A new battle for China's old soldiers: Teresa Poole reports from Hong Kong on the uncertain future of a tiny corner of a foreign field that is forever Chiang Kai-Shek's

ON THE shores of Junk Bay, between a hillside where a Chinese graveyard is under construction and the tower blocks of a new public housing project, lies a place where the spirit of the Republic of China lives on.

Just before 8am every weekday morning two teenage boys appear in a school playgound, cassette player and folded flag in hand. On the hour, the whole school assembles in the yard for a solemn flag- raising ceremony, accompanied by the national anthem.

The village houses that rise up behind the school are permanently decked with hundreds of Nationalist Chinese flags - white star on a blue and red background. High above, five gigantic Chinese characters, now more than 40 years old, have been carved into the chalky hillside. They spell out the slogan 'Long live Chiang Kai-Shek'.

Anyone would be forgiven for assuming that this monument to the Nationalist Chinese leader, driven out of China by Mao Tse- Tung's forces in 1949, was in some Taiwanese fishing hamlet. Not quite; fewer than five years before Britain hands over sovereignty, there is a small corner of Hong Kong that is forever dreaming of a very different kind of reunification of Greater China.

The village of Rennie's Mill is an improbable relic in a colony where the burgeoning economy tends to transform most skylines every decade or so. After 1949 Hong Kong was swamped by refugees from the mainland. Among those fleeing were a hard-core of former Kuomintang (KMT) soldiers, beaten in the last battles of the civil war and unable to get to Taiwan with President Chiang and most of the KMT refugees.

They were settled, first of all, in refugee centres on Hong Kong island. Then, one summer's evening a fight broke out and about a dozen local Communist sympathisers, loudly celebrating the Dragon Boat Festival nearby, were beaten to death by KMT soldiers. The Hong Kong Government decided to move the Nationalists to some remote, unpopulated spot. And so on 26 June 1950, six ferries transported about 20,000 KMT supporters to a site on the eastern side of Kowloon. Many of them have remained there ever since.

However, the Hong Kong government has now decided, despite protests, that next year Rennie's Mill will be flattened to make way for the next stage of the Junk Bay housing estate. This year's 10 October Nationalist Day celebrations were almost certainly the last to be held there.

That Rennie's Mill - named after Albert Rennie, a failed flour mill owner who hanged himself in a nearby battery tower after the Second World War - has lasted so long may be due to the harshness of its early years. Lam Tin King, 77, who fought with the KMT against the Japanese (and puts on a vivid reconstruction in his front room of one of his battles), was in the first group to arrive at Rennie's Mill.

'There were no roads, no houses,' he said. 'Just trees, snakes and rocks.' Nor was there any drinking water, which had to be carried in over the hills. The government built a dining shed, but living shelters, paths and drainage systems all had to be constructed by hand, with some financial support from Taiwan.

A pamphlet published about 30 years ago described the beginnings of the settlement: 'The camp is three sides surrounded by mountains, with the other side facing the sea, so no mosquitoes appear throughout the year. Moreover, all the refugees there have public spirit. They always try their best to keep the camp clean. All of this accounts for why there has never been any plague and the death rate is lowest, in spite of dense inhabitation and poor conditions in housing and feeding.'

About 6,500 people still live at Rennie's Mill - roughly the same as in the mid-1950s, after half the original residents managed to move to Taiwan. The settlement has winding concrete paths instead of roads, a main alley for a shopping street and a local fire station that relies on a hand- drawn pump. Access is by bus to a path that leads down from the top of the village, or by ferry.

During the day, dozens of the elderly residents sit by the sea- front or play mah-jong in the small restaurants. About 1,300 are over 60; the relative longevity of the villagers may be due to years of walking up and down the exhausting stone staircases that connect the different village levels.

But this is no village paradise. Open sewers run beside the paths, the village incinerators seem to be fighting a losing battle against mounds of rubbish, and during the week the noise of a steel mill shatters the rural calm. Nevertheless, the majority of residents are unhappy with the government's plans to move them.

Some are determined to stay put, but others want alternative village-style rehousing rather than a future in a 30-storey apartment block. All say the compensation offered does not allow for the fact that they own their present houses. Many are simply making plans to get out of Hong Kong before China regains control in 1997.

Chan Po-Sin, a former KMT major, is one of the village elders who is fighting the relocation. 'We like this place,' he said. 'We are united. Even though people work outside, they like to come back. The relationship among the neighbours is very good, very safe.' In fact, the village has the lowest crime rate in Hong Kong.

Mr Chan joined the KMT when he was 18, fighting first against the Japanese and then the Communists. His last battle, from which he bears a large scar on his neck, was the decisive Huai-Hai campaign, when Communist forces, led in part by Deng Xiaoping, defeated the KMT armies that were protecting the Yangtze, and took the Nationalist capital at Nanjing. Of the 700 men under Mr Chan's command, fewer than 100 survived. He escaped to Hong Kong in 1949 after the Communists entered his home province of Guangdong. Many others in Rennie's Mill came from farther afield - Peking, Shandong, Hunan - and even now the older generation speaks an extraordinary mix of dialects. Asked what he thought of Deng Xiaoping and the Chinese takeover in 1997, Mr Chan said: 'Deng's policy is just based on the principle of Communism. Their nature is very cruel. They would do anything just to stabilise their authority, no matter killing how many people.' He hasn't decided whether to leave before 1997.

Mr Chan has never been back to China. His home village invited him last year, but he refused to go. 'I don't want to be used by them,' he said. Mr Lam Tin King is more sanguine. 'At my age, I don't care,' he said. 'You find a step, you step on it. Let's see what happens. It doesn't matter to me now.'

As elsewhere in Hong Kong, there is considerable uncertainty in people's minds about the stand-off between the Governor, Chris Patten, and Peking over Mr Patten's plans to democratise Hong Kong's electoral system. Willy Wan, 33, one of the leaders of the Rennie's Mill campaign for better compensation and rehousing terms, said: 'Mr Patten seems very serious, very democratic. He looks like a movie star. But I just wonder, can he fulfil what he is at?' Mr Wan's late father, the former governor of the Chinese province of Hubei, came to Hong Kong in 1949 and started a household-supplies store that his son still runs.

'I support Mr Patten's policy, but it is too late,' Mr Chan said. 'Britain was here for more than 100 years, and they are trying to give us a bit of democracy in the last four years. This is just a way to deal with the Chinese government - they don't really mean to give us democracy.' Many residents of Rennie's Mill point instead to Taiwan, where this month there were broadly democratic parliamentary elections.

A 34-year-old teacher, whose qualifications would make it easy for him to leave Hong Kong, said he intended to stay. He also expressed a view about the row between Mr Patten and China that is becoming increasingly common among educated Hong Kong Chinese. 'Mr Patten's aims are right, but on the other hand how do you face the Chinese? China will interfere after 1997.'

(Photograph omitted)