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Phil Ponce converses with the Chief Secretary of Hong Kong, Anson Chan, about Hong Kong's relationship with China since they reverted to China almost a year ago.

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PHIL PONCE: A Newsmaker interview with the number two official of Hong Kong but first some background from Charles Krause.

CHARLES KRAUSE: Over the past year, since Hong Kong reverted to China, Anson Chan has remained a pivotal and popular figure in Hong Kong's post-colonial government. First appointed in 1993 by British Governor Chris Patten to head Hong Kong's civil service, Chan has direct control over the former colony's 190,000 civil servants--everyone from teachers to meat and chicken inspectors to the police. Since the transition, Chan has come to symbolize the continuity between British and Chinese rule, in large part because she publicly warned the Chinese last year that she would rebuff any attempt by them to corrupt the government, play favorites, or silence dissent.

ANSON CHAN, Chief Secretary, Hong Kong: I think it is crucially important for Hong Kong to control themselves, to appreciate and thereby protect the ingredients that have led to Hong Kong's current success. That means, for example, remaining open, remaining as a cosmopolitan international city, preserving the rule of law, an independent judiciary, and the entire community remaining united, a tolerance for dissenting voices.

CHARLES KRAUSE: In the years since those words were spoken the fears that China might curtail individual liberties and repress political dissent in Hong Kong appear to be largely unfounded. Anti-government protests have been allowed, and just last month the government held a widely praised, free and fair election for a new legislative council. Martin Lee and other Democratic candidates won a majority of the vote, but they will not end up with a majority of the seats in the new 60-member assembly. That's because 2/3 of the seats were either elected indirectly by small interest groups or appointed by China's hand-picked representative in Hong Kong, chief executive Teng Chi-Hwa. It was Teng who asked Chan to stay on as head of Hong Kong's civil service after the transition, and according to the respected Far Eastern Economic Review, China has allowed individual freedoms to flourish in Hong Kong as before. But what hasn't flourished is Hong Kong's economy thrown into recession as a result of Asia's economic crisis. The value of real estate in Hong Kong has plunged by some 40 percent. There's growing unemployment, and for the first time in recent memory Hong Kong's GDP shrank during the first quarter by 2 percent after years of constant growth. The Hong Kong Stock Market has also plummeted by 30 percent since the crisis began. Since her arrival in the United States earlier in the week, Chan has attempted to reassure bankers and businessmen that Hong Kong will not devalue its currency or panic in the face of continued economic turmoil. She's also sought to assure officials in Washington that Hong Kong's post-colonial transition has gone smoothly and urged members of Congress not to allow domestic American political controversies to get in the way of renewing most favored nation trade status for China.

PHIL PONCE: And Anson Chan joins us now. Madam Secretary, welcome.

ANSON CHAN, Chief Secretary, Hong Kong: Thank you.

PHIL PONCE: Before we get to the relationship between Hong Kong and Beijing, I was wondering if we could talk about the news of the day, and that is Japan all but acknowledged officially that it is in a state of recession. What will the impact be on Asia and specifically on Hong Kong?

ANSON CHAN: We are, of course, very concerned about the present state of health of the Japanese economy as are many other countries, specifically insofar as Hong Kong and the Mainland of China are concerned. I fear that the continuing weakening of the yen will lead to even greater instability in the region at a time when already there is a great deal of volatility, and they will turn to renew speculative pressures on the U.S./Hong Kong dollar link and on the Roman-

PHIL PONCE: Madam Secretary, how do you fix it?

ANSON CHAN: I think we in Hong Kong, as does the rest of the world, look to Japan, to its government to provide leadership to take the necessary measures and to pursue the necessary reforms to ensure that the economy picks up again. We will not see the economy improving in the other Asian countries until and unless Japan takes the lead.

PHIL PONCE: Madam Secretary, are you concerned that Hong Kong might be compelled to devalue its currency?

ANSON CHAN: I do not rule out that there will be speculative attacks again on the Hong Kong/U.S. dollar link, but I can state unequivocally that we remain firmly committed and wedded to the link with the U.S. dollar, because we know that it has stood us in good stead in meeting the challenges that we have had in the past, and we will stick with this link, even though we may come under renewed pressure.

PHIL PONCE: It's been almost a year now since Hong Kong and China were reunited. How's it going?

ANSON CHAN: I think the transition has gone very well by all accounts. And we've had third party endorsements of the fact that Hong Kong remains a vibrant, open city. Its people continue to enjoy all the rights and freedoms that we had before 1st of July 1997. We continue to have an independent judiciary, a clean and efficient civil service, and we've just had a record turnout for the first election to our first legislature. And we today have a credible legislature to which the government will be accountable.

PHIL PONCE: When you say there have been third party endorsements of the status of Hong Kong, for example who?

ANSON CHAN: Well, the British are signatory to the joint declaration. They have stated in their reports on the post transition Hong Kong that China, indeed, has honored its promises to Hong Kong. Your own State Department reports, as well as Congress reports on Hong Kong, also confirm that's a fact.

PHIL PONCE: And how do you assess the status specifically of civil liberties, freedom of speech, the ability to gather, the ability to protest?

ANSON CHAN: Freedom of speech, press freedom, freedom of assembly are all alive and well. And I think that there's evidence of that in the way in which there was a very peaceful commemoration of the June the 4th incident in Hong Kong.

PHIL PONCE: There were, according to reports, what, about 40,000 people at this vigil of Tiananmen Square?

ANSON CHAN: Yes.

PHIL PONCE: How do you think those people would respond--and this is an issue that's been very much in the public eye in this country-to President Clinton going to Tiananmen Square when he goes to China?

ANSON CHAN: I think President Clinton has already stated that that is up to the Chinese. Tiananmen Square is where Chinese leaders traditionally receive visiting dignitaries. And I'm sure they would be very anxious to accord President Clinton the same treatment.

PHIL PONCE: As far as the people who were at that vigil, though, how might they respond?

ANSON CHAN: I think most people would expect that since that is the usual place where dignitaries are received, I do not think that most would object, although other people may feel that for obvious reasons that the president ought not be received at Tiananmen Square.

PHIL PONCE: Madam Secretary, on many occasions you've been called "the conscience of Hong Kong." And you're on record as saying that if Beijing were to go back on its reassurances, its promises to Hong Kong, you would resign. Do you still feel that way?

ANSON CHAN: Well, I'm still here. I'm extremely glad that the transition has gone so well, and that's not just my view but the view of my colleagues within the administration and the view of the entire community and of the international community, who continue to take a strong interest in Hong Kong and who continue to support Hong Kong.

PHIL PONCE: You talked about the record turnout for the recent elections, and yet, the majority of the people who cast their votes in the popular vote voted for pro-democracy candidates and some of those candidates-Martin Lee, for example,--are saying that the time is now for immediate one person, one vote.

ANSON CHAN: I think, of course, people in Hong Kong want more democracy. That is, in fact, what they will get in accordance with the timetable for the development of democratic institutions, that is, election to the legislature. In accordance with our basic law, which is our constitution, there is a specifically laid-out timetable to reach the ultimate target of universal suffrage. And so for our next election, which will be in the year 2000, the number of directly-elected seats in the legislature will increase to 24, and in the year 2004, it will be half the legislature that will be returned by popular vote. And in the year 2007, in accordance with that timetable, the people of Hong Kong can decide for themselves whether to move straight away to universal suffrage.

PHIL PONCE: Madam Secretary, at this point, how can the United States be helpful to Hong Kong?

ANSON CHAN: The United States has been a very good friend and supporter of Hong Kong. We have shared values. We have strong trade links, cultural links, and human links. And I'm extremely glad that on this current visit to Washington that that degree of goodwill and support remains very, very strong. America can particularly help Hong Kong in exercising its high degree of autonomy by continuing to trade with us, by continuing to regard us as effective partners in law enforcement acts, and by continuing to ensure that Hong Kong has access to strategic commodities high-tech, because we need those in order to ensure that we can continue to grow and to maintain stability and prosperity of Hong Kong.

PHIL PONCE: And how-I'm sorry-

ANSON CHAN: We have separate, important export controls, which we have every intention of enforcing and protecting their integrity.

PHIL PONCE: How do you respond to people in this country who want to make a tie between most favored nation status for China and China's record on human rights?

ANSON CHAN: We understand the concerns that American people have, but we firmly believe that concerns on non-trade funds should be kept strictly apart from trade issues. We believe strongly in the United States having a constructive relationship with China. That is the way in which both sides can discuss their respective concerns. That is the way that America can ensure that China can have the economic wherewithal to provide for its people, and with economic growth there will be political growth too.

PHIL PONCE: Madam Secretary, last night you gave a speech in Washington in which you said you were "not an apologist for China." What compelled you to say that?

ANSON CHAN: I was setting out-I was giving some views of my personal feelings since the handover on 1st of July. I was setting out some of the developments in China and the way in which leaders have behaved towards Hong Kong. But my main point was to say that whilst on the one hand we appreciate that Hong Kong is very different from the Mainland of China, we developed at a different pace, we enjoy rights and freedoms, and our lifestyle are very different from those pertaining in China, but nevertheless the bulk of the population in Hong Kong are Chinese and there is a spiritual and emotional attachment to China. And we very much hope that China will be an increasingly open and prosperous society. And that will be of benefit not only to Hong Kong but to America and to the rest of the world.

PHIL PONCE: Madam Secretary, I thank you for being here.

ANSON CHAN: Thank you.

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