Hong Kong's return to China on July 1, 1997, went surprisingly smoothly. In the ensuing months, policy analysts are trying to assess how the territory will fare in the longer run under Chinese rule. The answer is important to U.S. interests because of the enormous U.S. economic presence in Hong Kong; because any adverse developments in Hong Kong are likely to affect U.S.-China relations; and because China's promise to give Hong Kong a high degree of autonomy under the "one-China, two-systems" policy has major implications for Taiwan. But given the political situation, the American ability to affect the course of events in Hong Kong seems marginal unless the U.S. decides to confront Beijing more directly. Developments in U.S.-China relations in recent years suggest Washington might be hesitant to do so.