In May, the Free China Review went to Hong Kong and spoke with a selection of business leaders, journalists, and other professionals to learn how they think post-1997 Hong Kong’s political, social, and economic life will develop. While they all agree on what has made Hong Kong one of Asia’s leading financial centers and an economic powerhouse, not all express equal degrees of confidence in the future of the territory under mainland Chinese rule. No one can predict the future, but here is a cross section of opinions from people who are in good positions to judge.
Ian Perkins, assistant director and chief economist, Hong Kong General Chamber of Commerce:
The working relationship between the SAR [Special Administrative Region] government and the central government in Beijing is critical to Hong Kong’s prosperity, and that relationship must be exclusive, with no intervention from any other mainland government or agency. The Basic Law says that no provincial authority will have power over Hong Kong, nor will they be allowed to make decisions affecting Hong Kong. Yet provincial leaders have been trying to get involved with the Hong Kong Preparatory Committee [the forerunner of the SAR government]. The SAR government must report only to Beijing.
In the future, economic competition will come from inside Mainland China, not from Singapore, Kuala Lumpur, Jakarta, or wherever. Hong Kong’s position as an international shipping and financial services center will be challenged by Shanghai or Guangzhou. Hong Kong must therefore be competitive within the mainland. But, given Mainland China’s size and rapid development, it’s going to need many economic centers. So it’s not about being the center, it’s about being number one, two, or three.
Hong Kong’s main advantages are its regulatory and operational environments. It will have a high degree of autonomy, and its legal and financial systems will remain different from those on the mainland. Our systems are very internationalized, understandable to multinationals, and attractive to foreign investors. Hong Kong’s infrastructure is also appealing to Westerners. They can enjoy a lifestyle and working environment with which they are familiar and comfortable. These things give us an edge over mainland cities.
Multinationals have strong concerns about the mainland’s legal system. Beijing-based lawyer Cao Siyuan stated in a recent Asian Wall Street Journal article, that the difficulty of getting fair treatment in business disputes with mainland partners is more often the result of deficiencies in the administration of justice than in the laws themselves, and he goes on to say that such malpractice goes far beyond the misdeeds of a single individual. I agree with these observations, and his conclusion that an impartial system of justice is crucial for maintaining a successful market economy. I think Hong Kong will continue to offer this advantage.
What’s hurting our competitiveness is the cost of doing business in Hong Kong. The new administration must try to control rising costs. Companies pulling out are, for the most part, not doing so because of 1997. They’re leaving because rents, wages, and other overheads are making it too expensive to stay. When you ask businesspeople about 1997, political issues rank very low on their lists of concerns.
In the future, Hong Kong will be totally dependent on its service industries. It could become the mainland’s Manhattan. But that will create a very fragile economy. That’s a problem that the SAR government will have to face. Otherwise, once the infrastructures of cities in Mainland China become better developed, Hong Kong can be replaced. Service businesses, like manufacturers, will be able to move to the mainland, where costs are lower.
It is also possible that Hong Kong will become a more Chinese city. Its image as an international city could diminish as its focus turns inward to the mainland. It might even become a financial center only for the mainland, not for the international community—Mainland China’s Tokyo. That makes international businesspeople worry.
Lee Yee, editor-in-chief, The Nineties, a Chinese-language political affairs monthly:
After July 1997, the media in Hong Kong will have to make some adjustments in response to changes in the political environment. If they are to survive, they must follow the rules laid down by the new authorities. For example, Beijing said that Hong Kong’s media, especially the Chinese-language media, must love the country [the PRC]. But if patriotism defines how we cover events, then there will be no reality, no truth. We were also told to respect our race, and that it is our duty to maintain the stability and prosperity of Hong Kong. I disagree. Our only duty is to report the truth. Maintaining prosperity and stability is the duty of the government, and society as a whole. If there are demonstrations and protests, are we going to report them or not? If we do, Beijing may say that we are undermining social stability, and for that we may have to answer to the Public Security Bureau.
Article 23 of the PRC’s Journalism Act stipulates that any media which publish treasonable, separatist, or seditious material will be banned. But who decides what is treasonable, separatist, or seditious? Beijing does. I asked the director of the Hong Kong office of the Xinhua News Agency if freedom of the press in Hong Kong would differ from that of Mainland China in the future. He would not answer. By that I gather he meant that the mainland already had freedom of the press, and after 1997 Hong Kong will have an equally free press.
Basically, the biggest threats to Hong Kong in the future are loss of freedoms, and loss of the rule of law. But another important concern is how the Hong Kong government will operate. At present, it operates like an international business. Proposals are made, criticisms heard, possible outcomes are weighed, and policies implemented accordingly. In short, it is fair. Beijing, on the other hand is too political in its decisions, and puts ideology before the well-being of its people. Mainland China’s civil servants are chosen not for their ability, but for their political correctness. So I wonder how well our government will work in the future. It is Mainland China’s nationalism that may seriously harm Hong Kong’s prosperity and stability. To remain an international financial center, and to stop the mainland’s culture of corruption from infiltrating Hong Kong, freedom of speech, freedom of the press, and the rule of law upheld by an independent judiciary—not one controlled by the government—are essential.
Lily Chiang, executive director, Chen Hsong Holdings Ltd, the world’s largest manufacturer of injection moldings:
Hong Kong’s economic fortunes will continue to grow after 1997, because it has an unbeatable location. It’s central to Asia, and its proximity to the mainland allows traders and technicians to travel frequently and conveniently to Mainland China. Common culture and language also make it easy for them to forge close relationships with their mainland partners. The whole world is looking to invest in the mainland, and Hong Kong is the natural choice as the gateway to mainland Chinese markets.
But we need to diversify our industrial orientation. In manufacturing, we lack three things: land, raw materials, and skilled labor. By relying on imported materials and parts, we’re vulnerable to price fluctuations and delivery delays, although our free port status allows manufacturers to import parts and components without having to pay heavy tariffs. The government’s hands-off approach to business is probably the greatest single reason for Hong Kong’s success. It has allowed the hard work of people here to really pay off. I don’t expect our future government to interfere with the business environment. That would make Hong Kong lose its competitive edge.
Mainland China and Hong Kong have a sort of father-son relationship. The question is, will it be based on cooperation or control? We have to help each other—we’ll bring business opportunities, and they’ll have to open a larger share of their market to us. If the father just wants to control the son, it will only increase the tension between them. I hope we can cooperate, but Beijing still likes to give orders and have them followed. In order to show its authority, it seems to feel the need to intervene in everything—the press, legislature, and the judiciary.
The SAR government should focus on playing the role of middleman between foreign interests in Hong Kong and the authorities in Beijing. To maintain its economic development, Mainland China needs to access capital from overseas Chinese and foreign investors, and channel it into the mainland via Hong Kong. Beijing often seems out of touch with global trends, but from its base in Hong Kong the SAR government can act as Beijing’s advisor on current events and issues in international business. It can also help bring the mainland closer to the international community.
Likewise, Hong Kong should be allowed to go on bridging the gap between the mainland and Taiwan, so that Mainland China can continue receiving capital and technological investment from Taiwan, and Taiwan can continue to benefit from access to mainland markets and resources. If Hong Kong, the mainland, and Taiwan can unite their interests, Greater China will become the economic center of the world in the twenty-first century.
Stephen C. Yam, head of the Centre for Continuing & Community Education, Open Learning Institute of Hong Kong:
I’m optimistic about Hong Kong’s future. Mainland China is Hong Kong’s number one source of foreign investment, and Hong Kong is a window for the mainland’s business relations with the world. The mainland won’t harm its own interests. If we don’t bother Beijing, it won’t bother us. There was a lot of noise and military posturing toward Taiwan, but that was because Beijing’s authority and security were threatened. Likewise, journalists are only detained when Beijing’s leaders feel that the security of the country is being endangered. But most Hong Kong people are apathetic about politics. They’d rather play mahjong.
The mainland will keep economics and politics separate in Hong Kong. Politically, Beijing has to safeguard its ideology. I have no doubt that it will tighten political laws, such as those concerning treason, to prevent Hong Kong from becoming an anti-communist base. But economic and investment laws will remain as they are now. Beijing emphasizes Hong Kong’s position as an economic, not a political, center. This is reflected in the fact that most Preparatory Committee members are from the business sector. Hong Kong is just like a company getting a new boss. The mainland boss does things differently than the English boss, but the basic structure of the company will remain. Two years ago, when a new shop was opened, people invited English officials to cut the ribbon. Now, officials from the Xinhua News Agency are invited instead. This is perfectly normal. We want good relations with our new boss.
What worries me is education. Most young people in Hong Kong, including university students, do not know much about politics, nor do they care. All they care about is whether they can get a job. They would rather have fun than think about social issues. Hong Kong’s educational system under British rule has been a complete failure. Students are not taught Chinese history and geography, and they don’t have a sense of belonging, or identity with Chinese culture. Many want to emigrate. What kind of future can they make for Hong Kong?
Jeffrey K. F. Lam, vice chairman, Hong Kong Toys Council:
When Mainland China initiated its open door policy in the early 1980s, we made good use of the cheap land and labor available across the border. There was still a lot of uncertainty, and many businesses contented themselves with staying in Hong Kong. But as confidence grew, more and more manufacturers moved to Mainland China. After the Tiananmen Incident, people got scared, and confidence fell. Now it’s rising again, but competition in general has gotten a lot tougher, especially in manufacturing. Business needs a stable environment in which to operate, and political stability is of great concern to investors. As a businessman, I am not interested in politics, but politics can affect industries and the economy. I don’t like to speculate on what will happen after 1997, but experience tells me that Hong Kong will remain a good place to do business.
Our future depends on confidence in Hong Kong. If most people remain confident, Hong Kong will continue to prosper, but if they don’t, and pull out of the territory, Hong Kong will suffer. Most businesses have stayed on, and that has stabilized the economy. That makes me optimistic about the future. Hong Kong has a lot going for it, most importantly the government’s laissez-faire economic policy. By focusing on developing Hong Kong’s infrastructure, instead of intervening in business, the government has cultivated conditions that have allowed our economy to flourish. The government neither subsidizes nor favors any industry or company, nor does it discourage any. This has created an absolutely fair competitive environment. Our new government should not change this.
Frank Ching, senior editor, Far Eastern Economic Review, a leading regional business and current affairs weekly:
I think Beijing is quite serious about keeping Hong Kong separate from the rest of the mainland. Beijing spent two years negotiating the Joint Declaration, five years drafting the Basic Law, and many more years negotiating various agreements with Britain. I think Mainland China intends to honor those agreements. But their interpretation of what the agreements mean, and how they will implement them, are of concern to me.
When the Joint Declaration was signed in 1984, people expected that everything would be ready by 1996. But barely a year away from the handover, nothing’s clear. We don’t know who the chief executive will be, we don’t know what the makeup of the legislature will be, and we don’t know if there will be free and fair elections. That’s largely because Beijing is unhappy with many of the changes that have occurred in Hong Kong since 1984.
When Beijing said that Hong Kong would remain “unchanged” for at least fifty years, I think they meant that Hong Kong could continue to practice capitalism, and would not have the mainland’s socialist system imposed on it. Any change in Hong Kong should come only as a result of society’s natural evolution. This is the way the agreement ought to be understood. But Beijing is now saying that what it agreed to in 1984 was that the situation should remain as it existed when it signed the agreement. It did not agree to accept any changes put in place between 1984 and 1997. The Preparatory Committee is now asking for a list of all the laws that have been changed since 1984. That may mean Beijing wants to turn the clock back.
It may also mean that it wants to interfere with Hong Kong’s legal system. Technically, Hong Kong law will be interpreted by the Hong Kong judiciary, not by Beijing. But the judiciary consists of individuals, and pressure can be applied to individuals. And many experienced foreign judges may leave before the handover because they fear the judiciary will lose its independence. That means the new judiciary will consist largely of inexperienced judges, some of whom could be vulnerable to political pressure—particularly if Hong Kong is administered by mainland officials with vested interests.
The concept of “one country, two systems” can only work if each system produces its own leaders. If Beijing decides who the leaders of Hong Kong will be, and controls them, there won’t be two systems, there will be one system. The Basic Law gives the mainland authorities the right to appoint the chief executive and other principal officials. However, such appointments should reflect the will of Hong Kong’s people, not the will of Beijing.
But the mainland authorities are doing away with the current legislature. They are saying that they will set up a provisional legislature, which will in effect be an appointed legislature. They are saying there will be elections in the future. But we don’t know what sort of elections these will be. All this strikes me as interference in Hong Kong’s domestic affairs. If that is so, how can you talk about “one country, two systems?”
It would also make me very pessimistic about Hong Kong’s future if our freedoms of the press, speech, and expression, which we are so accustomed to, were to be taken away. I don’t believe that the People’s Liberation Army would march into a newspaper office. If Beijing wants to control the media, and dictate what they do and don’t report, it will do so through legislation and economic pressure. For the sake of protecting their profits, some of the media have voluntarily succumbed, even though there hasn’t been any real pressure yet. However, the Hong Kong Journalists’ Association has been in the forefront of the battle to maintain Hong Kong’s press freedom. They have shown great courage, knowing as they do that Beijing keeps records on those who voice dissenting opinions.
M.W. Lui, chairman, The Hong Kong Electronic Industries Association:
Since the 1980s, Hong Kong’s electronics manufacturing industry has been in decline. Over 95 percent of companies in this business have moved their production lines to Mainland China. Like Taiwan, Hong Kong is afraid of deindustrialization. In 1979, 33 percent of our industry was in manufacturing, now it’s only 11 percent. Our GDP now relies on commerce, banking, and service industries. The unemployment rate has increased from 1.8 to 3.2 percent, and will continue to rise. This is not good.
Taiwan has done well in upgrading its industries. In Hong Kong, the government won’t support any industry, whereas Taiwan’s government supported the development of its computer industry and achieved impressive results. Since the handover is only about one year away, I don’t expect much from our current government, but I expect the SAR government to do better for Hong Kong.
There was some uncertainty about Hong Kong’s future after 1997 that affected our economy in recent years, but I think things have stabilized. Those who wanted to leave have left. Those who left and couldn’t survive abroad have returned. As long as Hong Kong’s social stability is maintained, and politics don’t get mixed up with economics, the coming of 1997 won’t present any big problems. If Mainland China destroys Hong Kong’s prosperity, it will be costly and embarrassing, so I think they’ll let Hong Kong people run Hong Kong.
Yeung Chun Fan, vice president, Federation of Hong Kong Garment Manufacturers, and committee member, Hebei Province People’s Political Consultative Conference:
Hong Kong is a free-market economy, the government rarely interferes with business, and I believe it will stay that way after 1997. The mainland stands to lose too much if Hong Kong’s business environment and economy are harmed. I don’t think the people in Beijing are fools. To run a country well, a leader must have the support of the people. How do you get their support? Give them a good life. Without that, no one will have popular support, regardless of the system. People are realistic. If their needs aren’t satisfied, socialism, communism, and capitalism are just words. But no leader likes his power to be challenged. That’s why the Chinese communists keep stressing that Hong Kong will not be allowed to become an anti-communist stronghold. Hong Kong will have no problems as long as it remains neutral toward Mainland China’s politics. Beijing also wants Hong Kong to recognize that it is part of Mainland China, and subordinate to the central government. You may not like it, but if you don’t go along with it, how can you expect Beijing to give you a free hand in conducting your life and your business?
People running small businesses in Hong Kong can’t afford to worry about politics, or about the distant future. 1997 will have little effect on business in Hong Kong. That’s my personal opinion. Some people have different ideas, for various reasons. Everyone’s needs are different: some want glory, and some want a happy, peaceful, ordinary life, and three meals a day.
Guy Lam, chairman, Hong Kong Alliance of Chinese and Expatriates, a registered political party:
Many people have emigrated from Hong Kong ahead of the handover, and many may want to return. Perhaps like those of us who are still here, they are waiting to see if Mainland China will be true to its “one country, two systems” policy. But most still feel that Hong Kong is their home. The best future that we can hope for is one where politics and economics are kept separate. The “one country, two systems” policy is unprecedented anywhere else in the world. There are great differences between Hong Kong and Mainland China, and we have been protected from many of the upheavals that have wrecked the mainland under the communists. But that might not be the case after 1997. Power struggles in Beijing can cause dangerous disruptions; can we avoid getting caught up in them?
Many businesspeople are optimistic about the future because they have benefited greatly from Mainland China’s open-door policy. Hong Kong has been able to access mainland markets and land and labor resources, yet remain separate from the mainland and enjoy a different way of life. But what if the “one country, two systems” policy doesn’t work, and we lose our economic independence? Then investors will lose confidence in Hong Kong—not just foreign investors, but local investors too—and they’ll invest elsewhere. If it’s going to work, Hong Kong’s senior officials must have the power to keep Beijing from interfering in Hong Kong’s domestic affairs. That power must come from the people. If officials are sent by the Beijing government, they will not be supported by the people of Hong Kong. And if Beijing continues to interfere, no one will invest here, and Hong Kong will be dead.