- The Washington Times - Friday, March 31, 2000

HONG KONG After nearly three years of Chinese rule, this former British colony finds itself beset with fears that Beijing is gradually eroding civil liberties and contributing to economic decline in one of the region's most vibrant business hubs.

"The human rights situation has not completely collapsed, the way people thought it might, but rights are thinly protected if at all," says Law Yuk Kai of Hong Kong Human Rights Monitor, a nongovernmental organization (NGO).

"There are many examples of our death by a thousand cuts," he said.

Hong Kong Chief Executive Tung Chee-hwa visits Washington next week primarily to seek China's admission to the World Trade Organization (WTO).

But officials in Hong Kong concede he will likely spend much of his time attempting to convince Washington that Chinese-ruled Hong Kong remains committed to free-market economics, the rule of law and the protection of civil liberties.

Critics of Chinese rule cite a number of developments since Beijing took over in June 1997, including:

• Staff at the Information Center for Democracy and Human Rights say they receive roughly 1,000 phone calls and faxes each day from people they believe to be security officials in China. The callers normally say nothing or issue mild threats before hanging up, in the process clogging the organization's telephone lines.

• The Hong Kong director of immigration refused to permit Wang Dan and other overseas Chinese dissidents to enter Hong Kong last year for a seminar on Chinese politics. A spokesman claimed the dissidents were banned for "operational" and not political reasons, but refused to elaborate.

• A recent poll by the Hong Kong Policy Research Institute revealed that roughly two-thirds of Hong Kong residents believe local newspapers self-censor their China coverage to protect themselves.

"All of the human rights abuses are worrying," said a source at the Asia Foundation, a renowned NGO with offices throughout the region. "But the weakening of Hong Kong's judicial independence is the most worrying of all."

The Hong Kong Court of Final Appeal ruled in January 1999 that the government could not refuse residence permits to children born in China of parents who subsequently became Hong Kong citizens.

Claiming the ruling would allow a flood of children into Hong Kong, Mr. Tung asked Beijing's National People's Congress to intercede, an unprecedented request. Beijing overruled the Hong Kong court and declared it possessed unqualified power to interpret the enclave's laws in the future.

The tussles over civil liberties and human rights followed the June 1997 handover of Hong Kong to Beijing after a century and a half of British rule under a plan known as "one country, two systems." The formula was devised to protect the freewheeling city from the authoritarian rule of mainland China.

Since then, however, many fear that Beijing's interference has not only shaken popular confidence in Hong Kong's limited democracy only a minority of seats in the legislature are reserved for popularly elected lawmakers but also frightened foreign investors.

Exports of Chinese products shipped through Hong Kong, a key sign of investor confidence, dropped 4 percent through the first nine months of 1999, the most recent figures available.

"Now foreign companies don't know if they can get a fair trial if they bring Beijing-backed business people to court," said Mr. Law.

Christine Loh, a member of Hong Kong's legislature, said she fears that Beijing's overrule of Hong Kong courts in the residency case will have a chilling effect on business.

"It can be difficult to tell what businesses are thinking, but the overrule of the Court of Final Appeal … and other factors surely have been filed away," she says. "Companies don't forget."

The U.S. State Department recently weighed in with its annual human rights report that cites a number of ominous trends in Hong Kong including censorship "to some degree," harassment of dissidents and a legal system that "may favor those closely aligned with China."

Some citizens believe the report, which balanced its criticism with praise of Hong Kong for allowing political demonstrations and for protecting many citizens' rights, was not critical enough.

Concern over interference from Beijing notwithstanding, many in Hong Kong claim the territory's own government is largely to blame for the city's economic malaise, which has made it slower to recover from the 1997 Asian crisis than most other states.

"The decline of the rule of law is troubling, but even given that, if anyone in power appeared capable of stewarding Hong Kong which they have shown no signs of then the economic situation here would be better," said a prominent financial analyst.

Neither Mr. Tung nor the Democrats, the most popular elected opposition party in the legislature, has proposed comprehensive plans for righting the city, critics say.

The Democrats "identify problems and articulate interests very effectively, but they merely regard themselves as the opposition, and thus often reject major proposals … without proposing cohesive programs," said a recent report by the Hong Kong Policy Research Institute.

For its part, Mr. Tung's government has increased its control over the economy, supporting the enclave's currency and protecting monopolies in many industries. In contrast, rival Singapore, the region's other financial hub, has reacted to the economic crisis by liberalizing and privatizing.

The Washington-based Heritage Foundation consistently names Hong Kong as "the world's freest economy," but some Hong Kongers question Mr. Tung's willingness to attack monopolistic business practices.

The family of tycoon Li Ka-shing, for example, controls companies that account for more than one-third the capitalization of Hong Kong's stock market.

Pacific Century Cyberworks, a 9-month-old company founded by Mr. Li's son, Richard, recently beat out the long-established Singapore Telecom to purchase Hong Kong Cable & Wireless, a bid that some observers said points to cronyistic business practices in Hong Kong.

"It is unavoidable that Richard Li's success may deepen public worries about the Li family's influence on the Hong Kong economy," the Chinese-language Ming Pao newspaper said in an editorial the day after Pacific Century took control of the city's primary telephone monopoly.

Such concerns, combined with frustration over the city's sky-high rents, is prompting some businesses to relocate to Singapore and other Asian cities.

In part because foreign investment has fallen, Hong Kong's gross domestic product should expand only 3 percent this year. Unemployment remains at its highest level in decades.

Hong Kong leaders have little time to reverse the city's fortunes.

If China and Taiwan join the WTO as expected this year or next, Western investors may bypass Hong Kong, not only for Singapore but also for Shanghai and Taipei.

WTO membership would allow Taiwanese businesses, which currently funnel money into China and ship goods from Chinese factories through Hong Kong, to deal directly with the mainland.

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