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I can't add much to your post other than: There is a dedicated pro-democracy movement in Hong Kong. There is also a larger pro-democracy and pro-individual and press freedom streak in the population at large, if the protests against Article 23 were any indication. While fears that Beijing would just roll right over the Basic Law and dismantle HK haven't materialized, Beijing and Tung Chee Hwa (chosen by Beijing) were supportive enough of Article 23 that I think a lot of people in HK have remained wary of just how Beijing might try to treat them. I don't think the pro-democracy movement's being naive, but then again, I'm not in HK-- I have to rely on the news and anecdotal reports.
If anyone's lurking out there who's in HK or from HK, please, tell us how things are going.
On top of this, one of my friends, raised in HK, said a big problem was that a lot of Chinese companies doing business in HK felt they did not have to honor contracts. They'd sign them and then just ignore them. (How this situation has progressed, whether it's improved or worsened, I don't know.) While that seems like a business issue only, if it was as widespread as she made it seem, I can imagine that it did not make it any easier to trust the Chinese government.
(Disclaimer: I'm not Chinese, I've never been to Hong Kong, I'm just obsessed with it. And I will get there. Someday. I've applied for jobs there, really.)
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