Leading Article: The real threat to Hong Kong

Can anyone really own Hong Kong? In less than 48 hours from now, it will have "returned to China". Early on Tuesday morning, as the mightiest of all parties in the city's convivial history staggers to an end, travellers on the dawn ferries will look back at the receding waterfront and see no change. This is one of the world's great cities. Like Manhattan, its towers soaring up from the sea have an unearthly beauty transcending the very earthly money-making that reared them. Can a mere change of flag be a threat to power and certainty like this?

But, of course, it can. That Tuesday morning, a large column of infantry and armour from the People's Liberation Army will be settling into quarters in Hong Kong. This arrival, which nobody in Hong Kong was told about until a few days ago, sends two kinds of unwelcome signal.

At one level, it is mere symbolic politics, a sudden extra statement that "we are the masters now". But for the West, already tormented by confused anxieties and guilts about the handover, it is exactly the symbol they could do without. This is not the China of solemn agreements on human rights to guarantee "one country, two systems". This is a reminder of that China which sent the tanks against students on Tiananmen Square eight years ago. Which one will be in charge?

The other signal, which Hong Kongers can read more expertly than Westerners, is also ominous. It is about institutional corruption. The PLA, which is something of a state within the state, is desperate to get a foothold in Hong Kong. For underpaid officers, this is a dream posting with untold opportunities, and competition to be part of it has been intense. It is a foretaste of how Chinese administrators may approach the running of a city which is one of the richest fleshpots on earth.

For many months, Hong Kong people have been trying to get this point across to visitors and interviewers. It is not that they are complacent about what may happen, suddenly or gradually, to the freedom of the press, to trade unions, to the rights to demonstrate or oppose. They worry about these things, but not - as the West does - to exclusion. They look at modern China, and they see not only a vast extension of economic freedom, a unique attempt to reconcile Communist government and the free market, but an almost universal spread of financial corruption throughout the state and its bureaucracy. This, they think, is the real threat to Hong Kong.

It is not that this sort of thing is unknown to the city. Under the British, as Hong Kong rose from a colonial outpost handling the South China trade to one of the busiest industrial producers on the Pacific rim, there was every kind of sleaze. Corruption in the Hong Kong police was notorious. But then the city changed. Industry gave way to financial services as the main source of wealth. And the British administration, in perhaps its finest hour, turned on the colonial bureaucracy and purged it clean.

These two things were connected. In the global market, banking and insurance require a minimum standard of integrity if they are to retain international trust. And this is the most basic threat to the survival of Hong Kong under Chinese sovereignty. The danger is that corruption will gradually invade all transactions and perhaps in time compromise the very regulation of Hong Kong's financial services. And if that happens, international confidence in Hong Kong as the channel for investment in the markets of China and all Asia will seep away.

The flag comes down, and it is too late to worry. In one sense it is a relief for Britain, which for many years has not really known what it was doing in Hong Kong. The attempts to expand political democracy in the territory undertaken by Chris Patten, the last Governor, were little more than window-dressing, addressed mostly to Britain's unquiet conscience.

But China, to which Hong Kong returns, is something infinitely greater than the Communist regime - which will not last for ever. There is some comfort in that. And in reaction to a world full of nationalism, there is a movement towards independent city-states, founded on commerce and drawing in the labour and talent of continents around them. Hong Kong, if it can survive the next decades, may have an even more spectacular future.