In Hong Kong itself there is the important symbolism of the first Hong Kong Chinese financial secretary delivering, in English and Cantonese, the last full-year budget under British stewardship and carefully drawing attention to the consultations with Beijing which had accompanied its preparation. Meanwhile Britain's last governor, Chris Patten, is starting to take on 'lame duck' status as the public focus shifts towards the Chinese selection of a new chief executive.
All of this has been taking place against a backdrop of the People's Republic intimidating its neighbour in Taiwan with a series of missile trials, and being accused by the US of having perhaps the worst human rights record in the world. In fact, it is the unpredictable nature of the Chinese regime which is giving cause for the pause in what has so far been a relatively calm changeover.
If Hong Kong was simply another British territory heading for independence, one could be very sanguine about its prospects. It has a remarkable economic record, a sophisticated workforce, a robustly entrepreneurial culture, a growing understanding of how representative government works, and a highly trained executive, now fully Chinese, which understands the importance of integrity and the rule of law. Its financial markets and banking system are mature and as a country it has rarely allowed its complex politics to intrude on its robust economics.
Despite the cloud of uncertainty over its political prospects, infrastructure development carries on relentlessly. Chek Lap Kok airport, so long a bone of contention between London and Beijing, is taking shape fast and scheduled to open in 1998. The original plans were for just one runway servicing the main terminal building. But carriers, led by the de facto flag carrier Cathay Pacific, are putting pressure on the Hong Kong government to build a second runway immediately and lift potential passenger throughput to 87 million a year.
Cathay believes that despite the political uncertainties - including the Chinese threat to its own domination of its Hong Kong hub - the new airport provides the means to dominate the world's fastest growing aviation market in China. Currently, the projected growth in the Chinese market is 10 per cent a year against between 6 and 7 per cent in other regional markets.
But the change to rule by the People's Republic in Hong Kong is no ordinary transition. The rule of law as embodied in the Joint Declaration and Basic Law, the two great Sino-British documents which will constitute Hong Kong's constitution, is under threat. Legco, the colony's now democratically elected parliament, is in danger of abolition. And the Bill of Rights, which is designed to protect basic human rights in Hong Kong, is threatened with emasculation by one of the Beijing groups preparing for Chinese control.
Democrats like Martin Lee, whose party holds almost half the seats in Legco, fear not just the destruction of human rights, but also repercussions from the People's Liberation Army (PLA). Patten has complained of an insidious self-censorship which is eroding what remains the most vibrant and free press in Asia.
Patten is seen as having achieved a great victory in securing visa-free travel to Britain, and hopefully allied countries too, for some 2.7 million Special Administrative Region passport-holders when the UK authorities had staunchly opposed such a move. But in reality - and in situations when it would count most - visa-free rights for the Hong Kong population on SAR passports would be worthless. For example, if PLA tanks rolled out on to the streets of Hong Kong to put down a demonstration against loss of democratic rights, the UK would be pressured into withdrawing visa-free access to prevent a flood of applications for political asylum.
After its flag is lowered Britain will not be helpless in fulfilling its promise to protect a democratically elected Legco. Francis Cornish, who is expected to be the first consular general, takes the view that the Chinese will try to make things work. Beijing wants Hong Kong's commercial system and expertise to help its economy become more efficient, provide access to western finance, and become the trade entrepot for mainland China.
The concern is, however, that the Chinese state could begin to interfere in Hong Kong's commerce. Significant mainland interests will be quick to demand a share of the action which has given the colony such a disproportionate amount of wealth. The erosion of freedom of the press will diminish the quality of open financial markets which demand full disclosure.
Compromises will almost certainly have to be made and with each deal there could be an erosion of political, financial and economic freedom. At the first sign of Chinese interference there will be the risk that international business, including global airlines, will shift their focus to more hospitable Pacific centres.
Moreover, no one in Hong Kong is seriously looking to a new chief executive to provide a buffer against the power of Beijing. All the current indications are that Chris Patten's successor will be shipping magnate CH Tung, a member of the governor's executive council, and with good connections in Beijing.
Alex Brummer
Source: Airline Business