If Hong Kong were a country, its population of six million would leave it ranking as a middle-sized member of the United Nations. But, for all its importance for the international economy, the territory has no claim to sovereignty, and its literal lease on life runs out in 10 years.

On the surface, all appears normal there. Hong Kong is as beautiful as ever, the population as dynamic, the enterprises as efficient, the government as crisply benign. But chilly political winds are blowing from China, and the world's third major financial center may be headed for trouble.The British were at their most genteel when they negotiated with China the 1984 Joint Declaration on Hong Kong's future. As previously agreed, they sought to keep the talks truly bilateral. They revealed what was transpiring

neither to their allies nor to the people whose futures were up for grabs. The Chinese were not so conscientious; they leaked bits of information and busily lined up opportunistic "friends" among Hong Kong's elite.

At the time, the Britons' good faith (some would now say naivete) seemed justified. On hindsight, London played into Beijing's hands and sold out the people for whom they were responsible. China's view was "what's mine is mine, and what's your is mine," and that position prevailed.

Still, as recently as two months ago there was room for guarded optimism regarding the territory's future. After all, the Chinese had made some, albeit vague, promises about freedom, the rule of law, and political autonomy.

More importantly, China was making impressive strides in modernizing her own political and legal system. Decisions of state were no longer made solely by a small group of narrow-minded politburo members insulated from worldly realities. The press and National People's Congress were beginning to play an impressive role in ventilating issues and amalgamating support for contending positions. No longer was bad news swept under the rug, its bearers hauled off to the gulag.

Alas, things have changed. What are Hong Kongers - consummately bourgeois and liberal people - to think about China's current campaign against ''bourgeois liberalism." What are they to think when political activists are arrested while on holiday on the continent? How are they to react when their fellow citizens are executed after perfunctory Chinese trials for rela tively minor alleged economic offenses? If this is how China treats Hong Kong people today, what can be expected after 1997?

Few in China understand how Hong Kong works. It is apparently believed that the London-appointed governor can be replaced by a Beijing-appointed one, without adversely affecting the subjects. The logical flaw here lies in the fact that the British governor is accountable to a democratic parliament (in London) and to the law. This is why Hong Kong is such a thriving economic and cultural center. Once law, political accountability and free-market mechanisms are replaced by a one-party dictatorship and a system of personal networks of influence and corruption (a la China), much will be lost.

Ideally, after Hong Kong's retrocession the projected "special administrative zone" would have political arrangements something like Puerto Rico's, and economic arrangements something like those enjoyed by members of the European Common Market. This would give Hong Kongers genuine constitutional democracy based on free elections, and an economy with a high degree of external integration, yet still with its own currency and free- market system. This would not only be in the territory's best interest, it would mean that China would continue to profit and learn from one of the world's most modern communities.

Obviously, people are going to have to settle for something less. How much less depends on the future course of Chinese politics - which only a fool would try to predict. But all indications are that Hong Kong will be subject to China's constitution. That instrument insists on socialism, Communist Party leadership, and a "democratic dictatorship."

Still, one should not be too quick to assume the worst-case scenario. Perhaps the current anxieties will persuade Hong Kong's normally apolitical populace to mobilize behind those leaders who are insisting on free direct elections. Furthermore, Beijing's aging conservatives will not be around in 1997. The purge will have to go much further than it has before we can write off the new generation of modern-minded intellectuals and technocrats.

And then there are all those Chinese students who in December were demonstrating for democracy and the rule of law. In such people lies China's - and Hong Kong's - hope.

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