AS the United States and China imposed trade sanctions on each other following the latter's refusal to curb pirating of music discs and computer software at Washington's bidding, China's future province, Hong Kong, watched with trepidation an issue that can wipe out nearly 18 per cent of the current British colony's entrepot trade.
Washington on May 15 published a preliminary list targeting about $3-billion worth of Chinese clothing and electronic products for 100 per cent punitive import tariff. And, sure enough, China retaliated with counter sanctions by unveiling a list of imports from the US that will attract 100 per cent tariff. The US trade sanctions, one of the largest in its history, will come into effect on June 17 on approximately $2 billion worth of goods unless an agreement is reached by then.
China's total annual exports to the US now total $40 billion. Trade experts say over 60 per cent of these consist of entrepot trade through Hong Kong. Manufacturers there are using China's MFN status to establish plants across the New Territories border.
On May 13 in Beijing, Foreign Ministry spokesman Cui Tiankai had been pessimistic about the outcome of the talks between the US and China. "They haven't progressed positively so far," he said. The talks focused on a 1995 accord that requires China to crack down on piracy, mostly of music and video CDs and CD-ROM software which US says would sell for over $2 billion if they were legally reproduced.
Tiankai said China had fulfilled its obligations and warned that sanctions wouldn't solve the problem. An official newspaper cited raids on pirated goods sellers in the last year that had netted at least 20 million CDs, 800,000 videotapes, 40,000 sets of software and 480,000 books. But US software industry spokesmen say Chinese-produced pirated software is turning up in ever greater quantities in markets worldwide.
Sanctions will be a personal blow to Hong Kong Governor Chris Patten who lobbied President Clinton and Congress for unconditional MFN renewal recently. While MFN renewal is not conditional or connected to the current sanctions' threat, the row is expected to have serious bearing on passing the MFN bill through Congress. Patten's bid was made for Hong Kong's sake, and he stressed he was not pushing for China's interests. He's a vociferous opponent of China and is not on speaking terms with his counterparts on the mainland.
Trade and Industry Secretary Denise Yue says Hong Kong would seek arbitration from the World Trade Organisation if the US imposes sanctions affecting the territory. Henry Tang Ying-yen, chairman of the Federation of Hong Kong Industries, expressed fears of the repercussions of the trade war on the territory's trade.
Patten had other problems coming his way. On May 10, as he flew back from the US, hundreds of Vietnamese boat people—facing repatriation to the country they had fled in the late '80s fearing persecution—set the Whitehead Detention Centre ablaze and stormed to freedom on May 10 in a mass breakout after one of the territory's worst prison riots. About 200 inmates, including families with small children, dashed from the camp after forcing the gates and toppling a fence in a dawn uprising in the New Territories area.
Officials said 17 buildings, including guards' dormitory huts and administration blocks containing vital camp records, were burned down. The police threw up roadblocks and and rounded up 55 escapees within hours.
About 30,000 boat people remain in camps in South-east Asian countries, with the largest number in Hong Kong. Most have been declared non-refugees and are deemed illegal immigrants who face no threat of persecution back home, which they fled after the 1975 communist victory in the Vietnam war. China wants all boat people to be repatriated before the sovereignty transfer in July 1997.
Local politicians and civic groups fear an escalation in violence. "It will get worse as 1997 approaches, as the government prepares to repatriate hundreds every month," says Lau Kong-wah, a regional councillor and chairman of a group lobbying for faster repatriation.
Zheng Jungsheng, deputy director of Xinhua News Agency, accuses Britain of putting "mental and financial burdens" on the people of Hong Kong by offering asylum to the boat people while not resolving their problems. China is worried that if the repatriation is not complete before the takeover, other ethnic Chinese minority groups will flood the territory, seeking refuge based on the Vietnamese precedent. Most refugees in Hong Kong camps are minority Chinese groups who Vietnam says have no right of abode in Vietnam.