Like any forceful leader, Chan has her enemies. The man she will work for, Hong Kong’s first chief executive, C. H. Tung, has welcomed her decision to stay on the job. But many of the business tycoons in Tung’s inner circle criticize Chan as “cold and calculating,” in the words of a property magnate. At the same time, local democrats see traces of the colonial autocrat in Chan, an elitist with little time for the rabble below. Yet nobody doubts her loyalty to the Hong Kong system. It is Anson Chan who has stepped forward most forcefully to defend Hong Kong’s freedoms. And after July 1 “I will continue to speak out,” she insisted in a NEWSWEEK interview.

The people of Hong Kong showed last week that they have something to say as well. More than 50,000 demontrators took to the streets in a candlelight vigil to commemorate China’s massacre of students at Tiananmen Square in 1989. “We must build democracy,” the crowd shouted. They are counting on Chan for help. Beneath the baby blue tailored jacket, the peach nail polish and the mesmerizing grace is a distinctly Hong Kong version of the iron lady. In stark contrast to Tung, who emphasizes “Asian values” stressing social responsibility over individual rights and loyalty to the Beijing line, Chan champions “British common law” arm pledges loyalty to Hong Kong’s East-West culture. Without ruffling her formal manner or mussing her perfectly coiled hair, the chief secretary has spoken out loudly and often for the kinds of political and civil fights that Tung has played down. “It’s probably not politically correct of me to be talking about human rights and whatnot,” Chan says, “but I believe these are issues that need airing.”

Chan has made no secret of her worries over the transition to Chinese rule. She has raised concerns about a free press, fair business practices and civil liberties. If things don’t go her way, she says, she may not stick around. “Loyalty is not everything in my eyes,” says Chan stiffly. “Where are points of principle, where as a matter of conscience you feel you can’t accept [certain] decisions. When that happens enough, you start asking yourself, do I stay or do I go? I think most people would know what my answer would be.”

Chan’s strong sense of Chineseness comes from her grandfather, a Nationalist general. Her strict sense of decorum traces back to a severe upbringing by her grandmother, an illiterate woman hobbled by the bound feet of imperial China. Chan’s mother, a well-known artist and calligrapher, was a liberating influence. After emigrating from Shanghai to Hong Kong as a child, Chan absorbed the, moral lessons of the Italian nuns who taught her in the colony’s parochial-school system. She remains a devout Roman Catholic.

More than anything else, the civil-service culture changed Chan’s life. She joined 35 years ago, as a recent graduate of Hong Kong University, and worked her way doggedly through the ranks. “I felt frightened,” remembers Chan. “I was dead scared of making mistakes.” But her bosses demanded that she stand her ground and argue her cases. “You are taught to question everything,” she says. She persevered, and is remembered by colleagues as a pioneer in elevating the role of women.

Her work is just beginning. Under the “one country, two systems” formula devised by Deng Xiaoping, China has promised not to interfere in Hong Kong’s affairs-and in fact has every interest in keeping the capitalist machinery running smoothly. Nobody in Hong Kong expects tanks to roll through the streets, or a bloody crackdown on human-rights activists. What some worry about is the creeping intrusion of China’s crony-driven political and business practices. Chan’s greatest fear is that Hong Kongers themselves are compromising Hong Kong’s autonomy. “I have little fear about Chinese leaders,” she says. “I am more afraid about what certain groups within the community might do.”

Chan has been jousting with Beijing ever since Gov. Chris Patten elevated her to the No. 2 spot in 1995. Two years later she refused to let Chinese officials interview her senior aides, suggesting that Beijing was attempting to split the government and isolate its perceived enemies. “Is this a joke?” retorted Lu Ping, the top Chinese official on Hong Kong affairs. Several months later Chan flew to Beijing for a secret meeting and came out saying the leaders had assured her of their “wish to see continuity.” Yet as China was setting up its Provisional Legislature for Hong Kong, Chan said it would be unacceptable for civil servants to pledge loyalty to the body.

Her close ties with Patten have not elevated her in Beijing’s esteem. He’s given her complete authority to run the civil service and confers with her daily. Says a senior official, “He wouldn’t make a big decision unless he had Arisoh’S say-so.” Patten pronounces Chan “absolutely tiptop” and says, “I would be extremely uncomfortable if I felt I was doing something she disagreed with.”

A certain discomfort with Chan may extend into the postcolonial era. Though the chief secretary professes friendship for Tung and his wife, her temperament may be less than a smooth fit with the new boss. Tung, the head of a family shipping business, is accustomed @to obedience and may not tolerate a combative No. 2 for long. To make the partnership work, some suggest, Chan will have to lower her profile. “She has gotten very used to being in the political spotlight,” says Paul Cheng, a legislator and prominent businessman who is close to Tung. “She’s going to have to learn to work under a new set of guidelines.”

Maybe. But Chan won’t back down on issues relating to the integrity of her civil service. Traditionally policies have bubbled up from the lower levels before being presented to the governor. But Tung’s reliance on task forces, headed by business leaders who sit on his cabinet, suggests to some that he plans to bypass the bureaucrats. “One of the most serious things that could happen is a sudden desire to show that the british did things wrong,” says a former high-level civil servant. To make matters worse, some officials in Beijing smell a British conspiracy to undermine Chinese Hong Kong–and link it to the British-trained civil service. “They wanted to scrap the civil senrice,” says a pro-Beijing adviser in Hong Kong. “We said if they did that it would be disastrous.”

Inevitably, Chan’s own Chineseness is now a topic of debate. Though she speaks perfect Mandarin, Shanghainese and Cantonese, a bitter former classmate scoffs that Chan “just wanted to concentrate on English.” A property tycoon and pro-China legislator, David Chu, obliquely ridicules what he regards as the foreign pretensions of her type. “Whenever I talk with these civil servants, I get ticked off by their artificial, British gracefulness,” says Chu, who grew up in the United States. “The minute they open their mouths with that Oxford accent, it annoys me.”

Chan finds refuge in her strong and cohesive family, including her seven siblings and her 88-year-old mother, Fang Zhaoling. Chan’s husband, retired oil exec Archibald Chan, acknowledges that the road ahead won’t be smooth. “It will take time for them to get in sync,” he says. “But I tell Anson to express her views. And at the end of the day, she can always retire.”

Will Chan find a way to make her partnership with C. H. Tung work? Perhaps Tung will decide he has won Beijing’s confidence enough to pay more heed to the local concerns that his chief secretary champions. For her part, Chan calls Tung “a person I can work with.” But given his stubborn, Confucian paternalism and her starchy, Western-style punctiliousness, it’s hard to envision a meeting of the minds. “She should swallow some pride for the sake of Hong Kong,” says one critic. But it is precisely because of her intellectual honesty that Chan is regarded as the champion of those in Hong K0ng skeptical of the seWserving bigwigs cozying up to Beijing. And as allies and critics alike agree, she has a powerful weapon of last resort. There’s little that would rattle Hong Kong more than a decision by Anson Chan to leave her job.