the relative abundance in China.

Despite the decades of estrangement and a heavily guarded border, there was still a sizeable influx from China to Hong Kong throughout the period. Fleeing the chaos of the Cultural Revolution and attracted by economic opportunity in Hong Kong, illegal immigration into the territory continued well into the 1980s. This influx provided a valuable source of labour for an expanding Hong Kong industry. There are many who believe that the refugee mentality so common to Hong Kong has been a substantial contributor to the territory's economic dynamism over the years. Though accurate figures on immigration from Guangdong are hard to come by, best estimates are that the '60s and ''70s saw tens of thousands arriving every year. By mutual agreement, this flow was cut off almost entirely following 1978, though the legal daily limit of 75 is no doubt far from the true number, with many continuing to cross into Hong Kong illegally in search of economic gains.

Increased contact for ordinary Guangdong citizens with their Hong Kong relatives and compatriots began to grow in the mid to late seventies. Nearly all of the province has links to Hong Kong, and increased travel to the homeland brought closer personal ties and awareness of the outside world along with gifts of money, television sets, and other electronics.

With the death of Mao Zedong and the overthrow of the Gang of Four, Chinese leaders took stock of the destruction and widespread poverty that were the result of years of ideological excess. Realising the extent of China's backwardness and need for change, Deng Xiao Ping boldly proclaimed new policies designed to speed economic development and the country's re-entry into the world economy. The economic reforms and the opening of China's door to the outside world, embodied in the Third Plenum of the Eleventh Central Committee of the Chinese Communist Party in December 1978, provided the framework for forward-looking policies which would uplift the Chinese people, forever change the country's pattern of isolation, and bring Hong Kong and China ever closer to each other. Over the past 14 years, what was once an impermeable barrier has become a two-way flow of people, capital, ideas, and indeed, increasing goodwill.

An end to collectivised agriculture, the encouragement of small-scale private enterprise, and the unleashing of entrepreneurial abilities brought a rapid improvement in living standards to the Chinese countryside. Greater economic incentives and a reduction in the bureaucratic and ideological obstacles in the way of economic development engendered a new spirit and hope that would transform Chinese society. Along with greater oppor- tunities for Chinese citizens, new policies also included the encouragement of foreign investment, which would serve to accelerate the development process through the introduction of capital, new technologies and modern management techniques.

In the ensuing years, as it became clear that China's new policies toward foreign investment were here to stay, Hong Kong's own economy was also expanding, and its