A HONG KONG DIARY

After the usual death-defying plunge to the tarmac at Hong Kong’s outmoded Kai Tak airport, we taxi to a stop next to a Cathay Pacific jumbo jet. Owned until recently by Swire, one of the great British trading houses, the Cathay Pacific airline is now controlled by Citic, a mainland conglomerate closely associated with the People’s Liberation Army. The Cathay stock passed to the PLA at a remarkably low price. As did a chunk of China Light & Power, the big public utility. As did a big piece of Hong Kong Telecom, the worldclass telephone system. Sounds like an infrastructure play, like Beijing is making offers that can’t be refused.

We check into the Peninsula Hotel, where high tea is preceded immediately by lunch and followed immediately by dinner. What better place to watch the sun rise for the last time on the British empire.

SUNDAY. The South China Morning Post has a poll this weekend. It reports that 72 percent of all residents are positive about the future of Hong Kong. Most of the rest think the future will be about as good as the recent past. Even in America, perhaps the only country in the world where change is routinely equated with progress, euphoria has never run this high. What’s up? Friends here offer three explanations. First, the poll has been conducted ineptly, and possibly on purpose. Second, those being polled suspect their views may be transmitted to the PLA and thus they have the smiley faces painted on. Third, the colony is filled with cockeyed optimists.

I think it’s #3. China is the most nubile market in the global economy, and the greed instinct, never well modulated here, is throbbing loudly. Hong Kongers want a piece of that action. A second theme is the palpable fact of ethnic nationalism. Everywhere one sees evidence of Chinese pride, the sense that Beijing is reversing an ugly historical injustice. One sees it even among Western-educated, Chardonnay-sipping uppercrusters.

Hong Kong is not a settled community caught flatfooted by a Red revolution, after all. The locals came here in waves, most of them fleeing terror — the Taiping rebellion more than a century ago, the warlords in the ’20s, Japan’s invading army in the ’30s, Mao in the ’40s, and the cultural revolution in the ’60s and ’70s. In each case, it was a difficult passage, no stroll across the border from Tijuana. Even into the ’80s, they dashed past the attack dogs or tried to float past the sharks at Mirs Bay.

In 1984, it was made clear that the game would change — and exactly when. In the so-called Joint Declaration of that year, Margaret Thatcher pledged that the British garrison would sail out of Victoria Harbor on June 30, 1997. Given that kind of lead time, Hong Kong’s highly mobile residents mobilized again. By the thousands and then by the tens of thousands they airmailed themselves into exile. By the early ’90s, 70,000 Hong Kongers a year were moving abroad, most of them to Canada or Australia, some to the U.K. and the west coast of the United States. It was the greatest migration of wealth and talent in the second half of the century, and cities that recruited effectively — Vancouver, Sydney, and the rest — propelled themselves into the front ranks of the world economy.

And just who was it that packed up and shipped out? Some of the best and brightest, to be sure. And the politically radioactive. They reckoned that their names had been inscribed on special lists in Beijing. Why wait around and take the risk? But even as the exiles left, their places were taken by new arrivals, many of them PRCers looking to beat the post-handover rush. So in raw numbers, the population has remained at approximately 6 million, but it’s a different 6 million: Almost everybody wants to be here, wants to be a part of greater China.

There are exceptions, of course. My new friend Lo Fu made a place for himself on one of those lists in Beijing. He had a nasty habit of saying what was on his mind. So the PRC came after him, and he escaped the mainland, making his way to Hong Kong — and now this! Think of a young Jose making his way across the straits from Havana only to read in his Miami Herald that Lawton Chiles had just ceded South Florida to Fidel.

MONDAY. You’ve read about the democracy movement here, Martin Lee and company? You may have read more about them than the average Hong Konger. The democrats are hyperactive, skilled at media relations, and indisputably on the side of the angels. But at one level they are running a theme park for the amusement of Western journalists. They do not appear to be organically connected to the people they represent. When they speak to their constituents, the democrats are shouting into a stiff breeze of confusion laced with indifference. Hong Kongers have been British subjects for 99 years and expect to be Chinese subjects for at least as long. They have little experience with democracy and, truth be told, not much interest in politics. To be sure, a little pressure from the heel of a boot could excite the democratic instinct, but as of now the message just does not resonate.

Then there are the refugees from the Chinese mainland now well settled here. They despised the old PRC enough to risk everything in a mad dash for the border. Now they look forward to the “Special Administrative Region” of the PRC that Hong Kong will soon become. They thus want to give every appearance of believing that Beijing has changed. Indeed, they are rolling out the inevitably red carpet. Parties, concerts, light shows, parades, mass dancing in the parks, a “Reunification Spectacular at Happy Valley” — events are scheduled hour by hour until the moment of the handover. At the tony Regent Hotel, under a Union Jack snapping smartly in the harbor breeze, a countdown clock ticks off the seconds.

TUESDAY. The Hang Seng Index, the equivalent of the Dow Jones Industrial average, continues to outperform even the U.S. market, fueled by fresh money in so-called red chip stocks — securities in companies with mainland connections. At the current pace, stock-market activity for the first six months of the year will exceed that for all of 1996, which was itself the most active year on record. A friend at First Boston — a mainland-born, U.S.- passport-holding, Mandarin-speaking banker — tells me that real-estate prices are doing even better. A house he bought on Victoria Peak in 1986 has appreciated “eight or nine times.” The new real-estate buyers? Mainland businessmen as well as multinational corporations stocking up on executive housing.

Think of June 30 as a giant initial public offering and you’ve got a sense of the deal. The PRC will be obliged, it is presumed, to “support” the deal in the aftermarket by propping up prices for stocks and real property. But after a decent market-clearing interval — say, a year or two — what’s left? To me it looks like a classic bubble market. The really smart money is, as always, carefully hedged. Most of the Hong Kong elite hold foreign passports (500,000 of them at a guesstimate), stuff cash in foreign bank accounts, and position close relatives in London, San Francisco, Sydney, or elsewhere. More than half of the companies listed on the Hang Seng are now domiciled abroad, up from fewer than 10 percent in the mid ’80s. For all their booster rallies, these All-Star capitalists could be in business in some third country by next week. An item in the paper caught my eye: “Indian socialites are packing their most dazzling jewelry into travel bags and heading for Singapore as the handover approaches.”

Interesting conversation with a military attach from a European country. Why, he wanted to know, is the United States allowing Hong Kong favored status on export controls? Didn’t I understand, he pressed, that Hong Kong would instantaneously transship to China any U.S. technology with military application? Didn’t I understand that Japan and other sophisticated nations were tightening controls even as we were relaxing them? How could we be so naive? he harrumphed. I recited the U.S. position as best I could discern it. But his question lingered, reminding me later of the dog that did not bark in the strange case of Hong Kong. In four long days of talk, interview, and harangue, the name Bill Clinton has never come up. A neat trick. How does the leader of the world’s only superpower make himself irrelevant to the biggest geopolitical story of the decade? I find it hard to believe that Ronald Reagan would have looked on quietly as the “handover” became the coda to the American century.

WEDNESDAY. At last I meet somebody who is high-tailing it out of here. A boutique dealmaker, he has done fabulously well in Hong Kong but is planning to move to the New York area, to a “place with good schools, probably Greenwich, Connecticut.” Why the move? Does he tremble at the prospect of the Big Red Machine rolling down Salisbury Road? Hardly. “What I used to think of as excitement now looks to me like hassle.” I may be witness to the birth of a new lifestyle option — moving to New York for the quiet life.

One hears reports of beeper messages intercepted, newspaper columnists self- censored, political conversations hushed. But at the official level, the Chinese government is advancing in small, barely perceptible increments, none of them so discretely shocking as to cause the frog to jump from the hot water. In odd moments, though, one calibrates the cumulative distance traveled. Tonight at the China Club, where the politically correct gather in retro-chic, faux-Shanghai surroundings to prolong the business day, I have a drink with a local lawyer. He is an American employed by a fancy New York firm, a veteran mid-level appointee of the Reagan administration. He drops a phrase into conversation that comes back to me hours later as I ride the last Star Ferry back to Kowloon. When he speaks of the final takeover of the mainland by Mao Zedong five decades ago, he calls it the “liberation of ’49.”

Neal B. Freeman is chairman of the Blackwell Corporation, a television-production company.