In less than a decade, CITIC Pacific Ltd. has become the premier "hong" in Hong Kong, challenging the leadership of that territory's four largest trading houses. But CITIC Pacific is not the typical British-controlled conglomerate that has dominated Hong Kong's economy for the past century. Until 1996, CITIC Pacific was 43 percent controlled by private CITIC Hong Kong, which in turn is 100 percent controlled by the ruling cabinet of the People's Republic of China and its foreign investment company China International Trust and Investment Corporation (CITIC). From its formation as a largely passive investment vehicle--a so-called "red-chip" stock that gave investors financial and political ties to China's ruling party--CITIC Pacific has matured into a capitalist powerhouse with primary interests in infrastructure, real estate, trading and distribution, and Hong Kong's aviation industry. In its rise, CITIC Pacific has enjoyed a unique relationship with the mainland: its chairman, Larry Yung Chi-kin, is the son of China's vice-president and "red capitalist" Rong Yiren (Yung and Rong are different English transliterations of the same family name), himself a close ally of Deng Xiaoping, who died in early 1997. But CITIC Pacific is no puppet of the Chinese government; rather, Yung and CITIC Pacific have enjoyed from the company's inception an independence crucial to establishing CITIC Pacific as the soon-to-be former colony's top investment play. At the end of 1996, CITIC Pacific achieved still greater independence, when Yung and other management purchased an additional 15.5 percent of the company's shares from its Chinese parent, reducing CITIC Hong Kong's control to 26.5 percent. Yung took the majority of these shares, raising his own stake in the company to more than 18 percent.