HONG KONG By Jan Morris. Illustrated. 359 pp. New York: Random House. $19.95.

Fewer than nine years remain before Hong Kong will cease to exist as a British colony and become part of the People's Republic of China.

Never before have several million people been handed over to Communism. Jan Morris's unarticulated question in ''Hong Kong'' is: will Hong Kong continue to flourish as a bastion of capitalism, one of the world's leading financial centers, or will it slowly degenerate, turning into just another seedy and tacky Chinese city?

The story of Hong Kong, as Ms. Morris tells it, is full of drama, beginning with its birth as a colony a century and a half ago as the result of an encounter between the two dominant powers of the day, the Manchu dynasty, then in an advanced state of decline, and the expansionist British empire, which had yet to reach its zenith.

The colony was wrested from China in stages: first Hong Kong island was ceded in the aftermath of the Opium War in 1842; next, the Kowloon peninsula was seized in 1860; and finally, in 1898, the New Territories (the hinterland of the penisula and the rocks and islands immediately around Hong Kong) were added, enlarging tenfold the colony's area.

However, the last treaty contained the seeds of the colony's destruction, for instead of taking the land outright, Britain obtained a 99-year ''lease'' for which it did not pay any rent. No doubt, at the time, 99 years appeared to be close to eternity.

In the early 1980's, as the deadline loomed closer, the British asked for an extension and were sternly rebuffed. In 1984, Britain agreed to return the colony to China on July 1, 1997, along with its five and a half million people.

Ms. Morris, a historian, travel writer and author of the ''Pax Britannica'' trilogy, is fascinated by the story of Hong Kong, the last major colony not only of Britain but of any of the former colonial powers of Europe. She approaches the subject of Hong Kong ''as a student of British imperialism.'' She sets herself the task of portraying ''the last of the great British colonies as it is in its last years.'' She does a superb job.

Ms. Morris confesses that as recently as 1982 her sentiments toward Hong Kong were characterized by ''unmitigated dislike.'' Now, however, she finds a sense of poignancy as the territory faces a future that can be described, at best, as uncertain.

Ms. Morris alternates chapters of themes or analysis with chapters of historical description. She lovingly describes the historical setting, painting in broad strokes the colony's rise from a settlement of a few thousand fishermen to the present.

In the early years, she recounts, ''the Chinese Secretary was a Pomeranian clergyman, the Treasurer a former ship's mate, while in 1849 the Registrar-General dropped everything and joined the Gold Rush to California.''

Today, she says, tiny Hong Kong is the world's largest exporter of textiles, toys and watches. It has more Rolls-Royces per capita than any country in the world, makes more films per year than Hollywood and the pay of the Governor of Hong Kong is more than double that of the British Prime Minister.

One of the book's best historical chapters is on the Japanese occupation from 1941 to 1945. The Japanese tried to eradicate all vestiges of the British presence, to the extent of changing the name of the Peninsula Hotel to the Toa, of Jimmy's Kitchen to the Sai Mun Cafe and of Queen's Road to Nakameiji-dori.

Many in the Chinese community were compromised, Ms. Morris says. Some of the best-known Chinese citizens joined Japanese puppet bodies, such as the Rehabilitation Advisory Committee, the Chinese Representative Council and the Chinese Cooperative Council. ''Some Chinese'' she writes, ''at least in the beginning, supported the Japanese simply as fellow Asians.'' But she concludes that, in general, ''they were not traitorous.''

For more than a century Hong Kong was essentially a transient community, offering haven for refugees from China who either returned home when things quieted down or who used the colony as a springboard from which to seek greener pastures abroad.

Only in 1981 did the census show a majority of the people actually born in Hong Kong. ''Only recently,'' says Ms. Morris, ''has the emergence of a new, educated Chinese middle class, born and bred in the colony, made one feel that Hong Kong is approaching some kind of social equilibrium, becoming a real, balanced city - and with 1997 closing fast, perhaps it is too late.''

Only history will tell whether it is too late. So far, the signs are not good. Earlier this month, a China-appointed committee responsible for drafting the Basic Law that will govern Hong Kong after 1997 rejected demands for greater democracy and imposed additional hurdles to make universal suffrage unlikely even in the next generation.

Photo of Jan Morris (Jerry Bauer)