582 { China’s Quest
Korea, Taiwan, and Singapore—which were rapidly industrializing through
dynamic participation in the global economy. By 1982, when negotiations be-
tween London and Beijing over Hong Kong’s reversion to China began, the
average per capita annual income in Hong Kong was US$6,000, then a quite
comfortable mid-level of development.
Hong Kong’s growing economic prosperity offered opportunities to Beijing.
Hong Kong’s swelling population, combined with the mountainous nature of
Hong Kong plus the greater return on level land for commercial rather than
agricultural use, created a strong demand for imported food. A large portion of
those foodstuffs were supplied by farms across the border in southern China.
Rice, pork, chicken, fish, eggs, fruits, and vegetables, as well as electricity and
potable water, came from Guangdong. By the late 1980s, half of Hong Kong’s
water supply came from Guangdong province.^6 All these goods were paid for
in freely convertible Hong Kong dollars. Beijing was always in need of hard
currency, and sales to Hong Kong supplied a substantial amount. According
to a saying widely attributed to Zhou Enlai, Hong Kong was a fine machine for
turning Chinese chickens and pigs into pounds sterling.
Hong Kong also served as a window on the world for the CCP. This func-
tion was especially important during the PRC’s early period of relative iso-
lation from the capitalist world. The CCP maintained an overt organization
in Hong Kong, led by the Hong Kong office of Xinhua News Agency. This
above-ground organization maintained liaison with leftist labor unions,
patriotic capitalists, pro-PRC newspapers, and friendship associations. The
CCP also maintained a covert organization in Hong Kong to conduct intel-
ligence and other special tasks.^7 Intelligence collection was a key task of both
overt and covert organizations. The staff office of China’s Military Affairs
Commission maintained a small team in Hong Kong to collect foreign books,
newspapers, and magazines.^8 Because of Hong Kong’s Chinese culture and
language, it was relatively easy for CCP covert operatives to move about and
avoid detection, although perhaps only seemingly so, since, according to Xu
Jiatun, by the 1980s British counterintelligence in Hong Kong had a pretty
good idea of CCP covert operations in the colony. Xu Jiatun was head of
the Hong Kong branch of Xinhua News Agency and, as such, also the head
of the CCP organization in that city from 1983 to late 1989. As late as the
1980s, the Military Intelligence Bureau of the PLA General Staff Department
focused its intelligence collection operations on Hong Kong.^9
China’s post-1978 quest for foreign capital and export markets gave the
PRC a different and even greater interest in maintaining the economic and
political status quo of Hong Kong. Once the PRC opened to foreign invest-
ment and foreign business operations on a market basis, and once it began
promoting exports, Hong Kong’s dynamic and globally savvy business class
contributed very substantially to the success of China’s new policies. Robin
McLaren, senior British representative to the Sino-British joint liaison group
between 1987 and 1989 and then Britain’s ambassador to Beijing from 1991 to