Leading article: Freedom is the way forward for Hong Kong

This has been an important week in Hong Kong. Last weekend, the colony (because that is what it still is) marked the beginning of its last 100 days under British rule. This weekend, the territory's pro-democracy movement began a campaign to raise the status of civil liberties during the countdown to Chinese rule.

To those who know Hong Kong well, all of this may seem like so much meaningless shadow-boxing. After all, the rules and the timetable for the hand-over were largely laid down years ago. The British presence in Hong Kong, as we point out today, is really at the symbolic level now: cap badges, street names and so on. The substance of London's influence has been waning for a decade. The new stars are those who have had the presence of mind and the sense of self-interest to switch their allegiances to Peking.

But, as Tung Chee-Hwa, Hong Kong's chief executive-designate, has discovered, there is still plenty of room for error and success in the remaining few weeks. Mr Tung has had a pretty bad week, with complaints over how he has allocated jobs amongst his new cabinet-in-waiting, and tumbling scores in the opinion polls that record his popularity.

There is still a lot up for grabs, and actions or words now will make a lot of difference to how the transition functions. There are some hopeful signs. This week, Al Gore has passed through Hong Kong and China, and the US Vice-President made it clear that Washington regards the hand-over of Hong Kong and the subsequent handling of its governance as a key feature of future Sino-US relations. Newt Gingrich, Speaker of the House of Representatives, made a similar point.

Business, it is clear, is sanguine about the hand-over - optimistic, even. A land auction this week saw a 26,000-square-metre chunk of territory on Hong Kong Island go for the grand sum of HK$11.82bn, or about pounds 1bn. Sino Land and the family of its chairman, Robert Ng, clearly believe that the real estate market, at least, is in safe hands. The main complaint from property developers, indeed, has been about measures to damp down speculation and put a cap on soaring prices. The International Institute for Management Development, according to preliminary results, regards Hong Kong as the third most competitive territory in the world, just below the US and Singapore (Britain soared up the rankings to a spectacular 12th place).

Both the increased interest of the United States, and the rise in business confidence, are good signs.

But beyond this, there are plenty of counter-indications, signs that all is not well and may not be getting any better. Negotiations in London between Britain and China on the hand-over in the Joint Liaison group broke down with no agreement on key issues, including the entry to and presence in Hong Kong of China's People's Liberation Army.

The role of the courts in Hong Kong also came under the spotlight this week. One of the chief aides to Mr Tung, SY Chung, said that, in future, courts in the territory would not be able to hear cases brought against the provisional legislature which China is setting up to run Hong Kong.

The rule of law - as the West never ceases to remind China - is vital to the future of both the territory and the mainland. It would be deeply troubling if that lesson were not getting through even to Hong Kong's elite.

Future civil rights continue to cause grave concern. Yesterday, human rights groups began a campaign that will end with a candle-lit vigil to mark the anniversary of the Tiananmen Square killings on 4 June. China wants to water down the rights granted to the people of Hong Kong by Britain (albeit without any great sense of urgency), something that should be unacceptable to us as well as to the citizens of Hong Kong.

The fact that businesses, and that amorphous entity the international community, are watching Hong Kong closely, is a good sign; but neither has much of a track record in protecting human rights. Business, too, often regards the notion as a luxury that is too easily dispensable for expedient reasons. Washington's commitment to scrutinising human rights in China (and elsewhere) is, to put it politely, wafer-thin. Hong Kong itself sometimes seems to be sunk in a kind of trance, more concerned with the transactions of everyday life than with the bigger question of freedom. They should never forget that economic freedom and freedom of expression are inseparable, as China must one day learn.

Those who do fight for human rights are clearly concerned that the leash is getting shorter; after this year, there is unlikely to be any ceremony to commemorate Tiananmen.

The freedom of the press to monitor Hong Kong is a vital liberty, and it is one that we will exploit as much as possible over the coming weeks. This week Lily Wong, our latest cartoon recruit, has highlighted the role of the press in Hong Kong, where - despite the lack of formal restrictions - it is becoming harder and harder to express any criticism of the new order. Independence of the media in Britain is an important issue; in Hong Kong, liberty and democracy depend upon it.