Five years after the handover, Hong Kong is still where the world goes to shop. But it's the Communists who are spending all the money


Hours before sundown on Friday, the neon-drenched Kowloon District is already rocking. The weekend action in Hong Kong, as always, revolves around shopping: streets are mobbed, stores are packed, the spirited bargaining over a Rolex sounds like opera to local ears. Only the language might seem surprising—it's Mandarin, the national dialect of mainland China.

Forget the stereotype of Communist cadres in Mao suits. Mainland China has become the principal source of visitors to Hong Kong, providing a record 4.4 million last year, or a third of the total. Enthusiastic (if recent) converts to capitalism, they're crowding the former British colony's gold and Gucci shops, spending even more per capita than Americans or Japanese—a total of nearly $3 billion in 2001.

Five years after its return to Chinese rule, Hong Kong is being transformed by China in ways few predicted. Before the British flag was lowered for the last time on June 30, 1997, thousands of anxious Hong Kongers emigrated overseas, fearing that the Communists would quell the entrepreneurial spirit that made the colony's economy one of the strongest in the world.

Instead, Hong Kong looks much as it did before: fast-paced and filled to the brim with trinkets, textiles, and flashy electronics for sale. Most of what has always endeared the colony to foreign visitors remains the same. The five-star hotels still have impeccable service, the restaurants are still abundant and extravagant, the nightlife districts such as Wanchai and Lan Kwai Fong are still lit up like Times Square. All this despite an economy that's been in the doldrums since before the handover and an unemployment rate that hit a record high this winter.

The $8 billion tourism industry is easing the pain. In February, visits by Chinese tourists rose 70 percent over the previous year, helped in part by looser restrictions on travel permits. Though it belongs to the People's Republic, Hong Kong remains a special administrative district, with strict border controls. Early this year, Beijing increased the number of travel agents allowed to book trips to Hong Kong from four to 67. The Hong Kong Tourism Board has worked to broaden the city's appeal, promoting Chinese temples and traditions side by side with colonial heritage. "We're enhancing awareness of attractions we've always had: feng shui, cultural monuments, Chinese tea ceremonies," says Lillibeth Bishop, a board spokesperson. "Promoting them just required a more formal campaign." A major refurbishment of Victoria Harbor was recently announced, and a Disney theme park is planned to open on Lantau island in 2005.

But the primary draw is still the shopping—and the primary shoppers are from the mainland. Savvy storekeepers are staying a step ahead, launching in-house training in Mandarin (Cantonese is the native tongue). "Five years ago, everyone looked down on you if you spoke Mandarin," says a Beijing executive living in Hong Kong. "Now, they know we're the big bosses with the money." Not that all communication goes smoothly: one Hong Kong socialite recently published a book and CD intended to teach mainlanders and others how to pronounce words like Hermès and Chanel.

Five years on, Hong Kong is still very much Hong Kong. As Bishop points out, "You can't erase one hundred fifty years of colonial rule in just five years." But there have been subtle changes. The rickshaws that once greeted visitors at the Star Ferry, for example, have all but vanished. The local English-language newspaper mourned their passing as the end of an era, but the rest of the city has moved on. "Hong Kong still has that special dynamism," says former governor Chris Patton, who has returned three times since the handover. Patton credits an independent civil service and the rule of law for the former colony's continued success. But Hong Kong's most amazing skill, no doubt, is its canny ability to keep making money. Nowadays, not only can you hear Mandarin while you're shopping, but you can spend Chinese currency. Money, after all, means the same thing in any language.