How 1997 paved way for China’s reforms

Hong Kong’s handover gave way to a financial crisis and reform quickly followed. The pressure China is facing now could likewise lead to major changes.

As the cliché goes, 1997 was a year of two halves for Hong Kong. As it began, lingering concern about the handover by Britain to China had largely subsided. The two leading indicators of sentiment, the stock market and property market, were both bullish. The Hang Seng Index closed at 15,197 points on June 30, about 50% higher than a year earlier. In May, the IPO of Beijing Enterprises, controlled by the Beijing municipal government, was more than 1,000 times oversubscribed. The application form for retail subscription ran out and was said to be up for sale at HK$100 each.

But the mood was to change sharply, with euphoria...

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