Letter from Hong Kong

Jason Cowley on the city state that, despite a recent double child murder and a depressed economy, h

Little Yim Pui-shan disappeared on her way home from school. Police were called a few days later to a house fire in a remote village in Yuen Long. A Vietnamese-Chinese man had failed in an attempt to kill himself and his three children by blowing up the family home. He succeeded only in injuring himself. When the house was searched, the dead body of Yim Pui-shan was found in a wardrobe in an upstairs room. The next day, the body of another missing girl was found locked in a drain outside the house. The catastrophe was complete.

The murder of the two girls, while I was in Hong Kong recently, became symbolic of a deeper malaise within the city itself, a further indication that the former colony, once the safest of places, had changed. "How could it happen here?" asked a banner headline in one of the papers, capturing the general mood of bewilderment. A leader in the Sunday Morning Post began: "Hong Kong is sometimes portrayed as a cold, tough city, yet such crimes have, remarkably, been largely unknown until now. Hong Kong's violence is often linked to business or gangland affairs or domestic disputes. Unlike other places, such premeditated psychopathic crime against children seldom surfaces. In that regard, spare a thought for Hong Kong, too."

It is difficult not to spare a thought for Hong Kong at present; in an economy dependent on the value of real estate, property prices have dropped by two-thirds since their peak in 1997, unemployment is at record levels (about 8 per cent of the local population is out of work), deflation, as in Japan, is an anxiety and, as the government prepares to introduce anti-subversion laws, there is again concern about freedom of expression. (Indeed, there was a huge pro-democracy rally while I was there.)

No longer the economic gateway to China, Hong Kong has lost much of its purpose and former shine.

Yet Hong Kong remains one of the most exciting cities in the world to visit, if not in which to live. There is, at all hours, unceasing movement, both on the waterways and on the central city streets themselves, where restaurants never seem to close and hucksters never sleep. While I was there, Angelina Jolie was in town, to shoot some scenes for the new Lara Croft movie. But so hectic was life around her that no one bothered to stop, as I did, to see what happened when the cameras rolled. Their indifference was characteristic: as a foreigner in Hong Kong, you are only ever really noticed when someone wants to sell you something.

For all the presence of international film crews and of a small, resilient expatriate community, as well as the reminders of an older colonial order - such as the cricket club and race course - Hong Kong isn't really a cosmopolitan city. Discrete, self-contained areas, such as Soho on Hong Kong Island, provide a gloss of internationalism, but you do not have to go far before you discover just how much the city and local population have retained their identity. The majority, 96 per cent, is ethnically Chinese, of whom 80 per cent are Cantonese and 16 per cent Shanghaiese. About half of the remaining 4 per cent is from Indonesia or the Philippines, mostly working in lowly, supporting services such as bellboys or chambermaids. Nor is Hong Kong as densely populated as one would think - one afternoon, for instance, I went walking in the vast open spaces of the New Territories, close to the border with China, and met no one.

"There is a popular myth that land is at a premium here," Jason Wordie, an Australian-born local historian, told me over tea one afternoon at the Peninsular Hotel. "We're not short of land at all - there's stacks of it in the New Territories. But the land is restricted: 40 per cent of Hong Kong is country parks."

In a city where there are few remnants of a rich architectural past, and there is no institution such as the National Trust to preserve old buildings, the Peninsular, which this year celebrates its 75th anniversary, has a magical difference. When a restriction order preventing buildings on the Kowloon peninsula from being more than 16 storeys high was lifted in the early 1990s, following a decision to relocate the airport, the Peninsular chose to expand and modernise but, unusually in Hong Kong, it did so by conserving the original building.

This means that today, with its grand lobby and elegant facades, the hotel is one of the few places in a city of superb, high-tech amenities that offers a sense of the old, pre-war colonial Hong Kong. It is also one of the tallest buildings on the Kowloon side of the harbour, because it solved its space problems, as is the local way, by reaching for the sky. The result is a 30-storey tower extension to the original structure.

John Lanchester, in his most recent novel, Fragrant Harbour, sends his main character from 1930s England to work at the Peninsular. There he is caught up in the Japanese invasion, and discovers, later, following his internment, that the formal surrender of Hong Kong was signed in room 336 at the Peninsular on Christmas night 1941, as it indeed was - an unforgotten moment of shame for both the British and the Hong Kong Chinese themselves.

On my last night in the city I visited Felix, the bar on the top floor of the Peninsular, which affords some of the finest views across the city. Standing at the window with a drink, looking out across Victoria harbour at the dazzle of lights from the skyscrapers stacked up on reclaimed land along the waterfront of Hong Kong Island, you find yourself moved, all over again, by the romance, wonder and possibility of the place.