THE HERITAGE OF HONG KONG HISTORY

By Norman G. Owen and E.V. Roberts

[Authors' note: In the interests of intelligibility, rather than consistency, Chinese names are given in the romanized form by which they are best known to Westerners, whether Wade-Giles, Pinyin, or some other version.]

In the territory now known as Hong Kong ("Fragrant Harbour") there has been continuous human habitation for at least seven thousand years. The cavalier dismissal of pre-British settlement by colonialists -- Lord Palmerston, the British Foreign Minister, described Hong Kong island as a "barren island with hardly a house upon it" -- was misleading, to say the least. There is archaeological evidence that Hong Kong was inhabited from at least 5000 B.C., probably by people known to the Chinese as the Yueh. More than one hundred Neolithic or Bronze age sites have been discovered, often, ironically, in the course of the construction of huge modern high-rise flats that will obliterate the sites.

By the Han period (220 B.C - 206 A.D.) there were clear signs of Chinese influence, possibly actual imperial control, in the territory. Over the next two millennia the Yueh people became sinified as China's rule was firmly established and Chinese language and culture pervaded the society, in part through intermarriage between (Han) Chinese immigrants and the locals. One reason for the interest in Hong Kong was the rapid growth of the great mercantile city of Canton (Guangzhou), just up the Pearl River. Hong Kong provided fresh-water pearls, salt and incense, as well as fortified outposts to safeguard commerce to and from Canton, a centre of maritime trade ranging through Southeast Asia to India and beyond to the Middle East and Europe.

Thus by the time the British arrived in 1841, there were in the territory some seven hundred villages with an estimated population of about 180,000 people, mostly in what would later be known as the New Territories. Even on Hong Kong island itself there were small fishing ports at Aberdeen and Stanley so it was by no means the metropolis it was to become, but neither was it a barren rock. When the census was taken soon after the British occupation the population was estimated to be around 4,350 living on the island and another two thousand or so fishermen living on their boats. Hardly the populations density for which Hong Kong was later to become famous but still inhabited.

Nevertheless, there is a sense in which "Hong Kong " was a British creation, although largely an unplanned one. During the late 18th and early 19th century industrialising Britain was attracted to the great riches of China: silks, Nankeen cottons, porcelain, paper, tea and spices. Another remarkable Chinese export was rhubarb, to which the West attributed medicinal properties. During the confrontation with the British, Commissioner Lin Tse-hsu expressed concern that the Westerners might perish without tea and rhubarb: "If China cuts off these benefits with no sympathy for those who are to suffer what can the barbarians rely upon to keep themselves alive?"

The problem was that Britain wanted Chinese goods, but China was not interested in much that Britain had to offer. In fact the imperial government was quite happy with what it produced itself as the purchase of western industrialised products held little attraction. In any case just to make sure that western goods did not become too popular there was for a long time considerable restriction put on free trade by the imperial authorities. Indeed the only products of interest to the Chinese were cotton, woollen goods, and spring-driven devices such as clocks, watches, and moving toys , goods hardly likely to prove a huge revenue earner for Britain.

The result was a huge increase in Chinese exports, which had to be paid for in silver, so Britain faced a classic trade deficit and balance-of-payments problem. Its solution was what the Chinese called "foreign mud," that is, opium, grown in British-controlled Bengal and marketed by the East India Company and associated "country traders" with blessings from London. The Chinese took quickly to the deadly drug and within a very short period of time the trade balance was reversed, with silver flowing out of China at a rate that alarmed the imperial authorities in the north. Imports of opium expanded. For instance in 1821 4,770 chests were unloaded , but by 1830 that figure had reached 9,000.

Opium itself is harvested from the seed pods of the poppy plant papaver somniferum. It had, of course, been known in Asia for a considerable period of time having been referred to in Sumerian writings as the “joy plant” over six thousand years previously. Its efficacy in reducing chronic pain made it an essential ingredient in most medicines. It was prescribed in the nineteenth century for about every malady including cholera, malaria, dysentery and the vaguely termed “fevers”. Mixed with alcohol it was called laudanum. It had another less laudable use, that being to induce pleasure and euphoria. Although there is no definitive proof it was thought to have been introduced into China in about the seventh or eighth centuries by Arab traders It was not until the seventeenth century that it was first smoked and it is believed that it was the Portuguese who mixed it with tobacco. The smoking habit quickly caught on and opium divans were quickly sprang up in China .

The Chinese government seeing no end to the importation of opium decided to take action. The crisis came to a head in the late 1830's. In Canton, foreign merchants were permitted to trade only under tight government control in designated locations, at specific periods and without any wives being allowed. As they were not allowed to establish permanent residence, most of them returned to Portuguese-controlled Macau when the trading season ended. The merchants chafed at these restrictions, but were willing to accept them so long as the enormous profits from opium continued to roll in. However, the Emperor of China felt that matters were out of control and sent Commissioner Lin south to deal with the problem.

Lin, shortly before the outbreak of war, sent an impassioned plea to Queen Victoria saying, “Suppose there were other people from another country who carried Opium for sale to England and seduced your people into buying it and smoking; certainly your honourable leader would deeply hate it and be bitterly aroused. May you, O Queen, check your wicked …. Your vicious people before they came to China, in order to guarantee the peace of your nation, to show further sincerity of your politeness and submissiveness.” Such requests fell on deaf ears and so the First Opium War was sparked. Lin, frustrated by his inability to curb opium by persuasion, took matters into his own hands. He confiscated opium stocks in Canton and destroyed them by soaking them in lime. British merchants vehemently protested, an expeditionary force was mustered and war began in June 1840 when the force arrived in Chinese waters.

Although the British had massive military superiority (in terms of modern technology, not numbers), they were unclear as to their political objectives. Militarily, however, the result was a foregone conclusion. The navy was the most modern and effective in the world as it had demonstrated with considerable effect since the battle of Trafalgar. It could call upon well trained and efficient infantry units not only from its own resources but from India. The British, along with European armies, were able to think in terms of clear tactical and strategic objectives in order to achieve victory over the adversary. Despite the distances involved there was a sophisticated method of logistical supply so crucial to a successful campaign. Lined up against the British were the imperial forces of China ,who had grossly underestimated the significance of modern western military thinking. Untrained in modern war, unable to compete with British naval and military tactics and strategy, lacking purpose and with poor leadership and military weaponry they stood little chance. Despite considerable bravery shown in battle by the Chinese forces, a fact mentioned regularly in British dispatches, the Chinese suffered humiliating defeats. Losses in war were to bedevil imperial China throughout the nineteenth century in virtually every war they engaged in against the west.

In terms of political objectives the British would have liked to open all of China up to free trade, but failing that they would take what they could get at the lowest possible price. So it was that the military defeat of the Chinese led to the Convention of Chuanpi, which, among other provisions, ceded Hong Kong Island to the British,. On the basis of this agreement a naval force under Commodore J.J. Gordon Bremer was sent to take possession of Hong Kong, an action which took place on 26 January 1841 at Possession Point. With the hoisting of the Union Jack by Captain Belcher Hong Kong island was to be ruled by the British, except for a brief period under Japanese occupation (1941-1945), until it was returned to China in 1997.

This Convention was never signed, however, as both sides considered it unsatisfactory. Captain Charles Elliot, the British Plenipotentiary, was reprimanded for disobeying instructions and accepting, in Palmerston's words, "terms which fall far short of those you were instructed to obtain". He was promptly replaced by Sir Henry Pottinger (who in 1843 became the first Governor of Hong Kong) and sent in disgrace to Texas as Consul General. Although Britain never formally recognised Elliot's initiatives, the effective occupation of the island continued even as hostilities resumed. After further military campaigns, the Treaty of Nanking was signed in 1842 on board HMS Cornwallis ceding Hong Kong Island to Britain "in perpetuity". The British also forced many other concessions from the Chinese government including the opening up five ports (Amoy, Foochow, Ningpo, Canton and Shanghai) to foreign trade. Just to rub in the humiliation a compensation of $21million was wrung out of China for a war that Britain began in the first place. As a corollary opium was not mentioned in any part of the treaty but the flood gates now opened and it poured into China. The first of the “unequal treaties” was now in place, imposed by the military victor upon a prostrate vanquished nation. These treaties were seen by China as a national humiliation which would one day be expunged but that day was a long way off.

Britain immediately imposed upon its newly acquired subjects a colonial form of government, which ensured that the locals were excluded from any formal institutions of power. A few surviving vestiges of Chinese imperial authority were rapidly expunged. The constitution of the colony was proclaimed with due pomp in high-sounding documents: an Order in Council, The Royal Charter, The Letters Patent, and The Royal Instructions. Under these the Governor was accorded considerable formal powers, the Executive Council enjoyed advisory powers only and an appointed Legislative Council usually rubber-stamped the Governor's decisions. For many years the Councils had no Chinese members, nor did an increasingly powerful civil service.

The economic structure was equally simple, based on laissez-faire principles, which had the total support of the extremely influential merchant houses (often referred to by the Cantonese term, "hongs"), such as Jardine, Matheson & Co.; their chief rivals, Dent & Co.; and, somewhat later, Butterfield & Swire. Hardly surprisingly, the "taipans" -- another local term adopted by the heads of these houses -- wanted maximum freedom to trade coupled with minimum (or no) taxation, rejecting entirely the idea that the government had any duties beyond the provision of internal and external security. (The South Asian community in Hong Kong owes its origins to these early days, as the British used "Indian" troops, especially Sikhs and, later, Gurkhas, as the main source of army personnel and an important element in the police force.) Even the basic concept that the government ought to be responsible for the supply of fresh water was seen by these merchants as undue interference in the free market.

The British quickly organised themselves. Roads were built, stone houses constructed, a theatre was introduced, an establishment for the “fallen of the fair sex” opened its doors for trade and newspapers quickly appeared. At a more formal level Flagstaff House was built in 1846 to accommodate the commander of British forces, followed by Government House in 1855 (this building was added to by the Japanese during the occupation). With the chiefs of the civil and military representatives now accommodated it only needed the completion of an established church to complete the circle. This was achieved with the opening of St. John’s Cathedral in 1849.

To keep law and order the Hong Kong Police force was set up in 1841 but was not really recognisable until 1845. Not that it was particularly effective, and it was certainly not admired. It was plagued from its very inception by corruption. The Hong Kong Governor Richard MacDonnell (1866-1872) was to comment in 1866 that, “ I have never met or heard of any colony of men so corrupt and worthless en mass as the Hong Kong police, or so unreliable in every way or so ineffective to their numbers”. In another dispatch he added that, “ every member of it is eager to be bribed and willing to connive for money at infringement of the law”. It might be added that despite attempts to improve the police force corruption continued to plague it for the next hundred years when, after a major scandal involving corruption, the “Independent Commission against Corruption” was set up in 1974 to deal once and for all with the problem. It was to be highly successful as many members of the force were to discover.

Only two things were now missing to make colonial life acceptable to the nineteenth century expatriate in Hong Kong. The first was the setting up of a club for the great and the powerful. In 1846 the Hong Kong Club was opened with strict regulations (all of which are no longer in force) that excluded, “Shopkeepers, Chinese, Indians, women and other undesirables”. The second was the establishment of horse racing, a passion for many members of the British elite, formalised as the Jockey Club in 1884. Chinese and other “undesirables” were also excluded from this august body for a long period of time. Gradually the Jockey Club, later to be renamed the Royal Hong Kong Jockey club, became a central focus for gambling in Hong Kong. It was, as time progressed, to attract a huge following from many of the local Chinese who loved wagering their money on chance. Whereas legal gambling in different forms had been allowed for a period during the nineteenth century, gradually the choice was narrowed down to horse racing and much later the “Mark Six” lottery. Both were controlled and run by the Royal Hong Kong Jockey Club who saw huge amounts of money pass through its hands and who made welcome contributions both to the tax man and to charity.

From the beginning the question of real estate was a vexed and vital issue. The island was mountainous and good land for building was at a premium, especially since what appeared to be the most suitable sites -- such as what was called, in unconscious irony, "Happy Valley" -- were infested by malaria. While this disease was later eradicated, the importance of land as a political and economic issue has been a recurrent theme in Hong Kong history. It led to some of the earliest disputes between the government and the merchants; it prompted the massive reclamation of the harbour, thus changing the physical landscape of Hong Kong (eventually some sixty square kilometres would be salvaged from the sea, roughly three-quarters of the area of the original concession!); and in the late 20th century it was the foundation for some of the territory's greatest fortunes. The need for land was also a major factor in the later annexation of Kowloon and, to a certain extent, the New Territories. In some ways, the history of Hong Kong was shaped by constant shortages of land.

Meanwhile, despite their exclusion from power, Chinese migrants kept coming to Hong Kong, causing a population increase from some 7,000 (on Hong Kong Island) in 1841 to approximately 24,000 just seven years later. Most came from nearby Guangdong province to work as labourers in the booming import-export trade. The more enterprising of them, who learned the English language, were employed as middlemen (or "compradores," an adaptation of a local Portuguese term) and soon became affluent themselves. At a more humble level, service industries such as bakeries, laundries, food shops, and tailors proliferated to provide for the needs of both the local and expatriate population.

Despite the superficial political stability, crime increased rapidly in the early years of the new colony. This was not surprising, since the British community included much of the flotsam and jetsam of the Empire, while the Chinese immigrants included criminals escaping from China's authorities.

Secret societies known as "triads," which had arisen in South China in the 17th century, were quick to take advantage of this opportunity and became a regular feature of Hong Kong life. Although now known primarily for criminal activities, including drugs and the protection racket, it has been claimed by some that, like the Mafia in America, they originally offered a kind of rough justice to a population without access to the official institutions of power. Meanwhile, off the coast piracy in the South China Sea remained a serious problem throughout the 19th century.

On the international scene, relations between China and the West continued to deteriorate, leading in due course to the Second Opium War (or "Arrow War"). This was precipitated by the intemperate response of Hong Kong Governor Sir John Bowring (1854-1859) to the seizure of the Chinese-owned lorcha (ship) "Arrow," flying the British flag, in Canton. His actions brought to a head festering differences between the two countries, with the Chinese still resentful of their humiliation in the previous war and the British frustrated by what they saw as the obstructive and short-sighted trade policy of a corrupt imperial government. When war broke out the result was never in doubt. The Western expeditionary force (including a sizable French contingent) crushed the Chinese armies once again, and in the process burned the Imperial Summer Palace in Peking (Beijing), an act of cultural vandalism still remembered in China. During and after the war, in the Treaty of Tientsin (1858) and the Convention of Peking (1860), they imposed on the imperial court further sanctions, including -- almost as an afterthought -- the cession in perpetuity of the Kowloon Peninsula opposite Hong Kong Island and Stonecutter's Island in the harbour itself.

Within Hong Kong, relations between the Chinese and their colonial masters were understandably strained. Chinese mandarins urged the local population to rise up against their oppressors, which greatly alarmed the British. The nadir of mutual mistrust came in the infamous E Sing Bakery incident of January 1857. One morning everyone who ate bread from that bakery became violently ill, poisoned by arsenic, which had been deliberately added to the ingredients, presumably on the grounds that only Westerners ate bread (Chinese ate rice instead). Fortunately, the dosage was too large, inducing vomiting rather than death, although Governor Bowring's wife later died, perhaps from after-effects of the poison. The bakery owner, Ah Lum, escaped to Macau but was immediately brought back and tried (and acquitted for lack of evidence), while mass arrests led to the expulsion of many Chinese suspects from Hong Kong. Bowring himself, under great pressure to prosecute all Chinese, decreed that "Any Chinaman found at large ... not having a Pass ... shall be summarily punished by any Justice of the Peace by [Fine or Imprisonment] or by Public Whipping, and Public Exposure in the Stocks."

After this low point, it was clear that the relations between the Chinese and the British had to be improved. Bowring himself was a liberal and a devout man (who wrote the words for such hymns as "In the Cross of Christ I Glory" and "Watchman, Tell Us of the Night"). Unlike many of his predecessors he encouraged colonial officials to study Chinese (a previous governor had refused to promote officials who spoke the language!), he allowed Chinese into certain official positions, including the magistracy, and he gave to the Registrar-General the additional title of "Protector of the Chinese," as for the first time the colonial government began to accept some responsibility toward the majority of its disenfranchised subjects. Other reforms followed over the next few decades, including the recruitment of Chinese into the police force after 1872 and the appointment in 1880 of the first Chinese member of the Legislature, the Singapore-born barrister, Ng Choy.

On the Chinese side, a growing sense of civic responsibility found its formal expression in an unlikely forum, the Tung Wah Hospital. The actual hospital committee was founded in 1872 in response to a public health crisis and when the current Governor MacDonnell (1866-1872) acted on advice from the Chinese community to set up a hospital system practising more traditional oriental medicine. It soon came to represent the interests of the Chinese community as a whole, or at least the better-off members of that community. The British quickly recognized it as the voice of the local Chinese and used it as a sounding-board and channel of communication. The Chinese also began to take much of the responsibility for their own education; many Christian missionaries opened schools for Chinese children as well, but the government did almost nothing. Indeed, it was not until the twentieth century and in the post-war period that the government really got involved in primary and secondary education in the provision of schools to the entire population.

Tertiary education had to wait until 1887 when the College of Medicine was opened in Hong Kong, an institution which Sun Yat Sen, the founder of modern China, was to attend. Evolving from that came the University of Hong Kong in 1911 with Governor Lugard (1907-1912) playing a crucial part in founding the institution. Funds were obtained from Chinese benefactors, including the Viceroy of Canton, as well as

“H.N. (Hormusjee) Mody. A Parsi gentleman, 50 Years a Resident in Hong Kong”. The University of Hong Kong was to remain the only such institution in the colony until the establishment of the Chinese University of Hong Kong some fifty-two years later.

Yet while this colonial modus vivendi was emerging, Hong Kong was drifting into an economic backwater, especially when compared to Shanghai, which became the major gateway to China after the Second Opium War. Between the late 19th century and 1941, there was an apparent sense of stability, verging on stasis, within Hong Kong society and government. The growing Chinese middle class were happy with the security and opportunity for prosperity provided by Hong Kong, and tried to work with the government and the British hongs rather than against them.

Formal localization of power was still agonizingly slow, however, and it remained a common jest that Hong Kong was run by the Jockey Club, Jardine Matheson, the Hongkong and Shanghai Bank, and the Governor, in that order. Social life for the rich expatriates centred on the cricket pitches of Central and their luxurious houses situated on Victoria Peak, from which Chinese were effectively -- though never officially -- excluded. A correspondent known simply as "Betty" noted in 1903 that "The Peak looks down on everything and everybody. The lower levels look up to the Peak, while Kowloon is supremely indifferent to both." Jardine Matheson may have stopped work daily to fire off the "noonday gun," a symbol of the eternal British presence in Asia, but the Chinese never stopped working.

Health problems, however, were slow to be resolved during the nineteenth century. Hong Kong’s population was increasing rapidly and had reached over 123,000 by 1862. However, the sanitary conditions in overcrowded housing for the Chinese in the colony were abominable. There was little or no provision for the efficient disposal of sewage, water supplies were more often than not contaminated and communicable diseases flourished in the sub- tropical climate. The Hong Kong government, in the best traditions of laissez faire, refused to make provision for expenditure to alleviate an ever more critical situation. Such an attitude was reinforced by Governor Hennessy (1877-1882), a man of some eccentricity, who complained that, “One hundred and eighty two water closets have unfortunately been constructed from time to time in Hong Kong”. It was to take a report from a major innovator in municipal and public health, Osbert Chadwick, to recommend necessary reform if the colony’s health provision were to improve. The report was damning in its contents and pointed an accusatory finger at government lethargy and inaction. This had been preceded by some horrific revelations, including a description by Alfred Lister in 1869 of the notorious Chinese “death houses” which were closed down soon afterwards by Governor MacDonnell. The situation was brought to a head with the great cholera epidemic of 1883 where large numbers died and the authorities belatedly responded.

The last great health scare was in March 1894 when in the Spring of that year there was the first outbreak of bubonic plague in Hong Kong. Located in the area known as Tai Ping Shan (Hill of Great Peace) it was to kill over 900 men, women and children within one month. Scientists rushed to Hong Kong to test the new scientific theory of specific bacilli causing discrete diseases. And it was in Hong Kong that the dreaded affliction was isolated by Yersin, hence its proper title Pestis yersin. It was also in Hong Kong that the first serum was used successfully.

One change of major significance during this period was the 1898 acquisition of the New Territories (including the Outer Islands), which increased the area of Hong Kong eight-fold and added another 100,000 inhabitants to a population which by then had reached a quarter of a million. This took place during the late-19th-century "slicing of the Chinese melon," with Japan, Russia, Germany, and France also creating spheres of influence at the expense of the weakened Ch'ing dynasty. On this occasion, however, because of pressure from the other imperial powers, Britain was forced to settle for a 99-year lease, after which -- on 1 July 1997 -- the Territories would revert to Chinese sovereignty. Much of its population was in clan villages run by "kuks," all-male associations of elders who continue to the present day handling many local affairs under customary law. Kowloon's "Walled City" was another anomalous acquisition; although the British unilaterally claimed formal jurisdiction in 1899, the Chinese never accepted this, and enforcement of Hong Kong laws was rarely attempted within its walls before it was demolished in the final decade of colonial rule.

Although the sun seemed always to be shining in Hong Kong throughout these years, just over the border storm-clouds were raging. Rising Chinese nationalism expressed itself in a bewildering variety of forms, most with anti-foreign tendencies: the Self-Strengthening Movement, the Boxer Rebellion, the Hundred Days Reform, the 1911 Revolution (which overthrew the Ch'ing dynasty), the May 4th Movement, the Northern Expedition of the Nationalist Party (Kuomintang), the rise of the Communist Party, and resistance to Japanese aggression in Manchuria and later in Nanking and Shanghai.

All of these movements shook Hong Kong, and it is only in hindsight that we know that none would spill over with enough force to create widespread opposition to the compromises that sustained the colonial way of life. (On the positive side, they contributed greatly to Hong Kong's rising population, as refugees fled upheavals in southern China.) Sun Yat-sen, the father of modern Chinese nationalism, was himself, as mentioned previously, educated in Hong Kong, and although he was later deported to placate the imperial Chinese government, he continued to look favorably on British law and order, encouraging his local followers to "carry the example of good government to all parts of China." The overthrow of the Ch'ing brought general rejoicing to the colony, with even the local prostitutes offering a share of their earnings to the revolutionary cause, but did not in any way threaten British rule. When Chinese nationalism actually erupted in Hong Kong itself, as in the seaman's strike of 1922 and the general strike of 1925, order was maintained through the combined efforts of the British government and merchants and their counterparts in the local Chinese community. No one wanted to kill the goose that continued to lay such golden eggs.

The threat of Japan, however, was not to be repelled so easily. Its aggressive militarism had long been seen in China, and by the late 1930s the Japanese Army was just over the border in Guangdong province. Still the British continued to downplay the threat, dismissing the possibility of a successful Japanese invasion of its Asian empire in a paroxysm of wishful thinking. Reality, and the Japanese, struck on 8 December 1941, and despite brave resistance by British, Canadian and Indian troops and local volunteers, the colony fell on Christmas Day. For the next three-and-a-half years, Japan ruled Hong Kong with great brutality. Many Chinese were driven back into China, either by bayonets or by the threat of starvation, with Hong Kong's international trade at a virtual standstill; some 10,000 civilians were executed. The population fell from a swollen 1.6 million just before the invasion to less than 600,000 at the low point of the war. British and other Allied personnel were interned for the duration, with many dying in the camps; those who qualified as neutrals were able to eke out a meagre existence within the diminished economy. The vast majority of Hong Kong's population had no more to do with the Japanese than was absolutely necessary, but a few, as in any war, seized the opportunity to collaborate and enrich themselves at the expense of their compatriots.

By early 1945 it was obvious that Japan's chances of holding on to its "Greater East Asia Co-Prosperity Sphere" were slim and its defeat only a matter of time. Britain was anxious to reoccupy its imperial possessions, a fact not particularly welcomed by the anti-colonial Americans, who had dominated the Pacific War. In Hong Kong, the matter was quickly resolved after the unconditional surrender of the Japanese forces in August, when Gimson, the pre-war Colonial Secretary who had been interned, reclaimed the territory for Britain. The colonial regime was re-established, with neither the United States nor the Republic of China offering more than token protest.

Hong Kong immediately began its post-war reconstruction. The old pattern of administration was re-established, and proposals to introduce partial democratic reforms under the Young Plan (1946) were quietly shelved, primarily because of opposition from the Chinese in the Legislative Council. The population first rebounded to pre-war levels, then soared to over 2.3 million over the next four years -- straining Hong Kong's resources to the limit -- as many fled from the civil war raging between the Nationalists and the Communists in China.

The burning question posed as Mao Tse-tung's armies moved victoriously south towards the colony was whether Mao would allow a free-wheeling, capitalist, colonial enclave on China's very doorstep or would feel obliged to expunge it as a humiliation imposed by foreign imperialists. In October 1949, the People's Republic of China (PRC) proudly declared its existence but the reinforced British military garrison was not needed for the defence of Hong Kong. The PRC -- whether from war-weariness, fear of retaliation, or just the desire to keep open a window to the outside world -- did not attack, but simply closed the border, and the whole colony breathed a sigh of collective relief.

The influx of refugees, despite placing almost intolerable strains upon the colony's ability to shelter and feed them, became the basis of the economic miracle that with gathering momentum took place in Hong Kong. Among the refugees, the Shanghai businessmen were particularly valuable. They brought with them capital and entrepreneurial skills which, combined with the ready availability of cheap and skilled labour, created an industrial revolution over the next thirty years. First in textiles, later in toys and other plastic goods, artificial flowers, watches, wigs, and other cheap consumer items, Hong Kong became a formidable manufacturing exporter. Almost equally significant to the local economy was the fact that Shanghai itself, along with all other Chinese cities, was effectively closed to trade with the West, restoring Hong Kong to its original position as the pre-eminent gateway to the China market.

On the debit side, conditions in Hong Kong for the working class were truly atrocious in this period. Squatter villages proliferated and poverty was rife, with health and education provisions rudimentary at best. The government, despite brave words espousing localisation, signally failed to promote Chinese into positions of power and influence. Top posts in the civil service and the police were dominated by expatriates; in the Legislative Council the Chinese, although increasing in numbers, were still in a clear minority; and the Executive Council remained the near-exclusive reserve of Europeans. It took some shocking events to waken the colonial administration to the need for reform.

The first of these was the Star Ferry Riots of 1966, ostensibly about a small fare increase, but clearly stemming from a widening gap between governmental services and public expectations. On the heels of these disturbances came the overspill of the Cultural Revolution, raging over the border in China. Riots, confrontations with the police, fire-bombings, and even murders exploded on an unsuspecting territory and an unprepared government. Like earlier 20th-century strikes, these disturbances did not gain the support of the majority of the population, thanks to the combined efforts of Chinese and British elites, and were dealt with by a police force that remained totally loyal, thus earning the designation "Royal."

These events galvanized the authorities, particularly Governor Sir Murray Maclehose (1971-82), into action. The civil service was overhauled and localisation of the civil service, the police, and the Legislative and Executive Councils gathered momentum in this period. The establishment of the Independent Commission Against Corruption in 1974 helped to restore public faith in the integrity of the government, particularly the police. At the same time, huge increases were made in expenditures on schools, hospitals, housing (including the creation of several "new towns" in the New Territories), roads, and public transportation. Thanks to the booming economy -- growing at a rate of over 10% a year -- it was possible to finance all this without an increase in the rate of taxation, which pleased the dominant commercial class as well as the lower-class and middle-class beneficiaries of these programmes. Finally, although the government stopped short of introducing institutional democracy, it did set up a formal network of consultative and advisory bodies. For the first time the government of Hong Kong actually had a reasonable idea of what its people wanted.

Thus Hong Kong entered a golden age of prosperity and stability. Its manufacturing miracle continued (until shifted over the border into China's "Special Economic Zones"), living standards rose enormously, and civil disturbances and demonstrations virtually disappeared. One side-effect was that Hong Kong became a magnet for its poorer neighbours looking for a better life. The overwhelming majority of these were illegal immigrants from Guangdong province, who if caught were summarily deported, although for a brief period in the 1970s they could obtain the right to stay if they could "touch base" beyond Boundary Street in Kowloon. Vietnam provided the "boat people," originally fleeing Communist persecution, but over time increasingly representing what the UN authorities labelled "economic migrants." The lucky ones moved on to developed countries, while the less fortunate were interned in camps for years before they were forcibly repatriated to Vietnam. From the Philippines and other Southeast Asian countries came contract labourers for menial jobs, especially domestic helpers.

One question continued to loom: after 1997, when the lease on the New Territories expired, what would become of Hong Kong? The possibility of reversion to a truncated colony consisting only of Hong Kong Island and Kowloon was quickly dismissed, as by this time Hong Kong was no longer viable without the New Territories. There appeared to be a number of options, such as a "leaseback," in which for unspecified considerations Britain might continue to administer the territory. Given Hong Kong's huge significance to the PRC (at this time one-third of China's foreign currency earnings came from the territory) and the mainland's totally incompatible socialist economic framework this seemed to many, both in Britain and Hong Kong, an attractive option.

However, this view overlooked two crucial considerations. The first was the introduction of China's "Four Modernisations" policy in 1978, which led to a stunning transformation from a planned socialist economy to a modified market economy. This "convergence" with Hong Kong both increased the integration of the local economy with that of China (especially the Pearl River delta) and enhanced the confidence of Chinese leaders that they could successfully manage a capitalist enclave. The second was the determination of these leaders, once the British had raised the issue, to reclaim the whole of Hong Kong. On her 1982 visit to Peking, Prime Minister Margaret Thatcher's insistence on the legitimacy of the 19th-century treaties, which patriotic Chinese had never accepted, infuriated PRC leader Deng Xiaoping, who is said to have muttered, "I can't talk to that woman, she is utterly unreasonable."

Negotiations on the future of Hong Kong were officially opened in 1983 and once Britain reluctantly accepted that a leaseback was impossible and acknowledged Chinese sovereignty over Hong Kong, things moved quickly. The outcome was the Joint Declaration of the Governments of the United Kingdom and Northern Ireland and the Government of the People's Republic of China on the Question of Hong Kong, ratified by both governments on 19 December 1984.

In this remarkable document, it was agreed that Britain would continue to administer Hong Kong until midnight on 30 June 1997, after which sovereignty would revert to the PRC. Thereafter the new Hong Kong Special Administrative Region (HKSAR) would be granted a "high degree of autonomy." Its lifestyle was guaranteed under the rubric "one country, two systems"; socialism was expressly forbidden. The HKSAR would have its own currency, its own economic, legal and political structures, its own police force, and control over immigration and customs. Human rights such as freedom of religion, the media, speech and association were assured. Only high diplomacy and defence were to be the exclusive domain of the PRC government. All these arrangements would remain in force for fifty years.

The euphoria engendered by this declaration did not last long. In the economic sphere China lived up to the letter and spirit of the agreement, and Hong Kong continued to prosper. But apprehensions soon arose over the political implications of "one country, two systems," and the precise meaning of certain clauses in the Declaration such as the one that stated, "The legislature of the Hong Kong Special Administrative Region shall be constituted by elections." These fears were exacerbated by Beijing's crushing of the students in Tiananmen Square on 4 June1989 and by the Basic Law of the HKSAR, promulgated by the PRC on 4 April 1990. The Basic Law (mini-constitution) included provisions on subversion and arrangements for the appointment of the Chief Executive and the elections to the Legislative Council that were far more restrictive than many had hoped.

Public opinion in Hong Kong was split between those who pushed for greater democracy and those who argued that it was counter-productive to alienate China, which was firmly opposed to any extension of institutional democracy. Political parties, which had never formally existed in Hong Kong, were created to contest local elections. Some fought for a legislature of fully and directly-elected members based on geographical constituencies; others supported a conservative system that would include functional constituencies, indirect elections and appointed members, thus ensuring a pro-Peking majority in the legislature.

Into this fraught situation came Hong Kong's last, and perhaps most controversial, governor, Chris Patten, in 1992. With his democratic airs, he took the colony by storm. Unlike all his predecessors, he came across as a man of the people, refusing to wear the ceremonial plumed hat and uniform and happily mixing in crowds, shaking hands, and holding public meetings. He also interpreted the Basic Law in such a way as to stretch to the very limit the democratisation of the electoral system (which the Provisional Legislature promptly reversed on assuming power in July 1997). All this endeared him to the popular Democratic Party, led by the charismatic Martin Lee, and infuriated the Liberal Party, with its more conservative, business-oriented membership, and the Democratic Alliance for the Betterment of Hong Kong, with its strong pro-Peking bias. Fear of a loss of freedoms, concern about the Legislative Council becoming a lame duck, and uncertainty about the future all led to a fall in public confidence. As the clock inexorably ticked down to the handover there were fears of a possible rise in corruption and even of public disturbances.

Despite these political misgivings, the transition continued remarkably smoothly in other areas. The economy, responding to China's Four Modernisations, underwent major restructuring. Manufacturing declined steeply year by year, with Hong Kong firms relocating across the border to Guangdong province where labour and land costs were much lower. Replacing it were a thriving tourist industry, the emergence of a sophisticated financial and insurance sector and, most importantly, the growth of re-exports to and from the mainland. Construction, rather than slowing down, actually accelerated, as newer and taller buildings adorned Hong Kong's skyline, with office space commanding higher and higher rents (approaching those of downtown Tokyo), while work began on a huge and expensive new airport and container port to meet the rising transportation requirements of the territory.

Now for the first time the Chinese capitalists, who had been growing in strength since the early 1950s, became the real taipans. The media glorified such local heroes as real estate magnate Li Ka Shing (who actually took over Hutchison, one of the old British hongs), shipping tycoon Sir Y.K Pao and Run Run Shaw, the king of Hong Kong movies. Localisation of the top civil service, police and government positions also proceeded rapidly. By January 1997 there was not one European in the Legislative Council, although some lingered on in the Executive Council until June, and the highest position in the bureaucracy, that of Chief Secretary, was occupied by Anson Chan, the first woman, as well as the first Chinese, to achieve such a rank. In effect, the transition away from British rule was virtually complete before the handover.

For the occasion dignitaries from all over the world congregated in this city of six million people to watch the departure of the British and the resumption of Chinese sovereignty. In a ceremony to mark the end of British rule Governor Patten and Prince Charles watched the skies open in a massive deluge, which some saw as the gods weeping at the loss of the last jewel in the imperial crown, others as ritual cleansing after one hundred and fifty years of foreign occupation. Later that evening came the formal handover, attended by China's President, Jiang Zemin, where at midnight the Union Jack was ceremonially lowered and the flag of the PRC was raised. As the Governor and the Prince sailed away on the royal yacht Britannia, Chief Executive Tung Chee-hwa and the Provisional Legislature were officially installed. Early the next morning detachments of the People's Liberation Army (PLA), wearing white gloves, rolled in through the pouring rain to commence their duties. There were no major demonstrations, there was no violence and all the fireworks were ceremonial.

To the surprise of much of the world, and even many people in Hong Kong, life changed remarkably little after the resumption of Chinese sovereignty. If you looked carefully you could see the PRC flag flying over public buildings, and the post boxes (with the Queen's seal removed) were now painted green instead of red. So invisible was the mainland presence that some tourists were spotted in Central District taking pictures of traffic wardens in the mistaken belief that these officious men in uniforms must be the fabled PLA.

Over the previous one hundred and fifty years Hong Kong, slowly and sometimes reluctantly, had been moving towards this culmination. The gradual devolution of political power to the local Chinese by the British authorities had been accompanied, and often preceded, by the Chinese stepping forward to take control of their destiny -- albeit under the watchful eye of their future sovereign. They built great business empires from nothing, they undertook to educate their people before the government stepped in, they gave huge amounts to charity and had much to do with creating the success of Hong Kong. In administration they showed themselves able and competent to run the affairs of a modern metropolis; all that remained was to let them do it.

For the departing British the last jewel in the Empire was now given over to the Chinese and there was much to commend.. During the periods of turbulence over the border Hong Kong had provided a haven for refugees, many of whom prospered in the politically stable environment. The authorities in Hong Kong were able, sometimes reluctantly, sometimes enthusiastically, to make such reforms as were necessary to improve the political, social and economic framework in which prosperity could take root. The legacy when the British left Hong Kong should not be underestimated: a civil service among the most efficient in Asia, corruption successfully dealt with, a highly educated population well able to take over the running of government and a vibrant economy much admired abroad. On the debit side it has been said by many that the British and expatriate authorities might have been more concerned with promoting institutional democracy much earlier than they did, but the apologists argue that resistance from both within the colony and without made that extremely difficult to achieve.

For a small territory, lacking in virtually everything except people, Hong Kong has done rather well over the past century and a half. The long partnership between the Hong Kong Chinese and the British -- sometimes distant, sometimes strained, sometimes cordial - created stability and prosperity as its lasting heritage.