HONG KONG — Many were gloomy about Hong Kong's future 10 years ago when the British colony of dazzling skyscrapers and gung-ho capitalists returned to the communist Chinese motherland.

There were fears Chinese troops would be goose-stepping down the streets, muzzling any whisper of political dissent. Masses of peasants would stampede across the border, filling the city with beggars and thieves. And the most talented Hong Kongers would become "yacht people," fleeing to Australia, Canada, America and other places welcoming their business savvy, workaholic ways and cash.

Fortune magazine's headline, two years before the British flag came down, proclaimed "The Death of Hong Kong."

Ten years later, the soldiers are here, but are rarely seen in uniform on the streets. Mainland Chinese are pouring in, but as big-spending tourists buying Rolex watches and shark-fin soup. Many rich Hong Kongers are back, resettled in a booming city, happy that their fears have proved groundless.

Queen Victoria's statue still stands in the middle of town, in a park where thousands of protesters rally each year to denounce China's undemocratic system and remember the Chinese killed in the crackdown on pro-democracy demonstrators at Tiananmen Square in Beijing — the 1989 bloodbath that spurred an exodus of Hong Kong Chinese fearful that they would one day face a similar fate.

The formula called "one country, two systems" promised a wide degree of autonomy, and in many ways, Hong Kong still acts and feels like a country separate from China. It has its own currency and telephone country code. Its legal system remains British and its judges wear wigs.

The election system, however limited, is far freer than anything in China. Hong Kong's leader, or chief executive, is the highly popular Donald Tsang, a policeman's son steeped in the British civil service tradition and knighted in the final days of British rule.