(FORTUNE Magazine) – When China's dictatorship of the proletariat exercises its right to rule Hong Kong on July 1, 1997, there likely won't be chaos or military suppression. Instead, look for an unusual form of polity: government by tycoon. Replacing Governor Chris Patten, the final plenipotentiary of the British Empire, will probably be a shipping magnate or real estate developer. No one knows who yet, but there is much speculation as Beijing decides on whom to tap for the post of Chief Executive of the Hong Kong "Special Administrative Region."

One favorite: Tung Chee-hwa, a 58-year-old Hong Kong tycoon who runs the shipping company Orient Overseas International. A telling clue: an awkward handshake by Chinese President Jiang Zemin, who picked Tung out of a crowd of dignitaries in Beijing earlier this year. Officially, Hong Kong's new leader will be chosen by a 400-member electoral body that will be selected by the 150-member Preparatory Committee, or PC. Beijing appointed the PC in December to guide the transition from British to Chinese rule.

Besides picking an electoral body, the PC must maintain the confidence of international business, as elite troops from the People's Liberation Army enter the enclave in July 1997. So Beijing stacked the PC with prominent and loyal business leaders.

Membership of the PC reads like a Who's Who of Hong Kong, including property developers Li Ka-shing, Henry Fok, and Peter Woo, and media magnate Sir Run Run Shaw. Real estate guru C.Y. Leung is considered Tung's rival; both are PC vice chairmen. American interests are represented by Nellie Fong, deputy managing partner of Arthur Andersen in Hong Kong, and Anthony Leung, of Citibank.

Can China manage this free-wheeling city-state via a proxy tycoon? Tung could be the man. In the 1980s he nearly went bust and was rescued by some emergency funding from China. So Tung is a tycoon who understands the beauty of socialism with Chinese--and capitalist--characteristics.

--Karl Schoenberger