CHRIS Patten made history last year as the first governor to compile a progress report of the policy pledges he made the previous year, describing it as an 'impressive record'. In his third policy address to be delivered next Wednesday, he is expected to do the same by listing the achievements of his government in building more schools, shortening queues at public clinics, putting more policemen on the streets, improving welfare for the needy and cleaning up the environment. But Mr Patten and his advisers know very well the public and posterity will not judge him according to his scores in solving these important but mundane issues. Rather, he will be judged by his performance in managing the greatest task facing Hong Kong - the transition to Chinese rule in 1997 - and the major livelihood issue of the day, spiralling property prices. A poll commissioned by the South China Morning Post earlier this month confirmed these were the issues uppermost in the public's mind when they were asked to evaluate the Government's performance in the past year. Overall, only 55.5 per cent rated his government's performance as 'extremely good' or 'fairly good'. When the respondents were asked to rate the Government's work in seven policy areas, the lowest ratings went to poor relations with China and inability to control rampant price increases in the property sector. Despite his generosity in meeting the community's demands for better public services, it is fair to say the public's mid-term assessment of Mr Patten's five-year term is only a marginal pass, because his otherwise glamorous report card has been tainted by a few big red marks. But should we blame Mr Patten or an intransigent China for the poor state of relations between Hong Kong and China? Speaking on the eve of the 10th anniversary of the signing of the Joint Declaration last week, Zhou Nan, director of the local branch of Xinhua (the New China News Agency), reiterated the mainland's position that Britain was responsible for the stalemate because it had changed its policy towards China. In apparent reference to Mr Patten's role in executing that new policy, Mr Zhou said the British had evaluated the situation in the wrong way particularly since 1992 (when Mr Patten became governor). The difficult position Mr Patten faces is clear. As the front man who executes the new British policy, he has been singled out by Beijing as the main culprit responsible for Britain's effort to widen democratic participation in Hong Kong, something which China considers contrary to the joint declaration. To Mr Patten, the widening of the franchise is a key means of accomplishing his goal, spelled out in his first policy address, to 'safeguard Hong Kong's way of life' during the last five years of British administration. His decision to increase democracy scored him the highest mark in the same SCMP poll which rated him poorly in managing relations with China. He is thus in a no-win situation, because the very thing that endeared him to the public was the source of poor ties with China. Historians can wait until decades later to assess if Mr Patten's move to give more democracy to the people and thus antagonise China during the territory's last years of transition to Chinese rule was really in the best interests of Hong Kong. But as the governor of the day, Mr Patten must make up his mind now on how he can diffuse the deadlock between China and Britain, which is threatening to hurt confidence and economic growth. While it takes two to tango, the public and China will be keenly watching any new initiatives he may unveil in his forthcoming policy address to break the current impasse. His announcements next week will reveal in a more concrete way whether Foreign Secretary Douglas Hurd and his Chinese counterpart Qian Qichen have made any breakthrough in their talks in New York. On the problem of burgeoning property prices, Mr Patten and his senior officials have taken credit for the recent drop in the value and volume of transactions, saying it showed the package of measures announced by the Government in June was successful. While the measures certainly played a part in containing further price spirals, Mr Patten would be more honest if he admitted rising interest rates in the United States, which led to corresponding increases in local rates, were the determining factor in dampening the speculation fever. The market has cooled down because speculators have retreated. But with the mortgage ceiling set at 70 per cent of property value, tens of thousands of people still find it impossible to own a small flat because they have great difficulty in forking out $1 million just to cover the initial deposit and transaction fees. Inflationary expectations are still high and the buoyant economy remains vulnerable to outside influences, over which we have no control. It is unfortunate the last years of Hong Kong's transition to Chinese rule will probably overlap a possibly unstable period for China after the eventual departure of Deng Xiaoping. Hong Kong will remain powerless to ward off any repercussions that such an eventuality may bring from across the border. But more cordial relations with China would help, as would a robust economy and a happy population. It is evident that Mr Patten has tried to strengthen his hand in dealing with China by placating the business community and handing out goodies to the people. His maiden policy address was full of proposals which could only be described as generous according to the frugal standards set by his predecessors. Between 1992 and 1997, Mr Patten promised a 26 per cent increase in public expenditure in real terms on social welfare, 22 per cent on health and 15.8 per cent on education. A $2.3 billion capital injection was made to the Lotteries Fund to finance additional welfare services and another $300 million to the workers' retraining fund. On the environment front, $3 billion was earmarked for the sewerage strategy. To woo the middle class, he approved a housing scheme for the 'sandwich class' and put pressure on the civil service to serve the public better by making performance pledges. The formation of the Governor's Business Council ensured that leading tycoons, who have established good personal ties with Chinese leaders, have direct access to him. In his policy address last year, he earmarked more resources to fight corruption, clean up the environment, improve roads and other welfare services. The Arts Development Council was given the go-ahead with a $100 million grant and the Consumer Council was allotted $3.5 million to conduct competition policy studies. Above all, a $7 billion pension fund was set up to allay civil servants' fears that the SAR government might not honour their pension entitlements. These measures and others to be announced by Mr Patten next week will of course be largely welcomed by the public. But if the Sino-British disputes over the airport, the ninth container terminal and dozens of outstanding issues on the Joint Liaison Group's agenda remain unresolved, the time will come when the political stalemate will hurt the economic growth needed to generate the revenue required to sustain these life-improving measures. This should be the prime consideration of both Britain and China if they really have Hong Kong people's interests in mind.