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<text> <title> U.S. Policy Toward Hong Kong </title> <article> <hdr> Foreign Policy Bulletin, May/June 1992 U.S. Policy Toward Hong Kong </hdr> <body> Excerpt from Statement by Richard H. Solomon to the Subcommittee on East Asian and Pacific Affairs, Senate Foreign Relations Committee, April 2, 1992. Sino-United Kingdom Joint Declaration In 1984, China and the U.K. settled the future status of Hong Kong and detailed the basic policies of the PRC [People's Republic of China] regarding Hong Kong in the Joint Declaration, a formal international agreement. China will resume the exercise of sovereignty over Hong Kong, which will be governed as a Special Administrative Region of China until, at least, the year 2047. The Chinese Government will be responsible for Hong Kong's foreign affairs and defense, just as the U.K. Government has those responsibilities now. Under the agreement, Hong Kong will enjoy a high degree of autonomy in all other matters. The Special Administrative Region will have its own government and legislature composed of local residents. The fundamental rights and freedoms of its residents are to be ensured by law, and independent courts will enforce these laws. China's socialist system will not be imposed in Hong Kong. Hong Kong will continue to participate after 1997 in international agreements and organizations which are open to non-states, such as the GATT [General Agreement on Tariffs and Trade] and APEC [Asia-Pacific Economic Cooperation]. The United States is not a party to the Joint Declaration, nor are we in any sense a guarantor. The United States has no special standing in regard to the agreement. Ordinarily in international law, states do not take formal positions on bilateral agreements to which they are not a party. However, the United States strongly supports the Sino-U.K. Joint Declaration and its objectives. We believe that the Joint Declaration provides the basis for maintaining Hong Kong's separate--and increasingly democratized--political system and private enterprise economy for, at least, the next fifty years. Our interest over the next few years is that the transition from U.K. to Chinese sovereignty be smooth, that Hong Kong's current prosperity and favorable human rights situation continue, that democratization advance, and that the U.S. relationship with Hong Kong be preserved and strengthened. Before 1997, it is primarily incumbent on the PRC and the U.K. Governments to take the necessary steps to preserve Hong Kong's essential character; after 1997, that task will be China's alone. Obviously, how China exercises its sovereignty over Hong Kong will affect American attitudes toward China. Hong Kong-China Economic Relations China has substantial interests and compelling incentives to respect its obligations and seek to preserve the conditions that have allowed Hong Kong to prosper. China's stake in Hong Kong's success is considerable. -- China has a clear and growing economic stake in Hong Kong's continued prosperity: the PRC is the largest foreign investor in Hong Kong, and Hong Kong is the largest source of foreign investment in China and an important economic and financial entrepot to the outside world. -- The economic integration of South China with Hong Kong has been key to the remarkable success of the Special Economic Zones adjacent to Hong Kong and the Pearl River delta, which has made South China an engine of Chinese economic growth. -- China views its success in Hong Kong as something that may have a bearing on its future relations with Taiwan. The symbiotic economic relationship between southern China and Hong Kong grew out of China's policies of modernization and opening to the outside in 1979. These trends accelerated dramatically after the 1984 Joint Declaration. Lured by investment opportunities, Hong Kong businesses spread into China, relocating factories processing goods for export. Today, more than 20,000 Hong Kong companies employ some 3 million PRC workers in these plants. Many more workers depend indirectly on these enterprises for their livelihood. Foreign investment, much of it from Hong Kong, has generated economic development and wealth in China. This has led Chinese companies to invest in Hong Kong, strengthening ties between the two economies. Chinese-owned firms participate in infrastructure projects; invest in the property market and stock exchange; and operate taxi fleets, hotels, and restaurants. China has very substantial interests in Hong Kong's banking sector. Chinese provincial and municipal traders and construction and manufacturing units have also set up companies in Hong Kong. These interests offer China compelling incentives not to tamper with Hong Kong's economic system. After 1997, the world will continue to engage in economic relations with China through Hong Kong. By that time, mainland firms will have had more than eighteen years of on-the-job training in how to do business the Hong Kong way. They will use Hong Kong as a base to increase their trade investment, and financial interchange with the rest of the world just as foreign firms now use Hong Kong as a bridge to China. Deng Xiaoping's January visit to Guangdong Province and particularly to Shenzhen, the Special Economic Zone on the Sino-Hong Kong border, was symbolic of South China's success and the importance attached to it for China's future. Subsequent to Deng's visit, China's Politburo publicly issued an endorsement of Deng's policies of economic openness and reform which, it stated, should be followed for the next 100 years. These developments should reenforce the positive trends which have created an integrated and rapidly growing market-oriented economy in southern China. Continued prosperity of this economy, which also involves investments from the United States, South Korea, and Taiwan, offers perhaps the best guarantee that Hong Kong will remain a financial, manufacturing and communication center. Hong Kong's Political Future In its last years under U.K. rule, Hong Kong is developing its own unique political identity. Since the signing of the Joint Declaration, a process of democratization has begun in Hong Kong and brought the partial realization of China's stated intention that the Hong Kong people themselves will rule the territory after 1997. China's commitment in the Joint Declaration to a high degree of autonomy for Hong Kong offers hope for continuation of this process after 1997. As I noted in my departure statement during my visit to Hong Kong last month, a fully successful transition must safeguard human rights, even as a basis for continued economic prosperity. Therefore, we view with some concern China's criticism of Hong Kong's Bill of Rights. In our view, this legislation ensures that the Hong Kong Government, and the Hong Kong Special Administrative Region, which is to follow it, has in place a systematic process to protect human rights. In this regard, we would also note with concern China's media attacks on Hong Kong's democratically elected Legislative Council members and its appointment of 44 "Hong Kong advisers," both of which suggest unease with the democratic process that bears watching. I would also note that, since 1984, some of the activities of the New China News Agency, Beijing's de facto representative office in Hong Kong, have periodically fueled controversy that has affected confidence. We believe that it is in China's best interests to respect the expressed will of the people of Hong Kong and to refrain from any action which would call into question the future protection of internationally recognized human rights and fundamental freedoms in Hong Kong. In the next few years, the trends of economic symbiosis and growth in political awareness will emerge more clearly. What will be visible is a Hong Kong m