RAISE THE RED ARC-LAMP

On the streets of Hong Kong, Wayne Wang is directing Jeremy Irons and Gong Li in a film set against the island's imminent return to Chinese rule.

It was the party of the century; the night when 156 years of British Empire ended with the reversion of Hong Kong to Chinese rule; a night of celebration and mayhem, marked by the kind of manic partying that masks a barely suppressed fear of the unknown.

Along the crowded streets of Lan Kwai Fong, British and Chinese revellers, many with their faces painted in the colours of the Chinese flag, danced, catcalled and drank, waving their red pennants. Ahead of me four Asian students dressed as PLA guards danced to patriotic mainland tunes on a boogiebox, its trumpeting strains lost against the cheers of the crowd. A British girl, in a red-sequined bikini top, and her boyfriend, wearing a cheongsam, lurched past, pausing only to accept a bottle of beer from a be-suited onlooker hanging out of a nearby bar. Buried under a sudden onslaught of streamers, I turned to face them as they raised their fists and together shouted into the night air one word: "1997!"

And then the director, Wayne Wang, said: "Cut".

There Can be few projects more ambitious than filming history before it has happened. Yet this is what Wayne Wang has chosen to do with his new film, Chinese Box, a love story set against the run-up to the handover of Kong Kong, filmed on the spot as it happens for real. In a place in the grip of uncertainty about the future, Wang is interpreting events on celluloid and, in the case of the scene above, providing a few certainties of his own.

The film, which has backers in Europe and Japan, stars Jeremy Irons as an expatriate journalist who discovers he is dying. To make sense of what is around him, he decides to film it on his video camera. Gong Li, the star of and inspiration for Farewell My Concubine and Raise The Red Lantern, plays the part of a Chinese hostess, the former object of his unrequited love. When she finally realises she loves him, she rejects him because he has no life to offer her. Their lives are interwoven with that of the city itself, and as the sun sets on 30 June, they, like Hong Kong, have to face a moment of self-discovery and a future they cannot be sure of.

Wayne Wang, the director of The Joy Luck Club and Smoke, is taking a break from filming, picking at a congealing banquet at a restaurant two streets from the "set". With a leading man from Britain and a leading woman from China, Wang completes a trio that reflects the three interests in Hong Kong's future. As a child of Hong Kong, Wang describes his film, a long-held ambition, as a "love-hate letter" to the territory.

The love he describes thus: "It's one of the most energetic, vital cities in the world. Things are always changing, in a refreshing, innovative way ... I love it because it's my home. I'm like a plant that functions better when it's brought back to a certain place." But filming, he said, had been a bitter-sweet experience, not just because of Hong Kong's changing status, but because of its rapid modernisation. Whole areas he knew as a child would soon be gone. "There's no history here. The air is inhuman - I've been coughing since I arrived. And there is a certain aggressiveness about it that sometimes wears you down." It was this mixture , he said, that he was trying to capture.

Since January, the crew has been filming on the streets of Hong Kong, where it's been a case of "guerilla" acting, according to Irons. "Get in, get your shot, and get out again." Wang says this process was an important part of portraying the mood of recent months. "We've tried to pick up the local atmosphere as much as we can. Deng's death was obviously big, so we try to integrate things as they happen and use them in some way for the story."

The Chinese leader's death meant filming one of Irons's scenes in the offices of a local news magazine. "We had their editorial staff sit around and discuss how it would affect Taiwan and the rest of Asia. We also made a story point out of it. In that particular scene he's thinking about something else and seems a little distracted."

Irons plays a journalist for a reason; it was a way for Wang to deal with real events. "We made him a business journalist also, because we felt that what's really strong about Hong Kong is the business aspect of it." Hong Kong's relationship with its business interests, he said, were "so complicated and so interesting" and likely to become more so.

But Wang confesses that, before filming, he and the writer of the screenplay, Jean-Claude Carriere (of Belle de Jour and Cyrano de Bergerac) had imagined that the changes in Hong Kong would be more explicit. "We were hoping that it would be much more dramatic." Curiously, for a film-maker, he does not appear to be disappointed." There are changes, but they're not 'fall of Saigon', " he says thoughtfully. "The changes are much more subtle. It's the day-to-day things that happen, those issues that are important."

Under The never-ending outdoor escalator in Cochrane Street, in central Hong Kong, the crew is resting. A few curious Chinese faces peer over at the set, but the vast majority walk on by, unseeing or uninterested. This has been a source of some surprise to the crew, most of whom have cut their teeth in Hollywood and Europe, but Hong Kong people are used to seeing filming in their streets; the infamous home-grown Canto-movie, which reached its peak of popularity several years ago, used to be shot round the clock.

So prevalent were these crews when I lived there that a favourite prank for the young and drunk would be to pull the plugs on the lighting cables, safe in the knowledge that by the time the crew sprinted up the city's steep gradients you could be long gone.

Opposite the escalator, sandwiched between high-rises, is Irons's "apartment", a pale green old-style Chinese building, draped in T-shirts and hanging plants. Beneath it, Francine the publicist is shooing away "the evil red cat" which is after the crew's two birds. While I ponder the obvious symbolism, someone jokes that they are used like miners' canaries, to warn us before we all die from the pollution.

It is unusually hot and humid for March and everyone shelters under the shade of the escalator, close to a table on which there is a hint of Hollywood: next to the orange juice, water and slices of melon sits a large tub of Sunpat peanut butter. And then there is Jeremy Irons, who is drinking a cup of treacly, industrial-strength local coffee.

Irons took the part on the basis of only a "vague story and character", knowing the filming would be "risky, difficult and dangerous". But he says he was excited by the prospect, and by that of working with Gong Li, whom he greatly admires. He was, he admits, extremely vague about the colony itself.

"I thought it was probably an island, full of high-rises," he says. "I knew there were some Vietnamese refugees, and I knew it was a financial centre. But I had no idea how Chinese it was. And I had no idea how much greenery there was, how much beauty. I had thought that because they were building into the sea that there couldn't be any more room on the land."

His abiding impression was of "the energy of the place... the unstoppingness, the number of people. I'm stunned by the lack of respect for old things - from a society that worships parents."

Dressed in a light blue cotton shirt and chinos, his complexion a little sallow, Irons looks every inch the ailing Englishman abroad. It was a role he had researched locally, visiting, among other places the territory's Foreign Correspondents' Club to speak to journalists about their thoughts on the future, hearing "a myriad of views", as he puts it. "But as David Cronenberg said to me when I was filming Dead Ringers [where Irons played a gynaecologist], 'Don't bother meeting anyone - they're all doing it their own way'. I feel the same about journalism. If I had to write a piece for a paper I would, in my own kind of way, be a journalist."

Irons subsequently met "lawyers, professional people and money peo-ple. I had to try and find out a lot of things that you would know if you lived here. I read business books, I read Jan Morris's book." His conclusion: "I realised you only really come here to earn money."

In other ways Irons was familiar with what he was surrounded by. "I was educated amongst the kind of people who are here," he says. "They hold no surprises for me. Neither was he surprised by the number of English who didn't speak any Cantonese. "Because I know the English. You know, this idea that if you don't understand English you must be stupid. I started learning Mandarin because Gong Li cannot speak English. I hate to be where I can't speak the native language."

That said, Irons admits later that there have been "communication problems" with the largely Chinese crew. "The difficult thing with this crew is that they don't whisper - they can't, to make their sounds [Cantonese is based on tones], so there's a lot of shouting. It took a long while before we got a crew who were able to work quietly. But their radios are always very loud, and it's a sound you don't normally hear. I can never get them to turn it down."

Gong Li is having her picture taken with members of her entourage, including her make-up artist and interpreter. They are all aahing and squealing, especially when she poses with a handsome production assistant. Two elderly Chinese men on a nearby bench watch impassively, cigarettes hanging from their mouths. Suddenly one reaches into his dusty Mao jacket, pulls a top-of-the-range camera from his jacket and snaps her.

Hong Kong people recognise the local star Maggie Cheung, who also appears in the movie, before the names that would mean more to others. But even in jeans and a T-shirt Gong Li has a luminosity that is impossible to ignore.

With films such as The World of Suzie Wong and Love is A Many Splendoured Thing, Hollywood has tended to typecast Chinese women in the role of enigmatic, manipulative courtesans. Wang admits that the fact that Gong Li falls in love with a westerner, will leave the film open to charges that it panders to a stereotype. But Chinese Box, he says, is different in that the white man is not the saviour - Gong Li is. It is an attempt, Wang says, to make a "realistic, interesting cross-cultural love story".

That said, Gong Li still plays a bar girl - a characterisation for which Wang is unapologetic. "Every time I come to Hong Kong prostitution is so prevalent. It's in your face. I always wanted to make a film about it in a realistic way." He adds: "I'm not making a documentary but trying to see that world in an interesting way. It's right here, it's everywhere; everything you touch that's related to a woman seems to be somehow related to prostitution."

Gong Li researched her part by meeting and talking to hostesses who had come from mainland China to work at Hong Kong's B-Boss club, which is "like a football stadium," she says through an interpreter. "With lots and lots of girls."

She had evidently been surprised by what she found. "We imagine they are like sexy (she demonstrates, shimmying) and wear strong make-up, but they're just ordinary girls like us - with a little bit of make-up. Some even wear glasses." The actress had asked the women how they felt about their work, and had been surprised by the unapologetic nature of their replies.

"Mostly they said they were going to work for one or two years to save up some money, to go back to China and open a beauty parlour, or go outside and study." They were, she concludes, "not ashamed of their work, but were very straightforward about it."

It is Gong Li's first English-speaking film, a venture which may well propel her from Eastern stardom to the upper echelons of Hollywood. But she admits that as a Mandarin-speaker, the fast-changing English script has been a problem. "The difficulty is speaking English and sometimes I have to spend so much time concentrating on the dialogue," she says. "If it were in Chinese, that would be fine." Because of this, she says, they sometimes cut her lines.

One hesitates to describe Gong Li as inscrutable, but she has an inherent poise that makes it difficult to interpret any degree of emotion on her part, especially when she is speaking through an interpreter. Did the experience of filming the return of Hong Kong to her homeland add any personal significance to proceedings? "Not really, because the whole issue might affect the British more than Chinese." The changes it would bring for the Chinese, she says, were "not so emotional".

The handover doesn't appear to mean much to her - she certainly won't be in the territory for the handover itself. "I don't think it will be very interesting to be here on 30 June. It won't affect the Chinese much. It will be like celebrating Chinese New Year - some fireworks, but that's it."

Although all involved are keen to stress that the film is a love story, and that it should not be seen as political, few seem to believe that this will not eventually be the case. The return of Hong Kong to Chinese rule is, after all, one of the most politically charged events of the century.

"It's very difficult to film approaching change," says Irons. "The changes have been happening over the last 10 years. China now has a much bigger proportion of ownership, so in a way the change has already happened. It's just being ratified at the end of June."

At the point when we spoke, all that was going to be seen on film of the handover was the party, and the PLA tanks rolling in. "We're not saying whether it will be good or bad because nobody knows," says Irons. "It's like watching a roulette game, with everybody betting on chips. That's how this place will react. They'll try and make money, try and guess how it will happen."

Wang is well aware that in some quarters the film will be seen as making a statement. But he says he is trying to bring to bear his view both as a Hong Kong citizen and as an outsider. "We don't make a moral judgement of any kind about the handover," he says. "We talk about it from many different perspectives but as the film-makers we don't make a judgement," he says.

Wang, however, is not optimistic about his chances of getting distribution for the film in China. "It's difficult right now. China is so sensitive about so many things. I don't know what will happen." He sighs. "China always has a way of reading things the way they want to read it."

As I left, before the filming was over, the ending was still undecided.

'Chinese Box' opens in the autumn