When Hong Kong returned to Chinese rule on July 1, 1997, there was no shortage of doomsayers who forecast that the former British colony would be stifled by rule from the mainland and that it would be reduced to ‘just another Chinese city.’

Fifteen years on, that has not happened. Nor, to be realistic, did it ever really seem to be on the cards.

Editing the South China Morning Post at the time of the handover it always seemed to me that July 1, 1997, marked the start of a long process which would be played out through multiple small developments rather than the dramatic clash some foresaw.

The democratic reforms introduced by Chris Pattern in the twilight of British rule were immediately done away with, of course.

Under the Joint Declaration that laid the groundwork for the handover, Beijing had signed up for the pre-Patten system of administrative rule and, however popular the Last Governor may have been, there was no way that the new sovereign to the north was going to alter the powers it had received under the deal known as the Joint Declaration it signed with London in 1984.

But the essential elements in the ‘Hong Kong way of life,’ which the People’s Republic of China (PRC) undertook to respect for 50 years were, indeed, preserved. Fifteen years on, that remains largely the case though there are signs of growing unhappiness on the Hong Kong side and it appears that Beijing has settled on a long-term strategy aimed at more systematic oversight of the territory.

The new relationship of the Special Administrative Region of Hong Kong (SAR) with the mainland has brought significant changes notably in the influx of funds that have boosted real estate and the retail sector. The links with Guangdong province across the border have grown ever more important.

At the same time, some Hong Kong people have expressed distaste for the visitors from the PRC, especially at the way in which pregnant women crossing to the SAR to give birth and get residency rights for their offspring. A lurid advertisement depicted them as ‘locusts’ swarming on Hong Kong.

There are complaints at the number of big cars coming in from the mainland and clogging up the roads. The manner in which Hu Jintao, the Chinese leader until the Communist Party Congress at the end of this year, reviewed a big detachment of units from the People’s Liberation Army (PLA) after arriving in the SAR for the anniversary ceremonies aroused comment.

A survey by the Hong Kong Journalist’s Association reported that 87 per cent of respondents said access to information had been limited and obstruction of news coverage had increased in the past five years. That was 29 points above the figure in a similar poll in 2007. In the poll, 79 per cent said they thought self-censorship had risen since 2005.

Some recent decisions by the editor of my old paper, the first editor from the mainland, have aroused criticism for being protective of China – thirty staffers signed a petition last week protesting at the decision of the Post’s editor to downplay coverage of the recent death of a Tiananmen dissident the day after the story broke.

Still, personal liberties remain protected and the media are far freer than in the PRC. People can conduct their business as they wish without the controls in place on the mainland. Hong Kong is the only place in China where those killed by the army in Beijing in June 4, 1989, are commemorated - with this year’s attendance at the vigil in Victoria Park claimed as a record by the organizers.

The former colony has retained its international character. Perhaps most important, the rule of the common law was perpetuated with a Court of Final Appeal sitting at the apex of the judicial system.

Yet things are changing. The slowing down of China’s growth is affecting Hong Kong’s economy. Growth fell to 5 per cent in 2011 from 6.8 per cent in 2010. Though unemployment remains low at 3.3 per cent, inflation jumped from 1.7 per cent in 2010 to 5.3 per cent in 2011, and trade has been declining since the middle of 2010. (See charts below).

The steep rise in property prices is a cause for complaint. The development of container ports in Guangdong challenges the SAR’S shipping sector. The low cost manufacturing plants set up by Hong Kong entrepreneurs across the border are under increasing pressure from increases in wages and other costs.

Politically, the unexpectedly rocky selection process for Hong Kong’s new Chief Executive to replace the former British civil servant, Donald Tsang Yam-kuen, has shown that politics is not dead in the SAR. Though in no way the result of a popular vote, the manner in which the original front runner, Henry Tang Ying-yen was overtaken by his main challenger, Leung Chun-ying, showed that public opinion does count despite the very small size of the selection committee which, approved by Beijing, made the choice.

Tang, a prominent businessman who was the chief secretary for administration from 2007 to 2011, scuttled his chances with a series of scandals and mis-steps ahead of the selection on March 25.

Leung, a self-made millionaire surveyor who has been on the political scene since the last years of British rule, remains a somewhat mysterious figure – he has always refused to say if he is a member of the Communist Party but has long been regarded as close to Beijing.

He will pursue a more populist path than Tsang who left office under the cloud of a string of revelations about how he had accepted favors from business people and spent lavishly on official trips abroad. This is likely to include measures to control housing prices, to encourage public services and to reduce unemployment.

Beijing accepted the Tang’s defeat ahead of the selection committee vote and the central government appears to have settled on Leung as its candidate for 2017 when the Chief Executive will be elected on a far wider franchise. If that strategy works out the PRC will be able to say that it has overseen a democratic election which the British always refused, and has allowed the Hong Kong people to chose their local ruler for the first time.

Beijing would probably like to reduce the link with the SAR tycoons which it needed in 1997 to help make the handover smooth. The recent arrest of the Kwok brothers of the big Sun Hung Kai (SHK) Group was quite a shock and may show a new readiness by the authorities to takes a tougher line – there are rumors of other arrests in the pipeline.

That said, Hong Kong’s business will, by and large, remain business. Both Beijing and the new Chief Executive will take care not to undermine that, especially at a challenging time for the economy.

Hong Kong will continue to evolve in its own way as befits a city in which most people regard themselves as ‘Hong Kong Chinese’ rather than simply ‘Chinese’ and only 52 per cent in a poll this month expressed confidence in the principle of ‘One Country, Two Systems’ under which the handover took place.

Hong Kong, in other words, will remain a work in progress in which, despite the slow progress towards the democratic election of the Chief Executive, the citizens are still able to exert an influence unknown in the rest of China because their territory has decidedly not become ‘just another Chinese city’.

Jonathan Fenby was the editor of the South China Morning Post from 1995-99 and is now China Director at the research service, Trusted Sources where he writes a China blog.

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