The airport agreement was the tonic that businessmen needed, says Chris Webb.
Fears about the future of Hong Kong after 1997 under Chinese sovereignty and the events in Tiananmen Square in 1989 have taken their toll on the economy of the Territory. But a new mood of optimism has emerged following the signing of the Sino-British agreement for a new £7.9 billion international airport.
Visitors to Hong Kong - business travellers and tourists alike - rarely forget their first encounter with the city. The approach to Kai Tak International airport is unlike any other, weaving a path between skyscrapers close enough to make even the most seasoned traveller turn in his seat.
Spectacular though this introduction to the city may be, it is one that is soon to be denied to the majority of travellers. If all goes to plan, 1997 will see the opening of a new international airport at Chek Lap Kok on the north shore of Lantau Island.
In July leading business figures welcomed the announcement that the British and Chinese had finally reached agreement on the airport. On the eve of the announcement, speculation pushed the Hong Kong stock market's Hang Seng Index up more than 54 points, with daily turnover reaching the highest for the year at HK$2.62 billion. The airport news sent the Hang Seng up still further, and saw turnover shoot to HK$3.4 billion the following day.
It was just what Hong Kong wanted. Uncertainty over the future of the Territory under Chinese sovereignty in 1997, the stock market crash in 1987 and the events of June 1989 in mainland China had combined to give the business community the jitters - in the circumstances entirely understandable.
The British Government, however, as Prime MInister John Major re-emphasised on his recent visit, remains firm in its belief that the Sino-British Joint Declaration provides sufficient reassurance that it will be "business as usual" in Hong Kong. The Joint Declaration describes the new regime as "one country, two systems", a concept which, in theory at least, will enable the Territory to exercise a good deal of autonomy over its affairs. Under the agreement, Hong Kong becomes a "Special Administrative Region" of the People's Republic of China, permitting the Territory to retain its capitalist system and lifestyle for at least 50 years after 1997.
Contrary to suggestions in the British Press, the business community of Hong Kong is not solely preoccupied with planning a mass exodus. Indeed, many closely connected with the manufacturing, financial services and shipping industries, which are the mainstays of Hong Kong's economy, firmly believe that 1997 will present many new opportunities.
Recent figures released by the Hong Kong Government underline a new mood of confidence and support claims that a recovery is slowly picking up momentum. They show the economy, as measured by gross domestic product, growing by an annual rate of 4.1% in the first quarter of this year. This is well below the corresponding figures for the boom years of 1987 and 1988 (13.8% and 7.9%), but nevertheless considerably better than those for 1989 and 1990 (2.3% and 2.5%).
Hong Kong, the city which runs the nightshift of the international financial world, has the archetypal "tiger economy", the epithet now attached to most of the fast-growing economies of the Pacific Basin. It has the world's busiest container port, at Kwai Chung, and also a thriving manufacturing sector for textiles and consumer electronics, which employ almost half of the workforce and produce three quarters of Hong Kong's export income. The average per capita GDP is HK$1,718, the highest in Asia outside Japan.
But consumer price rises still remain high. In 1990 they rose to 9.8%, with only a limited decrease (to 9.5%) being predicted for this year. The underlying cause of the high level of inflation is the restructuring of the Hong Kong economy, caused by the relocation to neighbouring Guangdong Province of much of the Territory's manufacturing capacity.
Guangdong, like Shenzhen, Zhuhai, Shantou and Xiamen, has been designated a "Special Economic Zone" of mainland China. Hong Kong's manufacturers see the promise of an abundant workforce with rapidly increasing skills, coupled with greatly reduced costs and the offer of various incentive schemes by mainland China, as the way ahead.
Hong Kong, now the world's 11th biggest trading community, is Britain's 18th biggest export market. British exports to Hong Kong, mainly capital goods, currently total more than £1 billion a year. British companies have net assets in Hong Kong of £3 billion. Twenty British banks do business there, while more than 1,000 Hong Kong companies have British involvement through direct control, investment or management. This is why the British Overseas Trade Board's Forward Plan gives such a high priority to Hong Kong as one of the key Pacific Rim markets.
In reality, the UK's share of the Hong Kong market has declined in recent years - all suppliers have lost market share to China - to around 2.4% in the first four months of this year.
Tourism is a major money-spinner - though it was badly dented by the Gulf war, only recovering after the ceasefire was signed. Visitors in May topped 500,000, slightly up on the previous year. Incentive travel business has boosted numbers to such an extent that the Hong Kong Tourist Association has formed a special branch, the Hong Kong Convention and Incentive Travel Bureau, specifically to deal with it.
Visitors have a dazzling array of some 100 top quality hotels from which to choose, including the prestigious Mandarin Oriental, Peninsula and Regent. They are the flagships of the home-grown international hotel chains and regularly rank among the top 10 in international polls, with a standard of service that is quite dazzling to the western visitor.
Most visitors arrive from Taiwan and Japan, though Hong Kong is also popular with North Americans and Western Europeans. They come, attracted by its legendary reputation for beauty and excitement, for the atmosphere, the sights of Victoria Peak, the temples, the night life and, not least, to sample Hong Kong's unrivalled cuisine.
Longer-stay visitors take day tours to the Portuguese enclave of Macau, only an hour away by jetfoil. Or they cross the border to Zhongshan, birthplace of Dr Sun Yat-Sen, the "father of modern China". They leave with one thing at least in common: a sense of having sampled a unique way of life.
(Chris Webb is a freelance writer.)