What a decade! Half a million people took to the streets on July 1, 2003. Sars turned Hong Kong into a city of masks, taking 299 lives. Over a million chickens were slaughtered in the government's desperate war against bird flu. The property market slumped. By mid-August 1998, the Hang Seng Index had plunged to 6,660; in the past week it has been nudging 22,000. Tung Chee-hwa stood down as chief executive. Enter his successor, Donald Tsang Yam-kuen, who was re-elected in March this year. Mickey and Minnie touched down at the Disneyland theme park on Lantau, the first on Chinese soil. At Ocean Park in Aberdeen, two giant panda cubs, Le Le and Ying Ying, greeted Hong Kong citizens on the 10th anniversary of the city's return to Chinese rule. The People's Liberation Army, a symbol of sovereignty, was conspicuous by its absence from public view. The past decade has provided a wealth of vivid images for the media to roll out in the lead-up to the 10th anniversary of the handover. To borrow a trendy phrase, Hong Kong society is immersed in a sea of collective memories, be they good or bad. Now we say goodbye to the first decade of post-colonial Hong Kong, peppered with dramatic events and loaded with mixed feelings. And we welcome the beginning of a new phase for the special administrative region, which is poised to be no less exciting and lively than the past 10 years. Many Hongkongers bade farewell to British rule 10 years ago with doubts and apprehensions about the new order with its catchy name, 'one country, two systems'. Their feelings about what the next decade may bring could be just as profoundly mixed and complex. Ask any ordinary citizen in the street a simple question: do you feel better or worse off, 10 years on? Chances are their replies will be anything but clear. Certainly, opinion polls show a consistent strengthening in people's feel-good sentiments towards Beijing and the nation's progress in areas including human rights and the rule of law. On the face of it, the implementation of 'one country, two systems' has been largely hailed as a success. After years of woes, Hong Kong's economy is back in the growth lane. The gross domestic product leapt by 6.8 per cent last year, and it should continue at a brisk 6 per cent annually from next year to 2011, forecasters say. Hong Kong remains a free, affluent and open society with the rule of law, as it was under British rule. The reality, however, is far more complex. The warm breeze blowing across the mainland-Hong Kong landscape was ruffled by a cold draught last month - a reminder by state leader Wu Bangguo of the limits to the city's autonomy. 'However much power the central government decides to assign to the SAR, this is what the SAR gets,' he told a Basic Law symposium on June 6. That stirred up some concerns. Did Mr Wu's not-so-gentle reminder mean Beijing would further tighten its grip over the city's affairs? Don't forget, after the mass protest rally of July 1, 2003, Beijing set aside the hands-off approach it adopted after the handover. Mr Wu's comments came on the eve of a public consultation on universal suffrage this summer. They laid bare the underlying tensions, both within society and between Hong Kong and Beijing, over the development of democracy under 'one country, two systems'. Ordinary people face bread-and-butter issues that they feel just as keenly, if not more so, than the right to elect their political leader and all lawmakers. These include economic and livelihood issues like unemployment and air pollution. Recent years have brought a jarring succession of amber-light warnings about the city's long-term viability, from people who know what they're talking about. Time magazine says its sister publication Fortune got it wrong in 1995 when it predicted the city's demise after 1997. But recently Time referred to Hong Kong as 'sunshine with clouds'. Some even see clouds hanging over the core issue of the city's long-term development. Lu Ping is a retired mainland official formerly in charge of Hong Kong affairs as director of the Hong Kong and Macau Affairs Office. Pointing at rapid economic development in the surrounding region, he recently said Hongkongers must be vigilant to avoid being marginalised. 'The problem of Hong Kong's economic transformation is structural,' he said. 'It won't be solved solely by Cepa [the Closer Economic Partnership Arrangement, a free-trade deal with Beijing] and the individual visitor scheme for mainland visitors.' Those measures were among Beijing's prescription to reinvigorate an ailing city economy, infected by the 1997 Asian financial meltdown and worsened in 2003 by the severe acute respiratory syndrome outbreak. The first Cepa, signed in June 2003, and subsequent agreements gave Hong Kong businesses and professionals easier access to the mainland market. The tonics worked wonders. The individual travel scheme eased restrictions for mainlanders, bringing legions of visitors to a city where tourism had been devastated by Sars. It went further, transforming the tourism industry and even raising profound questions about the city's development. In 1997, 13 million people visited Hong Kong, 3 million of them from the mainland. By last year, the visitor count had doubled to 26 million, with half of those from the mainland. Another reality was at play in this marked shift in tourism - the emergence of a well-off middle class on the mainland, spawned by its growing economy. Hongkongers grew increasingly receptive to the mainland influx as they saw the number of jobs it helped create, especially in low-skilled work. If the regional financial shock left people uncertain about the economy's future direction, the qualms did not last too long. Government and society grew to accept that the economy would stand on the four pillars of financial services, logistics, tourism and trade. Observers noted that the words 'industry' and 'technology' were dropped from the names of government bureaus in a major restructuring completed last month. That was yet another sign of a government self-correction, a shift in strategy towards a service-oriented economy with financial services as its core. Mr Tsang made it clear during his election campaign this year: the economy, he said, could create enough jobs and wealth to feed all 7 million residents if Hong Kong became Asia's key financial hub. But others, including former secretary for security Regina Ip Lau Suk-yee, are sceptical. Mrs Ip has become a strong advocate for innovation and technology to help diversify the city's economic structure. Among others, she has suggested greater collaboration with Shenzhen in promoting innovation and technology. Shenzhen's rapid growth and its economic relationship with Hong Kong speak volumes about the seismic changes in the mainland economy, especially in the past 10 years, and their impact on Hong Kong. This city had been the major driving force of the Guangdong economy since the open-and-reform policy of the early 1980s, but the cross-border economic relationship has become increasingly complex. Co-operation and competition co-exist in an increasingly integrated economy in the nation. There are growing fears that Hong Kong's container ports might lose out in competition with Shenzhen's ports. Mr Lu says the early completion of the Hong Kong-Zhuhai-Macau bridge project and greater co-operation with the western part of Guangdong will be crucial to Hong Kong's future development. The multibillion-dollar plan to build the bridge across the Pearl River Delta remains up in the air, with governments still locked in dispute over financing and other matters. Their differences, however, have not slowed the momentum of integration between the Delta cities. The past two years have seen a marked change of strategy towards regional co-operation. The co-operation framework of the pan-Pearl River Delta has increased government-led business activities across the region. The renaming of the Constitutional Affairs Bureau to the Constitutional and Mainland Affairs Bureau, in the latest restructuring exercise, reflects this wind of change. So closer economic integration is undeniably important: that view is shared by the government and some quarters in the community. But with awareness comes unease - what will Hong Kong's role be in the rapidly growing mainland economy? Former financial secretary Antony Leung Kam-chung is adamant that the city's future success lies in its ability to pool together capital and talented people. If you look at the surveys and studies by prestigious institutions and think-tanks, Hong Kong is still well ahead in the economic race - notably, ahead of Shanghai. That city's development of futuristic skyscrapers, roads and other infrastructure has been breathtaking. Yet it still lags far behind Hong Kong in terms of 'software infrastructure' - clean government, the rule of law, an independent judiciary, freedom of the press and flow of information. But Hong Kong's competitive edge in such software is fraught with concerns. Its living environment is deteriorating; the standard of its education and quality of its manpower are in decline. That 'must-see' attraction in every tourist guide, the view of Victoria Harbour from the Peak, is tarnished by haze mixed with air pollutants on most days of the year. Mr Tsang might genuinely believe the problem of air pollution is more a question of perception than reality. He has tried to deny the problem by citing statistics showing Hongkongers live longer than the average citizen elsewhere. Not surprisingly, he has been roundly criticised for this. Government statistics speak louder than words: the number of hazy days with high pollution is growing steadily. Hong Kong's chief weatherman, Observatory director Lam Chiu-ying, has warned that our winter might become a thing of the past within a century if nothing is done. 'When I was young, there were 20 to 30 cold days,' he said. 'Now there are roughly half that; but by the end of the century there will be zero.' While Hong Kong is not immune to global warming, half of its air-quality problems can be attributed to urbanisation, such as the proliferation of skyscrapers. In the face of growing concerns locally and internationally, Mr Tsang has put better air quality high on the agenda for his second term. The government will seek a helping hand from Guangdong authorities in relocating polluting industries further away from Hong Kong. And it is contemplating radical measures such as electronic road pricing and cutting emissions from electricity utilities, to improve air quality before it is too late. Hong Kong can claim to be one of the world's safest cities, with a low crime rate and highly efficient law enforcement agencies. The bird flu crisis and the Sars onslaught emerged to some extent as blessings in disguise: they awakened a belated sense of the importance of public and personal hygiene. Arguably, Hong Kong has become a cleaner city. The loss of 299 lives during the months-long Sars epidemic changed attitudes towards life for a people known as money-minded and materialistic. People's appreciation grew for what they already had, for the beauty of sharing and caring, and the meaning of community spirit. This changed mindset explains in part the surge in civic awareness and the sense of a Hong Kong identity, as manifested in opposition to harbour reclamation and the embrace of heritage conservation. Terms such as 'sustainability', 'green lifestyle' and 'open space' became woven into the fabric of society's values. As mindsets continue to change, the government faces fresh challenges against its policies and practices on a wide range of issues, including harbour reclamation, height limits of buildings, heritage conservation, city planning and caring for the poor. When it came to the vital sector of education, however, the Tung and Tsang administrations showed no lack of direction or commitment. It was one of the three livelihood issues - along with housing and elderly welfare - that Mr Tung identified as priority tasks even before he was sworn in. But a series of big-bang education reforms unveiled since the handover have proven overly ambitious, ill-timed and poorly delivered. They created more foes than allies in the education sector and society at large; more problems than solutions for the embattled Tung administration. At one point tens of thousands took to the streets, prompting a belated government review of teachers' workloads and what went wrong when reforms were launched in classrooms. The difficulties that befell Mr Tung's signature education reform highlighted the government's dilemma in trying to introduce much-needed changes in important areas. It faces a fragmented legislature, with no direct administration control over any lawmakers' votes. Ranked against it is an assertive and at times unpredictable media, and increasingly volatile public opinion. The result: major setbacks for the government over a proposed goods and services tax, national security legislation and the West Kowloon cultural hub project. The old formula of effective government used by the colonial administration no longer works, observed former chief secretary Anson Chan Fang On-sang, who retired in 2001. 'You cannot go back to the old system. You have to move with the times and change the system so that it can deliver strong, effective governance, transparent and accountable governance ... Until we have [universal suffrage] we are not going to have good, accountable governance.' Set aside for a moment the practical importance of good governance. The civic row over democracy has hampered the city's full-hearted return to the motherland, says an eminent pro-Beijing figure in Hong Kong politics, Tsang Yok-sing. The former chairman of a party that merged into the Democratic Alliance for the Betterment and Progress of Hong Kong, he wrote in Sing Tao Daily: 'Up to now, what is the most important factor that hinders the return of the hearts of people towards the nation? The answer is: there's no universal suffrage. Some people will say it is politically incorrect for [this comment to] come from the 'pro-China camp'. But it is true and obvious.' To break the deadlock, he said, the confrontation between the pro-Beijing and pro-democratic camps must change. For that to occur, influential figures in Beijing would have to take the initiative. Constitutionally and politically, there is no doubt that Mr Tsang plays a vital role in bridging the gulf between Beijing and Hong Kong over the democracy issue. He has pledged to come up with a 'complete solution' to the decades-old question during his tenure. Signs abound, however, that the upcoming public debate on universal suffrage will cause more divisiveness and controversy, both in the city and between Hong Kong and the mainland. Its timing, too, could hinder consensus, coinciding with district and Legislative Council elections and the fractiousness of the campaign trail. If people are doubtful or cynical about Mr Tsang's game plan, it is not so much that they doubt his resolve or political skills in brokering a deal. There are good reasons for him to do his utmost. If he succeeds, he would certainly go down in history as the man who accomplished an impossible mission. The question mark, rather, is over Beijing's view of the city's political future: that's the decisive factor. Beijing is caught in a dilemma. It feels obliged to progress towards the final destination under the Basic Law - universal suffrage. At the same time, it is still paranoid about the political uncertainties and implications that might arise when Hongkongers are allowed to elect their own leader. The dilemma boils down to this simple question: what if Beijing does not want to appoint the candidate elected by the majority of people through universal suffrage? If that happens, what political price would be paid by both Beijing and Hong Kong? Does the possibility of a political crisis exist only in theory, or in the real world? Beijing's lack of trust in Hongkongers is compounded by the complex issue of identity. Most Hongkongers have identified themselves as Hong Kong Chinese first, instead of simply Chinese. That may not seem like a problem to most city residents, but in Beijing's view, this 'identity issue' reflects their immaturity. Beijing cites this weak sense of national identity in the 'minus' column when it rates Hongkongers' trustworthiness in electing their chief executive. In an interview with Time magazine, Yan Xuetong of Tsinghua University lamented that Hong Kong's return to China 'is just half achieved'. He said: 'Hong Kong is still regarded as a foreign part of China, still regarded as a foreign country. Hong Kong has returned in name, but not in substance.' Central Policy Unit head Lau Siu-kai said that while Hong Kong had physically returned to the motherland 10 years ago, 'the hearts of Hong Kong people haven't. We have just begun to redress the balance between 'one country' and 'two systems','. That view is not shared by John Chan Koon-chung, a writer and cultural critic who has lived in Beijing in recent years. He told a conference on the handover anniversary: 'Why do we have to choose between being Hongkongers and Chinese? I don't see a conflict.' Judging from opinion polls, his view is shared by the majority of the community. Ordinary people can be pardoned for feeling perplexed by the identity debate. They feel Hong Kong has become more Chinese and less international since the handover. More people speak Putonghua in classrooms, shopping malls and workplaces. National anthems are broadcast regularly on local TV stations as part of a government-led campaign to promote national identity. The standard of English is on the decline. Hong Kong has largely vanished from the international radar screen. But the government has launched a global campaign to promote the notion of Hong Kong as 'Asia's World City'. Central and Hong Kong government leaders are at pains to highlight the importance of the city's uniqueness and its role as an international financial hub for the nation. A mainland expert on Hong Kong issues, who did not want to be named, said: 'To be fair, just so many things happened in the first 10 years of the SAR. There were economic ups and downs, epidemics and the September 11 terrorist attacks. Politically you had the Basic Law interpretations, the resignations of Mr Tung and some ministers, Article 23 ... you name it. '[The fact that] there are problems of this or that kind is the best illustration that 'one country, two systems' is a living policy ... the big test has just begun.' There has been one constant in the history of Hong Kong since the start of colonial rule in the 1840s - the tie between its fate and that of the mainland. That link strengthened with the handover. And so did the delicate task of striking a balance between 'two systems' and 'one country', made harder by the dramatic changes in the mainland's economy and society. The issue of universal suffrage in Hong Kong is a case in point. Former Basic Law drafter and kung fu novelist Louis Cha Leung-yung put it plainly when he said: 'It is not possible to have universal suffrage in Hong Kong when [mainland] China doesn't have it.' Universal suffrage aside, an air of unease and uncertainty over what the next 10 years may bring lingers in the back of Hongkongers' minds. There it rests against the tangled backdrop of celebrations and protests marking the 10th anniversary. In an interview with the Chinese-language Hong Kong Economic Times, Mr Tung said: 'Today, 10 years later, Hong Kong is more important to China ... if we can continue to lead, to help China's development by making use of our advantages, that will be very good.'