June 27, 1997

Big projects expand China-Hong Kong link

HONG KONG (AP) -- British merchants 150 years ago saw Hong Kong as a place of refuge from pirates and typhoons, as well as easy access to China.

Today China views Hong Kong, now the world's busiest container port, as the loading dock for its own economic transformation.

As it prepares for the handover from Britain, China's government is planning ambitious projects to strengthen the road, rail, air and shipping links between Hong Kong and China's neighboring Guangdong province.

"The cross-border element of Hong Kong's development is very crucial," said Stanley Wong, a government planning director.

A crucial link is the East Lamma Channel, which points directly at Hong Kong's Victoria Harbor and is the only deep-water harbor on the China coast with a clear channel from the Pacific.

"This is the value of Hong Kong," Wong said, gesturing toward the channel on his wall-sized topographical map.

Hong Kong currently has four land crossings to China, all at the southern city of Shenzhen: one for pedestrians, one for rail and two for vehicles. Tens of thousands of trucks run in a loop around Chinese factories and Victoria Harbor.

More crossings are planned as Shenzhen and Hong Kong begin to grow together.

Such infrastructure projects -- especially transport -- have taken on extra urgency following new government projections that the population of 6.4 million will swell by 30 percent within 14 years.

Big public works, usually linked to China, have helped drive Hong Kong's prosperity, said Mark McFarland, a senior economist at Peregrine Investments Holdings Ltd.

For example, without a new $20 billion airport and related works, real economic growth would have been zero in 1994 instead of 5.3 percent, he said.

The bond with China was sealed decades ago, when Hong Kong began supplying electricity to mainland cities, while China piped drinking water and trucked food to Hong Kong. It was a tradeoff that survived even the worst political crises.

When China opened to foreign investment in the late 1970s, the factories of the Pearl River Delta, many of them Hong Kong-owned, got into exports via ships and planes from Hong Kong.

"They depend on us for the know-how," says Wong. "We depend on them for the hinterland."