ENG-1992 — Page 23

THE HONG KONG-CHINA PHENOMENON

traffic jams where a few years ago the water buffalo enjoyed virtual unimpeded access to the road.

The 'open door policy', the introduction of Special Economic Zones, and the easing of foreign travel for ordinary Chinese, have meant changes not just in how the country will do business, but in the way people view their role in the world as well. Mainland citizens now visit Hong Kong in large numbers, not only on official business, but in holiday tour groups unthinkable just a few years ago. For officials and private visitors alike, Hong Kong serves as a model in its internationalism, modernity, and as the paradigm of a highly successful Chinese society.

The growth of mainland investment in Hong Kong has come about for several reasons. While Chinese investment in a variety of goods and services in Hong Kong have been undertaken for sound business reasons, highly visible mainland involvement in the territory's economy also conveys to the world China's commitment to Hong Kong's future and to its role in the global economy. Several PRC companies, established in Hong Kong well before the signing of the Sino-British agreement, have long been household names. Expertise gained by employment in the early Hong Kong-based firms has been an important contributor to the modernisation process on the mainland. China Merchants' Steam Navigation, begun as a shipping firm and agent, later expanded into activities as diverse as trading, construction, tourism and hospitality. China Resources, registered as a Hong Kong company in 1983, was originally established in 1948 as the Ministry of Foreign Economic Relations and Trade's Hong Kong trading arm. China Travel Service, established in 1928, now handles most of China's tourist trade from Taiwan, as well that of visitors from around the world. CITIC, established in 1979, stood out among the early PRC firms for its vision and professionalism. It is now a major shareholder in flagship Hong Kong firms such as Cathay Pacific and Hong Kong Telecom. The Bank of China group, building on success in retail banking, expanded quickly into merchant banking, foreign exchange, bullion trading and loan syndication. The sleek and modern Bank of China Tower is a distinctive addition to Hong Kong's famous skyline.

These large and prominent PRC firms are no longer alone as a myriad of mainland interests have joined them in Hong Kong since the late 1970s. All of China's 21 provinces and many municipalities now operate companies in Hong Kong, handling foreign trade, attracting inward investment, and seeking investment opportunities both in Hong Kong and abroad. Many mainland-invested firms have even taken advantage of the Open Door to re-invest in China, enjoying all the preferential terms granted foreign investors. With the wide variation of activities in which mainland firms are engaged, the value of their Hong Kong investments is not easy to quantify. An oft-quoted figure today is of US$10-15 billion, though many analysts believe China's investment in the territory may already well outpace that of Japan and the United States. Mainland property investments have received the most attention of late, with prime Central buildings going to PRC consortia.

Looking beyond the economic sphere, the mainland presence in Hong Kong today is also clearly evident in the arts. The greater number and variety of musical performances, dance, drama, and exhibitions of painting and calligraphy now available to the public are a welcome reminder of Hong Kong's Chinese heritage in an otherwise business-minded and fast-paced society. An increase in the number of tea houses and other shops provide locals and tourists a welcome respite in a traditional Chinese atmosphere. One even hears more Mandarin on the street, as greater mobility allows mainlanders to visit Hong Kong in

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