But perhaps the more important question is, will Hong Kong change China? After all, the Chinese are taking back more than the swamps, marshland and fishing villages they leased to the British in 1898. Hong Kong today is the seventh largest trading entity in the world, the fifth largest banking center and the busiest container port. It is China’s largest trading partner and the source of 60 percent of China’s foreign investment. Its gross domestic product is equal to 20 percent of the mainland’s GDP, with a population around one half of 1 percent of China’s. Perhaps most important, while Hong Kong was the least free part of Great Britain - it has been ruled by a colonial governor appointed in London - it will be, on July 1, the freest part of China.
Beijing has pledged that Hong Kong will keep its border, its currency (which would remain convertible, unlike China’s renminbi), its own membership in international organizations like the IMF and the World Bank, and significant autonomy over its affairs. To maintain such a separate entity within one nation would have dramatic effects anywhere. (Imagine if New York City were given such a special status.) In China, the consequences could be revolutionary, because they compound one of the most potent forces at work across the country - regionalism.
““China is a civilization pretending to be a state,’’ the scholar Lucian Pye once noted. For centuries China functioned like a medieval empire, with a political center that maintained loose, overlapping relations with its various regions. Even today China’s flag has five stars, a central one for the dominant Han nation and four circling it for the Mongol, Manchu, Muslim and Tibetan peoples. In fact, according to official Chinese data, there are 56 different minority nationalities in the country.
Recently regionalism - like everything in China - has been primarily economic in nature. The basic divide between the fast-growing ““gold coast’’ in the south and the northwestern hinterlands has persisted since the beginning of Deng Xiaoping’s economic changes. (Indeed, decentralism is at the heart of the reforms: when Deng could not gain support for his laissez-faire program in the communist capital, he allied with regional leaders who wanted freedom of action.) As they have grown rich, the southern coastal provinces - and because of them, other provinces as well - have become increasingly independent of Beijing. The central government’s tax revenues as a percentage of GDP have plummeted from 34 percent in 1978 to less than 15 percent over the last five years.
The coastal provinces have also begun to bypass Beijing when dealing with international economic matters. Guangdong, whose growth rate is twice the national average, has on occasion bought oil on the international spot market and hired its own tankers to deliver it. When Beijing determined that Shanghai would be the site of the communist mainland’s first stock exchange, Guangdong simply went ahead with its own plans and opened its exchange a day earlier. Local leaders, now usually chosen by the provinces without Beijing’s involvement, are asserting local interests over national ones.
At the other end of China, geographically and economically, lies the frontier province of Xinjiang. Ethnic Uighurs, who are Muslim and speak a Turkic language, constitute 60 percent of its population. They have tried, through riots and small-scale terrorism, to shake loose of Beijing. A Uighur leader explained: ““We want to be as free as the other Asian republics of the old Soviet Union.’’ Beijing’s response has been firm; since April 1996 there have been 3,000 arrests in the area.
To this turbulent picture add Hong Kong. If Hong Kong retains much of its independence, it is likely to fuel the spread of regional autonomy. Regional governors will point to Hong Kong when they want more leeway. Even the Tibetans could argue that what they seek from China is not, after July 1, unprecedented: Hong Kong could be their model. And if the city maintains its role as the service center for southern China and its point of entry and exit to the global economy, it will have found powerful allies against excessive interference from Beijing.
There is, of course, another scenario. Rather than heralding a move toward a de facto federal structure, Beijing might recognize that the reunion with Hong Kong has introduced a deadly virus into the Chinese body politic. It might view the rise of regional autonomy with increasing fear and paranoia and crack down hard, both on the regions and on Hong Kong itself. Which scenario unfolds will depend on the course of political change in China, particularly in Beijing. As Gerald Segal of the International Institute for Strategic Studies points out in his important study, ““China Changes Shape,’’ all these regional political and economic assertions are taking place ““at a time of the greatest uncertainty about the leadership of China since the communists came to power in 1949.’’ China’s handling of Hong Kong will, of course, profoundly affect the future of the island city. But more importantly, it will affect its own future. Reunification may prove to be one small step for Hong Kong, but one giant leap for China.
