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It’s been very interesting watching the Hong Kong Chief Executive “election” unfold this year, the first one I’ve witnessed as a Hong Kong resident. Hong Kong has long been a bastion of free market capitalism, with its free capital flows, staunchly pro-business government and laissez-faire approach to the economy. But the exercise of democracy and campaigning are still relatively new here, and watching the territory grapple with multiple issues and an uncertain future has been a fascinating experience.

Fortunately for the Chief Executive candidates, Hong Kong finds itself in a much better position than the United States does for the GOP presidential hopefuls. The economy here grew by 5% last year and is forecast to continue to grow by up to 3% in 2012. Unemployment stands at a minuscule 3.2% (as opposed to 8.9% in the US). The Hong Kong SAR government has foreign reserves of US$293 billion, which would be relatively impressive for a small country — but it’s for one city. Hong Kong is so flush with cash that it gave each permanent resident in the territory HK$6,000 last year. Furthermore, the city becomes more upscale each year; it long ago became a hotbed of high fashion and art, and is now moving into wines and other luxury items. Yes, these are heady days for the territory.

But despite these riches, tensions are rising. The people are restless. In a city where, only 10 years ago, people looked up to tycoons and other business leaders as role models, there is now anger at a system perceived by some, rightly or wrongly, as unfair. Many people have capitalized on Hong Kong’s growth over the last decade, enriching themselves in the process, but many have not. People — especially the so-called “grassroots” — don’t feel they are fairly represented in government. As Hong Kong has been consistent in its capitalistic approach for decades, it begs the question: why are people angry, and why now?

Hong Kong’s famous laissez-faire approach is now under threat for a few reasons. First, times have changed. I’ve spoken with some long-time Hong Kong residents, both locals and expats, who indicated that even though the government here has traditionally been very pro-business, there was always the feeling that if somebody worked hard, they could maybe become a tycoon, too. A system was put in place under foreign colonial masters that, in the later years of its rule, were aimed building a society that rewarded hard work; consider it Hong Kong’s very own version of the American dream. Although Hong Kong’s government was colonial, it operated with the full knowledge it was illegitimate and needed to win support from its subjects.

Hugo Restall touched on this in a column he wrote in his controversial article “Two Cheers for Colonialism” in the Wall Street Journal on February 22:

Hong Kong officials were accountable to a democratically elected government in Britain—a government sensitive to accusations of mismanaging a colony. Still, local officials often disobeyed London when it was in the local interest—for this reason frustrated Colonial Office mandarins sometimes dubbed the city “The Republic of Hong Kong.” And for many decades the city boasted a higher standard of governance than the mother country.

[Far Eastern Economic Review Editor Derek] Davies nailed the real reason Hong Kong officials were so driven to excel: “Precisely because they were aware of their own anachronism, the questionable legitimacy of an alien, non-elected government they strove not to alienate the population. Their nervousness made them sensitive.”

This is not to whitewash Britain’s role in Hong Kong, because its 150-year rule of the territory was not all ice cream and sprinkles. Still, Restall makes a good point: for Hong Kong to succeed, the people need to believe in it, too, and the government is ultimately responsible for creating those conditions. It’s this precise belief in Hong Kong which is now in doubt.

There was, and still is, concern that the foundations of a free society that took decades to form will be eroded as the territory further distances itself from its previous democratic overlord and assimilates more thoroughly with its new authoritarian one. Already, the delicate balance that was struck during the colonial years – a hands-off government, free market, free press, independent institutions – has slowly begun to unravel. First, while Britain knew it was illegitimate and thus acted in a way to win the people’s trust, China has no such concern. Through the Basic Law, China is able to ensure that the Chief Executive of the territory and his/her Executive Council (the cabinet) are all approved by Beijing. This has weakened the local government, which has drawn scorn for appearing to be doing Beijing’s bidding in the territory.

At the same time, local tycoons have consolidated their power. While much of their wealth was accumulated during the colonial years, Beijing knew that working with the powerful tycoons in Hong Kong would be necessary to keep the territory stable and moving forward. As prominent and successful business people, the tycoons also knew that working cooperatively with Beijing would open up a treasure trove of new business opportunities on the Mainland. Even if they had distain for one another (and there’s no evidence they did), it was and continues to be a mutually beneficial partnership. The result is Hong Kong being run by a weak local government, a distant authoritarian one, and powerful business interests. And lest people believe that Hong Kong’s tycoons and political leadership are on the people’s side when it comes to universal suffrage, Donald Tsang was quoted in a Wikileaks cable from 2005 saying:

The great fear in Hong Kong is not taxation without representation, but “representation without taxation” in which the non-taxpaying majority would dictate to the taxpayers.

In other words, tycoons (of which there are few) do not want to be subject to the whims of the working class (of which there are many).

Thirdly, following the 1997/98 Asian financial crisis and SARS epidemic in 2003, the Hong Kong economy took off. New millionaires were created, the rich got richer, the property market continued to climb, hedge funds moved in, and the financial industry became a larger part of the city’s economy. Central and Sheung Wan are now dotted with expensive wine bars, luxury goods stores, and Michelin starred restaurants. But while many were cashing in on the city’s success, the poor had few places to turn; only in the last six months has Hong Kong even introduced a minimum wage law.

Then there’s the slow but steady influence from the Mainland. Even before the Union Jack was lowered on July 1, 1997, Hong Kong people have lived in fear that, at any moment, the territory would someday be overrun by its big brother to the north and become just another Chinese city. It’s not that Hong Kong doesn’t like or appreciate Mainland China, but that the city wishes to protect its strong and independent institutions that safeguard the rule of law, free press, freedom of speech and so on. One of the things Hong Kong is most proud of — and sets it apart from Mainland China — is its exceedingly low level of corruption. This is why recent stories about Donald Tsang, in which it was uncovered that he spent time on private yachts and jets owned by tycoons, proved to be such a powder keg. Tsang’s behaviour seems much more in line with the expected norm in the Mainland. Evan Osnos of the New Yorker used a comparison with the GOP primaries to illustrate Mainland China’s view of its own politicians:

[US Republican Presidential candidate Mitt] Romney’s recurring silver-foot-in-the-mouth problem is perhaps the easiest for Chinese citizens to appreciate—their politicians make ours look like paupers—but they find the American love-hate relationship with Romney’s wealth to be confusing. “At least he got his fortune through proper means. Not much to explain. Can we say as much about Chinese leaders?” a commentator asked. As Roaring Shout put it, “Seems the way they do it is: get rich first, then become president. For us, the order is become a leader first, then….”

That may be accepted in Mainland China, but it isn’t here. Murray MacLehose, the Governor of Hong Kong from 1971 to 1982, lived out his retirement years in a small cottage in the British countryside with a run-down car in his driveway.* You wouldn’t know it from his humble retirement, but MacLehose bestowed tremendous gifts on Hong Kong, including founding the Independent Commission Against Corruption (ICAC) and launching public housing. Still, he knew his role as a public servant. What has Donald Tsang done, by comparison? With his retirement looming, he planned to use his connections to secure a multi-million dollar penthouse in Shenzhen. The idea of a public servant cashing in at the end of his term strikes too many here as a “Mainland-ization” of local politics.

So let’s recap: since 1997, Hong Kong has a new central government which is less concerned about proving its legitimacy to Hong Kong people, local tycoons have established more power and influence, poor people feel increasingly left behind and disenfranchised, and there is a growing territory-wide resentment towards the Mainland’s influence, which is seen as enabling Mainland “values” of corruption and authoritarian rule. This is an extremely potent mix. Add the fact Hong Kong people are well aware of the changes affecting their city through a free press, yet have no vote or say about any of it, and we uncover the root cause of the tension and discontent currently being experienced in Hong Kong.

Unfortunately, this chief executive campaign hasn’t given Hong Kongers much reason for optimism.

Henry Tang’s poorly run campaign has turned him into the butt of jokes, yet members of the election committee are reluctant to support his opponent, CY Leung, who is more populist. (There are in fact three candidates in the race, but Albert Ho does not have enough support from Beijing to secure the votes necessary to win). While Tang is the darling pro-business candidate who can be trusted to maintain the status quo in Hong Kong, Leung is a wildcard known for his aggressiveness and socialist streak. In fact, the weak support for Leung among election committee members – largely comprised of accomplished business leaders and pro-Beijing members of society – itself is a manifestation of the close relationship between business and government. Those that have power in Hong Kong want the status quo maintained because, after all, they have benefited the most from it.  Nothing illustrates the divide between haves and have nots better than this: the pro-Beijing, pro-business election committee supports Tang as chief executive, 51.3% of Hong Kong people believe he should drop out of the race entirely.

So what can be done?

First, there is a strong case to be made for continuing with the status quo; as I said at the start of this post, Hong Kong is wildly successful, so why mess with success? There is a large minority of people in Hong Kong which fears any laws which might dilute the business environment, such as the minimum wage law and anti-competition bill. Only through pressure from the public have these laws been introduced. But if the SAR government wants continued free rein for business, it needs to win renewed support for that approach. People need to believe in the Hong Kong dream again, and need to believe that giving business interests carte blanche will somehow benefit their lives, too. Otherwise, it looks like nothing more than collusion between powerful forces which are sorely out of touch with the working class.

Secondly, Hong Kong political leaders need to live up to an even higher ethical standard. Considering Hong Kong’s overlord is the Communist Party of China, and considering Hong Kong’s freedoms and independent institutions are under constant threat of being eroded, politicians here need to win confidence by being squeaky clean. Any perceived hint of corruption or conflict of interest is magnified here, as it should be. Unfortunately, both Donald Tsang and Henry Tang have failed this test miserably.

Finally, political leaders need to do a better job of understanding the working class. The protests in 2009 over the Express Rail Link to Mainland China, for instance, stunned the local political establishment. The anti-Mainland sentiment is a worrying trend. The backlash against big business strikes fear into business leaders, making them less likely to support universal suffrage. Aside from getting rich, people are now asking for more sustainable development, more green space, cleaner air and a reduction in poverty. As Hong Kong matures, students, the elderly, the working class and the poor are learning how to mobilize and advance their own agendas. These groups are often substantial in size and, in a free-press environment and using social media tools, cannot be ignored. Hong Kong’s business and political establishment needs to understand that giving a voice to these groups does not necessarily mean the beginning of the end of the territory’s capitalist experiment. Hong Kong can continue to be a playground for the rich, just not at the expense of the majority. A leader in Hong Kong who understands this – and understands the daily plight of most Hong Kong people – would be warmly welcomed.

 

 

*This comparison was originally drawn by a Chinese-language blogger in Hong Kong. Unfortunately, I do not have the link to the original.

 

 

 

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3 Comments

  1. gregorylent says:

    authoritarian systems everywhere deaden the human spirit. materialism doesn’t make up for it.

    that’s all one needs to know about hong kong. until china changes, hong kong will experience darkness.

  2. George says:

    Great article.

    It’s not clear though what you mean by “Although Hong Kong’s government was colonial, it operated with the full knowledge it was illegitimate” and later “while Britain knew it was illegitimate” … which in the literal meaning of the word ‘legitimate’ seems both technically incorrect and unsupported by any reasoning why you introduce that argument in your discussion.

    If it is in the argumentative sense quoted “the questionable legitimacy of an alien, non-elected government”, meaning presumably that peoples or states who are ‘victim’ of being colonized somehow universally and automatically refuse ever the recognize legimacy in their situation, then I’d say that should be qualified as whose opinion, since obviously from the point of view of the colonial power, and therefore literally the law, the government was technically legitimate.

    Throughout the entirety of history, colonial/imperial powers could make their – in modern terms – questionable ethical interpretations of moral-legitimacy, into literally legitimate structures merely by force of creating the laws themselves. Seems to me from a historical standpoint, there is therefore no use arguing with the ‘legitimacy’ of colonial powers’ attitudes as you would just be arguing with a past reality that was universal (Hong Kong being but a tiny and relatively un-controversial case) and now gone. And from a modern viewpoint the question is sufficiently complex and relativistic also to be meaningless as a term of criticism.

  3. [...] Blog has a lengthy post about Hong Kong politics and China- I’ll only post the first paragraph, and say that the rest [...]