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How Long Hong Kong a U.S. Partner?

photo
By Jenni Meili Lau
for The Washington Post
The American presence in Hong Kong extends to Superman, drawing customers into a newly opened Warner Brothers studio store.

By Keith B. Richburg
Washington Post Foreign Service
Monday, February 3, 1997; Page A01

The picnic on the colonial veranda was billed as "The Great American Barbecue," and its theme was 1970s disco fever. But far more evident than the oldies and the bell-bottom jeans was the array of American foods and beverages — chicken and steaks on smoky grills, corn on the cob and potatoes, Napa Valley wine and light beer.

This showcase for American agricultural products drew 200 guests last month, including restaurateurs, chefs and major food buyers. Among the many sponsors were the U.S Meat Export Federation, the Poultry and Egg Export Council, California's pistachio growers and Florida orange juice makers.

As at any backyard cookout, the mood was festive at the annual event, and the long list of sponsors indicated that little Hong Kong is big business for the U.S. agricultural industry — along with U.S. banks, insurance companies, brokerage houses and advertising firms.

The Commerce Department estimates that total direct U.S. investment in Hong Kong is $13.8 billion.

This is America's 13th largest trading partner, and for 1995 the United States had a $3.9 billion surplus in that trade. American banks have assets of more than $50 billion in the British colony and about 500 U.S. firms have regional headquarters here. Overall, 1,100 American companies have operations in Hong Kong. Nine U.S. states have representative offices here, and more than 80 American universities have alumni associations.

This may be Britain's last imperial outpost in Asia, but the 37,000 U.S. expatriates in Hong Kong outnumber the 27,000 British. Take away the British civil servants and police, and the construction workers on the new airport project, and the British number shrinks dramatically.

The huge investment of American capital and people means that over the next months and years, Hong Kong and its future are likely to remain one of the central U.S. policy concerns in Asia.

photo
By Jenni Meili Lau
for The Washington Post
A Chinese family fills out a visa application at the U.S. Consulate in Hong Kong. Large numbers of Americans have familial ties to the city.

With the colony set to revert to rule by China on July 1, what happens here will help define Washington's pivotal but prickly relationship with Beijing. The effects could range from where American ships dock in Asia for shore leave to how U.S. law enforcement agencies combat organized crime in America's cities.

"We've got so many Americans doing business here, both locally and in China, that if the guarantees are not lived up to, it would really make a difference in financial flows and trade patterns," said a U.S. diplomat with long experience in Hong Kong.

The Clinton administration and members of Congress are already moving Hong Kong to the front of the U.S. policy agenda.

President Clinton said at his news conference last Tuesday that he hopes China will continue "the personal freedoms that the people of Hong Kong have enjoyed in making it such an economic engine."

Several congressional delegations have visited this year, and many more are expected.

"As Hong Kong heads toward the transition, the handover has been assuming higher visibility as a factor in U.S. foreign policy," U.S. Consul General Richard Boucher said in a recent speech.

Beijing appears to accept that America has an important stake in Hong Kong's future.

Various U.S. policymakers said Hong Kong has been a topic in almost every high-level meeting, and Chinese leaders have not told their American counterparts that the future of the colony is an internal affair.

"They recognize our interest," a U.S. official said.

There are many reasons besides the heavy commercial investment for American policymakers' concern in maintaining Hong Kong's local autonomy and way of life.

For the U.S. Navy, Hong Kong is an important port of call, with some 65 American ships paying visits each year, bringing in 50,000 sailors. Those on shore leave pump an estimated $50 million into the local economy.

China has agreed in principle that the ship visits can continue after Hong Kong becomes Chinese territory but the details are still being addressed.

Hong Kong is also an important regional center for American law enforcement agencies, with the FBI and the Drug Enforcement Administration uncovering increasing links between Asian organized crime in America and the local criminal "triads." An official said several recent U.S. cases of kidnapping, drug trafficking, illegal immigrant smuggling and counterfeiting have been traced to Hong Kong gangs.

"The criminal links often come through Hong Kong because of Hong Kong's status as a regional financial and communications center," the U.S. official said. "Our ability to combat Asian crime is vastly aided by having an active partnership with the Hong Kong police."

America and Hong Kong also have cultural links, from Americans with ancestry here to the local Chinese who have graduated from American universities. Tung Chee-hwa, the shipping tycoon chosen to become China's first chief executive on July 1, lived for a decade in the United States and has been a longtime member of the American Chamber of Commerce.

"For 100 years or more, the pattern of immigration from China to the United States has been through this part of Guangdong and Hong Kong," a U.S. official said. "The majority of Chinese Americans in the United States trace their ancestry to this part of southern China. So there's the people-to-people tie."

More broadly, however, many American diplomats, academics and members of the business community say they see a stable Hong Kongówith its open markets, low tariffs, civil liberties and freewheeling capitalist systemóas a harbinger of the kind of society into which mainland China might one day evolve.

"On trading rules, financial rules, human rights, Hong Kong is the place where the world's rules and China's meet," said a U.S. official.

As the largest and most prominent foreign community in Hong Kong, Americans seem most likely to benefit from the shifting order that will occur here this summer. Throughout Hong Kong's history as a British possession, British firms and British interests held a privileged position against American and other foreign competitors, even as Hong Kong boasted of being one of the world's most open economies.

"In terms of influence, there's no question that traditional British firms have had a disproportionate influence here," said Douglas Henck, the newly elected chairman of the American Chamber of Commerce.

"There has been some privileged status for certain British companies, and that will go away. You are removing one element of competition at that top position."

Agriculture provides one telling example of the stakes in Hong Kong for American companies, both now and in the future.

A territory of just 400 square miles, slightly smaller than Montgomery County, Hong Kong is America's eighth largest agricultural export market, accounting for $1.5 billion in food exports. Perhaps the biggest American food import here is chicken feetóa southern Chinese delicacy not normally eaten in the United States.

Between January and October last year, the U.S. shipped $345 million worth of poultry parts to Hong Kong, and most of that was chicken feet. Hong Kong is now America's second largest poultry market, behind only Russia.

Much of the American produce shipped here gets reexported to mainland China, although the exact amount is difficult to gauge. "That's the strategic importance of Hong Kong," said LaVerne E. Brabant, director of the U.S. government's Agricultural Trade Office here.

"Hong Kong is definitely an important entity, not only as a market in itself. The really important dimension is that they move tremendous amounts through here."

© Copyright 1997 The Washington Post Company

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