A tale of two transitions : Hong Kong, Macau and Sino-European relations

The July 1997 handover of Hong Kong to China and the similarly planned handover in December 1999 of Macau to China mark a new phase in Sino-European relations. Not only will there be continuity, primarily through the continuing commercial interests of the Europeans, but also there will be some new areas of involvement, particularly in political affairs, which Europeans have tended to leave to the two colonial powers, Britain and Portugal respectively, to deal with in the past. All the major European states have a significant commercial interest in Hong Kong which acts as a trading, financial and service centre as well as a stepping stone into the China market. European businesses have an interest in the maintenance of Hong Kong's open market-economy system and a high degree of autonomy, underpinned by the rule of law. Macau has far less importance economically to the Europeans and the political contention has also been downplayed by comparison wiih the Hong Kong case. The European Union is pursuing two objectives towards China: to involve it as a responsible partner in the international system and to develop commercial opportunities in its vast market. Hong Kong and, to a lesser extent, Macau can play a role in both these respects. Hong Kong will continue to play its multiple roles as a commercial facilitator for China's modernisation and as a conduit for Europe's commercial activity there, but, at the same time, political issues inside Hong Kong may well intrude into the Sino-European relationship to an extent that was never seen prior to 1997.