By official count, more than 450 celebratory events have been scheduled, wall-to-wall from April to December this year, to commemorate the tenth anniversary of Hong Kong’s handover from British to Chinese rule. The exact date is July 1, also the climax of the celebrations, when the pandas Le Le and Ying Ying will make their official debut at Ocean Park Hong Kong. On that day there will be two parades, several Chinese opera performances, a soccer match and a ceremony in which Chinese President Hu Jintao will swear in Chief Executive Donald Tsang Yam-kuen and his administration for a new five-year term. That night there will be the requisite fireworks, as there have been every year for the past decade, over Victoria Harbor.

In the first ten years of the “One Country, Two Systems” experiment, Hong Kong has seen enormous changes. In that short span the city has soldiered through the Asian financial crisis of 1997-98, the era of “negative assets” early in the new millennium, the bird flu scare of 2002 and the Severe Acute Respiratory Syndrome (SARS) of 2003, before launching into an economic renaissance that, increasingly and inextricably, is tied to that of mainland China. Bilateral trade between the two economies reached $166 billion in 2006, up from $113 billion in 2004.

Ten years ago the fear was that civil liberties would erode under Chinese rule, despite the promise that the political and social system of the Hong Kong Special Administrative Region would be preserved for fifty years after the changeover (as the common, translation-resistant parlance put it, “horse racing will continue, dancing will continue”). The city’s last British governor, Chris Patten, made it his mission to implant democracy in the electoral process; by 1995 all sixty seats of Hong Kong’s Legislative Council were chosen through fully democratic election. In that historic poll “pan-democrats”–the term commonly used to designate the various democratic parties–won nineteen seats, more than any other party. The plan was that the duly elected legislature would continue its term through the handover. But even before the ballots were cast, Beijing declared it would dissolve the lawmaking body, dismantle the electoral structure and install a provisional legislature chosen by a Beijing-appointed committee.

Full democracy is still unrealized. At the same time, the kind of Tiananmen Square-style smackdown on critics of Beijing that many worried about has not happened. Law Yuk Kai, director of Hong Kong Human Rights Monitor, argues that there are subtler cues to China’s influence in the city. For example, the Standing Committee of Beijing’s National People’s Congress has the right to interpret Hong Kong’s Basic Law (its Constitution, in effect), and its decision takes precedence over the Court of Final Appeal (CFA), Hong Kong’s highest court.

One such interpretation, in 1999, involved the residency rights of children born outside Hong Kong to parents with legal residency, including children born out of wedlock. The ruling had significant ramifications for the city. Increased business ties mean that more and more Hong Kong residents have been traveling to China to work. A substantial number of businessmen have begun to keep mainland mistresses, who, as of the mid-1990s, had given birth to more than 300,000 children.

The CFA ruled that these children (both legitimate and illegitimate) should have the legal right to live in Hong Kong. Projecting that the verdict could open the city to an influx of 1.67 million migrants, the government decided to ask the Standing Committee to interpret the article concerning the right of abode in the Basic Law. The committee put a limit on the number of children who can enter the city. It was an emotional, divisive issue–and one indication of the difference between democratic politicians and human rights campaigners, on the one hand, and many, if not most, Hong Kong residents. While the democrats argued that Beijing’s reinterpretation should be dismissed, the city’s residents were supportive of the cap, given their fear that a flood of Chinese migrants would drain the city’s welfare system.

Law said the move was tantamount to an invitation for China to interfere in Hong Kong’s affairs. “Many of the city’s important decisions have to go through China. China has to be blamed for these interventions and, in a way, for not keeping their hands off Hong Kong elections and other things,” he said. “I think it’s important to look at how much room exists for civil society and political dissent…. Basically, the freedom of association, assembly and expression are largely intact for most people. But if you look more closely, you can tell that there are real threats to selected people and organizations.” Law cited unjust police treatment of the Falun Gong as an example.

This invisible pressure applies also to the local media. Law mentioned a February survey, conducted by the Hong Kong Journalists Association, which found that 58 percent of journalists believe press freedom has declined since the handover, singling out self-censorship as the greatest problem.

But the citizens of Hong Kong have not been passive observers of these changes. On July 1, 2003, 500,000 took to the streets to protest high unemployment; the failure of the city’s first Chief Executive, Tung Chee-wah, to revive the post-SARS economy; and, most of all, Article 23, an antisubversion bill that, if passed, could have rolled back freedom of speech in the city. In the face of that unprecedented show of people power, the government backed off and scrapped the proposal. In its wake came the resignation of three cabinet members. Feeling the heat, Tung stepped down in 2005, two years before the end of his second term.

Legislator Emily Lau Wai-hing said the eruption of public participation has come to define the decade. “Before the change of sovereignty, there weren’t so many demonstrations. Now we have five or six a day.” Lau, a founder of the hard-line democratic Frontier Party, said, “People are becoming more used to demonstrating, becoming more vocal. I think the rise of civil society is mainly due to the people’s deep dissatisfaction with the policies of the administration.”

The city was witness to another political first in 2007–and whether it was a triumph or a smokescreen very much depends on who you talk to. The March 25 Chief Executive (CE ) election was the first to feature a qualified candidate from the democratic camp, legislator and barrister Alan Leong Kah Kit (to qualify, a candidate must receive at least 100 nominations from the 800-member Election Committee, which is made up mostly of Beijing-government supporters and members of the business community). His opponent, incumbent Donald Tsang, won by a landslide, as expected. But Leong, who expressed interest in running in the next CE election, in 2012, said, “We are not in it to really win this rigged election…. I am in it to hopefully put in place a system that would allow Hong Kong people a real decision on who gets the job next time.”

Michael DeGolyer, director of the Hong Kong Transition Project, an academic think tank, said this year’s CE election was a watershed not so much for the city as for its democratic activists. In running Leong, “for the first time, the democrats were making a serious effort to play within the rules that now exist,” DeGolyer said, alluding to the camp’s boycott of the 1996 and 2002 CE election.

The democratic camp’s most contentious boycott came in 2005, when it rejected a modest electoral reform package put forward by Tsang. The democrats wanted nothing short of direct election in 2012, and would consider voting for the proposal only if all District Council seats (the lowest rung of government) were immediately opened to direct election. That didn’t happen. Despite criticisms that the reform package was merely cosmetic, many political analysts believed that the proposal did represent a step, however tiny, toward democracy. As such, many blamed the democrats for blowing a chance at reform.

“I don’t think it was a mistake–[the reform] wasn’t enough,” said Emily Lau, arguably the most vocal critic of the Beijing government. Also, Tsang “did not invite people to talk to him and say, ‘Let’s do some bargaining, some give and take.’ He just threw [the proposal] out there and said, ‘Hey, take it or leave it.'”

The city waits with bated breath for Tsang’s release of a new electoral reform proposal this summer. Pan-democrats stand by their target year of 2012. And the Core Group, a newly established think tank, is pushing for CE election by universal suffrage in 2012 and a fully elected Legislative Council by 2016 at the latest. On the other hand, Ma Lik, chairman of the Democratic Alliance for Betterment of Hong Kong, the city’s biggest pro-Beijing political party, said in a May press conference that Hong Kong citizens will not be ready to have the right to vote until 2022–twenty-five years into the One Country, Two Systems promise. Ma also said Hong Kong teachers should not characterize the 1989 Tiananmen Square events as a massacre.

Word is that Tsang’s upcoming package will present three categories of proposals toward electoral reform. DeGolyer, who believes that something very close to the pan-democrats’ wish will be on offer, predicted that dialogue between the government and the democrats will finally begin. In 2005 “it didn’t bring a fundamental change in strategy of the party involved. Now, however, we are seeing that the government no longer says, Take it or leave it, and the democrats no longer say, All or nothing,” DeGolyer said. “I think people now are ready to make a deal.”