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By Augustine Tam

HONG KONG - The curtain came down on one of Hong Kong's longest-running charades last week with the closure of a Taiwan-run travel agency and the opening of the Taipei Economic and Cultural Office on the fringe of the central business district.

While Hong Kong was under British rule, the People's Republic of China after 1949, as well as its predecessor - the Republic of China (ROC, now controlling Taiwan) - insisted on its sovereignty over the territory. As such, both consular offices had peculiar names that contained not the slightest hint as to whether relations were diplomatic or official.

Beijing's office was called the Hong Kong Branch of the Xinhua News Agency until it regained the territory, while from 1966 until last week, Taipei's office was called Chung Hwa Travel Agency. After Hong Kong's handover in 1997, Beijing, like the British, was reluctant to let Hong Kong develop any official or semi-official ties with Taiwan.

The Chung Hwa Travel Agency went on issuing visas to Hong Kong people and foreign tourists until late in the afternoon of July 15. As in all its 45 years of operations it did not book a single sightseeing tour or a hotel room for any of its customers.

The next day, with Chung Hwa Travel Agency relegated to the dustbin of history, the office with the new name re-opened - totally unchanged - as the official visa section of the Taiwan government's representative office. Only the delivery of several large floral tributes disturbed the otherwise humdrum activity.

Highlighting how seriously Taipei took the event, Dr Shin-Yuan Lai, minister of Taiwan's cabinet-level Mainland Affairs Council made a special visit to Hong Kong to officiate the renaming ceremony on July 20.

This also marked a milestone in cross-strait relations for Beijing, raising the prospects of a more secure and stable relationship that, for the first time, would allow Hong Kong to play its designated role as a model for reunification under Deng Xiaoping's "one country two systems" design.

Under former Taiwanese president Chen Shiu-bian of the pro-independence Democratic Progressive Party (DPP), Taipei firmly rejected reunification with the mainland using this model, seeking independence. But, since the Kuomintang (KMT) returned to power in 2008, cross-Taiwan Strait ties have warmed to the point where Chinese and Taiwanese officials are exchanging visits frequently to tackle common issues.

Legally, ties between the mainland and Taiwan remain hostile and as such, exchanges between them are not on the government-to-government level and restricted to economic and people-to-people affairs.

Beijing may have realized that Hong Kong could play an important role in piloting government-to-government exchanges with Taiwan. Hence in the past couple of years, historically lukewarm Hong Kong-Taiwan relations have suddenly begun to warm up.

The climax is the change in the name of Taiwan's representative office in Hong Kong, signaling that Beijing is allowing Hong Kong, now a Special Administrative Region of China, to deal with Taiwan on an official or semi-official basis. In exchange, Hong Kong will also set up a trade and cultural office in Taipei.

While Hong Kong has taken a big step forward in cross-strait relations, Taipei still firmly rules out the likelihood of setting up a similar office in Beijing or for Beijing to do likewise in Taipei.

Both former colonies - of the British and the Japanese - have a lot to gain from their warmer ties and improved cross-strait relations. Taiwan now is Hong Kong's fourth-largest trading partner, with total trade running at more than US$35 billion. And airlines ferried over 3 million people last year between the countries. That's almost half the population of Hong Kong.

But exchange has to be two ways. Hong Kong is a free society. In opening its doors wider to Taiwan, it is also opening itself to political and cultural influences from the island.

Indeed, the KMT's fortunes in Hong Kong also appear to be on the rise again. In this regard, the loud-mouthed and occasionally foul-mouthed "Mad Dog" Raymond Wong Yuk-man, a Legislative Council member, has been playing his role.

Until he came along in 2008, the KMT had disappeared from the radar, so when Beijing and London began discussing Hong Kong's future in the 1980s they surreptitiously agreed to wipe out a long-entrenched KMT enclave at Diu Keng Leng. (The thickly wooded hillside in Sai Kung District is named "hanging by the neck" as the Canadian entrepreneur Albert Rennie committed suicide there in 1908 after his milling company failed.) The enclave was quickly emptied of KMT diehards, leveled and developed into a huge new township for low and middle-income families.

It was here in June 1950 that the British dumped some 7,000 KMT refugees from mainland China after KMT troops were wiped out on the mainland, with remnants fleeing to Taiwan. There was not a single building to house them. No water, no roads, no electricity. No level ground, save for a small plot where Rennie's mill had stood.

Many of these refugees had been teachers, journalists and writers on the mainland. With their bare hands they turned the hill slopes into a settlement, then into an education center widely known for its largely free schooling and role as a staging post for free tertiary education in Taiwan.

Subsequently, the KMT in Taiwan raised funds to pay for these activities. In return these refugees and their children manned pro-Taiwan organizations, notably newspapers like Sing Tao and Wah Kiu Yat Po - which campaigned relentlessly against the "communist bandits" on the mainland. Until the late 1970s - the heyday of the KMT in Hong Kong - these newspapers still referred to the Beijing leaders using such titles.

The spillover of the Cultural Revolution showed how ferocious the leftists could be and the British actively stamped out the slightest stirrings of political activity in KMT ranks to avoid additional trouble. By the time of the 1997 handover, the KMT was a non-existent force in Hong Kong politics.

But in the past three years, the Taiwan flag has again surfaced at major anti-government demonstrations. The most prominent pro-Taiwan figure is "Mad Dog" Wong. Until early this year, he was the founding chairman of the League of Social Democrats (LSD).

Two other LSD leaders were the Marxist "Long Hair" Leung Kwok-hung and former Democratic Party member Albert Chan Wai-yip. The party broke up over personal issues and Wong took Chan and some 40 right wing members to join the KMT "pan blue" China Youth and another right wing group called "Power Voters" to form a new "People Power" party.

Wong's support is largely drawn from the poor, the elderly and secondary school-leavers. Wong has not merely brought the KMT back into the limelight. He has also introduced the physically combative Taiwan-style of politicking into the once august Legislative Council chamber.

He, along with Wong and Leung, have been throwing bananas, paper airplanes and the occasional blows at Chief Executive Donald Tsang Yam-kuen and other government leaders inside the chamber. Their rowdy and deliberately provocative demonstrations have also led to clashes with the police.

To mark the final session of the legislature in its current premises before moving to a new administrative enclave later this year, People Power held a three-day "siege" of the council building to give a public demonstration of its strength.

Hong Kong's political and executive luminaries have decried this importation of Taiwan-style outbursts into the city. But Wong has simply brushed them aside. Asked again recently if he would abandon such Taiwan-style behavior, he said curtly: "Hong Kong people will get used to it."

Many in Hong Kong may agree. Will Beijing?

Normalization of relations is not a one-way process as major demonstrations on June 4 and July 1 in this city have dramatically shown. More and more participants are Mandarin-speakers or non-Hongkongers. Are there new charades in the making that will some day allow the KMT to recover the influence in China it lost in 1949?

Augustine Tam is a freelance journalist based in Hong Kong