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The Challenge of the 1997 Hong Kong Handover for Taiwan*
Introduction
Ever since the early 199Qs, most observers on both sides of the Taiwan Strait had tended to view Hong Kong's reversion to Chinese sovereignty on 1 July 1997 as a crucial juncture for cross-strait relations. It had been a widely held expectation that this fateful date might be a makeor-break point far the "three-link issue."' The escalation of tension in the Taiwan Strait since 1994 substantially intensified the worry of a rupture in Taiwan-Hong Kong relations at the handover.z The 1997 reversion, however, turned out to be as uneventful and anticlimactic as the death of Deng Xiaoping in February of the same year. The immediate impact of the handover on both cross-strait relations and Taiwan-Hong Kong relations was surprisingly superficial, while the long-term implications of the 1997 reversion for Taiwan, much of which will be contingent on the outcomes of the "one country, two systems" experiment itself, remain to be seen.
In this paper, I analyze how Taipei's policymakers managed to cope with the challenge of the Hong Kong handover for cross-strait relations. I place emphasis on the strategic calculation and political process that induced Beijing and Taipei to pursue a cooperative, rather than confrontational, strategy over the issues surrounding Taiwan-Hong Kong relations after 1997. I take it as a premise that the three legs of the triangular relations between Beijing, Hong Kong and Taiwan are not on equal footing. In the first instance, Hong Kong-Taiwan relations are always subordinate to the dynamics of the overall cross-strait relations. The post-1997 political and legal framework for Hong Kong-Taiwan economic and cultural exchange is ultimately decided by Beijing and Taipei respectively and by their strategic interaction. The Hong Kong Special Administrative Region (H.K.S.A.R.) government under the first chief executive, C. H. Tung, can influence the policy framework only on the margin and at the implemenation stage. On the other hand, Hong Kong has earned its place in cross-strait relations on the basis of its unique location, status and economic prowess. The instrumental value of Hong Kong has led both sides to recognize that .Hong Kong-Taiwan relations are a key component of overall cross-strait relations. For both Beijing and Taipei, Hang Kong is and will continue...