Fifteen years ago on a plane headed for New York I sat next to an American businessman who lived in Hong Kong. He told me how much he loved it, having moved there many years earlier. I was only a teenager, but even with my minimal knowledge of the world, tying his future to an island that would soon become Chinese-governed seemed quite risky. The idea of Americans living anywhere in Asia was a bit bizarre to me, but his life struck me as especially precarious.

When I asked him if he was worried about the handover, still five years away, the heavyset man answered me with a directness that only a southern drawl can properly convey: “Son, I’m not worried in the slightest. Why on earth would China cook the goose that keeps layin’ golden eggs?”

Wisdom is rarely heard on airplanes, but those words turned out to be more prescient than any from the so-called pundits. In thirteen words he summed up the situation much more elegantly than that anyone I have heard since. Sure there would be changes, and some of them would be for the worst, but a culture does not reach its five thousandth anniversary by being foolish. Hong Kong, and all of the success that it stands for, would surely endure, and returning to the mainland would not change that.

A Tough Start: The Asian Financial Crisis

On July 1st 1997 at midnight, amid pomp and ceremony, Great Britain handed control of Hong Kong over to mainland China. As the Union Jack gave way to the Communist red flag many worried about Beijing’s ability to handle the free-wheeling Hong Kong economy. Even the cultural differences that had emerged over one hundred and fifty-seven years of colonial rule seemed a potential stumbling block. And to make matters worse, it took exactly one day for Beijing to get its first test.

Amazingly, problems in the Asian economy began to spiral out of control fewer than forty-eight hours after the handover. On July 2nd 1997, while people were literally still cleaning up from the celebration, Thailand’s currency, the Bhat, nose-dived starting what would later be dubbed the Asian Financial Crisis. Within months Hong Kong’s markets were down more than a quarter and people were left wondering if China was really ready to handle one of the most advanced economies in the world. For a city that is more concertedly focused on making money than most, this was hardly a trivial matter.

China had almost nothing to do with the precipitous economic collapse, but it was nonetheless in charge of the clean-up. One year later, on July 1st 1998, things were still looking fairly bleak, and there was plenty of reason for pessimism. Much of the market growth from the prosperous 1990s had dissipated, and most of East Asia was mired in economic troubles.

Ironically the mainland, far less financially sophisticated than its neighbors, survived relatively unscathed from the disaster, while many of the region’s leading economies—particularly South Korea—were crippled. Even without a crisis of its own, Beijing was in charge of righting Hong Kong’s ship. The great port city appeared to be sinking under its own weight.

Hong Kong limped through for a year and a half with a glumness that contrasted the July 1 celebrations. Many pressured China to un-peg the renminbi and de-value it, something particularly ironic given the current pressure to increase its worth. China steadfastly refused to do so, a decision that probably helped avoid a broader disaster and stabilized things both on the mainland and in the newly reclaimed territories. In time things turned around and Hong Kong’s economy strengthened, eventually returning to its earlier robust state. The first test had been a difficult one, but Beijing had handled itself well. In the end both China and Hong Kong emerged in strong shape, if slightly bruised from the ordeal.

Putting Aside a Colonial Past

Asia’s long-time capitalist star, with its stretches of neon lights bright enough to make a Las Vegas gambler blush, not only weathered the Asian Financial Crisis, but is now stronger than ever. It managed to survive a major test just after handover and defy critics who predicted its downfall. However, there have been struggles along the way, and people were not always so confident that things would work out.

Between 1984, when the Thatcher government struck a deal with Deng’s China on terms of the handover, and 1997 when the agreement was consummated, a huge chunk of the city’s foreign population fled, fearing the worst. Many ethnic Chinese who had the means also sent their children abroad, usually to Canada. Today there are one hundred thousand fewer western expatriates than there were ten years ago. Yet the city continues to thrive, and for the most part it is the remaining foreigners who miss those who left. Hong Kong moved on in its perpetual chase of money, with or without its guests from the United Kingdom.

While Hong Kong has come into its own over the last decade, there is something undeniably different, even missing, today. Perhaps locals feel no real sadness in seeing a foreign power go back to its own shores, but one hundred and fifty seven years is a long time, and cultures can only coexist so long before they begin to intertwine. There is still a distinct air of Britishness in Hong Kong, even as it becomes increasingly Sinofied.

After New York and London, Hong Kong is arguably the most important financial market in the world, a clear legacy of British occupation. English continues to be one of the official languages, although Cantonese is the dominant tongue of the streets. Furthermore, Hong Kong residents still hold many of the ideals of liberal government built up during British rule. Nonetheless, for all its remnants of European influence, at this point the city is no more British than India. People may still play cricket or rugby, but India and Hong Kong have both put significant distance between themselves and their colonial pasts.

Meanwhile Britain and China seem like a divorced couple with different ideas of how to proceed without awkwardness. The Brits look back lovingly at once was, hoping to be invited back once in a while to relive old times. Meanwhile, Beijing would just as soon forget the untowardly involvement, going so far as to exclude British officials (and those of other nationalities as well) from the tenth anniversary celebration. Apparently the spectacle of the ‘ex’ is something to avoid while China cultivates its new relationship with Hong Kong.

It is not just during the celebration that Beijing has decided to flex its muscles. Just in case anyone might forget who runs Hong Kong these days, China opted to raze Queen’s Pier this year. Long the entry point for British diplomats, the docks will be removed in favor of a land reclamation project. Officials have not announced plans for the pier’s relocation yet, but the symbolism of ripping out a royal vestige just before the tenth anniversary was lost on no one.

Onward and Upward

Petty differences aside, few would argue that the handover has been anything but successful. Hong Kong’s stock market is up nearly fifty percent over its 1997 levels, and in practice the city has much more political freedom than the mainland, in line with pre-handover promises. Furthermore, while British expatriates living in Hong Kong have decreased nearly ninety percent in the last ten years, other foreign groups have increased in numbers, most notably Filipinos.

It has lost numbers in some nationalities, but gained diversity with an influx of others. Hong Kong’s chief executive Donald Tsang went so far as to say that there was a need to encourage even more immigration from Asia—on the scale of several million people—even in the face of overpopulation and sky-high housing prices. Clearly the city will continue to be an Asian melting pot.

Since 1997 China has become increasingly adept at reincorporating territories into the mainland, perhaps foretelling bigger aspirations. When Hong Kong’s smaller neighbor Macau reunited with China in 1999 things went at least as smoothly. With so much to gain from successful reconciliation, and so much to lose from failure, perhaps it is not surprising that there were no major breakdowns.

Today Hong Kong looks to be every bit the cultural and economic giant that it was a generation earlier. It is still the neon city where people are willing to pay higher rents than in London to live in smaller apartments than in New York City. Its energy is neither Chinese, nor British, but instead that of a mature city, confident in its own unique style. Governments come, and governments go, but Hong Kong just keeps on layin’ those golden eggs. CE