Hong Kong is another little engine that could -
and did. While it was still recovering from the Japanese
occupation, Hong Kong's postwar population of 600,000 had
jumped to 2.2 million by 1951 as refugees poured in from the
communist mainland. They provided plenty of cheap labor and
business savvy. In 1958 sweatshops and factories were
humming: 50,000 workers were toiling 12 hours a day for
$1.77, spinning out blouses, shirts and trousers and enough
bras to supply 40% of the U.S. market. In 1967 alone,
exports jumped 22%. This characteristic Hong Kong work ethic
may explain why so many businessmen scoff at pessimism over
the city's fate after 1997.
By 1979 Hong Kong's 4.5 million population had reached full employment and then some; a sizable portion of the work force was moonlighting. A new immigrant to Hong Kong was quoted in TIME's Feb. 25, 1980, issue as saying, "With one job I was not tired. So I took a second job, and now I make a lot more money. That is important in Hong Kong."
In this fashion Hong Kong grew to be the freest economy in the world, but it was not always the fairest. Airline and telephone monopolies, for instance, were placed in British hands. But enterprising Chinese businessmen were eager to break up the cozy club. In 1979 the Hongkong & Shanghai Bank startled the city by selling a controlling stake of the conglomerate Hutchison Whampoa Ltd., the second largest British hong, to Li Ka-shing, who today is one of the world's wealthiest businessmen. "It changed the atmosphere of the place," recalls Gordon Redding, whose book "The Spirit of Chinese Capitalism" analyzes the success of the Overseas Chinese. "The deal was a major vote of confidence in the management skills and financial clout of the Chinese."
At about the same time, Hong Kong was changing rapidly into a service economy. After areas of southern China were opened to foreign investment, Hong Kong's clothing and toy manufacturers moved their plants to the mainland, taking 440,000 jobs with them, while the number of Hong Kong jobs in transport, financing, trade and tourism more than doubled. Between 1986 and 1994, average wages also doubled, and office rentals tripled, bringing Hong Kong close to Tokyo's stratospheric levels.
Nowadays, Taiwan and Hong Kong account for about three-quarters of total foreign investment in China. "Hong Kong is the gateway to China, as Venice was to Europe in the 14th century, as New York was to America in the 19th century," says Redding. "China has to keep learning the ways of the free market. Hong Kong is the perfect laboratory to do that." When Beijing named the Preparatory Committee that it says will represent the territory after 1997, no one was surprised to see that businessmen dominated the rolls.
