HONG Kong's most enduring characteristic has been its remarkable ability to re-invent itself. As old flowers start to fade, new buds appear and grow bigger than their predecessors.

The secret of this rejuvenation has always been in the diversity of interests and enterprises that have found a home here. Though Hong Kong remains a small place, it has always been just about big enough and diverse enough to have “critical mass” – that hard-to-define state which acts as a natural magnet for enterprising people and for new ventures which prosper quickly in proximity to older and more established enterprises. Over time, the principal activities change, but there is still an accretion of functions. The older functions shrink in relation to the larger total mass.

Critical mass cannot be taken for granted. Its sustenance is openness to the outside world and competent – but minimalist – government at home. Call it a colony (as was the case and technically still is); a territory (as it currently prefers); a Special Administrative Region, or SAR (which it is soon to become) – the key to Hong Kong's success has been, and will remain, that it is a rather peculiar institution which thrives on the contradictions around it.

Hong Kong has only one natural advantage: its harbor. Effective and magnificent though it may be, this harbor is not a unique attribute on the south China coast. History has proved a much more important advantage.