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Hong Kong to pioneer new concept

Hong Kong, the pearl that China has cradled but could not pluck for nearly 150 years, is closer to slipping from British hands. The just-initialed agreement between China and Britain is the first step toward creating a unique social, economic, and political system for Hong Kong.

Both sides see it fitting into the untried concept of ''one country, two systems.'' From 1997, the small but vibrant territory will be under the jurisdiction of China but will retain much of its current economic and legal framework. Except in matters of foreign relations and defense, Hong Kong will be a virtually autonomous region within China.

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Speaking after the signing ceremony Wednesday in the richly decorated west room of the Great Hall of the People, Chinese Assistant Foreign Minister Zhou Nan said: ''In the spirit of friendship, cooperation, and mutual understanding, our two governments have finally reached a satisfactory agreement after patient diplomatic talks.''

The agreement provides for a peaceful and hopefully smooth transition from British to Chinese rule. Both sides have promised that the negotiated joint declaration will protect Hong Kong's stability and prosperity as well as the rights and privileges of its 5.5 million inhabitants.

Britain's ambassador to China, Sir Richard Evans, called the declaration ''the practical embodiment of the imaginative concept of 'one country, two systems.' '' This idea, put forward several years ago by China's top leaders, refers to the inclusion of a capitalist economy and consumer-oriented society, such as Hong Kong, within China's communist system.

China has elaborated in Annex I of the agreement its basic policies for governing Hong Kong after 1997. It has pledged to enact a ''basic law'' for Hong Kong in which China's ''social system and socialist policies shall not be practiced.... And that Hong Kong's previous capitalist system and life style shall remain unchanged for 50 years.''

The declaration states that China will resume sovereignty over Hong Kong on July 1, 1997. Hong Kong will then become a special administrative region directly under the authority of Peking.

However, the laws of Hong Kong ''will remain basically unchanged'' and the basic rights and freedoms now enjoyed will be assured. The joint declaration says that Hong Kong will retain its status as a free port and international financial center, permitting the free flow of capital and the free circulation and convertibility of its currency.

The region's finances will be independent of China's central government, which will not levy taxes. It will be allowed to maintain and develop economic and cultural relations with other regions, states, and international organizations under the name ''Hong Kong, China.'' It will issue its own travel documents.

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According to the declaration, Hong Kong will be governed by ''local inhabitants,'' although that term is nowhere defined. Its chief executive will be appointed by Peking on the basis of elections or consultations held in the territory. British and other foreign nationals will be allowed to continue to hold certain posts in government or to act as advisers.

Annexes II and III address the functions of the joint liaison group to aid in the transfer of power and the issue of land leases in the territory.

The draft agreement must be approved by the British Parliament and the Chinese National People's Congress before it goes into effect. Parliament's debate is scheduled to begin in November. The agreement is expected to be approved by year's end and to take effect in mid-1985.

The declaration marks the beginning of the end of more than 140 years of British colonial presence on China's south coast. This presence has carried the legacy of the two opium wars in the mid-19th century and the ''unequal treaties, '' including those which ceded and leased to Britain the territories making up Hong Kong.

The last such treaty, signed in 1898, leased a portion of China's Guangdong Province to Britain for 99 years. The expiration of this lease triggered Britain's decision to seek a negotiated settlement returning all of Hong Kong to China. Since the fall of the last imperial dynasty in 1911, successive Chinese governments, both nationalist and communist, have denounced the ''unequal treaties,'' so named because their benefits were one-sided.

The agreement between China and Britain is the outcome of 23 rounds of confidential talks begun in October 1982. During the last few months the talks were greatly accelerated to meet the Sept. 30 deadline imposed by Peking.

The successful conclusion of hard-headed negotiations with Britain is an invaluable political asset for China's paramount leader, Deng Xiaoping, whose ambitious program for modernizing the Chinese economy has only just begun. The agreement demonstrates that Mr. Deng is a leader who gets results. He can take credit for solving an emotionally charged problem of national sovereignty which, in Premier Zhao Ziyang's words, is a matter ''left over from history.''

As a world financial and commercial center accounting for an estimated 40 percent of China's foreign-exchange earnings, Hong Kong is an important catalyst for China's massive economic modernization. Thus Chinese leaders have been concerned that Hong Kong's stability and prosperity not be jeopardized during the transition period.

Nevertheless, it appears that national sovereignty has been the dominant concern. Chinese leaders have insisted during the past year that China would assume control of Hong Kong in 1997 or even earlier, regardless of whether Britain and China could come to an agreement. Such indications have left Hong Kong's business community badly shaken.

The succcessful return of Hong Kong also is an important step toward resolution of one of Peking's most pressing foreign-policy problems - Taiwan. The concept of ''one country, two systems'' has often been cited as a formula for peaceful reunification with the Republic of China.

Earlier this year in Canada, Premier Zhao said, ''All the policies we are going to adopt toward Hong Kong can also be applied to Taiwan, and even more.''

The guarantees China has made in this agreement are ones that no one can be sure will be kept. Even Deng Xiaoping cannot be certain what kind of government China will have in 1997, given the country's volatile recent past. Much depends on the current government's ability to follow through with its reform programs and on the flexibility of future leaders in applying the two-systems concept.

That concept is untried. One senior Chinese official admitted recently that the idea was experimental and vague, but that at least it expressed the intent of China's leaders to accommodate economic and social diversity and to consider more practical ways for developing the nation.

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