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China

Can 'One China' really have two systems?
STRATFOR.COM
Global Intelligence Update
February 1, 2000

Summary

China's prime minister has raised concern that top officials implicated in a months-long corruption shakedown may flee to Hong Kong for safe haven. Under existing law, the Chinese government cannot extradite suspects from Hong Kong. Now that the corruption scandal has become major news worldwide and threatens to destabilize China, Beijing will likely force Hong Kong to change the rules. The government will protect the illusion of autonomy, but in the end Hong Kong must capitulate.

Analysis

Chinese Prime Minister Zhu Rongji met with Hong Kong's Chief Executive Tung Chee-hwa in November to discuss a stumbling block to the Communist Party's months-long crackdown on corruption, reported the South China Morning Post on January 31. Zhu raised ''grave concern'' that guilty party members may flee to Hong Kong - a Special Autonomous Region (SAR) - which does not have an extradition agreement with the rest of China, to avoid investigations.

Now, the corruption scandal has become a major international news item, potentially dangerous to China's stability. Beijing must be able to extradite suspects from Hong Kong, or corrupt officials may disappear en masse - taking their stolen fortunes with them. Zhu's talk with Tung was likely an attempt to deal with the problem quietly, to avoid the appearance of infringing on the island's autonomy. The prime minister is all too aware that a crackdown on Hong Kong could send investors fleeing. As well, it could have grim implications for reunification of Taiwan with China.

When the British handed over Hong Kong in July 1997, China promised to leave the island's autonomy largely intact, within a ''one state, two systems'' framework. The government had to take such a stance to prevent a large-scale investment exodus. But Beijing's behavior toward the island over the last several years reflects the obvious: China's sovereignty takes precedence over Hong Kong's autonomy.

China's relationship with Hong Kong has already been tested. Last July, Hong Kong's highest court issued a ruling on immigration that both Beijing and the local government disliked. Beijing demanded that the court alter its decision. The court capitulated, then issued a statement agreeing on China's right to reinterpret the Basic Law developed when the island was a British protectorate.

By intervening in Hong Kong's judicial process, Beijing highlighted the thin veneer of autonomy. A more recent event suggests that the interference will continue. On January 17, the Chinese government announced that Xinhua's Hong Kong bureau would no longer double as the Chinese Communist Party's surveillance unit on the island. Instead, Beijing now has an official Liaison Office to watch over the local government.

Now the extradition problem may prompt Beijing to pull rank once again. The two sides have been negotiating, but as one senior SAR official pointed out, ''there are some fundamental differences to be resolved'', reported the South China Morning Post. But ultimately, Beijing will persuade the Hong Kong government to accept the change. The island of 6.2 million - compared to China's 1.2 billion - will have no choice.

But China must continue to manage relations with Hong Kong very carefully. The former British crown colony is a litmus test with which to gauge Beijing's likely behavior in the event of China's reunification with Taiwan, which also maintains a ''one state, two systems'' agreement. If Beijing appears to bully Hong Kong in blatant disregard of its autonomy, Taiwan's public will become increasingly nervous. This can only fuel Taiwanese President Lee Teng-hui's campaign to redefine relations as ''state-to-state'', easing the concept of Taiwan's independence into the political mainstream.

(c) 1999, Stratfor, Inc. http://www.stratfor.com/

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