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34 Settling Down C i espit e al l the gloom y predictions , an d th e fear expresse d b y J th e foreign media and political commentators that the 'Reds' / woul d take over, the PLA would march in, communist rul e would follow , an d everythin g buil t u p ove r a century an d a half of being a colony would collapse or be removed, the streets of Hong Kong did not look any different i n those days after th e handover than they looked before. Ther e were no horseback victory parades suc h as had accompanied the Japanese arrival after defeating the British force s in 1941 : there was not a soldier in sight. There was no gloating over th e extinction of the Crown Colony. In fact it was a British 'business as usual' atmosphere that prevailed. Everyone went about their daily lives as though nothing had happened. Now, as I write at the beginning of the new century, I can say that the pledge to Hong Kong by Deng Xiaoping of 'no chang e for fift y years ' looks more believable than when he first uttered it. Hon g Kong's capitalis t syste m i s still alive . Bu t its econom y i s suffering, no t only from th e problems face d b y the rest o f th e world's economies , bu t from its own special problems, such as the hollowing out of industry and its migration t o the mainland, th e link with the US dollar, and so forth . Of course Deng's statement was hyperbole even then; no society can remain frozen. Chang e was on the way. Early in 1997 there were warning signs that all was not well with Asian economies, and in the months an d years whic h followe d Hon g Kon g coul d no t ring-fenc e itsel f fro m th e economy o f it s neighbours . Th e ro t bega n i n Thailand . Bank s ha d 34 Settling Down espite all the gloomy predictions, and the fear expressed by the foreign media and political commentators that the 'Reds' would take over, the PLA would march in, communist rule would follow, and everything built up over a century and a half ofbeing a colony would collapse or be removed, the streets ofHong Kong did not look any different in those days after the handover than they looked before. There were no horseback victory parades such as had accompanied the]apanese arrival after defeating the British forces in 1941: there was not a soldier in sight. There was no gloating over the extinction of the Crown Colony. In fact it was a British 'business as usual' atmosphere that prevailed. Everyone went about their daily lives as though nothing had happened. Now, as I write at the beginning ofthe new century, I can say that the pledge to Hong Kong by Deng Xiaoping of 'no change for fifty years' looks more believable than when he first uttered it. Hong Kong's capitalist system is still alive. But its economy is suffering, not only from the problems faced by the rest of the world's economies, but from its own special problems, such as the hollowing out of industry and its migration to the mainland, the link with the US dollar, and so forth. Of course Deng's statement was hyperbole even then; no society can remain frozen. Change was on the way. Early in 1997 there were warning signs that all was not well with Asian economies, and in the months and years which followed Hong Kong could not ring-fence itself from the economy of its neighbours. The rot began in Thailand. Banks had Feeling the Stones overborrowed an d overlen t an d ther e wa s n o possibilit y tha t th e Tha i currency could remain pegged to the dollar. The baht was allowed to float and went int o free-fall . Th e Malaysian, Indonesian , Taiwa n an d Korea n economies wer e al l affecte d i n varyin g degree s an d responde d i n thei r different ways . The Japanese economy , which ha d bee n th e pi t prop t o the economies of the region, had been stagnating already for some years and could not be looked to for help. Since...

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