The Recovery of Hong Kong } 581
years to recover Hong Kong, and then did so in a pragmatic manner that did
not destabilize the economic and political institutions planted by Britain in
Hong Kong, at least until a belated, post-6-4 British effort to introduce de-
mocracy into Hong Kong.
In the early days of the PRC, Mao Zedong mandated a “long-range view”
and “full utilization” of British rule over Hong Kong.^4 British rule over that
territory was to be left intact and exploited by the PRC. Once the Korean
War began, British-ruled Hong Kong became very useful to PRC efforts to
circumvent US and UN embargos. Under those embargos, it became difficult
for the PRC to purchase strategic materials and a wide array of industrial
technology, let alone weapons and military equipment. But Hong Kong, as a
British colony, was able to import many embargoed goods. Hong Kong busi-
nessmen, for reasons of Chinese patriotism and pecuniary gain, were some-
times willing to acquire needed items and find discrete ways of moving them
up the Pearl River to PRC jurisdiction. The vulnerability of British Hong
Kong to Chinese embargo, or outright military seizure, also gave Beijing
leverage with London, and thus some modest degree of indirect leverage on
the Anglo-American alliance. One reason why London broke ranks with the
US and recognized the PRC in January 1950 was to dissuade Beijing from
seizing Hong Kong.^5
China’s 1949 revolution profoundly transformed Hong Kong. Prior to 1949,
Hong Kong was a center for entrepôt trade with China and a Royal Navy base,
with a modest population of 1.9 million. There was very little industry. But
with the CCP’s post-1949 liquidation of China’s bourgeoisie as a class, many
Chinese capitalists moved to Hong Kong and set up shop. The British admin-
istration in Hong Kong supported private enterprise with strong legal pro-
tections for property, impartial justice, low taxes and tariffs, and a relatively
incorrupt bureaucracy. Hong Kong quickly emerged as a production center
for cheap, labor-intensive goods: toys, fireworks, leather items, simple electric
appliances, and especially textiles, clothing, and plastic goods. Chinese ship-
ping firms previously based in Shanghai or Ningbo moved to Hong Kong to
carry much of that region’s booming trade. By the 1960s, Hong Kong had
become one of East Asia’s leading manufacturing and logistics hubs.
Several million refugees from communist rule in China fled to Hong
Kong over the years, providing a pool of cheap labor for Hong Kong’s export-
oriented industrialization. By 1980, the territory’s population was over five
million. Real estate development boomed as Hong Kong’s residential and
industrial areas expanded. Soon, new service industries grew strong: tourism,
merchandizing, shipping, logistics and port operations, banking, finance, law,
and insurance. A growing middle class of professionals developed in asso-
ciation with these economic changes. Wages and standards of living began
to rise. Hong Kong gradually became prosperous. By the early 1970s, Hong
Kong was recognized as one of East Asia’s “four tigers”—along with South