Hong Kong's economic prosperity should continue when China assumes control over the former British colony later this month, says a Ball State University educator.

The loss of some freedoms of press, assembly and demonstration will not undercut Hong Kong's economic prosperity and stability, said Chu-yuan Cheng, an economics professor.

"The political transformation of Hong Kong has engaged worldwide attention and triggered much debate among the world's economists, politicians and businessmen," he said. "The focus on the loss of some freedoms overshadows the more fundamental conditions that must be satisfied to preserve Hong Kong's prosperity."

Cheng believes Hong Kong's future is positive because of the increasing stock prices, booming real estate market, return of emigrants and the increasing influx of foreign capital.

Also, local residents are positive about the community's future, according to a recent poll sponsored by the South China Morning Post.

Cheng believes the future of Hong Kong depends less on political freedom and more on the fulfillment of three fundamental conditions, including:

• prevention of any huge influx of mainlanders into Hong Kong, which already has a population of 6.3 million with a much higher standard of living.

• continuation of China's economic reform and open-door policy.

• peaceful co-existence between China and Taiwan. Hong Kong serves as a gateway to the mainland, facilitating Taiwan to invest billions on the mainland and allowing millions of Taiwanese to visit.

When China initiated the "one country, two systems" formula for Hong Kong's changeover, it intended to use the city-state's special arrangement as a model to attract Taiwan, which separated from the mainland government in 1949 after a civil war, Cheng said.

"The success or failure of Hong Kong's smooth transition has great implications for China's and Taiwan's reunification," he said.

Cheng believes the world will pay close attention to Beijing's promise to allow Hong Kong to thrive.

"Hong Kong's smooth transition is a critical litmus test for China's foreign relations," Cheng said. "Failure to maintain Hong Kong's autonomy may lead to the loss of many special privileges for Hong Kong and deter the capital flow into the Chinese market.

"For all these considerations, it is unlikely that the Beijing rulers will kill China's golden goose."