China's Hong Kong Transformed : Retrospect and Prospects Beyond the First Decade 9789629374822, 9789629371685

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CHINA’S HONG KONG TRANSFORMED: RETROSPECT AND PROSPECTS BEYOND THE FIRST DECADE

回顧與展望中國香港特區之轉型 陳明銶主編

China’s Hong Kong Transformed: Retrospect and Prospects Beyond the First Decade Edited by

Ming K. Chan

© 2008 City University of Hong Kong All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, Internet or otherwise, without the prior written permission of the City University of Hong Kong Press

First published 2008 Second printing 2011 Printed in Hong Kong

ISBN: 978-962-937-168-5

Published by City University of Hong Kong Press Tat Chee Avenue, Kowloon, Hong Kong Website: www.cityu.edu.hk/upress E-mail: [email protected]

Table of Contents Preface by Anthony CHEUNG ................................................................ xi Acknowledgments ................................................................................ xix 1

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence? Ming K. CHAN ................................................................................... 1

Hong Kong Transformed.............................................................................................. 2 Post-1997 Changes: Key Factors & Major Dimensions .................. 4 Identity, Collective Memory, China Knowledge & Education Reform ...........................................14 Prospecting from a 1997–2008 Retrospective........................................22 Changes Yet To Come .................................................................................................33 About this Volume ...........................................................................................................36

Part I. The Political Matrix 2

The Hong Kong Special Administrative Region: Ten Years Later Sin-por SHIU ................................................................................... 43

Introduction ...........................................................................................................................43 The Economic Position of Hong Kong .........................................................48 China’s Post-1997 Policies Toward Hong Kong..................................50 Major Events in the Last Ten Years ................................................................50 Big Change Under a Policy of No Change .................................................52 Political System Under Development ..............................................................53 The Political Reality of Post-1997 Hong Kong .....................................54 Prospects....................................................................................................................................55 Concluding Observations ..........................................................................................56

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Democratization of the Hong Kong SAR: A Pro-democracy View Margaret Ng....................................................................................59

Overview ................................................................................................................................... 59 The Legal and Constitutional Basis of Democratization .............. 62 Democratization: A Progress Report .............................................................. 65 The Need for Democratization............................................................................. 75 Democracy for Hong Kong: The Issues........................................................ 82 Democratization: Looking Ahead...................................................................... 84 Postscript .................................................................................................................................. 86

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What You Are Not Supposed to Know About Hong Kong Ronnie CHAN ................................................................................... 97

Introduction ........................................................................................................................... 97 Moral Dilemma and International Reality ................................................ 98 Long-standing Half-Truths .................................................................................. 100 Newly Concocted Half-Truths ......................................................................... 101 Challenges Ahead.......................................................................................................... 103 Internal Difficulties...................................................................................................... 106 Can Hong Kong Thrive? ........................................................................................ 110

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Two Systems Becoming One: The 2047 Timetable Suzanne PEPPER .......................................................................... 113

The Writing on the Wall ........................................................................................ 115 Interpreting the Basic Law .................................................................................... 120 Reshaping the Foot to Fit the Shoe............................................................... 126 The November 18 Election and the “District Council” Model of Political Reform ......................................................................... 128 The December 2, 2007 Legco By-Election ............................................. 132 The Ties that Bind: Hong Kong’s NPC Delegation ....................... 133 The Roadmap Toward Full Political Integration ............................ 138 What Price Patriotism? ............................................................................................ 141

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Part II. The Legal-Constitutional Dimensions 6

A Decade of Hong Kong Basic Law Actualization Zhenmin WANG ............................................................................. 155

Introduction ....................................................................................................................... 155 Basic Law Actualization Through Hong Kong’s Judicial and Legal Mechanisms ......................... 156 Basic Law Actualization Through PRC National Constitutional Mechanism .................................. 161 Conclusion........................................................................................................................... 170

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The Rule of Law and Economic Development in the Hong Kong SAR Douglas W. ARNER & Berry F. C. HSU .......................................... 173

Introduction ....................................................................................................................... 173 Notions of the Rule of Law ................................................................................. 174 The Rule of Law and Economic Development .................................. 176 Judicial Independence in Hong Kong ......................................................... 178 Conclusion........................................................................................................................... 284

Part III. The Economic and Social Dynamics 8

The Hong Kong Economy Since Reversion Yun-wing SUNG............................................................................. 191

Relocation of Manufacturing and Competitiveness...................... 193 Economic Restructuring in Hong Kong ................................................... 194 Hong Kong: From a “Dragon” Economy to the Laggard of East Asia ....................................................................... 195 The Four Key Industries of Hong Kong ................................................... 198 Trading and Logistics ................................................................................................ 201 Financial Services .......................................................................................................... 204 Decline of Banking and Rise of Capital Market............................... 205 Hong Kong As a Center of Wealth Management ........................... 206 Conclusion........................................................................................................................... 208 vii

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New Generation, Greening Politics and Growing Civil Society Yan-yan YIP & Christine LOH ....................................................... 213

Hong Kong’s Evolving “Third Sector” ..................................................... 214 A Snapshot of Hong Kong’s NGOs ............................................................. 217 Green Politics: New Groups, New Focuses and New Values .................................................................................................. 218 Green Politics in the HKSAR: New Ways of Getting Things Done .................................................. 222 Using the Town Planning Process .................................................................. 225 Taking the Judicial Path ......................................................................................... 226 But There is Much Frustration . . . ............................................................ 227

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Social Conflict in Hong Kong after 1997: The Emergence of a Post-modern Mode of Social Movements? Alvin Y. SO ................................................................................... 233

The July 1, 2003 Anti-National Security Bill Protest................... 240 New Types of Social Movement Since July 1, 2003 ..................... 244 Conclusion .......................................................................................................................... 248

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Post-1997 Hong Kong Media: A Decade of Change, Competition and Contradiction Tuen-yu LAU & Raymond CHENG ................................................. 253

Five Levels of Analysis ............................................................................................. 254 Concluding Remarks ................................................................................................. 276

Part IV. External and Comparative Perspectives 12

Can Taipei Influence Beijing’s Policy Toward Hong Kong? Shiu-hing LO ................................................................................ 287

Introduction ....................................................................................................................... 287 viii

The Unattractiveness of Hong Kong’s “One Country, Two Systems”............................ 287 Applicability of the Spirit of “One Country, Two Systems” ........................................................ 295 Taiwan’s Influence on Beijing’s HKSAR Policy ................................ 298 The HKSAR Role in Beijing-Taipei Relations: The Need for Reform ..................................................................................... 306 Conclusion and Prospects ..................................................................................... 309

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A Comparative Perspective on Hong Kong Democratization: Prospects Toward 2017/2020 Larry DIAMOND .............................................................................. 315

Is Hong Kong “Ready for Democracy”?................................................. 316 The Conditions for Democracy........................................................................ 317 Models and Constraints of Transition ...................................................... 322 Implications for a Negotiated Transition in Hong Kong ........................................................................................................ 327 14

The Hong Kong SAR at Ten Years and Prospects for the Future James B. CUNNINGHAM ................................................................ 335

The Past Ten Years ...................................................................................................... 336 Issues Facing Hong Kong ...................................................................................... 338 Prospects for the Future .......................................................................................... 340 Contributors

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343

Index ...................................................................................................................................................... 353

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Preface Hong Kong’s Role in Transforming China Professor Anthony Cheung Member of the HKSAR Executive Council, President, The Hong Kong Institute of Education

Throughout Hong Kong’s transitional period – from the signing of the 1984 Sino-British Joint Declaration until its reversion to China’s sovereignty on July 1, 1997 – the dominant discourse on its future had been whether and to what extent Hong Kong might change, or in most critics’ mind, regress after the handover. The worst fear in those days was that Hong Kong might be subject to a process of “mainlandization” so that it would become no more than another tame Chinese city under strict communist control. All efforts were devoted to prevent that from happening. By endorsing a “One Country, Two Systems” framework China was keen to dispel such fears and reassure Hong Kong and the international community that the city would not be absorbed into the mainland system; instead it would be allowed to thrive as a free capitalist enclave closely aligned to the global economic order led by developed Western nations. The separation of the “two systems” – mainland socialism and Hong Kong capitalism – was to be a real one, almost to the point of mutual exclusion. Chinese leaders, too, worried that their socialism would get eroded by fully integrating what Milton Friedman once described as the last bastion of classical capitalism. Separation served the purposes of both sides. The Chinese Central Government would retain the ultimate sovereign authority over the new Special Administrative Region (SAR), but would otherwise leave its political, administrative, legal, judicial and economic life untouched, provided Hong Kong would not pose as a threat to the mainland. The underlying tone then was: “you go your own way, and we go ours,” such message being amplified in the aftermath of the Tiananmen xi

crackdown on democracy in 1989, when mainland authorities accused Hong Kong of turning into a base of subversion, warning that “the well water must not interfere with the river water.” Hong Kong people were shocked by the Tiananmen crackdown. Confidence plummeted. It seemed all the more necessary to them to keep Hong Kong as a self-sufficient economy and polity, and to have as little to do with the mainland as possible. 

More than a decade after the handover, while mutual political suspicions have remained high, the big scene is a far cry from the uncertain 1980s and 1990s. Hong Kong’s basic freedoms are as vibrant as before, at least according to various public opinion polls. Public confidence in the Central Government and the People’s Liberation Army garrison has moved up steadily from low ebbs. Even foreign pessimists like the Fortune magazine, which predicted “the death of Hong Kong” on the eve of the handover, has to admit that they were wrong: business is booming as before. However there are undercurrents of insecurity, and worries about the threat of ‘marginalization’ by the mainland as big cities like Shanghai, Beijing, Tianjian, Guangzhou and Shenzhen all seek to catch up and even surpass Hong Kong. The past decade saw the rapid rise of China. There is wide recognition of China’s ever-expanding economic strength and global influence. Business and professional sectors now hurry to take advantage of this China boom. The sense of boundary between the HKSAR and mainland is being transformed – it was known as “the border” before the handover. Economic, social and cultural intermingling intensified. Increasing droves of students, professionals, business people and visitors move in both ways. Intermarriages are becoming common. The previous precept of mutual exclusion no longer fit the evolving reality. Hong Kong now rises and falls with China. Before 1997 there was somehow a sense of purpose – to forestall mainland interference and influence, and to keep Hong Kong’s status quo. Now, the irony is: keeping Hong Kong xii

unchanged does not help to chart a future. But the city at large is still uncertain of its new identity as an SAR of China. The mass protests by over half a million residents on July 1, 2003 denoted not just a backlash against an unpopular national security bill required to be enacted under Article 23 of the Basic Law. It represented more profoundly a collective act to assert the Hong Kong interpretation of national interest, as contrasted to what was defined by the mainland authorities. Following July 1, Hong Kong has seen consecutive social movements to demand universal suffrage, defend its core values, and preserve its natural and historical heritage (Victoria Harbour, Star Ferry and Queen’s Pier, to name the notable themes). These are not sporadic campaigns; they articulate a common desire, particularly amongst the younger post-1980s generation, to search for Hong Kong’s identity and worth from the colonial past. This is understandable. Despite its various shortfalls and “borrowed place, borrowed time” mentality, Hong Kong had made tremendous progress in the final decades of British rule. It had succeeded in building an international city not only known for economic vibrancy, but also the respect for freedom, rule of law, integrity, professionalism, fair play, and in recent years, transparency, accountability and human rights. Any erosion of these core values and institutions is tantamount to taking away Hong Kong’s raison d’être. 

The present volume edited by Professor Ming Chan, a long-term observer of Hong Kong’s political transition, is a collection of timely academic and reflective essays covering different aspects of Hong Kong’s post-handover journey. They chronicle its dilemmas, challenges and constraints, as well as its achievements, setbacks and anxieties as the HKSAR gradually but steadily moves towards integration with the Chinese Mainland at a time when the country saw its most impressive economic growth and social change in recent history. Eleven years after reunification, it is indeed appropriate time to ponder over Hong Kong’s long term future, xiii

both in terms of sustaining its unique identity and comparative advantage under “One Country, Two Systems,” as well as finding a role to play within China’s overall trajectory towards affluent and strong nationhood. The big question is not just how Hong Kong will be transformed by China in the process. Inasmuch as it is being changed because of reunification, Hong Kong is also capable of contributing to China’s transformation first instigated by Dengist reforms thirty years ago. If one looks back to the past century, one can find many instances of Hong Kong – as a city ruled by foreign power and yet closely related to the mainland by trade and family/clanship affinity – playing an important part in both the Republican and Communist Revolutions. By being of and yet not under the effective control of China, Hong Kong had thrived as a Chinese settlement with non-traditional institutions, a source of alternative thoughts and ideas, and a refuge for dissidents and ordinary folk seeking a new and better life. Deng Xiaoping once held Hong Kong as a role model for the rest of China during the 1980s and urged the mainland to build more “Hong Kongs.” What makes this city a role model is not only its economic power and affluence, but ultimately its advanced institutions and liberal environment that has been conducive to free speech, diversity, competition and entrepreneurship. Hong Kong has stood up in contemporary Chinese history because of its liberty and freedom, supported by the rule of law and modernity. During British rule, its “Englishness” and insulation from the mainland had given Hong Kong the historical opportunity in the last century to develop and modernize without being affected by the political and economic turmoil that plagued the mainland under Maoist fanaticism. Now, Hong Kong cannot continue to thrive on such insular position. Back in the 1980s, Hong Kong felt insecure in face of the political giant on the mainland, but took pride in that China had to rely on Hong Kong for economic development and modernization. It was then hailed as a growth model for the rest of the mainland. Now, after three decades of economic reform and opening up, China no longer needs Hong Kong so desperately. No xiv

doubt the Basic Law has provided safeguards for the coexistence of “two systems” within “one country,” but sticking too much to Hong Kong’s difference may breed indifference, and over-emphasis on self-sufficiency may cut it off from the national mainstream. While the SAR enjoys a high degree of autonomy, it has limited say in the national policymaking process. Hanging onto the past formula of success may hinder it from seeing fresher perspectives and new possibilities. For too long Hong Kong has been embroiled in an identity crisis, self-pity and nostalgia for the prosperous past. The “One Country, Two Systems” framework provides a pretext for differences and creativity, but it could also lead to economic and political marginalization if Hong Kong people become too cynical and riskaverse. For too long the political discourse on Hong Kong’s handover has been framed by the concerns about maintaining Hong Kong’s separation from the mainland and the pitfalls of “mainlandization.” The reverse discourse steered by many in business and the establishment has alluded to a bright future because of the economic benefits the city can derive from mainland integration. While Hong Kong no doubt will gain from strong economic links with the mainland, a thesis harping only on such gains would by default, if not by design, denigrate its role and importance as it becomes increasingly dependent on the mainland economy. Instead of focusing on how Hong Kong has been transformed by China, as many skeptics and critics still do, a new discourse should turn to how Hong Kong can contribute towards China’s transformation into a modern and civic polity the power of which goes beyond economic. Only this can help to define Hong Kong’s future. 

More than a decade after reunification, Hong Kong should seek to come out of the identity doldrums and take a more proactive perspective of the “One Country, Two Systems” framework. Unless rediscovering a sense of purpose and destiny – i.e. a “new” Hong xv

Kong spirit – it may continue to be embroiled in the sentiments of threats, uncertainties and divisiveness. Great cities rise and fall in history. While respecting its colonial heritage and collective memory, Hong Kong must not allow itself to remain defined by its past. At the same time the earlier Hong Kong people drop both the economic dependency and political impotence syndromes vis-à-vis the mainland, the better. Hong Kong is an integral part of China, and as such should not be shy in displaying its features as one of China’s new faces. Its return to China can be taken as offering the premise for another era of development that could parallel the last century. There may well exist the risk of clash of institutions and cultures, or even reverse capture by the mainland, but staying outside the Chinese orbit is neither realistic nor desirable. Hong Kong should not be content with being cast to the periphery of China, but should strive to be at the centre of things and a pioneer of the nation in her journey towards modernity. Its modernization experience – in governance institutions, its mature market, free media and civil society – should form part of the broader national heritage. Its institutional strengths should add to China’s new face. For China, too, “One Country, Two Systems” should no longer be seen as a formula of political expediency, but rather a conceptual basis for a new China that is built upon greater diversity – whether economic, political, social or ethnic. As China moves rapidly into the world, so is the world moving towards China. Between China and the world stands Hong Kong whose role lies in its connectivity with both. Closer integration with the mainland should be part of a larger historical outlook where China is significant to the world, and if Hong Kong can play an active part in it, its impact can radiate more widely. Hong Kong’s future lies in internationalization as much as nationalization. Hong Kong remains China’s truly international financial centre. Such claim is well underscored by Time magazine’s (January 17, 2008) depiction of the “Nylonkong” nexus – namely New York, London and Hong Kong. In its words, the three cities have created a financial network that has been able to lubricate the global economy. Such international status, though, is only sustainable and xvi

meaningful if functioning for the whole of China. Finding Hong Kong’s niche in the national and global scene is essential to give it a sense of destiny and mission, which is not merely economic. A more positive construct of the Hong Kong spirit is that it should underpin a cognitive capacity to see “value” in diversity when relating to mainland China under the notion of “One Country, Two Systems.” Former New York mayor Rudolph Giuliani has once claimed that the city’s diversity is its greatest strength. It is an open city – never been afraid of people, no matter their color, religion or ethnic background. New York is the world city not just because of the New York Stock Exchange, Manhattan, or the Statue of Liberty. It is colorful because of its cultural and ethnic diversity, which has not reduced its American-ness. Though Hong Kong aspires to be Asia’s world city, in the image of London and New York, and the hub of a prospering China, the hard reality is it risks becoming too inward looking – not daring enough to connect widely to the mainland and to lead the nation and the world as a city of avant-garde, advanced institutions, commercial innovation and creative ideas. Just being a financial capital is not enough. Dynamism thrives on diversity – of peoples, cultures and values. Hong Kong should become a melting pot of China, open to and attracting Chinese from anywhere within the country, and talent from other nations, who come for creativity, entrepreneurship, professionalism, freedom, and good governance. Multi-cultural and multi-lingual features can make Hong Kong truly a city of growth, tolerance and opportunity.

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Acknowledgments My profound gratitude goes to all the chapter authors for contributing to this collective undertaking in print. Some of them have performed double duties as both speakers and authors, because nine of the chapters in this volume originated from their earlier presentations at the two symposia on the HKSAR experience that I was privileged to help organized. I like to thank their sponsors and all those who have facilitated their successful actualization. For the April 27–28, 2007 Symposium on “Constructing China’s Hong Kong: Ten Years of the Hong Kong SAR” jointly hosted in Hong Kong by the Hong Kong Economic Journal Monthly and the School for Professional and Continuing Education, University of Hong Kong (HKU-SPACE), the credits should go to Professor Sonny Shiu-Hing Lo – University of Waterloo, who cochaired with me, Mr. Cheuk-Fai Man – Chief Editor, Hong Kong Economic Journal Monthly, and Dr. Peter K. Fong – HKU-SPACE, who shouldered much of the logistical tasks. I am also grateful to the symposium’s many distinguished speakers as well as the local attendees and participants from Guangdong and Macao. I am particularly indebted to Professor Anthony B. L. Cheung (President, Hong Kong Institute of Education, member, HKSAR Executive Council, and Chair, Consumer Council) for his learned “Preface” to this volume and for his invaluable inputs as a panelist on the symposium’s concluding roundtable and as a prolific author whose academic volumes and newspaper columns on governance and politics in Greater China have been most enlightening. For the November 12, 2007 Symposium on “The Hong Kong SAR’s First Decade: Retrospect & Prospects” held at Stanford University, I wish to thank its sponsor the Center for East Asian Studies, especially its Director Professor Chaofan Sun, Associate Director Ms. Lydia Chen and their colleagues Ms. Connie Chin and Ms. Stephanie Lee for their conference arrangements and the hosting of the six speakers from Hong Kong and Beijing who came especially for the occasion. I am also grateful for the enthusiastic xix

attendance by members of the Stanford community and the coverage by major Hong Kong and Taiwan newspapers. I wish to express my appreciation to Mr. Patrick Kwong, Director, City University of Hong Kong Press, for suggesting the idea of this volume and for seeing through its publication within a relatively short time span. Last but definitely not the least, I must record my deep appreciation for the efficient service of my summer 2008 research assistant at Stanford, Ms. Patricia Wing Ki Chung, whose help is indispensable to the preparation of my long first chapter. Likewise, I wish to thank her sister, Ms. Stephenie Wing Shan Chung, for her kind efforts since mid-2007 in dispatching from Hong Kong a constant supply of original news clippings and official documents that cover much of the gaps and holes in my off-shore attempts at monitoring HKSAR developments in between my six trips to Hong Kong during 2007–08. Ming K. Chan Hoover Institution, Stanford University August 28, 2008

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China’s Hong Kong Transformed: Retrospect and Prospects Beyond the First Decade

1 Transforming China’s Hong Kong: Toward 2047 Merger-Convergence? Ming K. CHAN

The title of this volume accentuates Hong Kong’s transformative experience as a Chinese domain since 1997 and the opportunities and challenges that will punctuate its many transformations ahead, perhaps orbiting toward a presumed 2047 full merger-convergence with China mainland. In a nutshell, it suggests that just like the many sweeping changes that remolded Hong Kong since the start of the transition era in 1984 and through the initial post-colonial years, further changes are inevitable and necessary in China’s Hong Kong. Prior to Hong Kong’s July 1, 1997 retrocession to Chinese sovereignty, there were serious doubts and widespread skepticism in the international community on the future of Hong Kong under the “One Country, Two Systems” formula. Perhaps the most notorious media piece foretelling Hong Kong’s doom under Chinese rule is the Fortune magazine June 26, 1995 cover story “The Death of Hong Kong.”1 Of course, what happened in the eleven years since Hong Kong became a Special Administrative Region (HKSAR) of the People’s Republic of China (PRC) have very much contradicted such dire doomsday visions of Hong Kong losing its international business hub and world financial center status. While such pessimistic pontifications on post-colonial Hong Kong’s inevitable demise have missed the mark, many optimistic forecasters’ confidence-building blanket assurances of nothing would change in Hong Kong after July 1997 did not measure up either. In fact, China’s Hong Kong has been transformed 1

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China’s Hong Kong Transformed: Retrospect and Prospects

significantly after a decade plus of local autonomy under Chinese rule. Many of these transformations are fundamental and far-reaching, beyond the original expectations of the local populace and even the Beijing officialdom. The 1997 power transfer did set in motion profound, multi-faceted processes of institutional realignment and value reorientation that are wholesale but initially slow and gradual.2

Hong Kong Transformed Among the changes that Hong Kong has undergone in the past eleven years, many on the political and socio-economic fronts were more discernable. For instance, unexpected personnel change among top government officials was not infrequent. Since the handover, the Basic Law was interpreted three times by the National People’s Congress Standing Committee (NPCSC). The abolition of the elected Urban and Regional Councils in 1999 and restoration of the discarded appointment of District Councilors in 2000 adversely affected the development of political parties, political talents and electoral culture. Finally, after prolonged debates and repeated procrastinations, Beijing released in late 2007 a timetable to actualize the Basic Law-promised right to universal suffrage by 2017 and 2020. The July 1, 2003 rally of half a million protesters constituted an unprecedented eruption of popular discontents against maladministration that sealed the fate of inaugural HKSAR chief executive C. H. Tung’s lackluster leadership and heralded his premature departure in 2005. Yet, the late-July 2008 approval rating of his successor Donald Tsang, an ex-colonial bureaucrat experienced in political tactics and public relations, was only a few points above Tung’s lowest.3 Troubled governance and unresolved executive-legislative gridlock continue to erode societal support and accentuate the Tsang administration’s lack of electoral legitimacy. The local property market collapsed and the stock market speculative bubble burst in the 1997–98 Pan-Asian financial crisis, depriving many Hong Kong people of employment security and

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

driving them once again to lost confidence in their own and the local economy’s future. Buoyed by mainland China’s continuous economic boom, especially since its 2001 accession into the World Trade Organization (WTO), Beijing’s mid-2003 beneficial measures like the “Closer Economic Partnership Arrangement” (CEPA) and the mainlander individual tourist scheme helped uplift the ailing HKSAR economy and further intensified the HKSAR-mainland functional integration. The recent economy recovery has not yielded the fruit to be shared by Hong Kong’s different sectors while the rich-poor divide has worsened amid inflationary pressure under rocketing fuel and food prices since spring 2008. Socially, post-colonial Hong Kong has gone through a hard time battling with public health threats like the 2003 SARS epidemic and the repeated Avian Flu attacks. There were strong public outbursts to express collective concerns for development issues like Victoria Harbour preservation and heritage conservation and to vent frustrations against administration failures in major policy areas like the truncated education reform. These unforgettable and poignant memories not only aroused the Hong Kong populace to defend their environment and cherish their history but also galvanized their civic activism-electoral participation and invigorated their demand for a more responsive and accountable government. As changes characterized Hong Kong in the past eleven years, more extensive transformations will lay ahead. This is because the Basic Law enshrined “One Country, Two Systems” formula has by deliberate design a pre-set validity for only fifty years until mid-2047. At the end of this half century span, this formula supposedly should have fulfilled its intended functions in providing a fifty-year transitional arrangement toward the ultimate objective of the HKSAR’s full political, social and economic integration with the mainland. In the final colonial era and in the initial HKSAR days, both London and Beijing had over-emphasized the “fifty-year no change” pre- and post-1997 continuity as stipulated in the 1984 Sino-British Joint Declaration. However, in view of the 2047 mainland-Hong Kong merger-convergence, one should recognize the transitional nature and transformational functions of the “One Country, Two Systems” formula. The cliché of preserving Hong Kong’s pre-1997

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social, economic and legal systems unchanged for fifty years after the handover could describe only the initial stage of the longer process of its full integration with and absorption into mainland Chinese polity, society and economy by 2047. Changes over time during this fifty-year interval should come as no surprise but be considered as inevitable. The results of such transformations may initially seem small and not easily discernible, but with the mainland merger-convergence a preordained end product to conclude this fifty-year transition, the pace and scope of the transformative motions would accelerate and expand during the countdown to 2047. Now, with only thirty nine years left in the long march to 2047, the intensity and profundity of such changes would gradually increase in Hong Kong’s second stage post-colonial transition toward becoming more fully Chinese. With the dynamics of the motions toward 2047 in mind, the many adjustments and reorientations that have unfolded in China’s Hong Kong during the past eleven years should be of interest and concern to Hong Kong residents, their mainland peers and their many international partners. As highlighted in the following chapters, China’s Hong Kong did go through multiple processes of significant change on various levels with unexpectedly drastic transformations in its outlook, political culture and public policy discourse since the handover. As a complex, open, free and externally-oriented society of seven million, it would be unrealistic to expect Hong Kong to stand still and remain exactly the same until 2047 as if it were frozen in time, unchanged in the past eleven years and also for the next thirty nine years. Thus, it is normal and even healthy for an organic and growing society to transform itself over time. The crux of our concern is rather are these changes for the better and at what cost?

Post-1997 Changes: Key Factors and Major Dimensions Among the various shaping forces, this section will highlight seven key factors that have directly contributed to fundamental changes in

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

several major areas in Hong Kong’s institutions, processes and way of life since 1997. The following delineation of these factors is not intended to be comprehensive or exhaustive but is highly selective in focus and scope.

Altered Political Structure The 1997 sovereignty retrocession necessitated certain institutional alterations and personnel realignment in the political realm as carefully prescribed by the Sino-British Joint Declaration and the Basic Law. There were also unforeseen changes, some of them in gray areas not stipulated but yielded the space for unexpected developments. Non-Basic Law scripted developments in political structure included the establishment of a Provisional Legislative Council. This extra-constitutional organ of non-elected members functioned from July 1997 to April 1998 due to the derailment under Sino-British discord of the “through train arrangement” to enable the last colonial legislature elected in 1995 to transcend the 1997 handover to serve a full four-year term until 1999. There was the late 1999 abolition of the elected Urban and Regional Councils on the pretext of unifying sanitary control to combat avian influenza. Also there was the 2000 re-introduction of appointed members to the District Councils whose membership had become all elected in the final colonial era. Not stipulated by the Basic Law nor mentioned in the Joint Declaration, these undertakings in the early HKSAR years under Chief Executive Tung constituted deliberate attempts at democratic regression and institutional rollback in the eyes of many observers. The pre-1997 three-tiered elected political participation was reduced to a two-layer system with the Legislative Council (LegCo) on top and the eighteen District Councils at bottom that disfranchised voters and narrowed the opportunity to nurture future politicians. Also of consequence is a new proportional representation system for directly elected LegCo geographical constituency seats adopted by the provisional legislature to prevent the emergence of any single majority political party that could dominate the HKSAR legislature. As the Basic Law has only stipulated the electoral arrangements

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China’s Hong Kong Transformed: Retrospect and Prospects

for the chief executive and the legislature in the first decade, it is theoretically and legally possible to modify the post-2007 HKSAR polity according to Basic Law-defined procedures and subject to Beijing’s approval. In fact, further electoral liberalization has remained a hotly contested issue between many Hong Kong people and Beijing as well as within Hong Kong. The need to change the electoral system toward the Joint Declaration-promised universal suffrage has opened the door for the strong popular democratization demands that drew Beijing’s direct intervention. This took the form of Basic Law interpretation by the National People’s Congress Standing Committee (NPCSC). The Tung administration sought the first interpretation in 1999 to overturn the HKSAR Court of Final Appeal’s ruling on the right of abode of HKSAR permanent residents’ mainland children. The second one occurred in spring 2005 over the replacement chief executive’s tenure after Tung’s March 2005 resignation before his second five-year term’s mid-2007 expiration. The third came in April 2006 to reject the demands for direct election of the chief executive in 2007 and the entire legislature in 2008. In late 2007 the NPCSC set the 2017/2020 date for the direct election of the chief executive and the entire LegCo, and this will change the HKSAR electoral system in the next decade and beyond.

The Political Appointees System With the introduction in July 2002 of political appointees to the cabinet level secretary/head of bureau posts under the “principle official accountability system” the Tung administration significantly changed its top echelon personnel structure. In May 2008, Chief Executive Donald Tsang expanded this system by appointing the first set of eight undersecretaries (deputy bureau heads) and nine political assistants to the cabinet secretaries. These three layers of political appointees constitute the administration’s top officialdom core, which are all selected by the chief executive and serve at his pleasure with a term of office co-terminus with the tenure of the chief executive that appointed them. In a new bureaucratic structure, these political appointees have displaced the senior civil servants

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

(who were the colonial era policy formulators) in decision making, policy formulation and policy promotion directly under the chief executive. This system when coupled with the 2017–20 direct elections could promote the further development of political parties and partisan politics.

New Mainland-HKSAR Dynamics In the rearticulated post-1997 mainland-Hong Kong relationship, influence from and developments in the PRC mainland have been of increasing importance and more direct relevance to Hong Kong. The PRC’s marketization reform and external opening since 1978 has transformed the mainland into an economic giant and world power. Not only the Hong Kong-mainland gaps in material well-being, living standards, physical infrastructure and hardware development have vastly narrowed, Hong Kong has become increasingly dependent on the booming mainland economy. The intensifying Hong Kong-mainland economic interfaces have yielded a new interactive dynamics between the two. The already powerful China Factor has now become an overwhelming transformational force shaping the HKSAR through a wide range of mainland inputs that bonded Hong Kong’s own development in an intimate and even symbiotic relationship with its natural economic hinterland. In view of the mainland’s sheer size, scale and magnitude, the HKSAR could not escape, despite its Basic Law-enshrined autonomy, the profound mainland influence. For instance, the new Hong Kong-Zhuhai-Macao Bridge will facilitate intra-Pearl River Delta integration and bond the HKSAR more tightly to the mainland economic orbit. Furthermore, the PRC’s 11th Five-Year Plan, a master blueprint for the next (2007–12) phase of China’s national development announced by Beijing in 2006, includes for the first time explicit provisions on Hong Kong and Macao. The incorporation of these two SARs’ into the mainland’s overall development objectives confirms the accelerated pace and irreversible trends toward fuller mainland-HKSAR economicfunctional integration as a necessary prelude to the 2047 merger-convergence. Future mainland policy changes, especially in

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the economy, will very directly impact Hong Kong, which has already relied on extensive mainland cooperation in cross-border issues ranging from law and order to public health and ecological protection.

Modified International Status and External Links The 1997 retrocession has acerbated Hong Kong’s strategic repositioning amid China’s fast unfolding globalization trends. As an externally oriented economy dependent on the world market, the HKSAR is shaped by its functional viability as a regional and global hub of trade, finance, logistics and tourism. Developments elsewhere in the world often translate into forces realigning the PRC’s global standing and Sino-foreign relations as well as impacting Hong Kong, both as an active participant in the global economy (subject to both mainland China’s growth and world market trends) and also as a part of China, which under the Basic Law Beijing is responsible for Hong Kong’s foreign affairs and defense. In the colonial era with the strong US-UK alliance, American naval vessels could easily visit Hong Kong as a favorite open port for rest and recreation (R&R). But since 1997, due to the ups and downs in Sino-US relations, American warships could no longer count on their previous near-automatic right of entry into Hong Kong for R&R. After the May 1999 US “mistaken” bombing of the PRC embassy in Belgrade, US warships were denied permission to visit Hong Kong for R&R. In 2007, US aircraft carrier Kitty Hawk again could not obtain Beijing’s approval to call at Hong Kong for the Thanksgiving holidays. These naval episodes reflected Hong Kong’s altered political-diplomatic status in the international arena. Much of Beijing’s deep distrust of Hong Kong has been rooted in the fear in letting it to become a Trojan Horse in the Western powers’ anti-communist crusade against the mainland Chinese Communist Party (CCP)/PRC party-state. Alarmed by the strong external (foreign and from colonial Hong Kong) support for the 1989 Tiananmen pro-democracy protestors and further disturbed by the later collapse of Eastern European Communist administrations and the USSR’s disintegration. Beijing has regarded many, if not all, Hong Kong persons to be of dubious political loyalty and

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

questionable allegiance. Perceived by Beijing as “subversives,” they are deemed to have been corrupted by international interfaces and indoctrinated with anti-communist ideas and Western values under British tutelage. The fact that many are refugees or are descendents of those who fled the Communist mainland has not enhanced their patriotic credentials. Since the late 1980s, Beijing has repeatedly condemned Hong Kong pro-democratic activists for to seeking foreign (particularly US) support to “internationalize” the Hong Kong issues, especially democratization. Its fierce criticisms of the pan-democrats’ overseas links have intensified after 1997 and were often echoed by the HKSAR administration’s verbal assaults. On a more positive side, the November 2006 election of former HKSAR health department director Dr. Margaret Chan as DirectorGeneral of the World Health Organization (WHO) was a breakthrough achievement as she became the first Chinese to head a major United Nations organization. Due in large part to the PRC’s full support and strenuous diplomatic efforts, the WHO appointment of Dr. Chan (despite her dubious record in handling Hong Kong’s avian flu attacks and the SARS epidemic) reflected the PRC’s rising world clout. Likewise, the HKSAR’s playing host to the equestrian events of the 2008 Beijing Olympic Games is an undertaking that would definitely not be possible for colonial Hong Kong. Under Beijing’s auspices, Hong Kong has gained extra space and new opportunities in the international arena as a part of China while still retaining its non-state status in functional areas and its own membership distinct from the PRC as “Hong Kong, China” in world bodies like the WTO. In fact, following the practice at the 2000 Athens and 2004 Sydney Olympics, the HKSAR has dispatched its own “Hong Kong, China” team to the 2008 Beijing Games.

Beijing’s Interventionist Approach The Tung administration’s governance crisis due to inept performance with misguided policies and repeated blunders that provoked widespread discontent in turn led to a major shift in Beijing’s approach to HKSAR affairs. The July 1, 2003 mass rally by 500,000 against the Article 23 national security bill and aggregated

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administration failures was Hong Kong’s largest anti-local administration protest. Tung was forced first to concede the bill’s provisions, then postpone and finally forfeit its enactment. Tung also accepted two cabinet resignations, the secretary for security responsible for the bill and the financial secretary who was mired in a car purchase ahead of a tax hike scandal, the first causalities among his political appointees. This epic protest and the following chain of events constituted a political earthquake that reshaped the political landscape, altered state-society dynamics and realigned the PRC central state-HKSAR relationship. The Tung administration’s governance crisis compelled Beijing to depart from its “hands off” approach to HKSAR affairs after the handover to adopt a more pro-active, hands-on and interventionist approach. Besides the need to restore political stability, Beijing’s professed public support for Tung in mid-2003 also stemmed from their desire to avoid letting the HKSAR-style “people power” set a dangerous example for mainlanders to pressure the CCP/PRC party-state. Beijing tried to re-stabilize the HKSAR crisis front with relief measures like CEPA, mainlanders’ individual tourism, Renminbi business for HKSAR banks, and a Hong Kong-Zhuhai-Macao bridge. These signaled Beijing’s attempted diffusion of HKSAR political crisis with economic means. Ironically, after the local economy began to rebound in 2004, Tung had to resign as chief executive on health pretext in March 2005. Tung’s premature departure (like his 2002 non-contested second term “reelection”) was engineered by Beijing reflecting an admission of the HKSAR crisis and Tung’s poor performance. Since mid-2003 Beijing has tightened its reign over Hong Kong with a more interventionist hand, accentuating the local concern for mainland economic over-dependency and also complicating Beijing-Hong Kong relations.

People Power & Electoral Politics The mid-2003 “people power” tidal wave has critically shifted the course of HKSAR political development with Beijing becoming a more upfront, assertive major play and as the supreme power arbiter

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

among the pro-Beijing partisans. Beijing’s new full engagement strategy through direct interventions has left its fingerprints on various HKSAR policies and personnel decisions and electoral maneuvers, matters that are supposedly within the remit of Basic Law-enshrined local autonomy. Beijing has been especially vigorous in its response to the perceived threats from the pan-democrats who demanded universal direct election of the chief executive and the entire LegCo by 2007–08. Riding high on galvanized public support from anti-Tung administration mobilizations, a re-energized HKSAR pan-democratic camp scored a landslide victory (taking 161 of the 326 contested seats) against the patriotic bloc in the November 2003 District Councils elections. The pro-Beijing Democratic Alliance for Betterment of Hong Kong (DAB) got only 62 seats among its 204 candidates and party chair Tsang Yok-sing resigned for its worst defeat. This alarmed Beijing into devoting greater efforts to counter the democrats. In the 2004 LegCo elections, the pan-democratic camp took only 25 (of 60) seats. The Democratic Party (DP) with only 9 seats fell from being the LegCo’s largest party to the third, behind the DAB’s 13 and the pro-business Liberal Party (LP)’s 10. Such results seemed to have vindicated Beijing’s softer united front tactics after it vetoed 2007–08 direct elections while its economic measures had uplifted the local economy and its public mood. A local tour by the 2004 Olympic PRC gold medalists right before the September 12, 2004 LegCo polls aroused nationalistic pride that translated into support for pro-Beijing candidates The NPCSC’s second Basic Law interpretation on April 6, 2004 abrogated to Beijing the power to approve HKSAR electoral changes which could only be initiated by the chief executive according to the principles of “actual need” and “gradual and orderly progress” for “balanced participation” by all local sectors and classes. Besides vetoing demands for 2007–08 direct elections, Beijing fixed for the 2008 LegCo elections the existing 30:30 ratio between the directly elected geographical and limited franchise functional seats. Beijing’s pre-emptive intervention in HKSAR reform was a crucial departure from its previous self-restraint. Blessed by Beijing, Donald Tsang won an unopposed “election”

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in June 2005 as replacement chief executive to fill Tung’s remaining two years. Tsang’s tenure was set by a third NPCSC interpretation in April 2005. In the 2004–08 LegCo, besides the DAB, LP, and the pro-Beijing Federation of Trade Unions (FTU), Tsang enlisted several independents to fashion a pro-administration LegCo majority on political issues. But on socio-economic policies with divergent class interests, a loyalist majority could not be assured. The late 2005 LegCo rejection (as lacking 2/3 majority support) of Tsang’s modest Beijing-approved electoral reform proposal revealed the limits to Beijing’s “economic benefits to defuse political demands” strategy. After Tsang, again with Beijing’s blessing, won a second term for five years in a lopsided chief executive election in March 2007, he was unable to suppress the popular demands for the 2012 direct election of the chief executive and the entire LegCo. Once again, Beijing stepped in to defuse the democratization crisis with another preemptive intervention. On December 29, 200, the NPCSC unveiled a timetable for the direct election of the chief executive in 2017 and for the entire LegCo by 2020, with a host of conditions. This breakthrough decision considerably reduced the political pressure on Tsang while removing the pan-democratic camp’s key rallying cry in the September 2008 LegCo elections. In this crucial policy shift to tone down the democratization debate so that Hong Kong could better concentrate its efforts on economic growth and resolving domestic problems, Beijing changed the game and opened the floodgate to major transformations of the HKSAR realpolitik scene in the next 12 years.

Policy Reorientations The sharp social divides and deep grassroots discontents on the HKSAR domestic front under prolonged livelihood pains added complexity to the ongoing economic restructuring and complicated the administration’s fundamental socio-economic policy reorientation induced by budgetary deficits. Even after Beijing orchestrated the spring 2005 Tung-Tsang power transition in order to improve governance, it remains an extremely challenging task to

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

lift Hong Kong from the complex webs of “deep-rooted conflicts and internal problems” (in the words of Premier Wen Jiabo).4 Amid economic restructuring of moving from manufacturing to services, the HKSAR government attempted a basic socio-economic policy shift. Keen to “depoliticize” the local community that was deemed to have been over-politicized in the 1984–97 transition (attributed to British-sponsored electoral reforms), Tung hoped to re-focus public attentions to economic matters and social undertakings with a long agenda covering, among others, education reform, improved welfare for the elder, and an ambitious annual target of 85,000 new residential units to solve housing shortage. Yet, the 1998–2003 recession induced-budget deficits deprived the Tung administration of the fund to affect most reforms. The economic downturn also necessitated a shift of administration priority toward relief efforts to lessen the recession’s impacts like growing unemployment. Worse still, the Tung administration’s inability to revive the ailing economy or to adequately assist the affected populace generated popular discontents and wide spread middle/working class grievances that depleted much of his political capital to push these reforms. Despite the legitimacy and governance crisis that besieged him, Tung pushed his bold privatization attempts that aroused strong public opposition as in the 2004 Link case (that provoked a public housing tenant’s litigation against the plans to issue and list shares in the Link Real Estate Investment Trust created by the Housing Authority to transfer ownership of shopping malls and car parks in public housing estates). This is a noted example of the now frequent attempts by private individuals or organizations to challenge policy or modify administration decisions via litigation or judicial review, a major change in post-colonial state-society relations even though the HKSAR administration has retained the colonialist’s pro-business bias. Donald Tsang’s well publicized late 2006 departure from the colonial era “positive non-interventionism” has ushered in a much needed reexamination on a host of domestic socio-economic issues that underlined the serious administration-society discord and inter-class/inter-sector conflicts. Some scholars suggest such Tung and Tsang administration acts signaled the HKSAR ruling elites’

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determined efforts to embark upon a major “neo-liberalization” project to remake Hong Kong’s developmental orbit and state-society dynamics. 5 The Tsang administration has also intensified the implementation of its “cost recovery” and “pay by users” approach to public service delivery and would soon adopt a new public healthcare funding scheme. The long term implications of the administration’s reorientation toward a “neo-liberalization” vision with the privatization of public facilities and community services (under the pretext of budgetary pressure and greater efficiency) could be alarming. By abdicating through marketization or privatization some of it its necessary societal responsibilities due to limited administration capacity, this could yield space to civic activism and new state-society dynamics to fuel changes altering the HKSAR social fabric.

Identity, Collective Memory, China Knowledge and Education Reform A significant but incomplete transformative process unfolding during the past two decades is the rise of identity consciousness as a vital dimension in the rearticulated mainland-Hong Kong relationship. The 1984 Sino-British Joint Declaration launched the 1984–1997 transition era characterized by British decolonization, civil service localization and partial democratization as main political thrusts of change. Less obvious but very profound changes also took place in the realm of collective consciousness among Hong Kong people who began to ask such questions as “Who they are?” and “What they will become after the 1997 handover?” that reflected anxieties for their uncertain future status. Besides the alteration in legal status from being British colonial subjects to become PRC-HKSAR citizens, their status change entails more than a simple switch of passports. The process leading to their reorientation towards Chinese identity and the notion of being a member of the Chinese nation has accelerated since the mid-1980s. Their identity search, citizenship re-articulation and nationality reorientation were never a smooth, easy and simple process.

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

Identity Politics As revealed in public opinion surveys, there is a clear and irreversible trend among the HKSAR populace toward embracing a Chinese national identity during the past decade. The HKSAR’s status as an autonomous entity within the PRC yet distinct from the mainland in many discernable hardware and intangible software dimensions has yielded a distinctively localized Chinese identity – “Hong Kong Chinese” or Chinese of a particular Hong Kong vintage. Being “Hong Kong Chinese” or “PRC-HKSAR persons” would not make them the same as Chinese with full PRC mainlander status and the regular PRC passport. A certain dualistic pattern links Hong Kong people with China mainland while implying their local distinctiveness while still within the socio-culturally Chinese national community as had been the case before 1997. Since then, the citizenship/passport legal status change was easily affected, but changing the hearts and minds of people with their personal sense of belonging and national allegiance construct requires long term complex transformations of their entangled collective identities involving particularistic concerns of locale, class, ethnicity amid the interplays between subjective preferences and objective circumstantial factors. While over ninety percent of Hong Kong populace are ethnic Chinese and over half were Hong Kong born as the children or grandchildren of mainland migrants (mainly from Guangdong and hence Cantonese as the dominant dialect). A large segment are mainland born who came at different ages, some arrived as adults and even came with their own families. Many old timers are refugees who either arrived around the 1949 Communist takeover of the mainland or came in the successive exodus waves during the 1950s–1960s, an era of political upheavals, famines and the Cultural Revolution. Relocated to Hong Kong to escape the mainland’s hardships and material deprivation, their troubled memories and uneasy experience of life under the CCP administration are punctuated with bitterness but also laced with emotional ties to people and places on the mainland. Such complicated sentiments have colored their often ambivalent homeland linkages and the multi-layered nationalistic sentiments of

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themselves and their descendents who grew up or were born in Hong Kong. Such mixed demographic profiles carry varying degrees of homeland attachment and diverse perspectives as well as differentiated allegiance and calibrated levels of support for mainland China and the PRC state. To many Hong Kong folks, sentiments toward their ancestral homeland and its socio-cultural heritage, their mainland kinsmen and compatriots, the Chinese nation, and the PRC administration with its CCP leadership as different objectives of affection and loyalty are often complex and not necessarily the same. There is a very crucial distinction between Hong Kong people’s self-asserted claim as Chinese in the ethnic, socio-cultural sense and their legal status of Chinese HKSAR citizenship under the PRC state as well as their ambivalent sense of nationalistic pride and patriotic allegiance which are definitely not the same as partisan loyalty and ideological conformity. Hence, their embracement of a Chinese national identity and acceptance of their post-1997 status of being a PRC-HKSAR citizen should not automatically mean their wholehearted subscription to mainland norms and values, and definitely not their unquestioned allegiance to the PRC state, let alone the current administration leadership under the CCP and their policies. The fact that the pan-democratic camp still commands considerable popular support reflects the sharp discord between the Beijing officialdom and a sizeable segment of Hong Kong populace over basic values and the democracy, civic liberties and rule of law issues. Thus, embracing their own “Chineseness” or being proud of the Chinese nation (its land, people, culture, history, and achievements) would not necessarily mean their full and unreserved support of the CCP-PRC party-state. Such differentiated manifestations of “Chineseness” reflect the limited effects of an incomplete process of national identity conversion and patriotic indoctrination in post-colonial Hong Kong. This led Beijing and HKSAR officials to deplore the inadequate efforts in Chinese national education, which to them means using officially sanctioned “patriotism” to ferment a new brew of pro-Beijing political culture for a transformed HKSAR citizenry. The generous outpouring of their hearts and pockets to aid the Sichuan earthquake victims by

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

the Hong Kong people and their 95% support for the Beijing Olympics reflects the progress in this complex process since 1997.6 Perhaps, the Hong Kong people’s evolving identity change in the post-colonial context should not become a polarized simple choice between “Hong Kong” and “China” because belonging to Hong Kong or to China should not be two mutually exclusive, non-compatible options. Rather these two affiliations could be overlapping, complementary and even mutually reinforcing. Claiming a more localized identity not against but rather within or parallel to a larger nationalistic attachment is sometimes a sensitive and delicate matter of individual and circumstantial priority making. It can be a case in when both options are valid and good, the question then turns into which one comes first? Instead of being forced to pick only one label as either a “Hong Konger” or a “Chinese” person, why can’t they enjoying being both at the same time as “Hong Kong Chinese” in China’s Hong Kong. Furthermore, as China is moving forward on a globalization trajectory while one of Hong Kong’s major contributions to the mainland had been its extensive worldwide networks and transnational experience, it is vital for Hong Kong to maintain its global city status and the cosmopolitan outlook of its populace. As the use of Putonghua has become more common since the handover, the steady decline in English proficiency among Hong Kong students is not a healthy trend in producing manpower and talents needed to sustain and upgrade its knowledge-based economy. Belonging to China’s Hong Kong must not undermine one’s simultaneous membership in Hong Kong as a global hub. The rising English proficiency and international exposure of top mainland university graduates make them formidable competitors to their HKSAR peers in the world market of economic opportunities and career development. Hong Kong’s younger generation should not lag behind in the “globalism and nationalism” dynamics that will shape both the city-domain and the mainland.

Collective Memory Construction The identity realignment process has also ushered in a search for collective memory and a related phenomenon of public campaigns

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for heritage preservation and historical sites conservation. Amid their identity assertion or re-articulation efforts, besides asking “who they really were/are?” and “who/what they have/should become since 1997?” some Hong Kong residents have developed the urge to trace their personal roots and reaffirm their own experience in yesterday’s Hong Kong. Perhaps this is part of an attempt to ascertain who they were and to discover what anchored or constituted their sense of belonging to a specific place or a certain way of life at a particular juncture of time and space. This new awareness or reignited interest in the discovery, reconstruction and affirmation of their own past as integral facets of Hong Kong community find concrete expression through collective memory construction that are often linked with old artifacts, public sites and long-standing structures. Such newly aroused popular sentiments in turn propelled ad hoc campaigns to preserve public space with long existed structures and well-known sites against administration-sanctioned removal or demolition to make room for redevelopment projects supposedly for infrastructure needs. The fierce protests against the demolition of the Star Ferry Hong Kong Terminal and the prolonged struggle to preserve the nearby Queen’s Pier exemplified this rising tide for heritage preservation as key elements in the collective memory movement. In fact, both the now demolished Terminal and Pier were relatively “modern” structures built in the mid-1950s to replace much older facilities. Yet, despite their relatively recent vintage and the lack of officially designated heritage or monument status, to multitudes of Hong Kong residents they had become well-known sites and commonly used facilities during the past half century. These sites/structures were regarded as cherished parts of their local environment and familiar communal space filled with collective memories of “old” Hong Kong, one that they had lived through personally, and hence their strong desire to retain these sites/structures as concrete elements in and observable anchorage of their collective memory. Half a century may seem an insignificant span for a country like China with its long traditions, rich cultural relics and countless historical monuments. Yet, in a small territory where the development cycle has been compressed, structures that have existed

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

over a decade or two are often labeled “old” or “outdated”, thus half a century could mean a long duration in modern Hong Kong whose take-off dated back to the 1950s when massive influx of mainland migrants altered the local scene. For the older residents, their local experience often began in the 1950s when the Terminal and the Pier were constructed. For the mid-generation, they grew up with these two structures already in sight and some even traveled through them as a daily routine. To the younger generation, these two sites were long-existing facilities that were still in use not so long ago as parts of the contemporary landscape. To many the two structures were familiar sites and common facilities that physically formed part of their local experience through the years that constitute modern and contemporary Hong Kong. Their administration-ordered destruction in a sense violated their sacred collective memory and meant a brutal uprooting of their sense of belonging to the Hong Kong that has now changed beyond recognition as these well-known physical sites began to vanish from sights. What is disturbing in the protest movement is not just the Tsang administration’s high-handed demolition to make room for a harbor front highway to relief traffic congestion. Rather the implied message of preservation that in a more partisan light might see the preservation of colonial era structures as politically incorrect in view of the 1997 retrocession as a done deal. The campaign for Queen’s Pier preservation raised a particularly acute point as much of the site’s presumed historical significance was ascribed to it being the scene of the official arrival of the post-War colonial governors as well as British royal family dignitaries in their visits to the colony. If this heritage preservation would indirectly become a consecration of the colonial “good old days,” it would counter the much desired promotion of a new and more genuinely Chinese national identity among the HKSAR people. Perhaps this reflects more that just nostalgia for a past that many Hong Kong folks had enjoyed and come to cherish. Precisely because many are now struggling through the turbulent early HKSAR years with limited assurance of their own future in the countdown toward 2047, the conservation effort’s implied comparison and contrast of the colonial past with the HKSAR

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present and future are obvious. If the present is problematic and the future seems uncertain, it is natural instinct to find solace with fragments of a known past, even though the colonial era is becoming increasingly remote and less relevant. But such nostalgia might imply an indirect indictment against the current HKSAR administration and its policies that failed to meet the basic needs and address the key aspirations of a populace whose supposedly fond memories of the past did give substance to Beijing’s concern for the urgent task to win over the hearts and minds of the HKSAR citizenry. This urge to reconstruct a collective memory of a common past linked to “historic sites” ought not to be interpreted as necessarily a positive affirmation of colonial legacies. Still, it is regrettable that the Tsang administration, in the name of development, had chosen to obliterate the sense of communal belonging as anchored in sites and structures. A more enlightened approach to build communal cohesion ought not be contradictory to the Hong Kong Chinese nationalization efforts as they now all belong to the Chinese nation. Ironically, the fierce public criticisms of the Tsang administration’s mishandling of the recent appointment of foreign passport holders as undersecretaries reflected a new found public sense of national identity, local commitment and citizenship awareness eleven years into the HKSAR era.

China Knowledge Acquisition and Education Reform The growing Hong Kong-mainland economic and functional integration on top of the 1997 retrocession necessitated a more systematic and better focused approach to wholesale “China Knowledge” acquisition through the education system and other public institutions and communal networks. So far the task has not been successfully carried out. Also directly related to the uncertain prospect of securing future manpower needs for relevant skills with adequate China Knowledge is the problematic HKSAR education reform. The educational reform debacle remains a glaring administration defect. Despite C. H. Tung’s firm commitment to mount far-reaching reforms in education, the HKSAR school system

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

and the issue of language of instruction still remain disaster areas. Serious policy miscalculations and repeated bureaucratic blunders compounded by failed leadership at the Bureau of Education that launched flawed reform measures were evident in their flip-flop approaches and zigzag courses, especially over the sensitive matter of mother tongue teaching and streaming of schools according to the medium of instruction. Drastic cuts in education funding due to budget deficits had worsened an already confused and demoralized pedagogical front. Shortsighted and narrow curricula provided by an outdated education system dominated by unenlightened officials simply failed to properly remake the education system that was once an effective learning channel and skills transmission belt that had contributed directly to post-War Hong Kong’s economic take-off and upward social mobility. The education reform agenda, now full of holes and gaps, needs to be systematically rearticulated if education is to serve as an effective main channel to promote a new Hong Kong Chinese/Chinese Hong Kong identity and to facilitate the acquisition and dissimulation of China Knowledge (including a common Putonghua proficiency). In fact, the societal preparation for the 2047 mainland merger-convergence would necessitate a fundamental reorientation in civic culture and citizenship training that should have become an extra vital functional responsibility for the entire HKSAR education sector. One of the few positive Tung administration legacies has been its decision to overhaul the secondary and tertiary education systems – high school will switch from a “five plus two years” pattern to a simplified six-year system to link up with a new four-year (instead of three) basic university undergraduate curriculum by 2011–12. If effectively implemented, theses long anticipated changes will detach Hong Kong from the colonial era’s British style structure to make the HKSAR education system more in line with the China mainland and Taiwan systems and with that of the United States, Hong Kong’s foremost foreign economic partner. This will facilitate more extensive HKSAR-mainland educational interfaces to enhance mutual understanding in preparing the younger generation toward 2047. A properly reformed education system would serve as an

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effective channel to acquire China Knowledge and promote Chinese national identity awareness to equip the local community, particularly the younger generation, to confront the challenges and make the best of the opportunities of the 2047 mainland merger-convergence. With the laying of a solid foundation in China Knowledge facilitated by a reformed HKSAR education system that would make good sense of mother-tongue teaching and introduce a China-inclusive school curriculum in language/literature, history, geography, and related subjects, the promotion of Chinese national identity and civic-citizenship training should become an easier task with inputs from other public institutions and societal processes in this collective transformative process to construction a more genuine China’s Hong Kong.

Prospecting from a 1997–2008 Retrospective A summary retrospective on the HKSAR’s past eleven-year as framed in the context of future prospects, several overriding trends in the software realm of values, mentalities, outlooks as well as processes, institutions and movements deserved to be highlighted here. Appreciation of these major trends are vital to understand the transformative dynamics that have propelled Hong Kong through the problematic transition to 1997, sustained the populace through the ups and downs of the early post-handover era, and should guide them on the uncertain path toward the preordained 2047 merger-convergence with the mainland.

Governance Crisis and Realpolitik Trends The most fundamental change that sharply differentiated the post-colonial experience from the pre-1997 era concentrated in the political realm with the Basic Law as both the foundation for HKSAR governance and as an overarching canopy confining further evolution of the HKSAR polity. The democratization debate that began two decades ago amid British decolonization has raged unabated after the handover and will likely continue for another

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

decade or longer, all the way through the introduction of universal franchise to directly elect the HKSAR chief executive in 2017 and of the entire legislature by 2020. As stipulated by Basic Law provisions, the serious gridlock between the executive and legislative branches has distraught the political processes in China’s Hong Kong. The lack of popular mandates through universal direct election had rendered the chief executive a weak leadership figure from the start. The introduction of the principal officials’ accountability systems did not alter this acute lack of solid support. The 2002 non-contested “re-election” of C. H. Tung for a second term despite widespread public disapproval of his leadership further doomed any revival of administration capacity. The message from the July 1, 2003 mass protest was both an indictment of the new political system lacking ballot box legitimacy and a rebuke to Tung’s lackluster performance over economic malaise, the SARS epidemic’s mishandling and other administrative blunders, especially the Article 23 enactment. The selection of ex-civil servant Donald Tsang as successor was meant to be a corrective to the inexperienced and ineffective Tung leadership. “Elected” without contest by the small circle electoral committee, Tsang’s first two-year to fill Tung’s unfinished second term was blessed by an economic recovery that mitigated some of the social discontents and class tensions. However, only one year into his second term that began in mid-2007 (after elected with eighty percent Election Committee votes against a pro-democratic lawyer-legislator) the Tsang administration is experiencing some of the Tung syndromes. The fierce public criticism against the mishandled appointment of undersecretaries and political assistants (many of whom foreign passport holders and receiving high salaries not justified by their qualifications and experience), drastically depressed Tsang’s public approval rate to the lowest point since he took over in spring 2005. The difficulties encountered by the Tung and Tsang administrations reflected more than structural problems or institutional defects under the Basic Law framework. The leadership inadequacy and the larger governance crisis revealed a lack of political talents with skills and experience in public administration that is no longer a behind closed door game of bureaucratic power

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play but an increasingly open and publicly scrutinized parliamentary process. Beijing’s opposition to the development of political parties and its wish to restrict Hong Kong’s post-colonial development as a mainly “economic city” instead of a “political city,” have not contributed to the nurturing of the necessary political talents to actualize the opportunities created by post-1997 local autonomy. Only with the Tung administration’s debacle that Beijing was forced to acknowledge the governance crisis yet its preferred remedial measures have been mainly economic rather than addressing the crux of the issue with political solutions. If the HKSAR’s 2004–07 economic upturn suggests the possibility that “stability” through mainland-engineered “prosperity” might work in the short term, fundamental reform of the local polity through democratization is still needed to resolve the governance crisis. Still, until late 2007, the PRC authorities have deliberately sidetracked and repressed the HKSAR’s popular democratization demands. The December 29, 2007 NPCSC decision on the 2017/2020 direct elections amounted to a preemptive gesture to remove democratization as a divisive public issue that has galvanized popular support for the democratic camp and prolonged the polarization of local partisans into the pro-Beijing and pro-democratic camps. Beijing’s change of strategy on democratic reform represented a fundamental shift with profound consequences to both Hong Kong politics and to Hong Kong–Beijing dynamics. The universal direct elections starting from 2017 and 2020 would naturally enlarge the political arena and create huge demand for such political talents as chief executives, cabinet officials and popularly elected legislators The past eleven years also witnessed significant realignments within the pan-democratic camp. Its further fragmentation with the proliferation of new, smaller pro-democratic organs has reduced the DP’s dominance. Its leadership role will likely be eclipsed by the middle class professional-based Civic Party’s emerging forefront profile. The September 2008 LegCo election results would confirm a new trend in political party renewal through the winning gains by second generation candidates from both the pan-democratic and pro-Beijing camps. The retirement of pro-democratic veterans with star appeal could yield room for an eventual entente with Beijing

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

that might relax a crux issue, the deep-rooted mistrust between the democrats and Beijing with its local supporters that burdened HKSAR political evolution toward a gradual democratic transition. As the economic crisis and social issue debates of the past decade illuminated, political power play in the HKSAR arena was often a three-way game between the pan-democratic camp, the pro-Beijing bloc and the conservative business circle. On major political matters like electoral reforms, the latter two could form a simple majority. But on rice-bowl issue and major development projects (like the West Kowloon Cultural District), a crossideological line, ad hoc alliance linking the pan-democrats with some pro-Beijing elements to champion middle and working class interests can be form to prevail over administration actions. Also emerging is a widening crack inside the pro-administration bloc due to partisan turf fights as seen in the DAB vs. LP and rural interests discord during the mid-2008 LegCo election campaign. As such HKSAR political life might unfold along the two axels of partisan divisions on political matters at one level and class interest coalition on socio-economic issues at another level. With the setting of a 2017/2020 timetable for universal franchise direct elections, Beijing has toned down the hottest political controversy. But the troubled economic conditions immediately ahead due to the combined pressure of US market downturn and rising inflation (at 6%+ in mid-2008) might reignite tensions and escalate conflicts on the domestic front. These trends could yield space for a much needed strategic repositioning of the pan-democratic camp to recast themselves as effective advocates for mainstream middle class and grassroots socio-economic interests versus the pro-business administration. Typecast by both the Tung-Tsang administrations and Beijing as the opposition, the pan-democratic camp could regain, through its socio-economic championship, lost momentum and inject new life in the political maneuvers toward the 2017–20 direct elections. As the Tsang administration would have to enact a minimum wage bill to cover some lower end workers, the pan-democratic politicians should seize the opportunity to make good their social engineering/ social missionary functions besides their democratic advocacy. They better avoid repeating their 1999 dilemma on the

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minimum wage that nearly split the pan-democrats camp over class and social constituency. This moving beyond but not discarding the democratization demands approach could open the door for new politics in the direct election era. The grassroots’ demographic majority, the intensification of the class cleavage and politicization of labor issues will become increasingly crucial to post-2017 contests. If the demise of the Tung administration stemmed in large part from its failure in economic revival to relive working class livelihood pains and middle class sufferings, then the rising inflationary pressure since spring 2008 due to global energy and food price increases should pose a very real challenge to the Tsang administration, especially when the administration has amassed a huge budget surplus after years of deficits. However, the last-minute set of ten economic relief measures worth HK$11 billion announced by Donald Tsang in mid-July 2008 became counter-productive to the desperate attempts to arrest his plummeting public approval rating. While it is important for the HKSAR administration elites to collaborate with their local allies and their Beijing patrons to win the people’s hearts and minds, the battle line for administration legitimacy and governance effectiveness would likely be drawn on the common folks’ stomach – rice bowls matters. The candidates/parties campaign platforms in and the results of the September 2008 LegCo elections should bear this out. After two decades of fierce struggles for a democratic Hong Kong, it is no longer a debate on the intrinsic societal merits or developmental benefits of democracy (i.e., the why and whether or not question) but rather it has moved to adopt a timetable (i.e., the when question) and onto the more complicated and vital task of reaching agreement on the actual process, procedures and criteria to actualize the 2017–20 direct elections (i.e., the what, how and by who questions). In a more optimistic forward evolution, the future fate of the existing LegCo functional constituency seats will be a crucial matter to test the wisdom and skills in the art of political compromise to lead an enlightened re-articulation of divergent sectoral interests among the HKSAR political actors. If the 1997 retrocession had acted as the midwife to the birth of Hong Kong democracy by ushering in British decolonization linked-partial

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

democratization, then this sensitive and delicate infant’s further growth toward 2017–20 and beyond as encased by the Basic Law would be the next big story.

Sense of Economic Vulnerability While for most of the post-War era until 1997, Hong Kong had been blessed with an expanding economy marked by GDP growth, expanding employment opportunities and widely shared upward mobility and general rising affluence overtime. For those who were born or grew up in Hong Kong during this half century of discernable improvements in material well-being and lifestyle comforts with confident prospects of continuous advancement through hard work, adaptation and education, it almost seemed that much could be taken for granted. The various economic ups and downs that were inevitable in a small-scale, open economy dependent on external conditions, most of the negative impacts stemming from international conflicts or global market trends created only short term difficulties for the local economy. Even upheavals in the China mainland did not inflict lasting damages to the local economy. Ironically such supposedly negative China events had yielded unexpected opportunities and extra resources for Hong Kong’s economic development through the influx of capital, business know-how, and skilled but cheap labor from the mainland. In fact, like much of its developments under British rule since 1841, Hong Kong seemed to have thrived in and benefited from mainland China’s misfortunes and setbacks. Other than the crippling 1925–26 General Strike-Boycott and the Japanese military occupation during the Pacific War, modern Hong Kong had little experience with prolonged economic downturn. This had yielded an easy presumption of uninterrupted growth and continuous prosperity for a much heralded “Hong Kong economic miracle” success story. This optimistic assumption of uninterrupted growth and forward development was shattered soon after the 1997 handover. The 1997–98 Pan-Asian financial crisis pierced the over-inflated twin bubbles of sky-high property prices and stock market share values. Compounded by the Tung’s administration inept crisis management that failed to revive the ailing economy, the new

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HKSAR soon slid into a prolonged seven-year recession. Further depressed by the autumn 2001 terrorist attack in the USA and the spring 2003 SARS epidemic, Hong Kong witnessed historic negative GDP growth, unprecedented peace-time high unemployment (8.7% in mid-2003), and successive budget deficits that necessitated civil service salary reduction. With a 60-month long price deflation spiral and record numbers of business bankruptcy and negative equity for many residential property owners, economic recovery came painfully slow and late.7 It only began to rebound in 2004 and most of the key economic indicators did not return to the 1996–97 level until 2007. Perhaps the “lost decade” label affixed by some academics to the first HKSAR decade is not unjustified.8 Figures alone could not fully reflect the pains, sufferings, acute sense of destitution and dislocation that seriously eroded popular support for the Tung administration. More significantly, this prolonged economic crisis has deprived, perhaps permanently, the local populace of their entrenched collective self-confidence with an assured sense of economic security and common optimism on upward mobility and opportunities for socio-economic advancement. This new economic vulnerability under the dark shadow of the 1998–2003 recession had been complicated by a universal recognition of the inevitable deepening economic dependency on the mainland. Besides altering the Hong Kong-mainland economic dynamics, this constituted a very hard psychological blow to the once very proud and even arrogant Hong Kong economic practitioners as a proud member of Asia’s “Four Little Dragons” who until 1997 were beneficiaries of the “Hong Kong economic miracle.” The mainland’s spectacular economic boom since the 1990s has redefined the mainland-Hong Kong calculus just like the recent depreciation of the Hong Kong dollar against the rising Renminbi. A common fear among many Hong Kong residents nowadays is not simply their sheer economic dependency on the mainland but the further development of other mainland Chinese economic hubs that could eventually marginalize Hong Kong’s perceived functional superiority and jeopardize its near monopoly over China’s economic interface with the capitalistic West. A further globalized and marketized mainland economy may generate opportunity for Hong

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

Kong as a service hub in finance, logistics, tourism and trade. Yet, an economically humbled Hong Kong’s mainland dependency is clouded by fierce competition with other Chinese cities. In fact, newly developed facilities in some mainland cities are already threatening Hong Kong’s preeminence as China’s premier international economic center, foremost container port and best connected air traffic hub. Greater Shanghai ports and even nearby Shenzhen are siphoning off container cargo traffic from Hong Kong’s harbor. In sharp contrast to Hong Kong’s recession and slow recovery, its twin neighbors, Guangdong and Macao have enjoyed record economic gains. Amid the competitive Pearl River Delta (PRD) sibling rivalries, both Shenzhen’s spectacular growth and Guangzhou’s assertiveness (that resented colonial Hong Kong’s economic dominance), have created problems in cross-border dealings. After years of deliberation, construction on the Hong Kong-Zhuhai-Macao Bridge has yet to commence. Except for Beijing’s deliberate measures favoring the HKSAR, Guangdong definitely has the upper hands with more cards to play in cross-border economic and functional interfaces with Hong Kong. The fact that its recent economic recovery was partly stimulated by Beijing’s uplifting measures have reduced Hong Kong to a helpless economic supplicant to Beijing, thus forfeiting its previous claim to self-reliance and adroit adaptation. This newly aroused awareness of economic vulnerability due to global market unpredictability, increasing dependency on the mainland and keen competition with other Chinese cities is reshaping the socio-economic prospects of Hong Kong residents and their younger generation who will have to contemplate life and livelihood in post-2047 Hong Kong as an integral part of mainland China. The more troubled, less optimistic outlook and radically modified economic mentality of Hong Kong residents as itched by the complex China Factor realities (of dependency and competition) and baptized by the 1998–2003 recession’s bitter experience will shape the HKSAR populace’s continuous efforts to reposition themselves economically in responses to both mainland China’s rise and the forces of globalization. Perhaps gone forever is their arrogant, chauvinist and rather parochial “Greater Hong Kong” syndrome.

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Fissures Within Hong Kong Society The seeming end of the continuous prosperity and unlimited growth prospects is also echoed by an alarmingly widening gap between the haves and have-nots in Hong Kong society. During the first post-handover decade, while many middle class elements were reduced to negative-equity homeowners, the working class endured the pains of reduced wages and unemployment, and the disadvantaged suffered sever reductions in welfare benefits and public assistance entitlements due to budget deficits. The Hong Kong grassroots had much to fear and to complain during the 1998–2003 recession. In contrast, the tycoon-dominated economic upper echelon managed to grow leap and bound, in part due to their high-yield investments in property development and other lucrative undertakings in mainland China. The growing socio-economic inequality and the rapid debasement of the lower classes and marginal elements have created a worsening wealth-poverty gap that accelerated class tensions and societal instability. The tertiarization process amid Hong Kong’s economic restructuring that shifted the core of local productivity from labor-intensive manufacturing to higher-skill services has created serious employment problems for the unqualified and non-skilled laborers, some of them new comers. The daily influx of 150 legal mainland immigrants complicates the problem as they are often inadequately socialized/educated, lacking the Chinese-English bilingual proficiency needed in Hong Kong’s service industries. The long term socio-economic implications of the non-selective influx of mainland immigrants for the HKSAR demographic profile would mean disturbing trends for the combination of the growth of an aging population with an inadequately skilled workforce in the decades ahead. After failing to undertake effective measures to combat poverty during the 1998–2003 recession, the Tung administration in its last days in office finally established a Commission to Alleviate Poverty. But little practical efforts came of the commission’s recommendations as the 2005–07 economic upswing seemed to have ameliorated some of the pressure. Of greater concern is the long term implication of the administration’s reorientation toward a

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

“neo-liberalization” vision with the privatization of public facilities and community services (under the pretext of budgetary pressure and increase efficiency) that was launched under Tung’s leadership as in the Link case. By abdicating some of it its necessary responsibilities due to limited administration capacity and governance philosophy, this could open the floodgate to a new state-society dynamic that might not be conducive to promote societal harmony. The myriad problems on the HKSAR social front due to prolonged economic pains and administration incapacity yielded new space, opportunity and also the necessity for expanded direct engagements by civil society activists and other non-administration players. From the litigations to protect Victoria Harbour from encroaching administration-funded reclamation/road construction projects, the rejection of the administration’s West Kowloon Cultural Complex plans, the protests against demolition of cherished sites and old structures, to the campaigns for gender and racial equalities as well as consumer rights and privacy protection, there was a rise in civic engagement manifested thorough collective actions like street rallies and public demonstrations or through legislative maneuvers and interest group lobbying. The effects of Beijing’s attempt to maintain local “stability” through mainland-generated “prosperity” to ensure Hong Kong’s functioning as a vibrant “economic” but not a “political” city remain in doubt if these internal contradictions within Hong Kong can not be resolved to achieve societal harmony that has been prioritized by Beijing as a top policy objective. The emergence of assertive social activism and civic society militancy in public affairs have led to vocal re-articulation and heated debates over town planning decisions, ecological measures, fair competition law, and major development projects from the wider perspectives of community interests and collective concerns (like environmental protection and heritage preservation) that are deliberately non-business oriented and not-for-profit based. Paralleling these debates have been a surge of public assaults on suspected “administration-business collusion” and public officials’ alleged conflict of interest scandals over development projects and personnel decisions. These reflect the public efforts to seek greater

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policy responsiveness, transparency and accountability from the post-colonial administration that is supposedly their own autonomous local organ as they hope to overturn the repressive institutional shackles on Hong Kong society at the roots of many social conflicts and popular grievances. A new wave of collection action has already ignited by labor unrests and grassroots demands to redress the uneven distribution of gains from the 2005–07 rebound. The successful strikes by transport workers employed in four major beverage-food suppliers in July 2008 could herald a new wave of industrial actions for wage increases and better benefits to meet rising prices and to recover loses sustained in the 1998–2003 recession era salary and benefit reduction.9 Enlightened professional and business leaders now begin to praise civic activism for moderating administration behavior toward balanced development of the HKSAR’s as a healthier and more caring community. If politics makes strange bed fellows, then the unsettled social landscape often yields room for a de facto trans-partisan alliance for socio-economic justice on legislations and public policy debates between the pro-Beijing grassroots organs and the pan-democratic camp that caters to both middle and working class interests. A mid-2008 example is the passage of two bills, one on the labeling of food contents and another on anti-racial discrimination that magnified the Tsang administration’s inability to impose its will on a supposedly divided legislature fragmented by partisan loyalties. An ad hoc coalition of the pan-democratic camp legislators with the three pro-Beijing FTU legislators managed to reject administration sponsored amendments that would have created legal loopholes for generous exemptions. This yielded rare triumphs to the pan-democratic camp as a legislative minority because on bread and butter everyday livelihood issues, parallel socio-economic concerns of the middle class and the grassroots provide common ground for collaboration transcending partisan ideo-political polarization. In the foreseeable future, this trend of middle/working class based coalition for collaborative politics will likely shape the administration-business-society dynamics and modify the administration’s social policy and resource allocation priorities in order to promote socio-economic justice and balanced development.

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

Changes Yet To Come Three Everyday Life Items The “One Country, Two Systems” formula in its application to Hong Kong is supposedly valid for only fifty years until mid-2047, be then the HKSAR should have become fully integrated with mainland China. As such, the 1997–2047 half century could be regarded as a period of transition during which Hong Kong supposedly should develop along a course of increasingly closer cooperation and further harmonization with the mainland. In this sense, considerable changes in Hong Kong’s many institutions and systems should be desirable, necessary and even inevitable in order to attain parity with the mainland in their many functional and institutional as well as political, socio-cultural and economic interfaces. For instance, due to British colonial influence, automobiles in Hong Kong until today still have their steering wheels mounted on the right, while those in the mainland are mounted on the left (just like those in the US). Another example, since the late 1950s the official standard written script of the Chinese language used in the PRC mainland has been the abbreviated/simplified characters, while Hong Kong has always used the full traditional characters in the schools, government agencies, public institutions and the local Chinese language press (just like the practice in Taiwan). This “language gap,” besides the need for common Putonghua proficiency, is another vital functional matter that has to be resolved by 2047. Likewise, the distinctly separate Hong Kong currency with its own banknotes, coinage and international exchange rate are very different from the mainland’s Renmenbi. But by 2047, should the internationally convertible Hong Kong dollar, still linked to the US dollar at HK$7.8 to US$1 peg) since late 1983, rearticulate its relationship with the Renmenbi, which by then might already have become an international currency? These are just three everyday life items that separate Hong Kong from the mainland today. But within the next four decades, should such differences still be permitted to remain, or would the much

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larger mainland systems gradually absorb and obliterate the smaller Hong Kong systems? This is a matter further complicated by the fact that the Chinese mainland itself is an evolving and fast transforming giant. Thus, extensive changes in Hong Kong are inevitable in order to link up and synchronize with a China mainland that is advancing in new directions as propelled by its growing economic might and rising international power status.

Looking Ahead The game at foot is that in a more competitive global context on the one hand and with the integrative forces moving Hong Kong closer into the orbit of a blooming mainland China on the other, how would these social processes and institutions, including the educational system, the skills and demographic sensitive criteria for immigrant absorption, etc. help prepare Hong Kong to face the challenges of the mid-21st century? This is a tall order and the task requires a capable leadership of true vision and dedicated sense of mission. The current Tsang administration has so far displayed few signs that it is really up to the task. As seen in its distorted priority in resource allocation, personnel appointment and sheer lack of longer term vision with political will, compounded by flawed policy orientation and bureaucratic mishaps, the HKSAR administration’s performance vacuum must be filled by other local organizations or possibly even by mainland interventions. The inputs from Beijing, however charitable and good-intentioned, would probably be problematic because the mainland cadres’ lack of in-depth and thorough understanding of local conditions. But more importantly, their ideo-political culture and their lack of experiences with, faith in and even sound knowledge of such core elements in the software realm of Hong Kong dynamics as the rule of law, a liberal and open milieu of civil liberties, personal freedoms, and political pluralism. In other words, a premature and ill-informed “mainlandization” of Hong Kong via an orthodoxy Communist partisan prism would be counter-productive. The other possibility may be to yield by default the space and opportunity to assume the transformative leadership in molding a

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

new China’s Hong Kong to the non-governmental organizations (NGOs) that have scored impressive gains during the past quarter century. From the 1984 Sino-British Joint Declaration that ushered in the decolonization and retro- cession processes to the crisis that engulfed the HKSAR in its infancy, Hong Kong had witnessed a rising tide of civic engagement and popular activism that are hallmarks of civil society growth and maturity. This expanding NGO front with larger membership and proliferation of social organizations over a widening range of public affairs issues constitutes a most promising development in post-colonial transformation. This vibrant civic engagement front is the hallmark of a maturing and a more caring community moving beyond material affluence in its purposeful undertakings to foster sustainable growth and balanced development. Jumping ahead of the story, four decades from now after the “One Country, Two Systems” formula supposedly has fulfilled its transitional functions toward full integration with the mainland, what kind of Hong Kong people in what kind of Hong Kong society would shoulder the responsibility for the next stage development in the post-HKSAR era? How prepared they would become and with what skills and knowledge both of China and of the world that they should have equipped with to chart Hong Kong’s path as a fully integrated part of China that would definitely be a vastly transformed country by the mid-21st century? In closing, perhaps one can ponder again Beijing’s preferred formulation of a new HKSAR order – confining Hong Kong to be an “economic city” thriving for “prosperity and stability” rather than becoming a “political city” or even worse “a city of protests” with extensive global links and liberal values.10 In an unforeseeable future scenario, one might be tempted to ask some hypocritical questions: What would be the political consequences if for its own reasons Beijing chooses to reject, by withholding its formal appointment of, a HKSAR chief executive properly elected through universal franchise after 2017? Would the mainland officialdom again be called upon to deploy its resources to rescue another faltering HKSAR chief executive, one who has been directly elected and hence directly accountable to the voters for his popular mandate after 2017? Would the HKSAR’s autonomy become hollow if its

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deepening economic dependency on the mainland also carries extra layers of cross-border ideo-political missions and other functions directed from an interventionist north? These and other questions will likely punctuate any well-informed prospecting for the HKSAR’s further transformations in the coming decades.

About this Volume At start of the twelfth year of Hong Kong under Chinese rule, it is a fine time to examine what one has and should have learnt from the various changes as well as many unchanged facets of the HKSAR’s turbulent early phase in order to better appreciate the unfolding trends that will further reshape the city-domain. Of course, the verdicts are still out on various pertinent questions, such as: What role should post-colonial Hong Kong play in the spectacular development of mainland China amid its record-shattering marketization and rapid globalization? Has HKSAR development since the 1997 handover really placed it on the right track toward becoming the self-proclaimed “Asia’s World City” or even as a part of the “Nylonkong” trans-globe nexus?11 How should the HKSAR people formulate an autonomous governing system and fashion a post-colonial culture that would adequately promote the interests of and be acceptable to both Hong Kong and mainland China? In what sense and to what extent should the long term transformations of the HKSAR toward the 2047 merger-convergence with China mainland dominate and prioritize the agendas of the current generation of local officials, elected politicians, business leaders, professional elites, and civic activists as well as the grassroots? Hopefully, the present volume will advance our understanding of these and many other vital questions in a boarder and more balanced context with insightful analysis to facilitate a better informed search for possible answers. Among this volume’s fourteen essays, nine were first presented in the two symposia on the HKSAR that I helped to organize last year. These symposia aim at clustering officials, scholars, professional specialists and NGOs experts in politics and public policy as well as in socio-economic affairs to critique and reflect on

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

the collective experience of China’s Hong Kong and to explore the optimal future locus along which Hong Kong should orbit to confront the challenges ahead. Of these nine chapters, six (chapters 2, 3, 4, 6, 11, 14) are updated and refined versions of earlier presentations at the Symposium on “The Hong Kong SAR’s First Decade: Retrospect & Prospect” held at Stanford University’s Center for East Asian Studies on November 12, 2007. Three chapters (chapters 8, 9, 12) are elaborated and updated version of their authors’ original presentations at the Symposium on “Constructing China’s Hong Kong: Ten Years of the Hong Kong SAR” held at University of Hong Kong’s School of Professional and Continuing Education, April 27–28, 2007. 12 Four additional chapters (chapters 5, 7, 10, 13) are specially commissioned for this volume from leading scholars who did not participate in these symposia. A unique strength of this volume lies with the wide range of views and divergent assessments offered by the chapter authors, who are of different nationalities, varied experience, diverse academic and professional disciplines, and even of opposing ideo-political persuasions. Collectively and individually, they make this volume a genuinely pluralistic and multi-dimensional delineation of key features in the early HKSAR experience coupled with a vividly articulated spectrum of future prospects. While many chapter authors are leading academics with extensive lists of scholarly publications on Hong Kong topics, seven are seasoned practitioners on the frontline of Hong Kong’s fast unfolding development as diplomat, senior HKSAR official, elected legislator, HKSAR Basic Law Committee member, business leader, think-tank activist and journalist. Their personal reflections, laced with illuminating observations on the local populace’s aspirations, hopes and fears, capture the accents of the changes sweeping Hong Kong since becoming a part of China. These practitioner-authors also share with the readers their cherished visions, passionate critiques and committed missions for the future HKSAR. Indeed, their contributions have endowed this volume with profound insights and enriched it with direct relevance beyond any collection of purely academic studies on Hong Kong’s exciting post-colonial metamorphosis.

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Viewing from the perspectives of politics and governance, legal-constitutional systems, economic performance, social institutions and civic participation, and external implications, the thirteen substantive chapters in this volume are arranged thematically in four parts. Part I. “The Political Matrix” comprises four essays: Chapter 2 by Mr. Sin-por Shiu (Central Policy Unit, HKSAR Government) opines on the “big changes under a policy of no change” paradox in the HKSAR which has become a very different society since the handover. Chapter 3 by Ms. Margaret Ng (HKSAR Legislative Councilor) critically charts the uphill battle for Hong Kong’s democratization since 1997, from a pro-democratic perspective. Chapter 4 by Mr. Ronnie Chan (Hang Lung Group, Better Hong Kong Foundation & Asia Society-Hong Kong Center) shares both his rebuttal of some wide spread “half-truths” about Hong Kong and his warnings for the road ahead. Chapter 5 by Dr. Suzanne Pepper (Universities Service Center, Chinese University of Hong Kong) keenly critiques the local democratic activists’ ineffectual struggle against Beijing’s strong handed attempt to expedite an imposed political conversion toward an ultimate “one country, one system” full integration with the mainland ahead of 2047. Part II. “The Legal-Constitutional Dimensions” includes two studies: Chapter 6 by Prof. Zhenmin Wang (Tsinghua University Law School & NPCSC Hong Kong Basic Law Committee member) delineates key elements of a significant “constitutional revolution” ushered in by the Basic Law’s actualization amid Hong Kong’s common law system. Chapter 7 by Prof. Douglas Arner and Prof. Berry Hsu (both University of Hong Kong) pinpoints questionable aspects in Hong Kong’s judiciary appointment practice that could undermine its cherished rule of law based on genuine judicial independence. Part III. “The Economic and Social Dynamics,” presents four pieces: Chapter 8 by Prof. Yun-wing Sun (Chinese University of Hong Kong) succinctly outlines the major trends and key factors remolding the HKSAR economy. Chapter 9 by Ms. Yan-yan Yip

Transforming China’s Hong Kong: Toward 2047 Merger-Convergence?

and Ms. Christine Loh (Civic Exchange) evaluates the impacts of rising civic society activism on HKSAR public policy articulation, especially on environmental issues. Chapter 10 by Prof. Alvin So (Hong Kong University of Science & Technology) examines local social conflicts that might signify a post-modern mode of social movements. Chapter11 by Dr. Tuen-yu Lau (Stanford University) and Mr. Raymond Cheng (HKSAR journalist) analyses the post-1997 Hong Kong media scene reshaped by market, technological and political forces. Part IV. “External and Comparative Perspectives” offers three contributions: Chapter 12 by Prof. Sonny Lo (University of Waterloo) ponders the cross-Taiwan Straits dynamics’ impact on Beijing’s HKSAR policy. Chapter 12 by Prof. Larry Diamond (Stanford University) suggests a “negotiated democratic transition” with the HKSAR pro-democratic forces seeking an accord with other players to actualize the 2017/2020 direct elections. Finally, Chapter 13 by Ambassador James Cunningham (US Consul-General in Hong Kong) offers a generally positive American official assessment of Hong Kong’s overall development under Chinese sovereignty with an explicit call for further democratization. The impressive array of penetrating analytical insights and thought provoking observations afforded by these chapters will sharpen our appreciation of the ongoing multifaceted transformative experience of China’s Hong Kong since 1997 and the possibilities embedded in its uncharted journey toward a fuller integrative merger-convergence with the mainland by 2047. How well will the local populace reposition themselves as citizens of a global Chinese city and the most democratic domain under PRC sovereignty to contribute more to China’s national/international advancement and to take the initiative to reinvent China’s Hong Kong by preserving their core values through institutions and processes that will be acceptable to and harmonize with the mainland polity, society and economy while becoming a genuinely integral part of China, this will constitute the greatest challenge for the next four decades. For this line of inquiry, this volume will be a refreshingly enlightening reference.

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Notes 1. Louis Kraar, “The Death of Hong Kong,” Fortune, June 26, 1995. 2. For the major changes and crises that shaped the HKSAR in its initial years under Chief Executive C. H. Tung’s first term, see Ming Chan and Alvin So, eds., Crisis and Transformation in China’s Hong Kong (Armonk: M.E. Sharpe, 2002). 3. Ming Pao, August 27, 2008. 4. Ming Pao, December 29, 2005. Wen said this to Tsang a day earlier on his first duty visit to Beijing. 5. Yun Chung Chen and Nai Pun, “Noeliberalization and Privatization in Hong Kong after the 1997 Financial Crisis,” China Review, 7:2 (1997), pp. 65–92. 6. Ming Pao, July 28, 2008. 7. Figures on the economic crisis, budget deficits, unemployment and other indicators up to mid-2006 are recorded in Ming Chan and Sonny Lo, Historical Dictionary of the Hong Kong SAR and the Macao SAR (Lanham: Scarecrow Press, 2006), especially pp. 60–68, 86–87, 111–113, 200, 214–222. 8. See Joseph Y. S. Cheng, ed., The Hong Kong Special Administrative Region in Its First Decade (Hong Kong: City University of Hong Kong Press, 2007), p. 1; Joseph Cheng, “The Pro-Democracy Movement, A Lost Decade?” China Perspectives, no. 2, 2007, pp. 14–27; and Tai-lok Lui and Stephan W. K. Chiu, special section guest co-editors, “Special Issue: Ten Years After 1997: The Lost Decade of Hong Kong” The China Review, 7:2 (Fall 2007). 9. Ming Pao, August 5, 2008. 10. “City of Protests” is the term used by the Washington Post, in its June 28, 2000 coverage of the HKSAR. 11. This refers to the linking of New York, London and Hong Kong as a trans-globe financial power nexus coined by Time magazine in January 17, 2008, in an article “A Tale of Three Cities” by Michael Elliot. 12. For coverage of the symposium proceedings, see, the No. 363 issue (vol. 31, no. 3, June 2007), pp.1, 4–40, of Hong Kong Economic Journal Monthly, a co-sponsor of the symposium.

Part I The Political Matrix

2 The Hong Kong Special Administrative Region: Ten Years Later Sin-por SHIU

Introduction In the lead up to the 1997 takeover of Hong Kong, the major concern of the Chinese Government was the economy. Before the Joint Declaration was signed and ratified by the two governments, China had sent its leading representative to Hong Kong with a mandate to stabilize the business sector in the run up to 1997. Xu Jaituen, the head of the Hong Kong Branch of the New China News Agency, the de-facto representative office of the Chinese Government in the territory, took this as his primary task and he did a fantastic job at it. There were capital and talent flights away from Hong Kong because of the coming political change and uncertainty. But they mainly came from the middle class and professionals. Most of the major economic interests stay put. Hong Kong had a smooth transition to Chinese rule and Britain had an honorable exit, much to the surprise of many critics and political observers. The Chinese policy of “One Country Two Systems” was put in place with a skeptical population watching wearily. Political changes were taken as unavoidable. But the structure of the system and personnel were left mostly untouched after the handover. Only the head of the government and the Secretary of Justice were changed (They were both British which were not allowed at the top levels). All senior officials and civil servants, including many British nationals, remained in their 43

China’s Hong Kong Transformed: Retrospect and Prospects

positions. Political dissidents were not arrested or exiled as some had suggested before 1997. Newspapers critical of the Chinese Communist continued to publish. Opposition parties and political figures ran in elections and more than a few of them won. Subsequent events proved the Chinese were right after all but for the wrong reasons. The economy was the problem. But it came as two, not just one “black swans.” The 1997–98 Asian financial crisis hit the territory hard with the equity market downed by two-thirds and the property market more or less did the same. In the strenuous effort to tighten it belt and trying to recover, Hong Kong was hit by SARS, a then unknown deadly and mysterious virus in 2003, and killing nearly 300 residents. This further depressed its economic outlook and prolonged its recovery. These blows had nothing to do with the 1997 changes. It cannot be said that they are new phenomena but they are certainly unexpected. This said much for public policy formulation. If we look at the numbers, Hong Kong now is roughly at what we were in 1997. (Not counting what happened in 2007 to the stock market and the high-end property market.) But if you take into consideration of the rapid rise in stock and property prices in the ten years before 1997, Hong Kong does not come out badly in these twenty years on average. (See Figures 1 to 6.) Figure 1. Gross Domestic Product 1990–2007

1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 2006

2004

2002

2000

1998

1996

1994

1992

0 1990

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GDP (HK$ Million) - at current market prices Note: The 2007 figure was estimated from the Jan.–Jun. figures of 2007. Source: Census and Statistical Department, HKSAR Government

The Hong Kong Special Administrative Region: Ten Years Later Figure 2. Per Capita GDP (1990–2007)

250,000

200,000

150,000

100,000

50,000

2006

2004

2002

2000

1998

1996

1994

1990

1992

0

Per Capita GDP (HK$) - at current market prices Note: The 2007 figure was estimated from the Jan.–Jun. figures of 2007. Source: Census and Statistical Department, HKSAR Government

Figure 3. Unemployment Rate (1990–9/2007)

9.0 7.9

8.0 7.3

7.0

6.8 6.2

6.0

5.6 5.1

5.0

4.7

4.8 4.9

4.0

4.1

3.2 2.8

3.0

2.2

2.0 1.3

1.0

1.8 2.0 2.0 1.9

Note: Unemployment rate (not seasonally adjusted) (%) Source: Census and Statistical Department, HKSAR Government

2006

Sep-07

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.0

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China’s Hong Kong Transformed: Retrospect and Prospects Figure 4. Price Indices of Private Domestic – All Classes (1990–6/2007)

200 180 160 140 120 100 80 60 40 20 2006

2004

2002

2000

1998

1996

1994

1992

1990

0

Note: The 2007 figure was estimated from the Jan.–Jun. figures of 2007. Source: Rating and Valuation Department, HKSAR Government; http://www.rvd.gov.hk/tc/publications/pro-review.htm

Figure 5. Price Indices of Private Office – All Grades (1990-6/2007)

240 220 200 180 160 140

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

120 100 80 60 40 20 0 1990

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Note: The 2007 figure was estimated from the Jan.–Jun. figures of 2007. Source: Rating and Valuation Department, HKSAR Government; http://www.rvd.gov.hk/tc/publications/pro-review.htm

The Hong Kong Special Administrative Region: Ten Years Later Figure 6. Hang Seng Index (7/1997 – 10/2007) 3 5,0 00

3 0,0 00

2 5,0 00

2 0,0 00

1 5,0 00

1 0,0 00

5,0 00

0 7

1

1 997

7 1 998

1

7 199 9

1

7 20 00

1

7 2 001

1

7 2 002

1

7 200 3

1

7 2 004

1

7 20 05

1

7 2 006

1

7 2 007

Source: Hong Kong Exchanges and Clearing Limited.

Figure 7. Hang Seng Index (1990 – 10/2007) 35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Hong Kong Exchanges and Clearing Limited.

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China’s Hong Kong Transformed: Retrospect and Prospects

The Economic Positioning of Hong Kong Hong Kong has always been a player in the globalized economy. World economic integration is nothing new to Hong Kong. Globalization is good for Hong Kong. But this is not the case with our changing economic relationship with mainland China recently. The reform and opening of China gave Hong Kong great opportunities. We expanded our industrial manufacturing capacity by moving our factories into the mainland and expanding them, taking advantage of the cheap labor and land there. But the rapid change in China also creates problems. We did not have a consensus on the effect of the rise of China on Hong Kong in 1997. Some see the change in China is great for Hong Kong. You can list the financial sector and the tourist trade as shining examples. But you can also find problems resulting from our changing economic relations with China, the growing wealth gap, the declining economic situation of the lower income sector, to name a few. Both sides had their supporting evidence and they probably are both right. The rise of China has a mixed effect on Hong Kong. It benefits some and hurts others in various ways. This is just an old relationship taking on a whole new content. After much debate and argument, Hong Kong now agrees the rise of China is not only an unavoidable reality we have to face, but also if we deal with it right, it would be good for us. So far it is good for Hong Kong. Hong Kong thrives on its relationship with mainland China in the past. We were mainland China’s access to the western world in the aftermath of the Korean War and during the Cold War, the window and bridge to the world when China began to opening up in the ‘80s and ‘90s. But since then, mainland China has built many bridges and opened many windows. Hong Kong’s uniqueness is disappearing fast and its functional role in China’s next stage of development is unclear. The first term government under Chief Executive Tung Chee-hwa refined our economic focus to four sectors – the financial sector, logistics, trade related services, and tourism. These remain the policy of the present government. Hong Kong was hailed as the shining example of a free market economy with minimum government intervention. Under the new

The Hong Kong Special Administrative Region: Ten Years Later

situation, our old formulation of “positive non-interventionism” was discarded and redefined by our current Chief Executive Donald Tsang. A more proactive government role in the economy is necessary under our drive to find our position in a rapid changing surrounding. This resulted in signing the CEPA agreements (Closer Economic Partnership Arrangement, a kind of a free trade agreement on goods and services under the WTO framework.) with the mainland, and after much lobbying from Hong Kong, the Central Government introduced a more liberal mainland visitor policy which was a primary recovery drive factor in the post-SARS Hong Kong. Many observers were upset by this change. This included the champion of free market economy, Mr. Milton Friedman. But a close examining of Mr. Tsang’s policy would show that there was no change in our basic policy of respecting the role of market in our economic activities. A more active role for the government in foster and directing economic and non-economic relations with our neighbors is unavoidable under the new relations with mainland China. Another factor supporting this adjustment is the increased significance of regional development. In the first forty years after the Chinese new republic was found, Hong Kong thrived on its isolation and separation from the mainland while enjoying the benefit of having this neighbor. The reform and opening of China changed this. Under our new relationship, with hundreds of thousands of people moving across the border everyday and thousands of Hong Kong owned factories operating in the mainland, isolation and separation is no long the possible. Active governmental engagement is necessary for Hong Kong to ensure that we are not falling behind and become disconnected, not matter it is in infrastructure developments or environmental policy. What happen with our neighbor is important for Hong Kong. A case to illustrate this is Macao. Within a short time, Macao creates an exhibition industry out of nothing with venues twice the size of what Hong Kong has at the moment. Regional development is becoming a big issue for Hong Kong and this certainly cannot be dealt with without the proper participation of the government. So Hong Kong has established coordinating body with Guangdong, and later, a larger effort was made with the Pan-Pearl River Delta Region involving nine provinces and Macao.

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But Hong Kong’s role should be beyond its neighboring region. For example, our financial market cannot just serve Guangdong enterprises. How much we should focus on connecting to the whole of China and how much should we focus on our relations in the region has become a new act we have to learn to balance. All these new challenges actually have nothing to do with 1997. With or without Hong Kong’s return to Chinese rule, these changes were going to impact Hong Kong. The return of Hong Kong to China only provides a different and a better setting for Hong Kong to deal with these changes.

China’s Post-1997 Policies Toward Hong Kong China’s policy toward post-1997 Hong Kong is capitalized by the “One Country, Two Systems” slogan. To simplify it and make it easier to understand, the slogan basically means “Hong Kong remains unchanged as much as possible.” Hong Kong will not only keep its economical and social system unchanged, but also enjoy a high degree of autonomy and self-rule. No cadres will be sent from the mainland to serve in the Hong Kong government. Stability and maintaining prosperity are primarily considerations in all policy decisions by the Central Government. All these sounded simple enough but the reality is more complicated. This is not because these promises were not kept. Indeed, the Central Government is very diligent in making sure their policies are consistent with it and the people in Hong Kong, including many critics and dissenters, after ten years, have generally agreed that the policy is working. Then what are the problems? Let’s take a look at the major events happened in the last ten years.

Major Events in the Last Ten Years 1997–98

The Asian financial crisis.

1999

The right of abode dispute and the Standing Committee of the National Peoples’ Congress made its first interpretation of the Basic Law.

The Hong Kong Special Administrative Region: Ten Years Later

2001

The resignation of the Chief Secretary.

2002

The second term of the Chief Executive began.

2002

The drafting of National Security Law as required by the Basic Law was initiated.

2003

SARS attack.

2003

Massive anti-government demonstration on July 1st.

2003

The National Security Law was withdrawn due to lack of majority support in the legislature.

2003

The resignation of the Financial Secretary, the Secretary for health Services and the Secretary for Security.

2003

The establishment forces suffered defeats in local (District Councils) elections.

2004

The Standing Committee of the National Peoples’ Congress made a resolution and an interpretation of the Basic Law concerning political development.

2005

The Chief Executive (C. H. Tung) resigned.

2005

The Standing Committee of the National Peoples’ Congress made an interpretation of the Basic Law concerning the term limits of the Chief Executive.

2005

The political development proposal failed to get the two-thirds votes from the legislature needed to take it further.

2007

The opposition fielded a candidate (Alan Leong) to challenge the establishment’s candidate (incumbent Donald Tsang) in the Chief Executive election for the first time.

2007

The Standing Committee of the National Peoples’ Congress made another resolution of the Basic Law concerning political development in the future.

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Big Changes Under a Policy of No Change In face of a change of sovereign power over Hong Kong, the Chinese government’s basic policy approach to Hong Kong is to keep everything unchanged as much as possible. This includes the political system. The title of the head of the territory was changed from Governor to the Chief Executive. Instead of someone sent from London, or, now from Beijing, a local will be selected. This is a welcome change. The government was largely untouched including all personnel from top to bottom. The change of the Secretary of Justice was because he is British. The British government wanted to keep this post in their hand until the very last day and refused to localize this position in the run up to 1997. But the change of the top man from an external figure to a local person has many hidden implications. Any prominent local figure that qualifies for the post inevitably has many connections in the community. This would change the many relationships within the government. One good example is the Executive Council, the top advisory body for the Chief Executive. In the old days, the unofficial members were mainly appointed on the suggestions of the principal officials. The Governor hardly knew any of them before he landed the job. The senior officials worked in cohort with the unofficials to coach the Governor on local politics and conditions before he made a decision. But with a local serving as the Chief Executive, he would choose his unofficial members who ended up protecting and supporting the top man when the senior officials differed. So the form of government might not be changed. But the internal working relationship cannot be the same. This is just one example. The major change in the political system did not just happen inside the government, it also happens outside of the administration too. The introduction of electoral politics in the legislature is the biggest change in the political culture of Hong Kong. Twenty years after its introduction, we are still trying to deal with it. Introducing elections and through it, fostering a friendly local political force to takeover from them is a typical British de-colonization process. This is not inconsistent with the Chinese

The Hong Kong Special Administrative Region: Ten Years Later

policy of letting “Hong Kong people govern Hong Kong.” The Chinese had no objection to election in the territory. The argument between the Chinese and the British before 1997 was mainly centered on the form of elections and the pace of its introduction. With an elected legislature, parliamentary politics became part of the governing practice in the territory. The government no longer has certain support in the legislature. While the legislature’s power to initiate legislation is restricted, its approval is required in making and changing laws and for the government to spend money. This is new to the government and senior officials and the civil servants have a hard time adjusting to this new political reality of check and balance by a force outside the government. Another major change was in the judiciary. Hong Kong has change from a form of common law with no or little written constitution to a system with a comprehensive written constitution, very much in the American style. This change makes new demand on the judges who was trained and selected in the old way. Judges are now required to make political decisions, which try to seek balance between conflicting social values and individual rights and public interests. The number of judicial review case surged and the courts made conflicting decisions in the search to define a jurisprudence consistency.

Political System Under Development The present political system in Hong Kong is similar to the presidential system in the US. The head of the government and the legislature are elected in separate elections. There is a basic division of power between the two branches and the judiciary is fiercely independent. An electoral collage elects the Chief Executive. The legislature is formed by elections in the forms of popular direct district elections and elections by functional constituencies, a leftover from the British days. Under this system, political parties have little or no chance of becoming the governing party. They become the loyal opposition which checks the policies put forward by the administration. This leaves the job of governing primarily in

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the hands of the civil service, i.e. the Administrative Officers. But their hands are tied not only by an oppositionist legislature, but they also have to work under a political leadership that comes from a very different political culture and mind set. This problem is somewhat alleviated after a civil servant succeeded Tung Chee-hwa as the second Chief Executive of the Hong Kong SAR Government. But the structural problem remains. Hong Kong has had a vibrant civil society with a large number of non-governmental organizations (NGOs) providing education and social services of all kinds. But they were not political until the process of de-colonization and the Chinese policy of “Hong Kong People Governing Hong Kong” was pronounced. To be exact, a large number of new NGOs emerge in the process and start influencing public policies and becoming political. This puts further pressure on the old way of decision making inside the government. The increase in conflicts also drawn in the court to arbitrate social conflicts. This is new for Hong Kong where the government and the legislature are powerless to deal with this rise of using the judiciary to overrule government decisions and rewriting existing laws. The Central Government, who is responsible for the design of this constitutional framework and its ultimate interpretation, is reluctant to get involved. When it did get involved to alleviate a crisis situation, like in the case of the right of abode in 1999, it arouses great concern and oppositions for their “meddling in Hong Kong’s internal matters.” The Central Government’s reluctance to use its power did not recede until after the massive protest demonstration in 2003.

The Political Reality of Post-1997 Hong Kong Underlining all these political issues is a political reality that is much neglected. That is Hong Kong people have a confused national identity. National identification is either weak or unclear among Hong Kong people. This is hardly the proper ground to build political consensus. The government is doing more on this front amid a lot of resistance and skepticism. Anyway to look at it, change in this area will take time.

The Hong Kong Special Administrative Region: Ten Years Later

Electoral politic is new in Hong Kong. It is new for everyone, the government, the civil servants, the political activists, and the business sector, not to say the community as a whole. We have a good start. Our elections are well managed, clean and fair. We control campaign spending of the candidates and is serious in make them abide by the rules. But this should not be taken for granted and there are rooms for improvement. How electoral politics will develop in the territory is a major factor shaping the future of Hong Kong.

Prospects Post-1997 Hong Kong is a very different society from its colonial days. Hong Kong has turned from an apolitical society into a highly divisive and political one. Some see this as bad and other see this as inevitable. Its future development depends on a few issues. The first one is the implementation of universal suffrage for the elections of both the Chief Executive and the full legislature. This is mandated in the Basic Law without a fix date. At the present, the government side lacks the two-thirds votes it needs to pass its proposal and the opposition would not give it their votes unless the proposal is to their advantage. There is no way out of this deadlock and it will test the political skill of both sides. In the meantime, political parties are tired out by elections with no possibility of holding power. Political parties are the result of electoral politics. Their development is inevitable if elections are open and contested. The proper working of the legislature would also drive legislators to band together. Their development into a more mature political force is crucial if a solution can be found to move towards the goal of complete universal suffrage set in the Basic Law. But there are strong reservations from certain sector in the community about having political parties running Hong Kong. The business sector is apprehensive about having political parties arbitrating competing interests. They would have to become political in such a setting, reversing a long held tradition of an apolitical business community. Exiting law does not allow a member

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of a political party to assume the office of the Chief Executive. Its practical effect is doubtful because it can be easily circumvented. But as long political parties cannot become the governing party, they can only be election machines. Their oppositionist approach to politic also makes them less acceptable to the public as a governing force. This is a vicious circle, a chicken or egg first dilemma. The government has made moves to change the administration in a way to equip itself better to deal with a more politicized society and a fractionalized legislature. The introduction of political appointment in the top level of the government in 2002 was the first step. The recent creation of more politically appointed positions was done both for grooming new talents and strengthening the political side of the administration. This job is far from complete. The reforming of the administrative apparatus to fit in better with a more politicize society is a continuous task which can only taken on prudently. The Central Government is not a bystander while all these happened. It has an important role to play as the guardian of the constitutional framework and the stability and prosperity of the territory. But it is still trying to find its proper role in terms what to do and not to get involved. So far, opinion polls consistently showed they have earned greater trust from the people of Hong Kong for their measured moves.

Concluding Observations Taiwan At the present, political figures of major parties on the island reject the policy of “One Country, Two Systems” for solving the cross strait problem. They insist that Taiwan is different from Hong Kong. But I believe the Hong Kong experience is still very much relevant. It is not yet the moment for the two sides to start negotiating the future status and a final solution. But when the time comes, the “One Country Two Systems” would be the only formula which can satisfy both the concerns of the people on the island about their self-interests and the concerns of the Beijing government about

The Hong Kong Special Administrative Region: Ten Years Later

national integrity. “One Country, Two Systems” would be the final arrangement in substance if not in name. So Hong Kong’s experiences will be important for the Central government and the people of Taiwan. There are already voices in the business sector in Taiwan that express support for the formula as something that at least is better than the unstable situation they are having now.

The Role of Hong Kong in China The search for new role for Hong Kong in China’s rapid rise will be a continuing challenge for Hong Kong. China is moving into a new phase of development that departs from simple emphasis on more export and foreign investment. Growth in GDP is no longer seen as sufficient standard for cadre promotion. Environment, sustainable growth, innovation and high and new technology, a better-balanced economic structure, culture and civic values are being put forward as objectives and new standards of social development. What can Hong Kong contribute in these new drives and in the process, piggyback our progress with China’s is a question we have yet to fully answer.

Managing an Open Society The experience of Hong Kong in managing an open and diverse society is important. The process is no doubt painful and risky. Policy formulation and implementation take longer time, or have to be abandon some times, something nearly unheard of in the old days. But Hong Kong is on a course of no return. A vibrant civil society, with a free press and freely organized political parties, contesting fairly run clean elections is not something common in this part of the world. Our experiment is far from conclusive and achievements set in stone. There may be many twist and turns in its future development. But it is no doubt we have come a long way.

Democratization in a Chinese Context Democracy is a commonly use terminology in China now, no matter it is in Hong Kong, Taiwan, and the mainland. But the meaning of

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the word can varied wildly in different places, and among different people in the same place. Hong Kong’s experience with democracy is relatively short. Its form and content have commonality with other democratic systems. But we also have our uniqueness. Hong Kong has the benefit of a well-entrenched culture of the rule of law, a population that values stability. All these contribute to an orderly introduction of political changes that would empower the public at the expense of the ruling elite. This, at the end, is what democratization is all about. Hong Kong’s experience can contribute to similar attempts in Taiwan and the mainland.

3 Democratization of the Hong Kong SAR: A Pro-democracy View Margaret NG

Overview As the Hong Kong SAR celebrates its tenth anniversary, people are taking stock of the achievements and failures of the first decade under Chinese sovereignty. How far has Hong Kong advanced in democratization is an important issue. I would argue that it is the most important issue of all, because it determines how free Hong Kong people will be and how Hong Kong will be governed. This in turn will affect Hong Kong’s economic system and the role it will and can play as an international city. Hong Kong is part of China. After the reversion of sovereignty to China, Hong Kong comes directly under the control of the Chinese Central Government under the “One Country, Two Systems” principle. What that relation means in practice for Hong Kong and for China will depend on the progress, or lack of progress, of democratization in the HKSAR. A quiet but fierce drama has been taking place in Hong Kong away from the international limelight between individualism and collectivism, between the rule of law and state control, between the Hong Kong identity and national identity, between freedom and submission to oppression. Some of this will emerge in this presentation. For this is inevitably a participant’s account of an endeavor in progress, written mostly from first-hand observation and in-depth engagement. 59

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I was elected to the Legislative Council in 1995 by the legal functional constituency, with an express mandate to safeguard the smooth transition of the rule of law, and to vote for the abolition of all functional constituency seats in favor of direct election at the earliest possible date. I have since then been re-elected to the Council by the same constituency three times. In 1999, I had led a silent march of 630 lawyers to protest the National People’s Congress Standing Committee’s (NPCSC) Interpretation which overturned the ruling of the Court of Final Appeal. In 2002, together with others, I formed the Article 23 Concern Group to rouse the community against the HKSAR government’s national security legislation. In 2003, after the march of the 500,000, the Article 23 Concern Group became the Article 45 Concern Group to fight for the election of the chief executive and the Legislative Council (LegCo) by universal suffrage. In 2004, four members of the Group including myself were elected or re-elected to LegCo. In 2005, the four of us took the initiative to organize a new political party which was established on March 19, 2006 as Civic Party. In 2007, Civic Party candidate Alan Leong successfully obtained nomination to challenge the chief executive election. Currently, Civic Party has 6 members in the 60-member LegCo. The fight for Hong Kong’s democratization is a race against time. In this chapter, I will show that, over the last decade, more and more people of an increasingly diversified background have been drawn into the movement to play an active role. Most notably, more people from the middle class and professional sectors have joined in. More civil society organizations have been formed and begun to play an active role in public policy advocacy, particularly on environmental, heritage and town-planning issues. This represents the most significant development in the democratization process. In contrast, the forces for democratization have lost ground on a number of fronts. Institutionally, the spheres of political power and influence for democrats have diminished. The wholly elected municipal councils were abolished, and the wholly elected district boards (now renamed district councils) became partly by appointment. The new voting method in LegCo introduced by the Basic Law means the majority of directly elected members can be vetoed by the majority of functional constituencies. The power to

Democratization of the Hong Kong SAR: A Pro-democracy View

introduce private member’s bills on public policies became virtually non-existent. On the whole, the elected legislature has proved a weak check and balance against the appointed executive, which has grown in force with the backing of Beijing. The chief executive now spearheads a political appointment system the development of which started with the introduction of the “accountability system” by which a body of politically appointed secretaries took over the power up till then exercised by senior civil servants. The system is in the process of deepening and linking up with the pro-government and pro-business political parties. Judicial authority has suffered directly from the NPCSC Interpretations and is subject to subtle or not so subtle pressure. Pro-establishment media now out-number pro-democracy media. The space for informed and serious public debate is now limited. Perhaps these institutional changes are to be expected with the reversion of sovereignty. China has never pretended to be democratic, particularly regarding what she characterizes as “Western democracy”. As will be elaborated in this chapter, China has agreed to democratization in Hong Kong as a matter of necessity or expediency for economic prosperity and social stability in the context of the state of China’s development at that time. The people of Hong Kong, however, had been demanding democratization on the basis of right and appropriateness. They have been promised a democratic system under the Sino-British Joint Declaration and the Basic Law; the guarantee of rights and freedoms and the continuation of the rule of law require a democratic institutional backing. As I shall argue in this chapter, the issue of Hong Kong’s democratization is legitimacy versus necessity. This is not to say that legitimacy and necessity are mutually exclusive, or that necessity plays no role in the demand for democracy or legitimacy has no role in the consideration of necessity. On the contrary. However, the difference and frequently the clash between the two positions are clear, and account for the delays to implement democratization and the reluctance on the part of Beijing. Looking at the future, legitimacy will be affected by necessity, and as time goes on, the debate will increasingly shift from legitimacy to expediency. Ten years after the Basic Law came into effect, the goal of

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universal suffrage under Articles 45 and 68 and as promised under the Joint Declaration looks as distant as ever: indeed, even more distant. In 1990, the year 2007 was held out as the target date for democratization. Now no one knows what the target date may be. The goalpost, having been shifted once, it appears to everyone, may be shifted again and again. In this chapter, I shall try to suggest the factors which will favour democratization and those which will delay or even derail democratization. Standing where I am now, I regret I cannot advise an optimistic view. But, as ever, opportunity can be changed by endeavor, and there is no lack of endeavor among the democrats in Hong Kong.

The Legal and Constitutional Basis of Democratization The Sino-British Joint Declaration Prior to the handover, Hong Kong was a British Crown possession comprising ceded territory and territory held under a 99 year lease. By 1982, just over half of Hong Kong’s 7 million inhabitants were British subjects born in Hong Kong. The handover of Hong Kong and its inhabitants to China, and China’s resumption of sovereignty over Hong Kong was by way of a bilateral treaty; namely, the Sino-British Joint Declaration ratified in May 1985. In the Joint Declaration, Britain agreed to restore Hong Kong to China with effect on 1 July 1997, while China declared its basic policy regarding Hong Kong upon resuming sovereignty. The 12-pont basic policy was further elaborated in Annex I to the joint Declaration. Section I of Annex I states: The government and legislature of the Hong Kong Special Administration shall be composed of local inhabitants. The chief executive of the HKSAR shall be selected by election or through consultations held locally and be appointed by the Central People’s Government. Principal officials (equivalent to

Democratization of the Hong Kong SAR: A Pro-democracy View

Secretaries) shall be nominated by the chief executive of the HKSAR and appointed by the Central People’s Government. The legislature of the HKSAR shall be constituted by elections. The executive authorities shall abide by law and shall be accountable to the legislature. After the draft Joint Declaration was announced in 1984 and before it was ratified in 1985, the wishes of the inhabitants of Hong Kong were consulted in an elaborate exercise, under a warning that the agreement could not be amended, and that the only alternative was no agreement at all. In these circumstances, the agreement was generally accepted by the people of Hong Kong. Thus, it can fairly and squarely be said that the handover was effected on the basis of consent, and the consent of the inhabitants of Hong Kong was on the basis of the solemn promise of Britain and China that the basic policy, including the form of government, would be honored after China’s resumption of sovereignty. The Joint Declaration, together with all its annexes, was an international agreement binding on the two signatories under international law. The basic policy included a provision that the matters set out in the basic policy shall be enshrined in a Basic Law of the People’s Republic of China, enacted under Article 31 of the Chinese Constitution. Thus the basic policy was to have the nature and force of law binding on China upon coming into force.

The HKSAR Basic Law The consultation on and drafting of the Basic Law took place from 1985 to 1990, and was promulgated by the NPC on April 1, 1990. Article 45 of the Basic Law provides for the election of the chief executive by universal suffrage in these terms: The Chief Executive of the Hong Kong Special Administrative Region shall be selected by election or through consultations held locally and be appointed by the Central People’s Government.

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The method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures. The special method for selecting the chief executive is prescribed in Annex I. Article 68 provides for LegCo elections by universal suffrage in these terms: The Legislative Council of the Hong Kong Special Administrative Region shall be constituted by election. The method for forming the Legislative Council shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the election of all the members of the Legislative Council by universal suffrage. The special method for the formation of the Legislative Council and its voting procedure is prescribed in Annex II.

The International Covenant on Civil and Political Rights (ICCPR) The term “universal suffrage” referred to in Articles 45 and 68 is not given a special definition in the Basic Law. However, Article 39 provides for the continued application of international human rights covenants in the HKSAR as follows: The provisions of the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, and international labor conventions as applied to Hong Kong shall

Democratization of the Hong Kong SAR: A Pro-democracy View

remain in force and shall be implemented through the laws of the Hong Kong Special Administrative Region. The rights and freedoms enjoyed by Hong Kong residents shall not be restricted unless as prescribed by law. Such restrictions shall not contravene the provisions of the preceding paragraph of this Article. “Universal suffrage” is defined in Article 25 of the ICCPR as “equal and universal suffrage.” Given that “universal suffrage” is not given any other definition in the Basic Law, the clear implication is that the term “universal suffrage” in Article 45 and 68 has the same meaning as “universal suffrage” as in Article 25 of the ICCPR. From the above, it is plain that the inhabitants of Hong Kong have been promised a democratically elected chief executive and legislature through elections on equal and universal suffrage. This was the promise held out to them before the handover, and the legal and constitutional basis of their demand for democratization is a demand that this solemn promise be fulfilled.

Democratization: A Progress Report The mission of the democratic movement in Hong Kong is to bring about democracy for Hong Kong by all means at their disposal, by participating and winning in elections on all levels of Hong Kong’s political system; by speaking out in public forums and through mass activities; by pressing the HKSAR and Central Government to implement the promises for democracy under the principle of “Hong Kong people running Hong Kong” at the earliest possible date; by keeping the international community informed of Hong Kong’s situation; by encouraging and facilitating more people to take an active part in public affairs through organizing or sustaining political parties, groups and civil society organization; and in the face of setbacks, delays and denials of democratization, to keep the light burning.

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Participation and Performance in Elections Direct elections based on geographical constituencies were introduced into LegCo for the first time in 1991. LegCo was wholly elected in 1995, 20 by direct election, 30 by functional constituencies elections, and 10 by election within an electoral college of 800. In the 1995 election, there were 2,572,124 registered voters; 920,567 cast their votes, representing a 35.79% turnout rate. The vote share for democrats in the direct election was 54.3%. On the eve of the handover on 30 June 1997, democrats held 15 directly elected seats, and 11 functional constituency seats.1 In the 1995 election for the two municipal councils – the last to be held before they were abolished by the HKSAR government – democrats won 14 out of the 28 seats in the Urban Council, with a vote-share of 40.94%, and 13 out of the 24 seats in the Regional Council, with a vote-share of 37.85%.2 The last district board (renamed district council in 2000) election before the handover was held in 1994. The total number of seats for the 19 district boards was 400, of which 27 were ex-officio. Democrats won a total of 101 seats with a 21% vote-share.3 (I should explain that this should be seen in the context of a pre-dominance of unaffiliated independent candidates). The breakdown of relations between Britain and China over Hong Kong led to the disruption of the transition of the political system. The “three-tier system of representative government” came to an end at midnight 30 June 1997. Their place was taken by a “Provisional Legislative Council,” the provisional municipal councils and provisional district boards, none of which was elected by open election. The 26 democrats refrained from taking part in the Provisional Legislative Council which they considered unlawful. In an emotional farewell from the balcony of the Legislative Council building shortly after midnight, they pledged to the rally gathered in the streets below that they would return.4 The first election for the HKSAR LegCo was held in 1998 with an electoral roll of 2,795,468 and turnout rate of 53.29%. The democrats with a 57% vote-share won 14 directly elected seats, but only four seats in the functional constituencies.5

Democratization of the Hong Kong SAR: A Pro-democracy View

In successive elections of the Council, the democrats had consistently won a majority vote-share (52.3% in 2000, 58.2% in 2004) but never a majority of seats. In 2000, they won 15 directly elected and 5 functional constituency seats. In 2004, in the election immediately after the march of 500,000, democrats took 17 directly elected and 7 functional constituency seats. The 25 were collectively nicked-named “the pan-democrats.”6

Fighting for Democracy and the Rule of Law in the Legislative Council The movement for democracy is a popular movement. A central task of democrats is to stand in the forefront of the movement, to speak out for democracy on all available occasions, to keep democratization on the agenda of the government and the LegCo, to look for possible ways to achieve the goal, and organize the support of the public into ever greater strength. Being elected in a direct election, the democrats have a popular mandate. Support for the election of the chief executive and the whole LegCo has been consistently the findings of opinion polls. Rules laid down in the Basic Law have fixed the constitutional development of the HKSAR up to the year 2007. Thus the earliest realistic date for the election of the chief executive by universal suffrage was 2007, and 2008 for LegCo. According to findings of the Hong Kong in Transition Project, in the polled years from 2003 to 2007, support for the election of the chief executive has never dropped below 69%, and support for the election of LegCo by universal suffrage never below 66%.7 As far as the date for implementation is concerned, the findings of the Public Opinion Program of the University of Hong Kong (POP), support for election of the chief executive by 2007 was as high as 82% in July 2003, and at 62% in March 2004 just prior to the NPC Interpretation. For LegCo, 2008 was favored by over 60% in March 2004.8 In preparation of the development, democrats in LegCo persisted in bringing constitutional development up for discussion and debate,9 causing studies to be made, options to be explored and

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public hearings to be held involving academics and all sectors of the public. These studies and consultations with academics and groups and individuals were comprehensive, including proposals on the relationship between the executive and legislature, the ministerial system, the election of the chief executive and LegCo, comparative studies of systems in other jurisdictions, status and code of practice for civil servants and their relations with “ministers,” the function and role of political parties and their development – these were only some of the other examples. Consultation and research studies extended to the protection of civil liberties which are directly relevant, for example, the Public Order Ordinance restricting the freedom of expression and assembly, and the exercise of police power in dealing with protesters, and freedom independence of the press. These concerns became acute in the heated debate on the national security bill under Article 23 of the Basic Law. However, these efforts were thwarted constantly by the HKSAR government by refusing to be engaged, and by the non-democratic majority of the Council which made every attempt to curtail on block the discussion. Without government’s response, the media’s interest was limited. Excellent ideas, cogent proposals, pertinent research which could have contributed to sustain an informed public debate, were all wasted in futility. Defending the rule of law under the common law system which is guaranteed in the Basic Law required major efforts. The first crisis occurred unexpectedly early in May 1999, when the HKSAR government sought to override the judgment of the Court of Final Appeal in favor of the rights of the mainland born children of Hong Kong parents,10 by asking the Central Government to intervene by way of a re-interpretation of the relevant Articles of the Basic Law by the NPCSC. Such a move was of the most far-reaching consequences. The Interpretation issued by the NPCSC on June 26, 1999 was in substance an amendment of the Basic Law which was without due process and an unconstitutional exercise of power.11 Of no less significance was the means the HKSAR government employed to bring about the result. Backed by wildly exaggerated forecast based on untenable premises, the HKSAR government

Democratization of the Hong Kong SAR: A Pro-democracy View

claimed that the judgment of the court would mean that 1.67 million mainland Chinese would flood into Hong Kong within the next ten years, causing an unbearable additional financial burden of some $710 billion. 12 On the basis that the expedition of an Interpretation by the NPCSC alone could meet the urgent need to block the influx, the HKSAR government moved a resolution in LegCo on May 16 to support the request.13Supported by the Hong Kong Bar Association, strong opposition was voiced. All but two of the democrats (who stayed to vote against the proposal) walked out in protest. The Resolution was carried by 35 against 2 votes. The process initiated by the HKSAR government set a bad precedent. Other NPCSC interpretations were soon to follow. The attack on the judges and the court was so unprecedented and traumatic that on June 30, 1999, 632 lawyers took part in a silent march of protest.14

Fighting for Democracy in the Streets Mass rallies were not new to Hong Kong. The most notable example being the protest of 1 million people in 1989 in support of the democratic movement in China. Since then, candle light vigils have been held every year in Victoria Park to commemorate those who died in the crackdown. While attendance fluctuated, the symbolic status of the occasion has never waned. The number of public demonstrations and protests greatly increased after the establishment of the HKSAR. It may, the SAR government claims, reflect the degree of freedom of expression in the SAR. But more likely than that, it reflected the government’s failure to uphold the core values of the community and key concerns of many of its sectors, and the public felt it was up to themselves to express support or opposition. Democrats whose task was thwarted within the established system were increasingly involved in the organization of mass protests. Marches for democracy have become a central feature of the fight for democratization. The march of 500,000 on July 1, 2003 was the largest, closely followed by the July 1 march in the following year. In one sense the 2004 march was even more

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significant for democracy, because it was a single theme march for universal suffrage for 2007/2008. This was the first time Hong Kong people have marched for their own political future. Marches became a standard event to rally popular support for all major issues of constitutional development, as did signature campaigns accompanied by the distribution of handbills by popular democratic legislators. Much had been made of the numbers, reading it as a barometer of support for democracy. The 2003 march set an unrealistic benchmark. It is hardly surprising that with repetition, in time the marches lost their attraction. An important development was that street rallies became acceptable to the middle and professional classes as they were drawn into the movement. Members of the legal profession who were committed to defending the rule of law and judicial independence realized that they could no longer rely on the HKSAR government but had to directly enlist the support of the public. They consciously embarked on a program of writing for the popular press. Eventually in the fight to protect individual rights and freedoms against the national security bill, the Article 23 Concern Group was formed. The group, mostly of lawyers, wrote pamphlets and distributed them in the streets, held media events and briefings, and ended up as part of the great march on July 1, 2003.

Professionals for Democracy As serious issues concerning the rule of law and constitutionalism came up one after another, more and more members of the legal profession were drawn in to play active roles. In 2000, Audrey Eu, Senior Counsel and former chairman of the Bar Association, was elected into LegCo in a by-election. Following the 2003 march, the Article 23 Concern Group transposed itself into the Article 45 Concern Group to promote the election of the chief executive under that Article of the Basic Law. In the 2004 election, two other members of the Group, Ronny Tong and Alan Leong, both Senior Counsel and former Chairmen of the Bar Association, were elected. In March 2006, the four of us, together with a group of people with pre-dominantly professional background founded Civic Party.

Democratization of the Hong Kong SAR: A Pro-democracy View

Further development followed the contested chief executive election of 2007. The democrats as a whole objected to the undemocratic “election” of the chief executive and refused to take part in all processes related to it. In the by-election following the resignation of Tung Chee-hwa in 2005, the then chairman of Democratic Party took a different view and sought to contest the Beijing-chosen Donald Tsang. However, because he could not get the necessary support of 100 from the Election Committee to be nominated, the campaign did not make an impact on the public. In 2006, that Election Committee came to the end of its term, and an election for the new committee was to take place on December 11. Taking this as an opportunity to call attention to the unfair “small circle election” which not only denies the right of the general public to vote but also shuts out competition, Democratic Party and Civic Party, together with other individual democrats, joined hands to field a candidate, and to campaign for more democrats to be elected into the Election Committee in order to enable a pro-democratic chief executive candidate to be nominated. On November 6, Alan Leong was announced as the joint democrat challenger. The campaign for the Election Committee and Alan Leong’s chief executive election campaign deserves separate treatment. It suffices here to point out that as an exhilarating surprise, an unprecedented 114 democrats were elected into the Election Committee from the professional sectors,15 with a clear mandate to nominate Alan Leong. Most of these professional – engineers, accountants, architects, surveyors, teachers, professors, social workers, lawyers – had never taken part in politics before. Not only were they instrumental in bringing about the first contested chief executive election with a democrat as candidate; they were active in the chief executive election campaign. From this group of Election Committee members, an organization called “Professional Commons” was established in September 2007. Their declared role is to back with professional expertise a democratic policy agenda for Hong Kong. From the start, democrats who supported Leong’s campaign knew that the outcome of the election was inevitable. But his participation in the election promoted democratization in the most

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powerful way of setting an example. It brought the campaign to the streets of Hong Kong and forced Donald Tsang to follow suit. It culminated in two televised election debates that, according to a survey by the Hong Kong in Transition Project were watched by 86% of the public. It brought home to every citizen the absurdity and unfairness of denying them the right to vote. According to the survey, months later, 69% of the public still recalled clearly Donald Tsang’s promise to propose a roadmap and timetable for universal suffrage by 2012.16 It is fair to say that the single most important achievement of the campaign was raising public consciousness: it was as if a trial run for universal suffrage was staged.

Set-backs of Democracy Fighting for democracy after Reunification has never been easy. The change of sovereignty meant a fundamental change. In the years immediately before 1997, democratization was on the agenda of the British colonial administration, subject to negotiation with China. In Governor Chris Patten’s era, democratization was a priority, but was handicapped by the ground already lost. The incoming sovereign had no conviction in democracy, and regarded local democratization with suspicion if not hostility. It was only to be expected that after 1997 the progress of democratization would be beset with delays and set-backs. The municipal councils, suspended upon the handover, were abolished by legislation passed on December1,1999 by 36 against 21 votes. 17 Thus a constitutional change abolishing an elected council first established in 1936 was effected summarily. Its powers and functions were taken over by a government department. In practical terms, it means the democrats lost a major arena and a large number of seats and with them the influence and financial support. However, in the district board election held in November 2003, the democrats won a record number of 137 seats. Although the Basic Law promises a measure of democracy, China controlled the pace of democratization. Moreover, the promises in the Basic Law are ultimately subject to the voluntary act

Democratization of the Hong Kong SAR: A Pro-democracy View

of the executive and the adjudication and interpretation of the courts. The past ten years saw an appropriation of power by the executive under the Basic Law, and a cut down of protection by the courts through the intervention of NPCSC interpretations of the Basic Law which were plainly amendments. The first interpretation, issued on June 26, 1999, in effect overturned a Court of Final Appeal judgment. The verbal assault on the individual judges and on the judiciary as a whole preceding the interpretation left its indelible mark and undermined confidence in the rule of law under an independent judiciary. The second interpretation issued on April 6, 2004 directly concerned democratization. Just as the Hong Kong community was starting to debate in earnest what constitutional development was appropriate for 2007/2008, the Interpretation of Article 7 of Annex I and Article III of Annex II changed the rules of the game by giving the Central Government the power to pre-empt any initiative to propose for its consent reforms which has the community’s consensus. Twenty days later, a “Decision” was issued by the NPCSC. It prohibited the implementation of universal suffrage in 2007 and 2008, maintained the proportion of elected seats and functional constituency seats, and the LegCo voting procedure which allows a small number of votes in the latter block any member’s motion. The set-back went beyond the Interpretation itself. It was a brutal message to Hong Kong that no progress can get off the ground without Beijing giving the green light first. It sapped the will of the people. It poured cold water on the optimism and enthusiasm for universal suffrage for 2007/2008, and cloaked any movement to persist in the demand with the appearance of not just politically impracticality but defiance and unlawfulness. In spite of this, the September 2004 LegCo elections were a resounding victory for democrats. But the effect of the interpretation ultimately sank in. The seal was set in 2005, when the NPCSC interpretation and decision were applied, by the HKSAR government proposing a so-called “constitutional reform package” which provided no roadmap or timetable for universal suffrage to be introduced, and was actually retrogressive. The 25 “pan-democrats” in LegCo voted against the

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package, and paid the political price for standing on their principle and election promise.18 The HKSAR government made such political capital of it as they can. As 2007 drew near and the goal receded, the democrats had to put their effort on 2012, which was the next possible date. But the public knew how illusory this was. During the chief executive election campaign, Beijing sources started to spread the message that 2012 was out, and 2017 was more hopeful. The despair of the community was palpable as opinion polls charted the shift from 2012 to 2017. During the July 1 protest march in 2007, Ming Pao Daily News carried out a survey among the participants. 19 Unsurprisingly, 80% responded that they marched for democracy, and 95% hoped they would see democracy by 2012. Yet when asked when, in their estimation, democracy would come, 30% put the date between 2022 and 2027, 20% reckoned 2047 or later. This was as close to “never” as makes no difference. During his election campaign in March 2007, Donald Tsang promised to publish a consultation paper which would put forward three options for achieving universal suffrage, each of which would meet international standards, with a roadmap and timetable. He promised that the option supported by 60% of the public would be put forward before Beijing. Eleven days after taking office, the Green Paper he published contained no option, no roadmap or timetable, only hundreds of questions. The public responded with resigned indifference.20 Consultation ended on October 10. The HKSAR government stated that a report would be made to Beijing with the findings. The Central Government would then issue its decision, cording to the mode set by the second interpretation. The HKSAR government already stated that public opinion would be for reference only, and would not be the decisive factor. The strongest grounds the democrats stand on are legitimacy, and public opinion. The Interpretation affects both. The powerlessness of the democrats’ leadership and their failure to deliver even if under overwhelming disadvantage will further erode their legitimacy. These are real set-backs that every democrat has to face, and find ways to overcome in order to succeed in their mission.

Democratization of the Hong Kong SAR: A Pro-democracy View

The Need for Democratization Safeguarding the Way of Life of Hong Kong Inhabitants It has been argued that the goal of democracy is not in doubt. The only question is “how fast.” Hong Kong people are admonished to be patient. The answer to that is that opponents of democracy seldom say no. They always say “not now.” In the case of the HKSAR, democracy delayed is likely to be democracy denied. The demand for democratization has with it at every stage a sense of urgency. The Sino-British talks raised the curtain on massive engagement in all sectors of the Hong Kong community on the future of Hong Kong. There was a huge difference between the social, political, legal and economic systems and way of life in Hong Kong and in China, particularly regarding personal rights and freedoms. In order for the Hong Kong way of life to survive 1997, strong institutional safeguards were needed. It was necessary to have the safeguard of law and treaty, and also by implementing the principle of “Hong Kong people running Hong Kong” by establishing a democratic system. To put it bluntly, Hong Kong people believed that their way of life could not survive the handover to a Communist China without a democratic government of local people in Hong Kong after 1997. The burning question in last years of the British administration in Hong Kong was how a democratic government was to be made ready for Hong Kong in time, before it was overwhelmed by the influence across the border. However, this great sentiment motivating the demand for democratization was seen in the “patriotic” quarters as an attempt to resist Chinese sovereignty. The slogan “Resist Communism with Democracy” polarized democracy and “patriotism” from the start, thus stamping the democratic movement in Hong Kong with the stamp of a resistance movement. The slogan was still quoted against the democrats ten years after reunification, clothing them with an anti-government color. Moreover, some of the people who had fears about the handover were mainly economically minded. They feared for Hong

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Kong’s economic well-being. As China’s economy grew in spectacular leaps, their fear also diminished. Thus to these Hong Kong people, the demand for democracy seems unnecessarily confrontational and largely ideological. This attitude accorded with Beijing’s thinking. One of the earliest local political groups for democracy which declared its support for reunification and the end of colonial rule was Meeting Point, a forerunner of the Democratic Party. In spite of their support for reunification, the group and later on the Democratic Party was labeled by the “patriotic” circles as anti-Communist and therefore deep down against Chinese sovereignty. The June 4, 1989 Incident, just 4 years after the accord to handover Hong Kong, shook the Hong Kong people to the core. The final version of Article 23 of the Basic Law became a palpable though latent threat to rights and freedoms in Hong Kong. It added a new urgency to build in legal and institutional safeguards against interference. The rule of law without the underpinning of a democratic government is not enough, nor is it even likely to withstand erosion. It has been suggested that under British rule, Hong Kong had enjoyed the rule of law without democracy. But the Hong Kong British colonial administration was ultimately responsible to Parliament, and international businesses expected the rule of law in Hong Kong to be upheld by the British. This underpinning was replaced by the Joint Declaration and then the Basic Law. In the past decade, neither has proved to be reliable. So long as democratization is denied Hong Kong, the threat to the rule of law will remain.

The Transfer of Power: An Unfinished Business “Hong Kong people running Hong Kong” means Hong Kong people of all walks of life and political convictions, not just people with certain background or political affiliation that enjoy Beijing’s favor. This can only be achieved by a democratic system. The democrats in Hong Kong were anti-colonial. They saw reunification as removing the colonial yoke from the shoulders of

Democratization of the Hong Kong SAR: A Pro-democracy View

Hong Kong people who would then be allowed to enjoy democracy under Chinese sovereignty. This is encapsulated in their slightly inaccurate slogan of “Restore governance to the people.” Before the Sino-British talks even began, disagreement sprung up about what was picturesquely called the “three-legged stool,” and China stood firm that the talks were bilateral, between Britain and China, without Hong Kong people as the “third leg.” Britain was to return Hong Kong to China, and China would then grant autonomy to Hong Kong under the Basic Law. The concern of the people in Hong Kong, not just the democrats, was that China would not pass the power to the Hong Kong people but to her Hong Kong agents. Hence a great deal of anxiety was expressed about the progress of democratization before 1997, and its continuation after 1997. So long as reasonable progress was being made, there would have been little concern. Unfortunately, this was not to be the case. Annex I and Annex II of the Basic Law only provides for progress up to 2007, at a point which is far short of democracy or universal suffrage, with the future beyond that unchartered. So long as democracy is delayed, the transition remains an unfinished business. That was why 2007 was such a significant date. This date was to have marked the start of a further phase towards the goal. Unfortunately, it was frustrated by the NPCSC’s interpretation of Annex I and Annex II on April 6, 2004, followed by its Decision of April 26, 2004. As 2007 came and is now nearly gone, and no new date, not even 2012, is put in its place, people are beginning to feel that democracy is not just delayed but denied. With this, the whole program of governance in Hong Kong takes on a questionable shape. It is almost accepted without question that Hong Kong had “a smooth transition” of sovereignty. Measured against revolts and suppression, the description is of course correct. Assessed on its own, there are grounds to argue that it was a stormy transition. The parties to the Agreement were hardly on speaking terms as the handover approached. The planned “through train” whereby LegCo members elected in 1995 were to continue their term until 1999 was derailed. A “Provisional Legislative Council” the legality and constitutionality of which was challenged in court and from which

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all democrats were banished was set up to pass laws for the new HKSAR in the interim. The other two tiers of the original elected three-tier representative government, namely, the two Municipal Councils and 18 District Boards, were likewise replaced with appointed provisional councils and boards, leading eventually to the total abolition of the former and the insertion of a decisive proportion of appointed seats in the latter. Although democratic LegCo elections were held again in 1998 and thereafter, the lost ground was never recovered. The longer democratization is delayed, the more remote would be the goal of Hong Kong people running Hong Kong.

Deteriorating Governance The need for democratization is not only a matter of right but also of the practical necessity of good governance. Governance impacts upon legitimacy, and that, in turn, affects social stability. Legal principles aside, from the Hong Kong inhabitants’ point of view, the British administration had won a measure of legitimacy by its generally effective governance of Hong Kong which was acquiesced to by the majority of the governed who had sought refuge there during a turbulent period of Chinese history. There was no serious insurrection or suppression within living memory. Indeed, the British government’s awareness of the political unacceptability of colonial rule, whatever its legal legitimacy, contributed to the care it took in its administration and policies to obtain the consent of the inhabitants if only by acquiescence. This accounts for the gradual enlargement of participation it introduced. There is no doubt that under British colonial rule, Hong Kong enjoyed increasing stability and prosperity. To the over 3 million Hong Kong people born in Hong Kong, there was no other place to call “home.” Poor governance under Tung Chee-hwa, the first HKSAR chief executive, created so much anger and frustration under the adverse economic conditions that Hong Kong people openly expressly nostalgia for the British administration under the last Governor Chris Patten. Following the SARS epidemic that claimed 299 lives and the reckless push to pass Article 23 legislation, anger and

Democratization of the Hong Kong SAR: A Pro-democracy View

frustration reached boiling point and exploded in the march of 500,000 people in the streets of Hong Kong on July 1, 2003, and eventually to Tung stepping down in March 2005. Tung blamed his unpopularity on his poor publicity skills. This just exposes his lack of understanding of the business of government. The problem was more fundamental and systemic. The chief building blocks of successful governance in Hong Kong under the British were a highly regarded and professional civil service, a government which was politically astute, which was reticent from open interference, kept sufficiently in touch with the expectations of the community and was in control. The Tung administration was marked by its open mistrust of civil servants whom he suspected to be loyal to the old regime and resorted to trusted appointees and personal associates who had little experience in the business of government, let alone state craft. He mistrusted and kept out all democrats who represented some of the most experienced members in LegCo and advisory or statutory bodies. They were replaced with people with little standing in the eye of the public. Out of inaptitude or mistrust, his administration avoided genuine public consultations on policies with serious impact on the people. The policy to build 85,000 housing units a year for which he was bitterly blamed was decided without the advice of civil servants or public consultation. He disliked arguments in LegCo and having his authority questioned, and looked wistfully at the “consensus” the pre-1997 Hong Kong government was able to command. However, that system was no longer possible. Under the political system of the Basic Law, the system is one of checks and balance as well as cooperation between the legislature and executive. His being in denial meant he made no genuine effort to advance constitution development in the HKSAR, and instead, did his best to avoid and delay a resolution of the numerous important issues. Under his administration, the relationship between executive and legislature all but broke down completely. The HKSAR government was unable to make or implement needed policies in a timely and effective fashion. The “accountability system” of principal officials which Tung introduced hastily in 2002 without thinking the matter through fundamentally changed Hong Kong’s system. These “principal

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officials” were not civil servants but could be drawn from any sector of society and were politically appointed by Beijing on the recommendation of the chief executive. They seized power from the top level of the civil service and placed them directly in the control of the chief executive. Unexceptionable though this may be under a system in which the HKSAR government is democratically elected, absent democratic elections of the government, such a system is neither legitimate nor conducive to the better governance of Hong Kong. Indeed, the development of the political appointment system in the absence of development of the democratic system is a serious detriment to democratization. But this was only the start of the real agenda. The recent decision of the HKSAR government seeks to expand what is now called the “system of political appointments” to create posts of undersecretaries and political assistants, all of which are high paid jobs in the gift of the chief executive. As admitted by the Secretary for Constitutional and Mainland Affairs, preferences will be given to those who share the political views of the Tsang administration. The system of democratic elections will be rapidly seen to be much less unrewarding than the system of political appointment. This agenda will have a direct impact on the development of political parties. Elections are the central vehicle for political parties to gain power in a democracy. In an authoritarian state, only political parties which support the government can survive and gain power. The advancement of the system of political appointments advances while universal suffrage is held back sets the wrong direction for Hong Kong’s future. It is preparing Hong Kong for authoritarianism, not democracy. The continued existence and effect of functional constituencies has ensured that vested interests are protected. The electoral system for LegCo is inherently unequal and freight with unfairness. Half of the 60 LegCo seats are directly elected by an electorate of over 3 million. The other half, the functional constituency seats are elected by a privileged electorate of some 200,000. Moreover, under the voting procedure stipulated in the Basic Law, motions demanding further democratization and greater transparency of the government and public policies addressing the widening gap between the rich and the poor in a rapidly changing economic environment and

Democratization of the Hong Kong SAR: A Pro-democracy View

concerns for the disadvantaged moved by democrats are constantly defeated. The result is that the public sentiment and public grievance cannot find relief or result in reform. Functional constituency seats defined on largely arbitrary lines allowed a great measure of government manipulation. The few exceptions are mostly to be found in the professional constituents such as lawyers and teachers. Thus a great many people without need of popular support are elected to LegCo whose main role is to support the HKSAR government while protecting their vested interest, or even in exchange for advantages the administration gives to their sector. This power structure does not only mean the frustration of the wishes of the public, but sometimes work to block the administration’s plans where they do not suit these sectors, or where the members or political party concerned wish to flex their muscle. Basically, it is not the HKSAR government but certain business groups and persons who claim to have Beijing’s ears who call the shots. It is questionable whether the HKSAR government is really in control. No government can function properly or efficiently in such a system. With needed reforms whether social, political or economic reforms stalled, Hong Kong has gradually fallen behind and become unable to respond effectively to the rapidly changing world. Issues like poverty, education, domestic violence, environmental protection, heritage and town planning have become more acute with far from adequate government response. Growing social injustice will threaten social stability, in spite of the HKSAR government’s slogan of “social harmony.” The system of electing the chief executive by an Election Committee of 800 which is elected by basically the same electorate as that of the functional constituencies has become even more vulnerable with the end of the Tung era. During that era, Tung was seen to be Beijing’s trusted man to run Hong Kong, all the way until he stepped down. His successor, Donald Tsang, previously and sarcastically referred to by patriots as a “relic” of the British colonial regime, was chosen from necessity rather than by preference. He had to win the support of the local pro-Beijing and business forces. In such a situation, the propensity for financial or political

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advantages being used as rewards in order to secure support in the election is a matter for concern. Indeed, the perception of this possibility and worse, its acceptance by the community as inevitable, will erode public confidence in maintaining a corruption-free government. The authority of the HKSAR government will suffer if its credibility is impaired. This is the fundamental problem of governance confronting the HKSAR. The downward spiral can only be broken by an open and accountable government with a popularly elected chief executive and a legislature rid of functional constituencies of any form or description. Democratization does not solve all problems, but without democratization, none of the problems can be solved.

Democracy for Hong Kong: The Issues Surprising as it may be for a modern city, whether democracy is a desirable goal for Hong Kong has been a sustained question for public debate, in spite of what is clearly stated in the Basic Law. At the most conservative end of the political spectrum, the objections raised include: 1. the introduction of democracy will widen disagreements within the community and create social instability; 2. democracy will lead to welfarism and undermine Hong Kong’s capitalist system; 3. democracy will encourage people to challenge the “executive-led” government and destabilize Hong Kong; 4. by politicizing the community, democracy will jeopardize Hong Kong’s economic success which rest on the basis of laisse-faire government; 5. the persistent demand for democracy will upset Hong Kong’s relations with Beijing on which Hong Kong’s economic success depends; 6. democracy will undermines efficiency and ruin Hong Kong’s prosperity.

Democratization of the Hong Kong SAR: A Pro-democracy View

It can easily be seen that the above objections are at least in part factual claims which should be capable of support or refutation by empirical evidence. The fact that no serious attempt has been made or made successfully to test them against evidence suggests that these are entrenched beliefs somewhat in the nature of a myth. The more “moderate” position does not dispute that democracy should ultimately be implemented, but only that this should not happen in the foreseeable future, contrary to the democrats’ demand for implementation at the earliest possible date by 2007/2008. Their position is based on the conditions set down in Article 45 and 68 that the implementation of universal suffrage must be in accordance with the principle of “gradual and orderly progress” and the “actual situation” of Hong Kong, and takes a combination of the following statements: 1. Hong Kong is not ready for democracy until there is sufficient guarantee that only patriots who love China and love Hong Kong are elected to office; 2. Hong Kong is not ready for democracy because the community has not reached consensus on the model of democracy to be implemented or the date of implementation; 3. Hong Kong people are not ready for democracy because there are no “mature” political parties and not enough political talents; 4. the priority now should be Hong Kong’s economic growth, not political development; Hong Kong’s success depends on its being “economic city” of international status and not a “political city”; 5. democracy is further delayed by the rejection of the government’s political reform proposal by the 25 pan-democrat legislation in December 2005, thereby frustrating the “gradual and orderly progress” requirement, and the opportunity to build up trust with Beijing. Thus delay is clothed with pseudo-legal constitutional authority. It is further clothed with political authority by the addition of the so-called “principles” of “balanced participation” and “executive-led government,” neither of which is found in the Basic

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Law. The former is cited from the address of Ji Penfei to the NPC on March 28, 1990 as Chairman of the Drafting Committee for the Basic Law. It has been used again and again to justify retaining the functional constituency seats in order to ensure that the different sectorial interests are represented in the Legislative Council. The difficulty of that argument is that it goes too far. On that argument, functional constituencies would have to be permanently retained, and that is incompatible with the requirement of the Basic Law to ultimately achieve the goal of universal suffrage and Article 25 of the ICCPR which stipulates “equal and universal suffrage.” Indeed, the UN Human Rights Committee has repeatedly and unequivocally stated that the maintenance of functional constituency seats is in breach of Articles 2 and 25 of the ICCPR. There has been no lack of erudite and compelling legal, constitutional, political, social and humanitarian arguments refuting these arguments against the implementation of democracy. I shall not attempt to repeat them here. That, in spite of such compelling refutation the old grounds are trotted out year after year gives a strong basis for the conclusion that they are only tactics of delay and firings of weapons to cover the retreat of the HKSAR and Central Governments into inaction.

Democratzation: Looking Ahead The democratic movement has done a great deal in the last decade. It has been under heavy fire and has seen serious set-backs in advancing democracy, but it has held the line. It has upheld the standard and kept the principles clear. This is an important achievement, as evidenced by the number, the quality and diversity of background of the people who have joined in the movement. Democrats’ open and fearless resistance has made those in power pause and checked their move, and gone further to justify their action. Surely this has made a difference. Ten years on, it is time for review, reassessment and realignment. It is time for change: not of objective and principle, but of style, strategy, and organization. As the democratization of institutions

Democratization of the Hong Kong SAR: A Pro-democracy View

are set-back, attention must be focused on democratic practice and thinking. Democrats should work on deepening democracy by going outside the limelight of the hollowed-out LegCo into “grassroots” level democratic participation in district administration and civil society activities, and by multiplying the application of the democratic process to a wide-range of vital issues such as protection of the environment, heritage, urban planning and land use, education and culture, services to the family and the community. Democrats should use as much energy to engage the people in these matters as they had to engage the HKSAR government in the past. Indeed, even more. The recent electoral experiences – chief executive, district council and LegCo by-election, are supplying a great deal of food for thought. In the past, democrats have trusted in their righteous mission, then undoubted integrity and the loyal support of the public. Those who marched for democracy for China in 1989 have aged. Even those who marched for Hong Kong democracy in 2003 are aging. The young 15–19 years-old are less concerned about the threat to rights and freedoms. In future, more thought must be given to the organization and skills of running a professional election campaign to win over the uncertain. New political parties have emerged in response to new social demands and attitudes. They should examine the role they wish to play. If leadership was a problem for the HKSAR government, it was no less a problem for the democratic movement. Every now and then in history, a leader naturally emerges and takes responsibility. There are too many factors in Hong Kong’s circumstances against such a possibility. Hong Kong democrats must consciously create leaders for the task. The good news is that there is no lack of excellent material. Speaking for myself as a long-time participant and observer, I am more convinced than ever than democratization for Hong Kong is worth fighting for, and no generation ought to have to fight alone. Conviction is not weakened by the difficulty of the task, but strengthened by the knowledge of how necessary it is, not only for the future of Hong Kong, but as a part of China and mankind. Democrats should go and explain to the people at home and abroad what is as stake, in their lifetime.

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Postscript Since this essay was first presented, the district council elections and LegCo by-election had taken place on November 18 and December 2, 2007 respectively. Overall, the democrats suffered a humiliating defeat in the district council elections, ending up with 41 seats fewer as compared with 2003. The Democratic Party took the heaviest loss of 36 seats. The two new-comers to the election, Civic Party and the League of social Democrats, won 8 and 6 seats respectively. On the other side, the pro-Beijing DAB came out as the big winner, netting 54 more seats as compared with 2003. They became at once the best-known party in Hong Kong. The pro-business and pro-establishment Liberal Party managed to keep the same number of seats at 14. However, in one of the contests focused upon by the media, the Peak constituency, the party’s incumbent Mark Lin lost to political freshman and Civic Party rising star Tanya Chan. It was not the results which were most crushing, but the superiority of the DAB which emerged in the territory-wide contest not only in terms of the vast resources which were poured into the development of their district work, but also in terms of strategy which was carefully planned and effectively carried out long in advance of the election. For example, in one district, Kwun Lung, which had special significance because the seat was wrested by the democrats from the incumbent, Ip Kwok-him, who was a DAB vice-chair and played a prominent role in pushing the national security bill. Ip had maintained his presence and activities in the district with a ward office despite his defeat. His democrat successor did not stand for re-election this time, and Ip won back his seat with 85% of the votes. It obviously required substantial resources to operate a ward office for four years. But it was not unlimited resources alone. The DAB had succeeded to field a great many new candidates who were younger, better educated, and with a more moderate, middle-class image. In some astonishing cases, these candidates defeated conscientious democrat incumbents who were also well-known faces in the democratic movement. A veteran member of Power for Democracy, the organization responsible for organizing the July 1 march in 2003, was defeated by a young

Democratization of the Hong Kong SAR: A Pro-democracy View

pharmacist who stood as an “independent.” More than anything else, the sense that their electorate was deserting them for someone better shook their confidence. Frederick Fung Kim-kee, chairman of the Association of Democrats for People’s Livelihood, exclaimed “The electorate have changed!” after escaping defeat by a narrow margin by a relative unknown. His party lost 8 seats and with them the long-established control of his party in the Shamshuipo area. He resigned his chairmanship in great disappointment. Against the background of such a comprehensive defeat, the victory of the democratic candidate, former Chief Secretary Anson Chan, over the Beijing-approved candidate, former Secretary for Security Regina Ip, in the LegCo by-election two weeks later, came as a great relief. Although there were eight candidates in the by-election, it was obvious from the start that only these two counted. A defining difference between their election platforms was on democratization. Anson Chan championed the democrats’ platform of universal suffrage for 2012 for the election of the chief executive and for LegCo. She was against the screening of chief executive candidates and in favor of the abolishing of all functional constituencies. Regina Ip, on the other hand, while in principle in favor of universal suffrage, supported universal suffrage for 2017 and was willing to accept the screening of chief executive candidates. This puts her in line with the stance of the DAB. The contest proved to be a roller-coaster journey. While Chan started off as the hot favorite with her huge prestige and popularity against Ip’s unpopularity over the national security bill which incited vast numbers to march in protest, the Beijing-orchestrated election strategy behind Ip soon changed the balance. For a long spell Chan’s campaign strategy was unclear and she thereby failed to respond effectively to the sustained attack against her credibility as a champion for the democratic cause. Chan also suffered from discontent among certain groups in the democratic camp. At one point, a popularity poll showed that the two candidates were within a few percentage points of each other. That set off the alarm. During the weeks to follow, the results of the poll fluctuated. The gap widened as the District Council elections took the foreground. In the last week before polling, however, the contest became intense. The District Council voting record showed that in the districts

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comprising the Hong Kong Island constituency, some 30,000 more voters voted for the pro-Beijing groups. The pro-Beijing “iron-clad” votes were estimated to be close to 140,000, so that if Anson Chan was to win, a minimum turnout rate of 50% was required. In the end, the turnout rate reached 52% – unprecedented for a by-election. Chan won by a 12% lead with 175,874 votes over Ip’s 137,550 votes. Chan’s victory contained many pertinent lessons for the democrats and for Hong Kong democratization. To state the obvious, there was no direct relationship between how people voted in the district council election and a LegCo by-election, at least as far as Hong Kong Island was concerned. Chan lost to Ip only in 13 of the 96 polling stations, and the margin was less than 1,500 votes. Even in the symbolic district of Kwun Lung, she beat Ip by a wide margin. Beijing did not baulk at taking a hand in the election and did not mind showing its hand. It certainly considered the outcome important enough for intervention. However, the results were mixed. While Ip was careful to present herself as a moderate in support of democratization, in the final week of the campaign the forces behind her emerged in their true colors. It was clear to all that the by-election was battle between the democratic movement which had taken root and grown in Hong Kong, and the “leftist” groups operating in Hong Kong with Beijing’s enormous backing; between Hong Kong’s core values and the Hong Kong way of life, and deference to the wishes and authority of Beijing; between Hong Kong people’s respect for openness, for law and order under the rule of law, and their opposite. Shocked by the district council election experience, the democrats were undoubtedly better organized this time, but it was the electorate’s appreciation of what was at stake, and their voluntary action that saved the day. Ordinary people not only turned up to vote, but also made telephone calls to their friends and relatives to vote. One of the messages which struck home forcefully was that Hong Kong cannot lose its system of checks and balance, and if Mrs. Ip were to win it would be a walkover for Beijing. If one accepts that the popular will is expressed through the ballot box, then the result of the by-election left in no doubt that

Democratization of the Hong Kong SAR: A Pro-democracy View

Hong Kong’s most middle-class and educated electoral district wanted universal suffrage by 2012 rather than postponed even further. It also identified with the stance represented by Anson Chan that LegCo should speak out for Hong Kong’s right to universal suffrage rather than the “democracy as and when Beijing pleases” represented by Regina Ip. Yet, popular will was not allowed to have its way. On December 12, 2007, Chief Executive Donald Tsang published the report on the consultation on the Green Paper on Constitutional Development, and simultaneously presented his report to the NPCSC in Beijing.21 There were many anomalies in the summary of the results of the consultation and his recommendations. The Summary of Views in the Report states, on the one hand, that “Opinion polls have indicated that more than half of the respondents support implementation of universal suffrage for the chief executive and LegCo in 2012.” On the other hand, it states that “At the same time, about 60% of the respondents accept the implementation of universal suffrage for the chief executive in 2017, if this cannot be attained in 2012.”22 This reflects the manipulation of public opinion to pave the way for Tsang’s anomalous recommendations. In fact, more in depth analysis of the Report (which cannot be done in this Postscript) will reveal how disingenuous the whole of the consultation was designed to be. It provided the basis for Tsang to manipulate the fundamental concept of “universal suffrage.” Tsang concluded by recommending postponing the election of the chief executive by universal suffrage to 2017 and the election of all LegCo members by universal suffrage to an even later, unspecified date. While in accordance with the meaning of “universal suffrage” under Article 25 of the International Covenant on Civil and Political Rights means “equal and universal suffrage” which gives expression to the will of the electorate, he recommended mechanisms for the screening out of candidates by a nomination committee before the public is allowed to vote on the selected candidates. His report also left the way open for functional constituency seats to be retained in some way in the election system for LegCo under “universal suffrage.”

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The Report’s Conclusion and Recommendation states: The results of this public consultation have indicated that the people of Hong Kong adopt a pragmatic attitude towards the issue of universal suffrage. There is general expectation within the community that the electoral system of the HKSAR can be further democratized and that the ultimate aim of universal suffrage can be attained as early as possible in accordance with the Basic Law. Having considered the views of LegCo, District Councils, organizations and individuals from various sectors, as well as members of the public in totality and, after thorough deliberation, I have come to the view that the community generally hopes that the universal suffrage timetable can be determined early, so as to set the course for Hong Kong’s constitutional development. Implementing universal suffrage for the CE first in 2012 is the expectation of more than half of the public, as reflected in the opinion polls; this expectation should be taken seriously and given consideration. At the same time, implementing universal suffrage for the CE first by no later than 2017 will stand a better chance of being accepted by the majority in our community. Although there are still diverse views on the models for implementing universal suffrage for the CE within the community, consensus has begun to emerge on taking forward universal suffrage towards the direction of implementing universal suffrage for the CE first, to be followed by that for LegCo. As for the models for forming LegCo by universal suffrage and how the functional constituencies should be dealt with, views are still very diverse. However, setting the timetable for implementing universal suffrage for the CE and LegCo can help promote the ultimate resolution of the issues involved.23

Democratization of the Hong Kong SAR: A Pro-democracy View

In its December 22–29, 2007 session, during Hong Kong’s Christmas holidays and LegCo’s adjournment, the NPCSC deliberated on Tsang’s report and recommendations. On 29 December 2007, the Standing Committee issued its Decision. The Decision unequivocally ruled out electing the chief executive and electing all members of LegCo by universal suffrage in 2012. It required the existing half-and-half ratio of members directly elected by geographic constituency and members elected by functional constituency to remain unchanged. The voting procedure on bills and motions in LegCo is also to remain unchanged. In the Preamble of its decision, the NPCSC also stated: The Session is of the view . . . that the election of the fifth Chief Executive of the HKSAR in the year 2017 may be implemented by the method of universal suffrage; that after the Chief Executive is selected by universal suffrage, the election of the Legislative Council of the HKSAR may be implemented by the method of electing all the members by universal suffrage . . . In a statement made the same day, Donald Tsang welcomed the NPCSC decision: The timetable for attaining universal suffrage has been set. Hong Kong is entering a most important chapter in its constitutional history. We should all try to apply fresh thinking to secure implementation of universal suffrage for the Chief Executive first, in 2017, to be followed by that for the Legislative Council in 2020. We must treasure this hard-earned opportunity.24 For a while, the general public who did not read the text of the NPCSC decision took Tsang’s assurance at face value. But even so, there was deep anger and disappointment in the community. The public found it particularly difficulty to accept the blatant anamoly of acknowledging the majority wish for universal suffrage for 2012 and denying their wish at the same time. For one thing, a clear timetable, even if there were one, for universal suffrage to be put off

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for another ten years for electing the chief executive, and 13 years for electing all LegCo members, by universal suffrage, was an intolerable delay, and moreover one for which no explanation was given. But Tsang’s statement was questionable. The date of 2017 was only mentioned in the preamble, and only as a date at which the chief executive election by universal suffrage “may be implemented.” It did not amount to a future promise. The year 2020 did not appear in the document of the decision at all. These questions were raised in a meeting held with Chinese officials in Hong Kong following the announcement of the decision. The answer and the discussion at the meeting made clear that not only were the dates not a firm promise, but what constitutes “universal suffrage” may be very far from what its definition under Article 25 of the ICCPR. Qiao Xiaoyang, Deputy Secretary-General of the NPCSC, explained that whether the election of all the members of LegCo by universal suffrage in 2020 would depend on whether the election of the chief executive by universal suffrage will have taken place before that date, i.e. in 2017. Although Beijing had solemnly decided on that date as the date on which electing the chief executive by universal suffrage may be implemented, whether it will in fact be implemented would not be entirely for the Standing Committee, but also would depend on whether in a further exercise a proposal will be made by the chief executive to the NPCSC and approved by a two-third majority of LegCo according to the five-step procedure set out in Article 2 of the decision. If the election of the chief executive by universal suffrage should fail to take place in 2017 for any reason, the knock-on effect would be that the election of all the members of LegCo by universal suffrage would be postponed beyond 2020, since the NPCSC’s view was that the latter event must take place only after the former had taken place. It is relevant to clarify whether the nomination for the chief executive candidates can include a screening procedure. The penultimate paragraph of the decision states a “view” on the provisions of Article 45 of the Basic Law: The Session is of the view that in accordance with the provisions of Article 45 of the Hong Kong Basic Law,

Democratization of the Hong Kong SAR: A Pro-democracy View

in selecting the Chief Executive of the Hong Kong Special Administrative Region by the method of universal suffrage, a broadly representative nominating committee shall be formed. The nominating committee may be formed with reference to the current provisions regarding the Election Committee in Annex I to the Hong Kong Basic Law. The nominating committee shall in accordance with democratic procedures nominate a certain number of candidates for the office of the Chief Executive, who is to be elected through universal suffrage by all registered electors of the Hong Kong Special Administrative Region, and to be appointed by the Central People’s Government. (Emphasis added) While a “view” in a decision does not amount to an interpretation of the Basic Law, the words I emphasis lend further strength to the imposition of preliminary screening. On functional constituencies, Li Fei, Director of the Legal Affairs Commission of the NPCSC, appeared to deny the relevance of Article 25 of the ICCPR and suggested that retaining functional constituencies can be compatible with universal suffrage. This is contrary to common sense and the common belief of Hong Kong people. Most objectionable of all was the explanation given by Deputy Director of the Hong Kong and Macao Affairs Office, Zhang Xiaoming, when he supported maintaining functional constituencies on the ground that the 28 existing FCs constitute 90% of the GDP of Hong Kong. It is not only objectionable to base the right to vote on economic contribution or status. It is also illogical in this instance because while the contribution is made by the whole sector, only a fraction of the people belonging to the sector, notably the bosses, are given the vote. The public’s reaction to the decision was interesting. Various surveys attempted to show that a majority of the public accepted the timetable of 2017 and 2020 for the election of the chief executive and of all members of LegCo by universal suffrage, and only a minority did not accept. The flaw of such surveys is that they do not indicate whether the “acceptance” signified resignation or positive approval; even less, do they raise the question of what is the

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alternative if they did not accept. On January 13, 2008, over 20,000 people marched to protest the NPCSC decision. It was not a great number compared to the 500,000 in 2003, but no responsible government should ignore a show of such determination in such circumstances by so many. The dynamics of Hong Kong’s democratization goes on, full of surprises, heartaches and lessons. Yet, at this point, it may be worthwhile going back to the question of legitimacy. It escaped no one’s view that the HKSAR government had resorted to increasing craftiness to avoid giving the public a chance to voice its views or have its views taken into full account. The consultation exercises are less and less genuine and more and more seen to be a sham. The consultation period coincided with the summer recess of LegCo; the report of the chief executive and deliberation of the NPCSC coincided with the Christmas break; clear concepts are distorted to deny real universal suffrage and replace it with a travesty. The people of Hong Kong are a highly sophisticated people and can see through the tricks. A government which resorts to tricks will soon lose its authority and put its legitimacy on thin ice.

Notes 1. The result of the 1995 Legislative Council election can be found on the website of the Public Governance Program of Lingnan University, Hong Kong, (http://www.ln.edu.hk/pgp/e-index.html). 2. The results of the 1995 Urban Council and Regional Council elections can be found on the website of the Public Governance Program of Lingnan University, Hong Kong, (http://www.ln.edu.hk/pgp/e-index.html). 3. The result of the 1994 District Council election can be found on the website of the Public Governance Program of Lingnan University, Hong Kong, (http://www.ln.edu.hk/pgp/e-index.html). 4. South China Morning Post, July 1, 1997. 5. The result of the 1998 Legislative Council election can be found on the website of the Public Governance Program of Lingnan University, Hong Kong, (http://www.ln.edu.hk/pgp/e-index.html). 6. The results of the 2000 and 2004 Legislative Council elections respectively can be found on the website of the Public Governance

Democratization of the Hong Kong SAR: A Pro-democracy View Program of Lingnan University, Hong Kong, (http://www.ln.edu.hk/ pgp/e-index.html). 7. Hong Kong, SAR – the first ten years under China’s rule”, Hong Kong Transition Project, June 2007, p. 78–84, (http://www.hkbu.edu.hk/~hktp/). 8. See Public Opinion Program at the University of Hong Kong, (http://hkupop.hku.hk/). 9. A total of 50 motion debates were moved by the democratic legislators in the 1998–2006 Council meetings, (http://www.legco.gov.hk/). 10. Ng Ka Ling and others v. the Director of Immigration (1999) 2, The Hong Kong Court of Final Appeal Reports (HKCFAR) 4. 11. Yash Ghai, The NPC Interpretation and Its Consequences,” in Johannes M. Chan, H. L. Fu and Yash Gha, eds., Hong Kong’s Constitutional Debate: Conflict Over Interpretation, (Hong Kong: Hong Kong University Press, 2000). 12. Official Record of Proceedings of the Meetings of the Legislative Council, April 28, 1999, (http://www.legco.gov.hk/yr98-99/english/counmtg/ hansard/990428fe.htm). 13. Official Record of Proceedings of the Meetings of the Legislative Council, May 19, 1999, (http://www.legco.gov.hk/yr98-99/english/counmtg/ hansard/990519fe.htm). 14. South China Morning Post, July 1, 1999. 15. South China Morning Post, December 12, 2006. 16. “Hong Kong SAR – the first ten years under China’s rule”, Hong Kong Transition Project, June 2007, p.57–58, (http://www.hkbu.edu.hk/~hktp/). 17. Voting on the abolition of the Municipal Councils can be found in the official record of proceedings of the 1 December 1999 Legislative Council meeting. http://www.legco.gov.hk/yr99-00/chinese/counmtg/ voting/v0212991.htm 18. See Official Record of Proceedings of the Meetings of the Legislative Council, December 21, 2005, (http://www.legco.gov.hk/yr05-06/english/ counmtg/hansard/cm1221ti-translate-e). 19. Ming Pao, July 2, 2007. 20. Green Paper on Constitution Development (HKSAR Government, July 2007), (http://www.cmab-gpcd.gov.hk/en/home/index.htm). 21. Report on the Public Consultation on Constitutional Development and on whether there is a need to amend the methods for selecting the Chief Executive of the Hong Kong Special Administrative Region and for forming the Legislative Council of the Hong Kong Administrative Region in 2012 to the Standing Committee of the National People’s Congress. 22. See paragraph 13, in particular (10) to (13).

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4 What You Are Not Supposed To Know About Hong Kong Ronnie C. CHAN

Introduction Let us look at 1997 and the ten years afterwards with a little historic context. Without knowing the history, we will not be able to adequately understand and judge the present nor will we be able to have a better estimation of what may happen. First of all, most people would agree that between 1955 and 1978, the track record of mainland China was terrible. Let us take it as a fact. The majority of those who came to Hong Kong around 1949 left the mainland because of the fear of communism. Another wave of refugees arrived in Hong Kong around 1979 soon after the Cultural Revolution ended. I consider the ten-year Cultural Revolution one of mankind’s two greatest tragedies of the 20th century. The other is the massacre of six million Jews in Europe by the Nazis. When Mrs. Margaret Thatcher went to Beijing in 1982 and Mr. Deng Xiaoping pronounced for the first time the intended return of the colony to her Motherland, most people in Hong Kong were scared to death. Then, June 4, 1989 came – what transpired that day at Tiananmen Square further terrified the already fearful. Many of those who were not that worried before quickly changed their mind. All those circumstances played heavily into the psyche of Hong Kong’s return to China. In the decade and a half leading up to 1997, there was a strong need to give Hong Kong people as well as the international 97

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community therein confidence in the city’s future. Beijing recognized the problem, so it gave in on many points during the Sino-British negotiations. For the British, there was the need to be seen as retreating honorably (as if there was something honorable about colonialism) while protecting their huge commercial interests in the territory. As a result, a lot of things were said and done by both sides that were not exactly the truth. They may be half-truths, but as we all know, half-truths can be more dangerous than outright lies. Before proceeding further, let me say at the outset that overall, Hong Kong’s return to her Motherland went well. The Sino-British Joint Declaration and the Hong Kong Basic Law basically turned out acceptably. The British and indeed the West applauded what was negotiated and signed. During the past ten years society was peaceful despite the many demonstrations, most of which were organized by the pan-democrats. Many who feared the Communists and left our city before 1997 have returned. In fact, beginning around 1994-1995, more people were already coming back than emigrating. Capital inflow was much greater than outflow. Both the real estate and stock markets reached new heights post-1997. In the past ten years, we successfully dealt with several unprecedented problems, the causes for which were all outside of our borders. The biggest was the Asian financial crisis which almost blanketed the region. Residential prices plummeted by 70% but the economy remained intact, a feat that few countries could boast. Not long after, bird flu hit which was followed soon after by the much more serious SARS. Can there be any fortune worse than the combination of financial and viral attacks so close to each other? Yet Hong Kong weathered them heroically and triumphantly, which is a testament to our government and our citizens.

Moral Dilemma and International Reality As we consider Hong Kong’s return, we should bear in mind a moral dilemma as well as an international reality. The moral dilemma can be illustrated by the following anecdote. An hour or so before midnight on June 30, 1997, and right after the British

What You Are Not Supposed To Know About Hong Kong

ceremony officiated by Prince Charles and the last governor Chris Patten, I like many others were heading to the convention centre where the changeover ceremony was to be held. Walking next to me was a British couple who were long-time friends of mine. I commented, “It was regretful that Prince Charles did not apologize for the colonization of Hong Kong,” to which she replied, “Ronnie, why are you harping on that? Look what we have given China – from a barren rock, we are returning a pearl of the Orient!” My answer was, “If you violate a young lady and then give her a million dollars, does that right the wrong? Are your moral standards that low?” While recognizing Hong Kong’s economic prosperity of the post-war era, one should not forget the psychological scars seared into the psyche of the Chinese – some in Hong Kong and many more on the mainland. As we consider 1997, this is a dimension which should not be missed. Yet few in the West recognize it. The international reality relates to a point almost never discussed – certainly not publicly and hardly even privately. Namely, do countries other than China want to see Hong Kong and “One Country, Two Systems” succeed? Do the British want to see Hong Kong thrive post-1997? If you say yes then you do not understand the British. They are among the most hypocritical people I know. Every colony they left behind underwent turmoil. Mr. Lee Kuan Yew of Singapore warned Mr. Tung Chee-hwa after the latter was elected Hong Kong’s first Chief Executive but before taking office: Beware of all the time bombs left behind by the British. As is almost always the case, Mr. Lee proved correct. Does Japan want Hong Kong to do well? Japan is afraid of China. They never properly dealt with their war responsibilities and are always fearful of a strong China. Hong Kong’s success will only economically strengthen her Motherland. How about Taiwan? I do not know about Mr. Ma Ying-jeou but certainly not Mr. Chen Shui-bian and his Democratic Progressive Party. If “One Country, Two Systems” works, the next target may well be Taiwan. What about the West? Most really do not care. But there are some countries which are particularly ideological, and the more ideological one is, the more one has something against, not Hong

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Kong, but Beijing. Since 1997, the city has become more than ever a political battlefield between these western countries and China. Even the Vatican is very much involved. Just witness the highly political profile that Cardinal Joseph Zen Ze-kiun of Hong Kong has taken in recent years. The Catholic Church has never before been so involved in Hong Kong’s political affairs. In addition, there are plenty of stories circulating in the city that one or more foreign governments supply funds and expertise to certain Hong Kong political parties.

Long-standing Half-Truths So what were some of the half-truths propagated before 1997? First and foremost: Hong Kong is a free market. To be sure, relative to much of the world Hong Kong is quite free, but neither is it really that free. For example, American lawyers and medical doctors cannot practice in Hong Kong. All the buses in the city were made by a British company almost unknown anywhere else in the world. Only after 1997 did our citizens enjoy Volvo’s, for example. For many years equipments of all sorts used in Hong Kong had to be from the UK. Hong Kong’s main airline, with its ultimate management control lodged in London, buys almost exclusively Rolls Royce engines from England. Is Rolls Royce more competitive than General Electric (GE)? Not necessarily. Recently I asked the chairman of an Asian airline how do GE and Rolls Royce engines compare. He thinks that GE is the better buy, so why in Hong Kong do we only use the British product? A second half-truth is that the Hong Kong government was very clean. Far from it! Until the mid-1970s, corruption was rife. Since that time, the Independent Commission Against Corruption (ICAC) did a good job of cleaning up, but it left the structural corruption at the top echelon untouched. As a result, collusion between big businesses and the government was endemic. The chairmen of Hongkong Bank and a few major British companies sat on the highest governmental body of Hong Kong, the Executive Council (ExCo). They always received policy and other important

What You Are Not Supposed To Know About Hong Kong

information first and easily acted on them, while the local Chinese businessmen were left to be second class citizens. In business, time is money – you get information first and you win. How clean or fair is that? Another half-truth: Hong Kong has press freedom. Did we have press freedom before 1997? To some extent yes, but not really. If you criticized the British government, there would be consequences. Years ago a Hong Kong newspaper editorial stated that because it wrote something not to the liking of the colonial government, for a considerable period of time the paper was not invited to government press conferences or was otherwise given information late. Is that press freedom? Yet another half-truth: academic freedom. For decades almost all professors had to come from Britain. In the 1980’s and in preparation for 1997, a lot of left-thinking, socialistic scholars from Western Europe were hired. Many of them have become staunch opponents of the HKSAR government. If an academic in the old days were to say or write anything not to the liking of the government, I can guarantee you that his or her chance of advancing in the university would be limited. After all, all universities were then controlled by the colonial master. Unlike the prevailing impressions of the West, Hong Kong citizens had limited political freedom. Not having democracy was but one issue. Shortly before 1997, society discovered that the British government regularly wire-tapped telephones. A partial list of victims was leaked to the press and it included a number of businessmen. Before 1997 Hong Kong was promoted by the West as a paradise of freedom, but what kind of freedom was that?

Newly Concocted Half-Truths While the above half-truths were long-standing, the following were concocted specifically for Hong Kong’s return to China. The part that was true boosted confidence before and soon after 1997. The other part which was not altogether true has however created considerable trouble in the past ten years.

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Beginning in the early 1990’s, Hong Kong civil servants were touted as the best in the world. The impression created was that they were invincible and could handle any situation. Were they good? Yes, they were in terms of efficiency and ethics. Under the British who took care of politics and policy formulation, local Hong Kong officials were left only with the task of execution. That they did well and continue to do well today. But times have changed. After 1997, government officials must now manage politics and guide policy formulation, two jobs which career civil servants were not trained to do. In fact they were deliberately kept out of these areas in the past. After 1997, the pan-democrats began hammering our senior officials. They are now said to be incompetent if not irresponsible. Having lived in the US for some sixteen years, I have never seen American officials so cruelly nailed as their Hong Kong counterparts. The accusers were frankly unfair, but their actions were politically instigated. And in politics, almost anything goes. In all the dimensions mentioned above – market freedom, a level playing field, press freedom, academic freedom, political freedom, and civil service accountability – tremendous improvements have been made in the past ten years. These are plain and simple facts that no fair-minded individual can deny. Yet the pan-democrats have been lying to their supporters in the West that Hong Kong has regressed. They are plainly dishonest. Truth is often inconvenient, and it takes courage to speak out. Moreover, as the Chinese say, effective medicine is always bitter to the palate. Let me assure you that I know how to sing the praises of Hong Kong. More than almost any other Hong Kong citizen, before 1997 I went around the world numerous times at my own expense and spoke about the likely success of “One Country, Two Systems.” I did not want to see anyone inside or outside of Hong Kong ruin our future. To help prevent that, the truth must be known. I was for six years since 1996 chairman of the Hong Kong-US Business Council. I am still chairman of the Executive Committee of the Better Hong Kong Foundation. So I know the many strengths of Hong Kong and repeatedly remind foreign friends about them. In 1995 journalist Louis Kraar, a friend of mine, wrote an article in Fortune called “The Death of Hong Kong.” I flew to meet him in Washington, D.C. and we spent five hours at the Hay-Adams Hotel

What You Are Not Supposed To Know About Hong Kong

in front of the White House. I tried to convince him that he was wrong. To make a long story short, he eventually asked me to write a piece. I wrote a defense of Hong Kong and it was published in the January 1997 issue of Fortune. In contrast, the so-called pan-democrats like Martin Lee since the 1990’s have gone around the world telling people that Hong Kong will sink after 1997. Remember the time right before 1997 when he and his cohorts went to the US and insinuated that they might be jailed after Hong Kong’s return to China? They were either ignorant or dishonest. If the pan-democrats really thought that they would be jailed by the HKSAR government, they were ignorant. They have been as vocal against the government post-1997 as ever. But if they knew well before 1997 that they would not be imprisoned, then they lied to mislead the West. Besides sympathy, perhaps they were after financial support as well. All these show that there is much misinformation. Those in the West who listened to Martin Lee and the like were misled then, and anyone who listens to them today will not fare any better.

Challenges Ahead Looking ahead, Hong Kong faces serious challenges. Let me first pose this question: What single event affected Hong Kong the most in the past ten years? Different people will no doubt have different answers. Some would say the Asian financial crisis, others SARS, and the pan-democrats may say government incompetence. My answer, however, is none of the above. I believe that the single most important event affecting Hong Kong in the past ten years was exogenous and not endogenous. It was the super-fast economic rise of China. Without it, Hong Kong would not be where it is today. And in comparison, all the problems mentioned by a previous speaker were nothing more than, as Hong Kong people would say, a tempest in a teacup. Mainland China has been growing at some 10% per annum, and we in Hong Kong just across the narrow Shenzhen River speak the same language, share the same culture, and have been working

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in the mainland longer and more extensively than anyone else. Besides the mainland Chinese, we of all people should benefit from the country’s exceptional growth. That, I believe, has had a deep and lasting impact on Hong Kong. It began to reverse among the local populace its fear of the Motherland. The rise of the mainland, however, is not beneficial to everyone in Hong Kong. While it is highly profitable for our economy as a whole, some sectors will be negatively affected. Before China’s opening in 1979, Hong Kong benefited. China was closed and we were open, so we became the mainland’s gateway to the rest of the world. After China opened up, it needed capital, human talent, technology, information, and many other things. We provided and were again blessed. However, there will come a time – and I believe that it has already arrived – when the mainland will increasingly become our competitor. If Hong Kong does not recognize this, we are foolish. It is inevitable and we should not complain. If we do, then we do not deserve to succeed further. If an individual is afraid of competition, he will not perform well; the same is true of a community. The fact is that if Hong Kong buckles up and exploits new opportunities presented by the mainland’s rise, we should win big – perhaps bigger than ever before. The potential is certainly there. Consider this case. The Yantian Container Port in Shenzhen just north of Hong Kong was built over twenty years ago. It meant that back then, Beijing already realized that one day Shenzhen would complement if not compete with Hong Kong. The port facility broke ground in 1985 and in 1990, tenders for superstructure construction were called. The following year, Peter Woo, chairman of the Wharf Company, went to Beijing to discuss the project with Premier Li Peng. Eventually in 1993, Mr. Li Ka-shing’s company Hutchison Whampoa won the deal to own and operate the port. Why were foresighted businessmen like Mr. Woo and Mr. Li so keen to get Yantian? They knew that it would one day compete with Hong Kong ports. This happened some twenty years ago, and if Hong Kong is still complaining today (as some do) that we are losing competitiveness in that industry, then we do not deserve to succeed further. Moreover, we need to ask, beyond our ports, what is next? Our

What You Are Not Supposed To Know About Hong Kong

airport? When flying to mainland destinations, my Hang Lung colleagues nowadays already prefer to depart from Shenzhen airport which is only an hour away. There are just so many more domestic flights. As the Pearl River Delta migrates to higher valued-added businesses, air cargo and not just container shipping will grow. It is safe to assume that in the coming years we will see many more international flights in and out of Shenzhen as well as the brand new Guangzhou airport. Where will that leave Hong Kong? Unless Hong Kong finds new business opportunities, our city will be rapidly marginalized. We are not a continental economy like the United States, and not even a big economy like Japan. It would take a long time to run those economies down. But for city economies like ours, it can happen very fast. A year and a half ago, our then Chief Secretary Rafael Hui publicly put forward the possibility of our being marginalized. It caused a heated debate in society which was frankly foolish. Some even quoted Beijing leaders saying that Hong Kong is not being marginalized. But what do you expect them to say? They must be politically correct. If you believe their rhetoric, then you surely do not deserve to economically survive. Is Hong Kong being marginalized? You bet it is, and it is happening very quickly. Recently I was invited to give a talk in Hong Kong on “Hong Kong as a Bridge of China to the World.” I looked at the title and pondered: Does China still need Hong Kong to be a bridge? Just visit Shanghai or Beijing’s airports. You will hear all kinds of languages spoken. Do foreigners still need Hong Kong as a bridge? Much less so than before as the mainland progresses. No doubt Hong Kong still has a number of critical roles to play but that list has been shrinking briskly in the past ten years. Do not only look at the China of the past; the country has been advancing at a breakneck pace. We must adequately understand the monumental changes there if we are to find our role. It is outright dangerous if we still have a “bridge” mentality; we may be building a bridge that leads nowhere. There are three kinds of people who talk about Hong Kong being a bridge. The first are Hong Kong people whose mindsets are frozen in history. The second are foreigners who do not quite understand Hong Kong and mainland China. The third are senior

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Chinese as well as Hong Kong officials. Their public pronouncements are at once both correct and politically correct. They are correct because Hong Kong still has a few significant roles to play such as in financial services. They are however at the same time merely politically correct because they – especially those in Beijing – know well that in many other areas, the mainland no longer needs Hong Kong. My worry is that most Hong Kong government leaders have not adequately comprehended this fact. So what conclusion can be drawn from the above regarding Hong Kong’s economic future? Hong Kong’s economy cannot fare too badly because we are right next to the humungous and fast growing mainland Chinese market. However, for external as well as internal reasons, neither will we do too well. I have presented some of the former, chief among which is that mainland China has increasingly become a competitor to Hong Kong. At the same time, while the growth of the mainland gives rise to almost endless opportunities for Hong Kong, for reasons internal to our city, we are not capitalizing on them. History will show that Hong Kong is wasting perhaps the greatest economic opportunities of the century. It is indeed sad.

Internal Difficulties The most troubling internal difficulty of the past ten years was a systematic attack by the pan-democrats on the HKSAR government, from our Chief Executive to our civil servants to our police. They put all the blame on the lack of one-man-one-vote: our government lacks legitimacy because the Chief Executive is not popularly elected. What is the fact? The former British Governor was never elected while Hong Kong’s Chief Executive post-1997 is, although not to the extent as some like. Yet, those pan-democrats never complained about the lack of legitimacy before. As such, their demand today for democracy is at best hypocritical. Hong Kong’s first Chief Executive Mr. Tung Chee-hwa bore the brunt of the attack. During much of his eight-year tenure, perhaps

What You Are Not Supposed To Know About Hong Kong

90% of all local media used him as a punching bag. The two pro-Beijing newspapers Wen Wei Po and Ta Kung Pao were hardly read back then, and almost every one of the other twenty some newspapers were anti-government. When that is the case in an open society like Hong Kong, it is a miracle that the government is still standing. There is only one reason – Beijing is 100% behind the HKSAR government. In as much as the pan-democratic leaders disdain the Central Government, they could not find fault in its handling of Hong Kong. To be fair, Beijing has repeatedly stayed out of Hong Kong affairs. Even in areas which touched upon the Central Government’s jurisdiction such as national security, Beijing’s policy was to avoid getting involved. In my opinion, it was definitely wrong to shirk responsibilities. It simply invited the pan-democrats to go too far. The pan-democrats also discredited the rest of the Hong Kong government including our civil servants. It became a self-fulfilling prophecy. When officials came under the daily media onslaught and were dragged to the legislature for an unfair weekly grilling, they simply froze. Anybody would. Do nothing and you will do nothing wrong. Efficiency dropped which then gave opponents an excuse to attack further. So we are in a vicious circle. Are our civil servants worse than their predecessors pre-1997? Even if true, it was at most a secondary reason. Under British rule, Hong Kong people did not dare to attack officials because the colonial government would make sure that there were consequences to the offenders. Now in a much more open and transparent environment post-1997, the HKSAR government cannot do anything. Neither was Beijing willing to intervene even in areas for which they are responsible. The pan-democrats, however, went too far and eventually forced the hands of the Central Government. A new Chief Executive was installed and Beijing reversed its former erroneous policy of the first eight years after 1997 – to not manage is to manage well. Things are finally getting better during the past two years although the jury is still out. Consider the case of the very generous political reform package put forward in 2005 by the new Chief Executive Donald Tsang. When it was first announced, the pan-democrats were surprised and

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overjoyed, but soon backtracked and rejected it. I believe that there is one dominant reason. If the government takes the high ground, then Donald Tsang becomes the biggest democrat. Where would that leave the so-called “pan-democrats”? There would be no more room for them to play; they would be relegated to second and third fiddle. So, are the pan-democrats really for democracy or are they hypocrites? Their actions show that they are not for democracy; they are out to gain political power for themselves. There is a second internal reason why Hong Kong will miss many of the great opportunities presented by China’s explosive growth. Not only are the pan-democrats systematically attacking the government, they are also working over time to vilify business leaders. The business community is always a minority. With almost half of our population living in government subsidized housing and only a small portion of our citizens paying income tax, the best way to get – i.e. buy, if you will – votes is to rob the rich and give to the poor. Paint business leaders as unscrupulous and greedy and the majority will clap. To be sure, like anywhere else some of our businessmen are not worthy of our respect although many more are. So what will the business community do? No longer feeling welcome, they can always take their businesses to the mainland where opportunities are much more plentiful and businessmen are welcome. Will that be good for Hong Kong? Hardly! History shows that communities which encourage proper commercial activities will be economically successful. Without wealth creation, there can only be distribution of poverty, not wealth. Just compare mainland China and Hong Kong prior to 1979, or contrast mainland China before and after economic opening. For the past ten years, Hong Kong has been regressing in this regard. Before 1997, successful businessmen were heroes in society. They were role models to our young who then sought to become entrepreneurs. As a result, our economy was vibrant. Now certain quarters of society are working hard to vilify the successful. Hong Kong is gradually transforming itself from an entrepreneurial society to an entitlement society. Thanks to the pan-democrats, we no longer care to create wealth but concentrate instead almost exclusively on wealth distribution. The economy will inevitably suffer. Just witness the fact that after the Asian financial crisis, Hong

What You Are Not Supposed To Know About Hong Kong

Kong was among the last three economies to recover its pre-crisis per capita income level. Our community is indeed free to choose our course, but we should do so with our eyes open. As if this were not bad enough, the systematic attack on the government and smearing of business leaders converged to produce yet another socially explosive issue. It can be captured in the simple phrase, “guan shang gou jie” or collusion between government and business. Pan-democrats love to use it; it is a hot button that causes everyone to jump when pushed. Envy of the rich is an inherent part of human nature. There is always a market when they are attacked. Once emotion is incited, whether the accusation is true or false becomes irrelevant. But let us not generalize. Do not practice character assassination by painting broad accusations. Tell us which government official, which businessman, and which incident. This quickly shuts the mouths of the irresponsible and politically driven. Then ask further questions: compared to 1997, is there more or less such collusion? Compared to the rest of the world, is there more or less? I have conducted extensive business activities in North America and Europe, and Hong Kong today is one of the cleanest places. We are of course not perfect but still very good compared to much of the rest of the world. When one compares the situation before and after 1997, the colonial government in Hong Kong colluded regularly with British companies in the city. The HKSAR government did much more than being removed from the business community. So why are the pan-democrats accusing the government of collusion now? Because they want votes – at all costs. In the name of democracy, lies and dirty tactics have all become acceptable. The end justifies the means. Such is Hong Kong today, thanks to the pan-democrats. Post-1997, there is the one case cited by everyone: Cyberport. When the project was unveiled, it smelled of collusion and seven of the city’s biggest real estate players confronted the government. Together their representatives met with then Chief Secretary Mrs. Anson Chan. She used strong arm tactics to steamroll the businessmen – by vehemently denouncing them. One of them, namely me, however, decided to write an article in Newsweek on September 6, 1999 condemning the Hong Kong government. Can

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collusion still happen in Hong Kong today? Like everywhere else in the world, yes, but it will not be easy to pull off.

Can Hong Kong Thrive? Can Hong Kong thrive in spite of the pan-democrats? It will not be easy because the problem is not economic. It is political. The pan-democrats say that the solution is one-man-one-vote, or if you will, western liberal democracy. To them, democracy is a panacea. The real impediment to democracy, however, is the pan-democrats. When the Basic Law was first drafted, historical records tell us that Beijing thought that ten years after 1997, Hong Kong citizens would be ready for universal suffrage and to elect their own Chief Executive. If the past ten years had been more peaceful as originally envisioned, Hong Kong might well have one-man-one-vote by now. But the actions of the pan-democrats since 1997 have greatly alarmed the Central Government. Worse yet, behind them are foreign forces. The Chief Executive, however chosen, represents the Central Government in Hong Kong. He has repeatedly faced strong opposition from the pan-democrats. Any exercise of Beijing’s sovereign rights in Hong Kong affairs, no matter how reluctantly they were exercised, were zealously and unreasonably fought against by the very same people. As such, it is altogether correct to say that the pan-democrats are the greatest impediment to democracy. A parallel is Taiwan. Whereas the island for decades has enjoyed de facto independence from the mainland, the push towards independence by Mr. Chen Shui-bian is forcing the hands of Beijing. When Mr. Chen came to office almost eight years ago, he and his followers might have thought that independence was a possibility. Now all know that the possibility does not exist. There is a limit to how much any country, including mainland China, will tolerate if its territorial integrity is at stake. Moreover, the pan-democrats run the risk of damaging Hong Kong’s press freedom. Nowadays no one is allowed to publicly question democracy. Sing its praises and the West will bestow on you a human rights award. You will be welcomed in Western

What You Are Not Supposed To Know About Hong Kong

capitals. But if anyone dares to question this sacred cow, you will be unjustly branded as anti-democratic. Mention the negative effects of democracy and you will bring wrath upon yourself. Attacks using the foulest language printed in the most widely read newspaper will be your lot. Reason goes out of the window when one elevates good things such as democracy to the level of religion. I will summarize with three points: Hong Kong is not an independent country, a fact which should never be forgotten. Hong Kong is just a city, albeit a very special one in a huge country. The “One Country, Two Systems” construct logically tells us that the two systems can only exist within one country. Point two, I am not pessimistic about Hong Kong as long as mainland China is doing well. But the mainland’s economy may falter like any other, so Hong Kong should not be complacent. Hong Kong must refocus its attention on the economy and find ways to further benefit from business opportunities to the north. If not, although our economy will not die, neither will it be robust. Painful regret will become our fate if several years later we look back at today and realize that we as a city have missed the greatest opportunity. Lastly, truth is always inconvenient. Do we have the mental capability to think independently? Do we have the moral courage to face the truth and to speak as we ought? No society will go far without them.

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5 Two Systems Becoming One: The 2047 Timetable Suzanne PEPPER

Amid many uncertainties there was much hopeful talk in 1997 about the democratizing influence of Hong Kong on mainland Chinese governance. Everyone took comfort in the “One Country, Two Systems” formula and its guarantee that Hong Kong’s way-of-life with its many Western-style civil liberties would remain unchanged for 50 years. 1 By 2047, people reasoned, China’s Communist Party dictatorship would surely have succumbed to the lure of prevailing world trends and the nation would be traveling along a democratic path like that belatedly laid down for colonial Hong Kong during the last years of British rule. Meanwhile, the new Hong Kong Special Administrative Region (HKSAR) would have served as a bridge across the 1997 divide, allowing everyone to join in the work of building a new democratic China. Today, 11 years after Hong Kong’s return to Chinese sovereignty, the future is if anything more uncertain than in 1997. Far from collapsing like its counterparts in the Soviet Union and Eastern Europe, the Chinese Communist Party (CCP) has reinforced its monopoly over government, politics, and judicial life including all forms of public expression and association. Incremental reforms are proceeding but only within the confines of the party’s autocratic rule. For every step forward there seems to be a step back, as the party adapts to innovations like village elections and new technologies like the Internet, and then finds ways of making them subservient to its will. Similarly, democratic institutions that were anticipated for 113

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Hong Kong have taken on the aspect of a mirage – perpetually drawing Hong Kong closer to a goal that retreats with every forward step. Those institutions were embodied in Hong Kong’s Basic Law constitution with its promise of universal suffrage whereby Hong Kong would elect its own local legislature and chief executive.2 But Hong Kong has now been told by the December 29, 2007 decision of the National People’s Congress Standing Committee (NPCSC) in Beijing that such elections, even with the Basic Law’s prescribed procedures and constraints, cannot begin to be introduced until 2017 for the chief executive and 2020 for the entire Legislative Council (LegCo). Those dates are also placed within the transitional context, “mid-way between” the beginning and the end of Hong Kong’s first 50 years under Chinese rule. 3 Apprehension can only grow amid this and many other indicators that point to only one conclusion. Whatever Beijing officials may have meant when the Basic Law was promulgated for Hong Kong in 1990, the aim now must be full political integration by 2047. Had China embarked upon its own path toward substantive democratic political reform, the resulting “One Country, One System” would pose few dangers and arouse little concern. But one-party autocratic rule still dominates all aspects of political life in mainland China, where none of the most important civil liberties guaranteed for Hong Kong by the “One Country, Two Systems” promise are allowed. Article 5 of the Basic Law stipulates that China’s “socialist system and policies shall not be practiced in Hong Kong” for 50 years during which the previous “capitalist system and way of life shall remain unchanged.” In Beijing usage, the term socialist system refers not just to economics but to Chinese Communist Party rule. Although the subject was never openly debated, Hong Kong quietly assumed it could rely on the promised democratically-elected legislature and a democratizing China to perpetuate local rights and freedoms once the 50-year guarantee expired. Uncertainty thus derives from the obvious question: after 50 years, if the two systems become one, which way of life will prevail in Hong Kong? Will all its pre-1997 rights and freedoms and judicial independence be preserved, or will mainland-style dictatorship reign over all? This question has never been publically debated, much less answered.

Two Systems Becoming One: The 2047 Timetable

Since the conclusion – about Beijing’s aim of full political integration by 2047 – has never been articulated by any government official either in Beijing or Hong Kong, the steps whereby it has been reached need explaining. They include first a series of hints and statements by Beijing representatives and Hong Kong’s pro-Beijing loyalists about patriotism being the prerequisite for universal suffrage. When pieced together these appear, like the writing on the wall, as a clear indication of Beijing’s current thinking about Hong Kong’s future within the Chinese state. A second set of indicators pointing toward systemic integration entails creative interpretations by Beijing of some Basic Law provisions that violate if not their letter then at least the spirit in which they were promoted before 1997. These adaptations have then been used as the source of authority for Beijing’s official decisions that do not proclaim convergence but seem calculated to achieve that end. Delaying universal suffrage is one such decision. A third dimension is more subtle than the others but more decisive because it entails the incremental trial-and-error reshaping of Hong Kong’s pre-1997 structures of elected representation into the building blocks of a mainland-style political system that local democratic opponents are already powerless to challenge.

The Writing on the Wall Most provocative of these indicators are the injunctions and advisories from Beijing sources about Hong Kong’s patriotic loyalties as a prerequisite for implementing the promise of local government elected by universal suffrage. The reference, however, is not to conventional notions about historical, cultural, ethnic, or even national loyalties. After the first shock of learning that Hong Kong would be returned to China, the public accepted this change from British colonial rule to Chinese sovereignty. Hong Kong people had never thought of themselves as anything but Chinese and Hong Kong had always been regarded as Chinese territory even under British rule. Reunification was accepted once the public had been assured that the 50-year promise was genuine. The many polls and surveys that seek to measure identities only

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skirt the issue by asking people if they regard themselves as Chinese first, or Hong Kong Chinese, or Hong Kongers. 4 The question foremost in the mind of Beijing decision-makers today concerns specifically political allegiance and they insist on conflating the nation state with its party-led government, defining patriotism as unqualified loyalty to both. A disturbing corollary that appears in many sources, both official and otherwise, is to invoke charges of disloyalty against those who do not accept this definition of patriotism. Hence Hong Kong democrats who routinely agitate against mainland-style governance are just as routinely labeled disloyal, subversive, traitorous, and bent on independence. Such taunts are also now commonplace among the hecklers who station themselves around the fringes of every democratic protest and rally. That the people running Hong Kong after 1997 should be patriotic is not a new idea. Then paramount leader Deng Xiaoping said as much to Hong Kong visitors and Basic Law drafters in the 1980s.5 But patriotism (aiguo) is also a local code word long used by Hong Kong’s pro-Beijing minority to differentiate itself from mainstream opinion, which has traditionally been hostile to Chinese communism. Concentrated around China-affiliated businesses and trade unions, this partisan minority has been part of local life since 1949. Being formally shunned by both the British and Chinese Hong Kong establishments, the pro-Beijing community kept to itself until the early 1980s, Unfortunately, Deng Xiaoping did not always specify what he meant or whether he was referring only to pro-Beijing loyalists, which left his comments open to later debate. After the suppression of China’s own short-lived democracy movement in 1989, Hong Kong democrats began calling for an end to one-party rule in China as the only real guarantee for Hong Kong’s post-1997 democratic development. The “subversive” allegations against them grew accordingly. Today their call is renewed each year at the local June 4th vigil commemorating those who died in 1989, when armed force was used to clear unarmed protestors from Tiananmen Square in Beijing. Meanwhile, some important changes have occurred in Hong Kong’s political life and terminology. Local pro-Beijing partisans joined Hong Kong’s fast developing political arena in the 1990s and adapted to the new local election

Two Systems Becoming One: The 2047 Timetable

routines with unexpected ease. They developed their skills under the banner of Hong Kong’s first pro-Beijing political party, the Democratic Alliance for Betterment of Hong Kong (DAB). This has allowed them to emerge from the shadows to which they had been consigned by the British and by mainstream anti-communist hostility. The patriotic community now basks in the warmth of Beijing’s approval, while the entire democratic mainstream is held up as “dissident” and an unpatriotic antithesis. A clear partisan divide has thus taken shape with democratic candidates nevertheless continuing to receive majority support from voters in LegCo elections, whereby half the 60-seat chamber is directly elected by one-person, one-vote universal suffrage. The other 30 seats are filled by small functional constituencies (FCs) that are heavily weighted in favor of business, industry, and pro-Beijing loyalists. The HKSAR chief executive is elected by an 800-member Election Committee that is designed, like the FCs, to guarantee “safe” majorities where democrats can compete but cannot win. Beijing’s December 2007 decision rejected the democrats’ demand for all legislators and the chief executive to be elected by universal suffrage at the earliest possible date, which would be 2012. Legislators serve four-year terms and the chief executive five years, but elections for both fall during that year. Beijing had earlier, in 2004, disallowed the Basic Law’s first permitted date of 2007 for such electoral reforms. Instead, Beijing has now decreed that the chief executive cannot be directly elected until 2017, and LegCo not until 2020. Nor is it promised even then since the official words used are “can” and “may,” not shall or must. Beijing’s decision does not really explain the delay except to invoke the Basic Law’s mandate for “gradual and orderly” progress, which necessitates an extended period of unchallenged executive-led stability. Authoritative commentators have nevertheless been dropping broad hints since 2004 when Hong Kong was subjected to its first real mainland-style political “re-education” campaign. This occurred in the wake of a spontaneous 500,000-strong mass protest on July 1, 2003, provoked by the HKSAR government’s unyielding push to force passage of a national security law against treason, secession, sedition, subversion, and theft of state secrets. This law, mandated by the Basic Law’s Article 23, was carelessly drafted and

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crudely promoted while Hong Kong was fighting the deadly SARS epidemic that originated across the border amid China’s lax health and rigid security standards. The bill was subsequently shelved when pro-business Liberal Party legislators withdrew their support. But the threat to Hong Kong’s “way of life” had been clarified as never before. That threat was underscored especially by the abusive polemics of pro-Beijing loyalists bent on performing their patriotic duty and they would have had the votes to prevail in LegCo but for the Liberal Party’s defection. This inspired the post-1997 revival of the by then dispirited local democracy movement and Beijing’s determination to contain it intensified from that time. Beijing’s effort toward that end has continued relentlessly ever since, based on an uncompromising “conspiracy to subvert” logic.6 Hong Kong’s first real community-wide political education occurred in early 2004 when Basic Law drafters, now dubbed its “guardians,” arrived from Beijing to lead an angry polemic on “patriotism,” Deng Xiaoping’s earlier commentaries, and the “traitorous” behavior of leading local democrats. 7 Afterward, Beijing sources frequently said Hong Kong people could not be trusted until they fulfilled the Article 23 obligation. The next most authoritative hint came in April 2006, again from the Basic Law’s guardians who ventured a more comprehensive set of guidelines. The guardians opined that Hitler, Mussolini, and then Taiwan president Chen Shui-bian all came to power by manipulating elections. Even in the United States they had produced presidents mostly of mediocre caliber. In order to avoid such misfortunes, Hong Kong should first prepare by: passing the dreaded national security legislation; passing a law to govern political parties; achieving community consensus on the need for such elections; safeguarding against the redistribution of economic wealth; and showing more interest in patriotic education! 8 These guidelines reflect the most comprehensive summary of arguments that Beijing and local conservatives have been using since the 1990s to rally their followers against the demon democracy. Beijing says it risks opening up Hong Kong’s government to Western forces bent on overthrowing communist rule in China; conservatives say democrats appeal to voters by promising welfare-state

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give-aways that will destroy Hong Kong’s capitalist prosperity. But of all the guardians’ criteria, patriotic education is the most difficult because it means community-wide acceptance of a political culture, defined by Beijing, which has separated the leftist minority from everyone else since 1949. In time-honored tradition, however, mainstream Hong Kong and its democratic leaders ignored these warnings. The two communities, patriotic and mainstream, coexisted between the early 1950s and the early 1980s like ships passing in the night. The two sides essentially ignored one other, and that old custom is only gradually being eroded by the cumulative course of events. One of these was the unplanned outburst from pro-Beijing politician Ma Lik who was a legislative councillor and head of the DAB until his untimely death in August 2007. He repeated the guardians’ message, which was far more authoritative. But unlike the guardians who were pontificating far away in Beijing, his unscripted May 2007 remarks were surreptitiously recorded and appeared as front-page news in Hong Kong papers the next day. Ma Lik declared that patriotism was the prerequisite for universal suffrage, meaning among other things, that people must stop thinking of the June 4, 1989 events in Tiananmen Square as a “massacre.” He reckoned that at the rate Hong Kong was moving, it would take until 2022 for the public to have received enough “national awareness education” to accept CCP rule and thereby win the right to directly elect local government.9 Finally, in June 2007, just prior to the HKSAR’s tenth anniversary celebrations, Chief Executive Donald Tsang did what would have been unthinkable for any Hong Kong government leader since the CCP came to power in 1949. Tsang appointed what some in the media still call a “hard-line” leftist to a cabinet position in the Hong Kong government. On July 1, 2007, ex-journalist Tsang Tak-sing became the new Secretary for Home Affairs responsible for territory-wide administration. He promptly announced that he aimed to make national patriotic education one of his top priorities. 10 Donald Tsang did the same. In his policy address inaugurating the 2007–08 legislative year, Tsang’s three paragraphs on universal suffrage reforms were overshadowed by the seven paragraphs he devoted to Basic Law training for civil servants, its

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promotion in schools, and national patriotic education for all in order to promote “a stronger sense of our national and cultural identity.” 11

Interpreting the Basic Law To suggest that the Basic Law is being creatively adapted is, of course, to demonstrate ignorance of the first lesson in Beijing’s political studies brief for Hong Kong. In 2004, the guardians repeatedly admonished democrats to study the Basic Law. Democrats said in response that they had read the law backwards and forwards and found there promises for universal suffrage elections with further progress toward that goal possible from 2007. The misunderstanding, like much else in Hong Kong’s political discourse today, derives from two divergent perspectives on the Basic Law’s contents. These differences derive in turn from the separate political universes that mainstream and patriotic Hong Kong inhabit. Hence the words may be the same in Western and CCP usage. But “democracy” and “universal suffrage” in Western and mainland Chinese practice reflect widely different ways of political life, and mainstream political life in Hong Kong is still based on Western standards. According to its national constitution, the People’s Republic of China (PRC) is a “socialist state under the people’s democratic dictatorship” and it exists “under the leadership of the Communist Party.” 12 Universal suffrage is also enshrined in China’s national constitution, which gives all citizens over the age of 18 the right to vote and stand for election.13 The concept is being applied today in grassroots-level elections that are held throughout the country. But there the similarity ends. Universal suffrage in China is confined to that level where it has been used as a means of rejuvenating the CCP’s mass base, demoralized by years of tumult. This included: the shift, after his death in 1976, from Mao Zedong’s radicalism to Deng Xiaoping’s moderation; the Tiananmen Square democracy movement and its suppression in 1989; and the collapse of European communism thereafter, which deprived all remaining

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communist parties of their claim to ideological infallibility. Today the 73-million-member CCP organization dominates candidate selection not only at the grassroots level but for all the indirectly-elected levels of the People’s Congress system above, just as the party organization dominates government in a parallel hierarchy that reaches into every county and province. Deng Xiaoping was clearer on this question than on the matter of patriots running Hong Kong. He declared categorically that the socialist system and CCP rule would not change in China, and that Western-style adversarial democracy would not be suitable for post-1997 Hong Kong. He then went on to distinguish between the mainland’s “socialist democracy” and Western “bourgeois democracy,” which he said might be fine for Western countries but not for China. We do not have multiparty elections, he said, nor a bicameral legislature, nor do we separate executive, legislative, and judicial powers. “We have a unicameral legislature, the National People’s Congress, which best conforms to China’s realities.” He enjoined people not to judge whether Hong Kong’s post-1997 system was democratic based on whether its government had Western-style features.14 All of Deng’s main commentaries on Hong Kong were re-issued in 2004, both in Chinese and English, pursuant to its Basic Law studies.15 What the guardians meant in promoting them was that Hong Kong should adjust the Western focus used to read the law before 1997. Its words and articles had long since been committed to memory; the time had come master their mainland definitions. But political study is only the first step. The next is to learn by doing, that is, to accept Beijing’s transpositions in practice and the Basic Law’s many gray areas are now the testing ground. Political leaders rarely say all they mean and the Basic Law is first and foremost a political document written to ease anxieties created by the transition from British to Chinese rule. As implementation progressed, Beijing began exercising its sovereign right to fill in blanks and exploit loopholes. Without trying to specify the main source of disagreement – whether due primarily to different political perspectives or to Beijing’s creativity – several “adaptations” seem to violate if not the letter of the Basic Law, then at least the spirit as promoted and understood before 1997. And the

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most important of these adaptations are serving to push Hong Kong inexorably toward one-system integration. For example, veteran commentator and legislator Albert Cheng King-hon revealed in January 2008 that despite his inclination to compromise on many issues, this was not yet one of them. In so doing, he also revealed that he was among those who still did not “understand” Beijing’s two key transpositions of the Basic Law. He did not actually admit he did not understand; rather he demonstrated his lapse by asserting that the law does not give Beijing the right to determine how elections for the HKSAR chief executive might be reformed in progressing toward universal suffrage. According to the Basic Law, wrote Cheng correctly, the NPCSC can only approve or disapprove Hong Kong’s proposed reforms, not determine them. He also asserted, correctly, that according to the Basic Law, any post-2007 reforms in Hong Kong’s LegCo elections need only be reported to Beijing “for the record,” meaning the decision is wholly for Hong Kong itself to make. 16 The latter point, about LegCo reforms, was reaffirmed by Beijing before 1997. The British had queried a related point in the early 1990s and the Chinese Foreign Ministry had given an unequivocal answer: electing all LegCo members by universal suffrage “is a question to be decided by the HKSAR itself and it needs no guarantee by the Chinese Government.”17 Lu Ping, then head of the State Council’s Hong Kong-Macao Affairs Office, made a similar statement in 1993: “How Hong Kong develops democracy in the future is a matter entirely within the sphere of Hong Kong’s autonomy, and the Central Government cannot (buhui) intervene.”18 Beijing’s new assertions on these points were the chief focus of the 2004 study campaign, which culminated in “clarifications” that effectively created rules different from those originally understood. According to the new rules, Beijing has arrogated to itself the sole power to determine Hong Kong’s political reforms. The first warning came in January 2004 at the onset of the political study campaign and was issued by the Hong Kong-Macao Affairs Office in Beijing. Hong Kong democrats had just made unexpected gains in the November 2003 District Councils elections and were using the anti-Article 23 momentum to demand universal suffrage in 2007, the earliest date permitted by the Basic Law. Following that victory,

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democrats had declared their goal of winning 50% of all LegCo seats in the coming September 2004 election. The idea was to claim a majority mandate for universal suffrage, although the Basic Law actually stipulates that such reforms need the approval of a two-thirds LegCo majority. Beijing’s January 2004 warning declared that Hong Kong must first consult Beijing before making any new electoral arrangements because Hong Kong’s future political structure concerns HKSAR-Central Government relations.19 This is a catch-all Basic Law qualification that confounded judges in 1999, when they ruled on the right-of-abode for HKSAR residents’ mainland-born children. The condition also pervaded the Article 23 legislation on national security and was what made it seem so dangerous a threat. Toward the end of the polemical campaign, in early April 2004, Beijing issued a stern directive ordering the Hong Kong government to consult Beijing prior to any such proposals. The Basic Law stipulates that political reforms could begin in 2007 “if there is a need.” Beijing was declaring its right to determine whether or not there was such a need. 20 The NPCSC decision against universal suffrage in 2007 resulted from the first such mandated consultation and the precedent was set: Beijing had acquired the right and assumed the power of prior decision-making on Hong Kong’s future political reforms.21 As for the earlier promise that LegCo reform was a matter for Hong Kong alone to decide, when this came up in the 2004 polemic, Basic Law guardian Shao Tianren insisted in his rebuttal that decisions on LegCo and chief executive elections were subject to the same constraint and related to the PRC government’s “exercise of sovereignty.” The 1990s promises, he said, “absolutely did not imply that the Central Government had relinquished . . . its responsebility and power regarding Hong Kong’s political system.”22 One pro-Beijing source placed the new rules in their proper political context: PRC national leaders had decided to stop the political reform train in its tracks by denying democrats the possibility of “seizing power via the struggle for universal suffrage.”23 The December 2007 decision delaying universal suffrage until 2017 for the chief executive and 2020 for LegCo, follows in a sequence from the earlier precedent.

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Donald Tsang had declared his determination to see the matter settled and launched the process soon after his new term began in July 2007. 24 The Green Paper on Constitutional Development inaugurating a period of public consultation reiterated the HKSAR’s newly clarified constitutional status. The PRC was a “unitary state” and “all powers exercised by the SAR are derived by way of authorization by the Central Authorities.” In other words, “there are no ‘residual powers’ on the part of the SAR,” meaning Hong Kong itself could not define or interpret any points not clearly stipulated in the Basic Law. The central authorities would therefore “determine” Hong Kong’s future constitutional development including the timetable for achieving universal suffrage and the model and design of the universal suffrage system. “The HKSAR cannot decide the political structure on its own.” Hence the appointment by the central authorities of Hong Kong’s chief executive “is substantive and not a formality” regardless of his/her local electoral mandate. 25 Albert Cheng was correct in noting the differences between the Basic Law as promulgated in 1990, and as implemented by Beijing in 2007. His “mistake” was to disregard the 2004 clarifications based on Beijing’s new definitions and the precedents they set. Another such mistake concerned Beijing’s power to appoint HKSAR senior officials. During the campaign to endorse incumbent Donald Tsang for another term as Hong Kong’s chief executive in early 2007, Hong Kong democrats joined the contest and their candidate received over 100 nominations from among a few professional subgroups within the 800-member Election Committee. The challenger was barrister Alan Leong Kah-kit, a legislator and member of the recently formed Civic Party. Since the Basic Law mandates the Election Committee’s conservative composition, Beijing was reportedly surprised by the number of Leong’s nominations although it was still a contest where democrats could compete but could not win. Besides the number of his nominations, Leong’s election platform contained another important challenge because it indicated that he, too, either did not understand or did not accept another of the Basic Law’s gray areas. Leong wanted the HKSAR chief executive to have a clear right to appoint senior officials, meaning

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the heads of government departments and the Executive Council or cabinet that combines department heads and members “without portfolio.” This was an issue that had never really been articulated in so many words. Hong Kong seems to have initially assumed that the slogan about “Hong Kong people ruling Hong Kong” was a corollary of the “One Country, Two Systems” promise. People read into it what they wanted. In 1997, the British Hong Kong government had made no secret of its consultation with Beijing on the “through-train” accommodation for all principal officials allowing them to continue serving in the same positions before and after July 1, 1997. Later it became clear that Beijing continued to be consulted but consultation and a nod of approval was to be expected. Alan Leong wanted the chief executive’s power of appointment to be made clear and explicit.26 A hue and cry immediately ensued. Surely a barrister could read the Basic Law, said a combined chorus of loyalists and conservatives. But the Basic Law actually contained three different articles on the matter. Article 15 did grant Beijing the power to appoint Hong Kong’s “principal officials.” But Article 48.5 gave Hong Kong’s chief executive the power “to nominate and to report to the Central People’s Government for appointment” Hong Kong’s top officials. Article 55 empowered the chief executive to appoint the members of his Executive Council from among those top officials, LegCo members, and public figures. Alan Leong received his clarification although not as he would have liked. Leong’s critics were united in reminding Hong Kong that the Central Government’s right to appoint Hong Kong’s top officials is substantive. Tsang Tak-sing’s appointment as Home Affairs Secretary was used to prove the point since news reports indicated that Beijing had insisted on boosting loyalists’ authority by moving them into ranking government positions and Tsang had few qualifications for the post. His only credentials were his status as a leftist and long-time editor of the pro-Beijing daily Ta Kung Pao. News reports also indicated that Donald Tsang had aimed for balance by appointing a democrat to an equally important position, but Beijing had vetoed one of his choices, Christine Loh, and evidently no others could be found. 27

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A few months later, Beijing conducted more refresher courses to commemorate Hong Kong’s tenth anniversary under Chinese rule. Leong’s appointment powers proposal became a negative example to illustrate Beijing’s contention that “there is still a long way to go before the Basic Law is fully implemented and understood by all.”28 In fact, Leong’s platform had contained several such challenges to Hong Kong’s executive-led system. He had advocated that legislators be allowed to propose legislation more freely, that the chief executive’s approval for such proposals be routine, and that top officials be accountable to LegCo instead of to the chief executive. These proposals reflected points of contention between democratic legislators and the executive that had been ongoing since 1997, as the former tried to clarify gray areas while exploiting their limited margins for maneuver. Democrats’ challenges to the Basic Law-mandated subordination of the legislature served to stiffen Beijing’s resolve not to allow electoral reforms that would risk admitting more democrats like Alan Leong into LegCo. Hong Kong’s top officials were summoned to Beijing for a 10th anniversary seminar keynoted by Wu Bangguo, NPC chairman, who asserted: “Whatever powers the HKSAR has are the powers granted to it by the Central Government, and whatever is not clear can be authorized by the center in accordance with Article 20 of the Basic Law, but so-called ‘residual powers’ do not exist.”29 By July 2007, Beijing’s power to determine all the key constitutional features of the Hong Kong’s government had thus been established both formally and in practice. But as Albert Cheng noted, the new reality did not conform to the “true spirit” of Hong Kong people ruling Hong Kong with a high degree of autonomy, as promised by the Basic Law (Articles 2 and 12) and as generally understood in 1997.

Reshaping the Foot to Fit the Shoe A third indicator of political convergence is the gradual reshaping of Hong Kong’s pre-1997 representative institutions into the building-blocks of a mainland-style system that local democratic opponents are powerless to challenge. This dimension registered a significant milestone in late 2007, with the unexpectedly decisive

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defeat suffered by pro-democracy candidates in the November District Councils election. Some background is necessary to appreciate the significance of this defeat, which has been in the making since the District Councils were created in the early 1980s. Hong Kong actually held five elections between December 2006 and January 2008 (in a cycle that concluded with the September 7, 2008 LegCo election). All contributed in different ways to the same evolutionary trend. These exercises were themselves a mark of the changes in political life that began in the 1980s, when London, recognizing Beijing’s determination to regain Hong Kong, belatedly began introducing universal suffrage in carefully rationed portions. Hong Kong alone of all Britain’s former colonies was governed as an unashamed political autocracy throughout its colonial life from 1841 until substantive political reforms began in the 1980s. By 1997, Hong Kong’s three-tier representative institutions comprised 18 District Boards, which were directly elected advisory bodies. Two directly elected municipal councils, the Urban Council and the Regional Council, were responsible for local chores in the urban and suburban areas. The former had begun life as the Sanitary Board and was partially elected by a restricted franchise until universal suffrage was introduced for some seats in the 1980s. LegCo was responsible for approving government laws and had been wholly appointed from the 1840s until 1985. By 1997 it comprised both directly and indirectly elected members. The colonial governor was appointed by London. With so shallow a foundation to build upon, the electoral processes and representative functions they serve are relatively easy to transform from their original tenuous Western-style designs into those bearing ever-greater resemblance to mainland counterparts. And here the Basic Law is especially helpful by essentially ignoring the lower tiers altogether. Article 97 states only that: “District organizations which are not organs of political power may be established to be consulted by the government . . . or to be responsible for providing services in such fields as culture, recreation and environmental sanitation.” Among the first post-1997 initiatives was the abolition of the two municipal councils; their housekeeping functions were transferred to the government bureaucracy. LegCo’s conservative

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design served its purpose meaning that democratic legislators lacked sufficient votes to block this initiative, which at a single stroke deprived their second-tier aspiring politicians access to positions of representative municipal authority. Recently, the government has begun transferring some power back to the basic level by entrusting the District Councils as the boards are now called with limited budgets for managing some local amenities. This move has occurred just in time to deprive democrats of the recognition that might accrue from grassroots leadership due to their successive electoral defeats and failures at that level. As for Hong Kong’s multiple 2006–08 elections, renewal of Donald Tsang’s mandate for a full five-year term in March 2007, by an Election Committee vote, was preceded in December 2006 by a convoluted functional constituency-type election, which chose representatives to create that 800-member committee. The Basic Law specifies this committee’s conservative design and its components resemble the functional constituencies that are responsible for filling the 30 indirectly elected seats in the 60-member LegCo.30 By concentrating on a few of the professional constituencies, democrats were able to win the 100-plus Election Committee seats responsible for nominating Alan Leong to stand in the March 2007 chief executive election. The contest for Hong Kong’s 18 District Councils was held on November 18, and the by-election to fill the late Ma Lik’s LegCo seat followed on December 2. The selection of Hong Kong’s deputies to the National People’s Congress occurred on January 25, 2008, with the Chief Executive Election Committee plus a few hundred extra appointees doing the honors.

The November 18 Election and the “District Council” Model of Political Reform Of all these contests, the District Councils election was most significant because it registered the loss of a popular electoral mandate for candidates committed to the extension of Western-style democratic institutions and in so doing paved the way for a further drift toward mainland-style alternatives. Soon after his outburst on

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patriotism in May 2007, Ma Lik spoke more formally about his immediate task, namely, the remaining contests in the 2007-08 election cycle. He was referring to the November 2007 District Councils poll and the LegCo elections in September 2008. “Under the new situation,” he said, “various political parties now understand that to win seats at the District Council elections would form a foundation for the LegCo elections.” 31 As usual, mainstream Hong Kong, including its democratic leaders, ignored the implications of Ma’s comments that contained an important clue about current loyalist strategy. The implications of this clue were already evident when Ma spoke in June and became more apparent once the Hong Kong government issued its Green Paper on Constitutional Development in July. They had actually first appeared in the government’s 2005 reform plan, which followed Beijing’s 2004 ultimatum against progressing with universal suffrage reforms or changing the balance of directly and indirectly elected LegCo members after 2007. The 2005 plan called for an increase in LegCo seats from 60 to 70, with five each in the directly and indirectly elected categories. But the latter would have expanded the precedent of using directly elected district councilors to indirectly elect LegCo members, giving them a total of six such seats compared to only one under the present system. The political catch is that councillors at the district level are overwhelmingly conservative by reason of their small constituencies, local neighborhood ties, and the appointment system. This latter, an old colonial safety device, enables the chief executive to appoint about 20% of the councilors (102 among the 529 district councilors in 2003). Nominated by the Home Affairs Bureau, appointees have been uniformly conservative since the practice was reinstated in 1997. In 2003, despite major gains from the public backlash over the Article 23 controversy, democrats could still win elected majorities in only three of the 18 District Councils and lost their parity position in six others once the appointees took their seats.32 In December 2005, democratic legislators voted down the plan that required a two-thirds majority to pass. But they did so without articulating its full implications. The six LegCo seats to be indirectly elected by district councilors would have introduced a pattern

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identical to China’s own People’s Congress system. This too is built upon grassroots foundations of universal suffrage, small constituencies, and indirectly elected delegates to congresses at the next level above, but with CCP domination of candidates throughout. In fact, the District Councils have always been dominated by local conservatives who made no secret of their dislike for the new-fangled notions about democracy. But the DAB benefits from the guidance of its CCP mentors and communist parties have a lot in common with democratic parties because both rely on popular mass-based participation. Hence DAB loyalists saw the potential and began putting down roots in the districts, working with conservatives in what democrats labeled an “unholy alliance” since Hong Kong conservatives had always been both anti-Communist and fearful of democracy. Sometimes they had even argued that democracy was dangerous because it made government susceptible to infiltration by communist parties due to the latter’s organizational strength and discipline, which democratic counterparts typically cannot match. Ironically, this same sequence is now being played out by Hong Kong conservatives in alliance with DAB loyalists. Democrats, for their part, were inclined to disregard the once powerless councils that are elected by 400 separate constituencies, each with only a few thousand voters. Most aspiring democratic politicians set their sights on LegCo where they could champion their cause to greater effect. Since the 2005 plan was defunct, Ma Lik had no reason to worry about district-level foundations, or so it seemed until the Hong Kong government’s next package of reform proposals was announced in July. Sure enough, one of only three LegCo reform options allowed by the Green Paper on Constitutional Development is based on the same District Councils design, that is, phase out the current 30 indirectly-elected legislators representing occupational categories and replace them with legislators elected by district councilors. The Green Paper also declares indirect election to be a legitimate method of achieving “universal suffrage.”33 Hence democrats are now paying a heavy price for their emphasis on LegCo over the District Councils that are being slowly

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transformed by official decree and DAB activism into a design that can dovetail neatly with the mainland People’s Congress system. The price came due on November 18 when they lost both a vote of public confidence in their commitment to full democracy by 2012, to which all democratic candidates had pledged, and their ability to gain merit via the new district-level responsibilities. In 2003, pro-democratic District Council candidates had done better than ever before by exploiting public anger over the national security bill. But in November 2007, all the earlier gains were wiped out by a skillful DAB-led comeback strategy. Democrats won elected majorities on only two councils with parity on one other. Precise figures are difficult to calculate given the large number of “independents” who are rarely devoid of partisan inclinations. The DAB won more seats (115) than all the democratic parties combined (93), in sharp contrast to the 2003 results – DAB 62, democratic parties 126. 34 All the appointed councilors were conservatives, chosen by Tsang Tak-sing’s Home Affairs Bureau, and not a single council chair remained in democratic hands. Many factors were seen to be at work including an improved economy and no immediate threats from Beijing. But beyond these considerations were others more specific, such as the DAB’s vigorous recruiting campaign that drove membership to over 10,000 now, up from 2,000 in 2005, far outstripping the few hundred members in the largest pro-democratic party. The next aim is to top 20,000 by the next election cycle. Tsang Yok-sing, DAB founding chair and brother of Tsang Tak-sing, can boast of the party’s extensive network in all 18 districts. With over 120 community officers and district councilors, he said, the DAB is running district activities every day.35 Equally important was the DAB’s strategy of coordinating its candidate lists with other patriotic groups that hide their affiliation while campaigning. Three of these groups: the Kowloon Societies Support Association, the New Territories Societies Support Association, and Civic Force accounted for some 80 candidates (in a field of 866 total; DAB, 177).36 In contrast, dispirited democrats themselves cited neglect of district work and their inability to compete with the well-funded DAB concentration on grassroots

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social activities. Yet some democrats with good service records were also defeated. A critical mass seemed to have formed against democratic candidates overall and voters seemed oblivious to the united appeal for universal suffrage in 2012. Probably the real answer lies in democrats’ long-standing failure to include district councils among their priorities. As a result, candidates were campaigning for democracy in 2012 at the legislative and executive levels, but the public was otherwise voting blind because no one had bothered to tell district council constituencies they were actually helping to create the potential building blocks of a mainland-style system. Exploiting this lapse, the DAB and its allies focused on local livelihood issues and their opinion polls invariably showed public preference for such concerns over political reform. The DAB obviously understands what democrats still do not about Hong Kong electoral foundations. Hence democrats were outmaneuvered at every turn and loyalists can now claim a grassroots mandate for delaying indefinitely the democratic ideal of directly elected government.

The December 2, 2007 LegCo By-Election Ma Lik’s seat was one of six in the Hong Kong Island constituency with some 618,000 registered voters who have always given democratic candidates the largest share of their votes. The electorate is not as reliably democratic as it used to be, however, and the last LegCo election in 2004 produced an unpleasant surprise with democrats winning only three of the six seats instead of four as expected. The surprise was due less to the number of votes cast than to a strategic miscalculation by democrats of their support. But the Democratic Party’s Martin Lee and Yeung Sum, and the Civic Party’s Audrey Eu had to share the six seats with two DAB candidates and a conservative. Democrats were eager to take back what they regarded as their due and thought they had a sure winner when they enlisted former civil servant Anson Chan Fang On-sang to stand as their candidate Choices were spelled out more clearly on December 2 than on

Two Systems Becoming One: The 2047 Timetable

November 18 because the two main by-election candidates were so well known. Both had built successful careers in the colonial civil service and both have made the transition to Hong Kong’s new participatory politics. Democratic standard-bearer Anson Chan won her fighting spurs during the early post-1997 era when she headed the civil service as chief secretary and pro-Beijing partisans accused her of disloyalty to the then chief executive Tung Chee-hwa. In contrast, Regina Ip was adopted as one of their favorites due especially to her pugnacious promotion of the government’s Article 23 legislation in 2003 when she was secretary for security. Both women left office earlier than planned amid these controversies. Chan’s platform dovetailed with the democrats’ demands for universal suffrage to elect both the entire LegCo and the chief executive in 2012. Despite her earlier caustic comments, Regina Ip has also now become a convert to democratic elections. But her candidacy was supported by the DAB and taking its cue from Beijing, the DAB was already advocating deferral of universal suffrage until 2017 for the chief executive and “later” for LegCo. Ip therefore presented herself as the candidate of compromise. So confident were they of Anson Chan’s victory that democrats initially billed the contest as a referendum to demonstrate public support for their demands. But confidence quickly ebbed as pro-Beijing loyalists mobilized to defend their seat and polls showed that public antagonism toward Reginia Ip was ebbing as well. Loyalists again successfully blurred the distinction between democracy and dictatorship by ignoring it. Ip never discussed the long-term implications of delaying full universal suffrage elections indefinitely. Chan ultimately won a convincing if hard-fought victory. The constituency’s 618,000 voters turned out in near-record numbers, but they also deprived democrats of the mandate they needed to proclaim a clear referendum victory in favor of universal suffrage. The total vote count was: Chan, 175,874 (55%); Ip, 137,550 (43%); others, 7,291. Chan’s win was not large enough to compensate democrats’ for their November losses while Ip with her 43% vote share confirmed the lack of overwhelming consensus for universal suffrage even in the most democratic of LegCo’s geographic constituencies.

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The Ties that Bind: Hong Kong’s NPC Delegation The electoral sequence concluded with the selection of HKSAR deputies to the 11th National People’s Congress (NPC) on January 25, 2008. Before 1997, Hong Kong’s representatives had been included in the Guangdong province delegation and their appointment was overseen by the Hong Kong branch of the New China News Agency (NCNA). The agency performed multiple functions before July 1, 1997, serving as China’s de facto embassy in the British colony; as headquarters for the still-unacknowledged local branch of the CCP; and as leader of the local pro-Beijing community. 37 NPC delegates were all drawn from within this community, which sometimes now distinguishes itself as the “traditional left.” In 2000, the all-purpose NCNA operation was reorganized and its local political work was transferred to a new Central Government Liaison Office in the HKSAR (Liaison Office). This operation is large and secretive and housed in its own 38-storey building. The Liaison Office, like its NCNA predecessor, is led by a mainland CCP secretary and continues to work with the DAB by helping to coordinate its campaigns in every local election. That plus a full range of leadership tasks for the patriotic community belie the pre-1997 pledge against mainland interference in Hong Kong affairs and the DAB is now openly praised by the chief executive as his “close comrade” in government. After 1997, because Hong Kong was not yet integrated within the People’s Congress system, Hong Kong could not select its delegates entirely according to mainland practice, which would have meant indirect election by LegCo. A separate arrangement was devised whereby the Chief Executive Election Committee would do double duty as the HKSAR’s NPC deputy-selection committee, thus providing one of the first direct links joining the two representative systems. Deputies serve five-year terms with the first such selection occurring in late 1997, the second in December 2002, and the third in January 2008. But instead of becoming more democratic in the Western sense, these selection exercises have become progressively more “mainlandized.”

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Democrats can wistfully recall deputy selection in 1997 when they were still hopeful of promoting Western ways within the mainland system. It was possible then to write that “the initial challenge for China’s political system from Hong Kong will come not directly from Hong Kong’s Westernized legislature but through the political culture that has grown up around it, and specifically the influence of that culture on Hong Kong’s NPC delegation. . . . The challenge has already been publicly articulated and initial points of impact registered both in the selection of Hong Kong’s NPC delegates and in the new rules being formulated to govern their work.”38 Following years of acrimony, a brief thaw occurred after July 1, 1997. Democrats were told they would be welcome to participate in the contest, which was probably unique in People’s Congress history. NCNA staff played their usual preliminary vetting and coordination role and in due course senior NPC officials arrived from Beijing to conduct the proceedings. Everyone seemed to bend over backward in their effort to accommodate “Hong Kong-style” democratic expectations. Three Democratic Party members put their names forward for nomination but they were sent into battle with a platform calling for an end to one-party rule in China. The three were shunned, unable to secure even the 10 Election Committee members’ signatures needed for nomination. Deputy selection then proceeded along conventional mainland lines but these were challenged at every step by democratic observers, an attentive media, and even some conservative local politicians on the Election Committee itself. The contrast was thus clearly drawn in the popular press and public mind between Hong Kong’s new Westernized political culture and the mainland’s “rubber stamp” legislative style. The former demanded transparency, accountability, more open campaign forums, and serious political dialogue from a Beijing-appointed presidium straining to enforce Beijing-style ground rules. These ultimately prevailed but not without deference to Hong Kong expectations especially in the form of multiple candidates and a run-off election to select, finally, the pre-determined list of deputies with the soundest pro-Beijing credentials. Most of the new 36-member delegation were from the

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traditional patriotic left, plus some “new left” conservatives who had opposed the populist drift of the colonial government in the 1990s and transferred their loyalties to the new order. At the same time, the HKSAR delegation continued to be appointed to the NPC’s companion advisory body, the Chinese People’s Political Consultative Conference (CPPCC). Loyalist and conservative nominees are appointed upon recommendation and approval by Beijing (the CCP’s United Front Work Department, the CCP’s Organization Department, the State Council’s Hong Kong-Macao Affairs Office) and Hong Kong (the SAR government and after 2000, the Liaison Office). In this way, the rules have already been set and implemented, by Basic Law design, to link the mainland and HKSAR electoral systems within the national hierarchy. Hong Kong’s chief executive sits on the mainland-led presidium that governs deputy selection and the same Election Committee that selects him also selects the NPC delegation. The committee is comprised of all Legislative Councilors, the current NPC delegations, and assorted CPPCC members. New deputies always include overlapping memberships with some HKSAR legislators wearing two hats, either as NPC or CPPCC members. These ties have established a “bridging” function, not just generally but in law and in practice, between Hong Kong’s NPC/CPPCC delegates and its Legislative Council. Just as overlapping and concurrent positions between party and state characterize China’s political system overall, so that same design is used at many points within Hong Kong’s two-systems model, often making it difficult to determine where one system stops and the other begins. In 1997, it was nevertheless possible to write that demonstrations of Hong Kong’s political culture even among conservative Election Committee members were such that “Beijing will probably never be able to hold a pure mainland-style election in Hong Kong.” 39 By 2007, deputy selection had been streamlined mainland-style and proceeded without a hitch. A few democrats did again try to participate and they did at least have sufficient nominating signatures to qualify. But the number of Election Committee members had been arbitrarily increased for the NPC deputy selection, with new safe appointees to offset the impact of

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the 100-plus members who had nominated Alan Leong. The number of candidates allowed to stand was also reduced and the run-off eliminated. What one conservative Hong Kong politician had criticized in 1997 as the “selection culture” prevailed throughout with little dissent from any quarter. All those who had been tipped to win beforehand did so, including a somewhat larger number than previously of prominent “new left” conservative business tycoons and former Hong Kong government officials. Most prominent among the former officials was Rita Fan Hsu Lai-tai. She had been a loyal executive councilor in pre-1997 colonial cabinets until democratic reforms escalated under Hong Kong’s last British governor, Christopher Patten. Declaring herself at odds with the populist ethos he fostered, she joined the new HKSAR preparatory administration and, like the business community, has been well rewarded for her shift in allegiance. She was selected to serve as LegCo president in 1997 and has served in that procedural position for 11 years. She was also selected in 1997 to join the HKSAR’s first NPC delegation and has now been appointed as its representative on the NPC Standing Committee. Including Rita Fan, six of the 36-member HKSAR delegation to the 11th NPC (2008–2012) are concurrently LegCo members. So too are 12 new Hong Kong appointees to the CPPCC National Committee, making a total of 18 two-hat members in the 60-seat chamber. 40 But most noteworthy was the appointment of Hong Kong Bar Association chairman Rimsky Yuen Kwok-keung to the Guangdong provincial CPPCC in spring 2008. Together with Hong Kong’s judiciary, the Bar Association has remained a staunch defender of the HKSAR’s independent legal system and the Westernized values it has thus far succeeded in perpetuating. Ten years ago this appointment might have been interpreted as a progressive step forward for those values into mainland political territory. Today, all trends are moving in the opposite direction. Yuen’s appointment is seen as another indicator of the rising “mainlandization” tide because the basic rule for individuals who hold such posts remains unbending. Their public actions and commentaries never contradict known official mainland policy on any issue. Hence Yuen’s recent reluctance to speak up on constitutional reforms, human rights, and the rule of law reflects the

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politically correct posture expected of NPC/CPPCC members, which contrasts sharply with the leadership exercised by the Bar Association on many important issues during the past decade. But pro-Beijing partisans say Yuen has now chosen the correct path, that is, from confrontation with to participation in mainland politics.41

The Roadmap Toward Full Political Integration Such are the considerations leading to the conclusion that Hong Kong is now being deliberately propelled toward full political integration on mainland terms. Economic interdependence has always been a preeminent fact of Hong Kong life. That fact and the relationships it fosters were exploited by Beijing in gaining the confidence of Hong Kong business leaders who shared primacy of place with local patriots on all the HKSAR founding committees. Beijing continues to foster those relationships because Chinese leaders, reflecting their Marxist inheritance, still believe in economic determinism. That is doubtless why they refused to believe, until the anti-Article 23 upsurge, that Hong Kong’s ongoing undercurrent of popular dissent was not due primarily to the post-1997 economic downturn. In 2003, however, Beijing leaders finally got the message and their determination to steer Hong Kong toward a more overt Beijing-controlled form of political integration dates from that time. The linkages between the NPC/CPPCC structures and HKSAR governing institutions were written into the Basic Law and its generalized prescriptions against Western-style government were intended from the start. But probably, without thinking the matter through in any great detail, Beijing leaders simply assumed that Hong Kong could continue to function much as before and thus slip gradually into the mainland mode of governance with a docile populace and autocratic Beijing-approved executive supported by the business and patriotic communities. The realization, finally in 2003, that such an assumption was wrong and that Westernized political values were deeply entrenched in Hong Kong society precipitated the more determined

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countermeasures outlined above. The results are: (1) what had never before been demanded of the Hong Kong public, namely, overt acceptance of CCP rule; (2) explicit mainland definitions of the Basic Law on important points that were open to Western interpretation; and (3) just in case all else fails, a bottom-up take-over strategy painstakingly crafted in alliance with conservatives to lay a solid DAB-led District Council foundation for HKSAR institutions of political representation. Most telling among the many clues pointing to the new political integration strategy was Beijing’s December 2007 decision delaying universal suffrage until the 2017–2020 elections, and the official hints about what to do in the meantime. Those of NPC senior official Qiao Xiaoyang were especially revealing. If, as he explained, the real reason for electing the chief executive first, in 2017, was to maintain the stability of executive-led government vis-à-vis an elected legislature, then the executive could easily have been chosen by universal suffrage in 2012 with LegCo following in 2016. This is because the chief executive election, as constrained by the Basic Law-mandated Election Committee, which was recommended by the December 2007 decision, would make such an exercise the easiest of options to finesse. Qiao even admitted as much saying, correctly, that Hong Kong accepts the Election Committee formula. Hence despite Alan Leong’s candidacy, the committee’s “safe” built-in conservative majority still gave Donald Tsang an overwhelming victory against the challenger who barely won a hundred votes from the 800-member Election Committee. Hence “universal suffrage” for the chief executive can only mean public endorsement for safe committee nominees. Yet even this option was ruled out until 2017. The intent now seems clear. By the 2020 LegCo election, most of Hong Kong’s original 1997 generation of democratic leaders will be in no condition to care one way or the other and younger generations will presumably have fallen under the spell of Tsang Tak-sing’s national patriotic education agenda. But if they still insist on defining democracy in Western rather than mainland terms, and if the communist party still insists on monopolizing all aspects of political life in China, then there is no guarantee that Hong Kong will ever see a directly-elected legislature.

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Meanwhile, Hong Kong’s Secretary for Constitutional Affairs Stephen Lam has begun talking about the “many long years” of argument over transitional LegCo reforms that will occur between now and 2020. But the options are no longer open-ended, says Lam, as he reiterates the only two remaining choices spelled out in the Green Paper on Constitutional Development. He also claims that universal suffrage is compatible with both the special-interest functional constituencies and indirect election by directly elected district councilors. Unfortunately for democrats, they must now accept one or the other option and they stand to lose either way. But the greatest danger for them lies in the “District Council model” where conservatives and loyalists now hold virtually unchallenged sway. Hence any indirect election by them of LegCo members can only increase the conservative majority there and with it the danger they pose to the long-term maintenance of Hong Kong’s rights and freedoms. Equally significant, the District Council model would dovetail neatly with the mainland’s People’s Congress system, which is also built on grassroots foundations of universal suffrage. But indirectly elected delegates fill all the congressional levels above and the CCP’s unchallenged nationwide 70-million-member organization vets candidates from top to bottom. The parallels are clear and present, especially after the loyalist-led success in the November 2007 District Councils elections where the DAB’s new 10,000-member mass base and its conservative allies won a popular mandate against democratic candidates who had united around the demand for Western-style universal suffrage. In one final touch, plans for Hong Kong’s new government complex to include a new LegCo building were unveiled in March 2007. Four modernistic designs emerged from the tendering process and a perfunctory public consultation focused on the external features of the project. Evidently the winning bid’s architects knew nothing about democratic parliamentary seating arrangements or they were told to create a miniature replica of the Great Hall of the People in Beijing. At the apex of its congressional system, China’s NPC gathers in this hall once annually. Deputies face a silent line-up of national leaders on the dais and just as silently endorse their

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policies. If this presidium-style design is not modified, and not a word has so far been openly raised against it, Hong Kong legislators will be similarly seated in front-facing rows. This should help formalize debate because law-makers will only be able to see the dais and the backs of one another’s heads. Since the public consultation ignored interior arrangements and since examples of the most democratic theatre-in-the-round European parliamentary designs were provided for the architects’ reference, it seems safe to infer that their work was inspired by a different political tradition. The new chamber will, in any case, look like the setting for a future People’s Congress of Hong Kong, good for presidium declarations and rubber-stamping laws but not for debating diverse views as represented in a directly elected legislature.

What Price Patriotism? The choices are as stark today as they were a decade ago, only then Hong Kong’s democracy movement assumed its Westernized values would prevail everywhere on both sides of the 1997 divide, as indeed they still might. But 10 years into what is now being called the 50-year transition period, China’s communist-led government is if anything stronger than in 1997, or at least more determined. Its leaders show little inclination for anything but minimal changes in the fundamentals that sustain their “people’s democratic dictatorship.” Instead, Hong Kong democrats are being told that it is they who must compromise and on Beijing’s terms. One of Hong Kong’s many difficulties in confronting the mainland political monolith is the lack of a debating tradition. The bedrock layers of instinctive public deference to authority are now enlivened by throngs of activists with multiple causes. But opportunities for genuine adversarial public debate on constitutional issues remain limited, as symbolized by the design for Hong Kong’s new LegCo building. Political discourse is therefore confined primarily to disparate groups, partisan circles, and official routinized venues where champions recycle familiar arguments for the consumption of likeminded followers. Elsewhere the newly

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pervasive undercurrent of verbal violence provides intimidating effect and a kind of self-fulfilling prophesy about the destabilizing effect of Western adversarial democracy. Hence the political choices at stake together with their attendant risks and dangers have yet to be spelled out in full. This lapse is not new. Hong Kong’s British rulers enforced this anti-political culture in education and public life until the last two decades of their reign. But now the costs in terms of public knowledge and experience are rising exponentially as those speaking for Beijing conflate patriotism with partisan political loyalty and demand deference to CCP rule from all of Hong Kong in exchange for universal suffrage. The need for open political debate is thus growing more urgent even as pressures to shut it down intensify. The basic choices nevertheless remain unchanged. Both were well represented in late 1997, when pro-Beijing writers rebutted the Democratic Party’s platform drafted for its nominees who tried to join the NPC deputy selection contest. Point one of the platform spelled out the necessary components of political reform in China, which the party regards as the only guarantee for democracy in Hong Kong: a timetable for national democratization; the promotion of constitutional democracy; separating party and government, meaning an end to CCP monopoly control of government; elevating the NPC to true ruling status; and the formation of all congresses, local and national, by direct election. Point two called for an independent judiciary, bureaucratic reform, and an independent Hong Kong-style anti-corruption body. Point three concerned human rights protection and point seven demanded investigation of the 1989 “June 4th Incident” with the aim of reversing the official condemnatory verdict, exonerating protesters, and compensating victims. Only as a concluding afterthought did point 10 add the standard politically correct promise to serve as bridge between Hong Kong and China.42 The rebuttal also remains valid today. First and foremost, China’s constitution proclaimed the dominant ruling status of the CCP, which reflected not the people’s will but the “law of historical development.” The Democratic Party’s manifesto presumed to challenge CCP leadership by calling for the separation of powers between party and state. Secondly, the national constitution

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proclaimed China’s political system to be a people’s democratic dictatorship and the multi-level people’s congresses to be its form of government. The Democratic Party’s manifesto challenged this political system by calling for direct elections throughout the congress hierarchy and for other reforms aimed at turning it into a Western-style parliamentary democracy.43 More ominously, these semi-official 1997 commentaries cast the Democratic Party’s challenge in terms of subversion. The Central Government did not require all Hongkongers to support the CCP, but under the two systems formula, the two systems must not mix. Hong Kong must not be turned into a base for subverting China’s political system. Hence the Basic Law’s Article 23 expressly authorized the HKSAR to enact laws forbidding all such activity and the Democratic Party‘s aim was to overthrow the Central Government and its CCP leadership.44 The main difference between then and now is that then, in 1997, Hongkongers were not being asked to support CCP rule. By 2007, that support had become the prerequisite for universal suffrage elections and democrats were even less inclined than before to spell out their vision in such full detail. Because these alternatives had never been presented to the public as a whole, there is no way of knowing how the public might have responded if asked to choose in 1997. Today, despite the repeated political study exercises that have been aimed at the public at large by Beijing and its surrogates, there is still no way of knowing how the public would respond if presented with so stark a choice. But bit-by-bit, the circle of opinion leaders willing to accept Beijing’s condition is growing, while the margins for democratic maneuver are growing ever more constricted. Again, two examples can be cited to illustrate Hong Kong’s changing reality. Among democracy advocates, the older generation remains committed and unmoved. Soon after Ma Lik’s May outburst about the Tiananmen Incident, LegCo democrats sponsored their annual non-binding motion asking that the June 4, 1989 events in Tiananmen Square not be forgotten and that constitutional democracy be established in China. Pro-government legislators absented themselves during most of the motion debate, which received only passing mention in the press. Hence few people

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heard Margaret Ng who gave one of the day’s most forceful speeches. Her colleagues referred frequently to Ma Lik’s comments and so did Ng: “He seemed to be telling us . . . we should accept whatever the State said . . . and only in this way could we be qualified to cast a vote. If that is the case . . . we would rather not have it.” 45 Ng concluded by noting that remarks about the “benefits” to be gained for Hong Kong from such deference “abounded in the community.” And indeed they do. In fact, they outweighed all others after Beijing’s December 2007 decision delaying universal suffrage until the 2017 and 2020 elections. Executive and legislative councilor Bernard Chan is a case in point. Among businessmen, Chan is a moderate conservative who has often sympathized with democratic causes. But he has just succeeded his father as a NPC deputy and for the time being at least, Bernard Chan is content to reiterate the official “establishment” consensus, establishment being the new term-of-choice for the pro-government coalition of conservatives and pro-Beijing partisans. In a recent, widely reported commentary, Chan said he still believes in democracy, although he did not differentiate between Western and mainland definitions, perhaps unwittingly but certainly without articulating the difference for better public understanding. Anticipating Beijing’s soon to be issued decision, he wanted to defuse the controversy by reducing it to its bare essentials. Some saw democracy as a matter of principle, he said, “a vitally important ideal and human right.” Others found democracy a dangerous idea. In contrast, he saw it as a simple practical matter of how best to choose government leaders. Chan agreed that the chief executive could lead more effectively with a mandate from the people, but failed to define his meaning. He seems to think that a popular mandate should mean conformity because he had noticed how the government struggled to implement its policies in the face of “different interests and factions as represented in LegCo.” Yet if such representation is already fragmented in LegCo despite its constricted design, an electoral mandate is not likely to provide much relief – unless of course he was referring to a mainland-style people’s mandate whereby potential deputies are vetted for conformity. Additionally, Chan said that Beijing felt effective governance “could be at risk if one part of

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the country has an administration opposed to the central leadership.” Hence the key to the impasse was “pragmatism” because “openly arguing with the Central Government is pointless.” Democrats should see that going along with whatever Beijing proposed was in Hong Kong’s best interest. It was, he concluded breezily, “not about human rights or patriotism” but only about finding mechanisms for choosing the chief executive and LegCo. 46 No matter how they are phrased, whether by well-meaning conservatives or traditional leftists, the arguments all lead to the same conclusion: Beijing will not be happy with anything short of “One Country, One System” political conformity. Yet that conclusion is never mentioned except in occasional letters-tothe-editor, which no one ever answers. Consequently, the risks and dangers for Hong Kong’s rights and freedoms once the 50-year guarantee expires are also never discussed. But democrats do not spell out the risks either, except among themselves. Whether they do not yet understand the full dimensions of their predicament or are only intimidated is not clear. Certainly they do fear heightening Beijing’s wrath and provoking more charges of disloyalty from the hecklers who now pursue them everywhere. Democrats therefore continue to seek support from voters on the basis of past loyalties and popular instincts. These are invoked mostly by slogans and formulas such as “universal suffrage in 2012,” while establishment candidates erode democratic margins of victory with every passing election. In this way, the struggle to democratize Hong Kong’s representative institutions in accordance with democrats’ original ideals has now been lost and that failure is the more significant for the manner in which it has been inflicted. The great irony is that Beijing’s local partisans and united front allies have mastered the skills of democratic electioneering with the aim of defeating local democrats at their own game and have succeeded in that endeavor, thereby opening the way for mainland-style alternatives without ever admitting as much in so many words. The world is filled with examples of skillful politicians who have proved adept at manipulating electoral processes for non-democratic ends and transposing democratic structures into forms of authoritarian rule. No one has yet discussed whether such

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a process is underway in Hong Kong, because the possibility has never been raised. If it ever is, and if Hong Kong knowingly accepts the implications, then a smooth transition to 2047 could be guaranteed and the few remaining holdouts would go the way of their dissident mainland counterparts. But Hong Kong’s democrats and the voters who continue to support them have only begun to think how they might keep their ideas and ideals alive as pressures intensify for systemic political integration. If democratic ideals are to succeed, in other words, their champions will have to do a better job of articulating the looming dangers in public, as well as in private, and democrats will also have to stop putting their faith in miracles. “Something might happen,” has become a favorite counsel in despair, as democrats remember how the pubic unexpectedly rallied against the Article 23 threat in 2003, thereby giving new life to their dispirited cause. But if “something” does happen, what then? Will they be ready? And if it does not happen, how can they keep their movement alive between now and 2020? Their assets are limited to a never-say-die spirit that is already flagging; majority support in LegCo elections that is slowly shrinking; and mainstream opinion, which still regards communist party rule as the discredited remnant of a bygone era but is now being openly challenged to accept such rule. In fact, the world has turned upside down for democrats. Before 1997, Hong Kong’s establishment was not democratic but it was anti-communist. Now the establishment accepts communist rule and pro-communists are the government’s closest allies, while democrats are deemed disloyal for resisting the new order. Nor has their resistance inspired much confidence because, despite their comparative disadvantage vis-à-vis the resources of their establishment adversaries, democrats could have done much better with the political and intellectual advantages they still enjoy. For example, democrats did succeed in exploiting public anger to make major gains in the 2003 District Councils and 2004 LegCo elections. Yet democrats then failed to consolidate those victories and again seemed to lose sight of the forest for its trees, just as they had done between 1997 and 2003. There are many examples but the most inexplicable are the lapses at the District Council level where democrats were already at

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a disadvantage due to the DAB’s well-funded social services and extensive alliance networks. Many more democrats won council seats in 2003 than ever before. One was veteran activist Cyd Ho Sau-lan, then also a legislator, who defeated long-serving DAB vice-chair Ip Kwok-him. But soon Cyd Ho essentially abandoned the district seat, evidently not appreciating its strategic value on the mixed Central and Western District Council. She devoted herself instead to social activism in a neighboring district and did not contest the district seat in 2007, when it reverted to the DAB. The council is now solidly in establishment hands. In Shatin, the “bad attitude” of one Democratic Party incumbent so irritated his constituents that they deliberately voted for his opponent and were appalled to learn afterward that in supporting a member of Civic Force, they had actually elected a close DAB ally. The incumbent thus had two negative marks against him: one for not attending to constituency work, and the other for not even maintaining enough contact with his erstwhile democratic supporters to update them on the affiliations of his opponent. Elsewhere, democrats cared so little about their last District Council chairmanship that they lost it to an establishment member rather than unite behind one of their own. Albert Cheng says democrats must continue to fight for their cause, which can only be safeguarded by a majority in LegCo. Yet he continues to blame his fellow democrats for voting against the 2005 political reform package with its inbuilt District Council model. He seems to overlook the fact that democrats have never been competitive at that level and indirect election by district councilors of LegCo members can only serve to entrench LegCo’s conservative majority. Hence the way forward for democrats should be the antithesis of much that they have done wrong in the past. Especially they need to think long-term and confront Beijing’s plans for 2047 integration by first articulating that reality to the public at large and then acting accordingly: either to accept openly, deliberately reject, or articulate a set of basic minimum demands to be guaranteed within the emerging one-system order. They must do this because their opponents are already clear about the end result and so are all the latter’s allies who are now contesting elections “silently,” without

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acknowledging their affiliations, much less the strategic objectives for which all are working in disciplined unison. They know who they are and what they aim to achieve whereas democrats behave as if they know neither who all their opponents are or what the end game is. Democrats need to understand that they must do much more than just coordinate candidate lists to keep disparate parties from competing with one another at election time. That competition is now the least of the dangers they face, given their failure to build a self-conscious coalition of all Hong Kong’s democratic forces. Intellectuals, activists, and politicians should be working together to draft arguments, disseminate them to the general public, confront Beijing rhetorically, and start behaving like the political leaders Hong Kong democrats must have if their rights and freedoms are to survive intact. The alternatives are not just either united front cooption and acquiescence, or anti-communist confrontation. Those are the either/or choices as Beijing is now defining them. But there is a third way for democrats: if only they can marshal their remaining forces to think and to work their way through the impasse.

Notes 1. The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, Beijing, April 1990, Preamble and Article 5. 2. Basic Law, Articles 45 and 68. 3. Quote from Qiao Xiaoyang, deputy secretary-general of the 10th National People’s Congress Standing Committee (NPCSC), Beijing, explaining the committee’s decision on 2017; speech text in Wen Wei Po [Wenhui bao], Hong Kong, Dec. 30, 2007. See also, in the same source, full text of the NPCSC’s “Decision on Methods for Developing the two Elections in Hong Kong and on the Question of Universal Suffrage,” Dec. 29, 2007. For an English translation, see, China Daily, Hong Kong, Dec. 31, 2007. 4. The most recent poll conducted between December 2006 and December 2007 showed a gradual rise in Chinese identity during the year (from 44% to 47%), and gradual decline in Hong Kong identity (from 54% to 51%). See Hong Kong University’s “HKU POP Site, Latest Findings of People’s Opinions Towards Ethnic Identity,” December 27, 2007 (hkupop.hku.hk/English/release/release 539.html).

Two Systems Becoming One: The 2047 Timetable 5. Deng Xiaoping, “One Country, Two Systems,” June 22–23, 1984, “Maintain Prosperity and Stability in Hong Kong,” Oct. 3, 1984, “Speech at a Meting with the Members of the Committee for Drafting the Basic Law of the Hong Kong Special Administrative Region,” April 16, 1987, all in Deng Xiaoping on the Question of Hong Kong (Hong Kong: New Horizon Press, 1993), pp. 10–11, 19, 56, respectively. For the original Chinese edition of these comments, see Deng Xiaoping, Lun Xianggang wenti (Hong Kong: Joint Publishing, 1993). 6. The quote is from an editorial denouncing the first post-July 1, 2003 rally for political reform as a democratic “conspiracy to subvert” the Hong Kong government (China Daily, Hong Kong, July 14, 2003). 7. This campaign received saturation coverage in all Hong Kong newspapers from January through April 2004. Beijing’s political polemics are usually confined to Hong Kong’s low-circulation pro-Beijing press, especially, Wenhui bao [Wen Wei Po], Dagong bao [Ta Kung Pao], and China Daily. 8. Wenhui bao [Wen Wei Po], Dagong bao [Ta Kung Pao], and South China Morning Post, all Hong Kong, all April 28, 2006. 9. Pingguo ribao [Apple Daily], Wen Wei Po, and South China Morning Post, all May 16, 2007. 10. South China Morning Post and Ming bao [Ming Pao Daily News], both July 14, 2007. 11. Chief Executive Donald Tsang. “A New Direction for Hong Kong,” address to the Legislative Council, Oct. 10, 2007 (Hong Kong: HKSAR government), paragraphs 99–101 and 115–121. 12. Constitution or the People’s Republic of China (Beijing: Renmin chubanshe, 2004), Preamble and Article 1. 13. Constitution, Article 34. 14. Deng Xiaoping, “Speech at a Meeting . . . ,” April 16, 1987, pp. 50, 55–56. 15. Deng Xiaoping on “One Country, Two Systems” (Hong Kong: Joint Publishing, 2004). 16. Albert Cheng, “No fait accompli,” South China Morning Post, Jan. 5, 2008. The relevant Basic Law citations are Articles 45 and 68, and Annexes I and II. 17. Ministry of Foreign Affairs, PRC, “Facts about a Few Important Aspects of Sino-British Talks on 1994/95 Electoral Arrangement in Hong Kong,” text, China Daily, March 1, 1994. 18. Renmin ribao, haiwai [People’s Daily, overseas edition], Beijing, March 18, 1993. 19. State Council, Hong Kong-Macau Affairs Office, Beijing, statement, Ta Kung Pao [Dagong bao ] and Ming Pao, both January 8, 2004.

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China’s Hong Kong Transformed: Retrospect and Prospects 20. National People’s Congress Standing Committee, Beijing, Interpretation of Clause 7, Annex I and Clause 3, Annex II to the Basic Law of the Hong Kong Special Administrative Region, April 6, 2004 (South China Morning Post and Ta Kung Pao [Dagong bao], both April 7, 2004). 21. National People’s Congress Standing Committee, Beijing, Decision on Questions Concerning Methods for Selecting Hong Kong’s Chief Executive in 2007 and Forming the Legislative Council in 2008, April 26, 2004 (http://news.xinhuanet.com/English/2004-04/26/content_1440569.htm; Ta Kung Pao, April 27, 2004). 22. Frank Ching’s column in South China Moring Post, Jan. 20 and Feb. 12, 2004; rebuttal by Shao in Ta Kung Pao, Ming Pao, and South China Morning Post, all Feb. 8, 2004. 23. “Zheng zheng 300 ri” [300 Days of Political struggle], Dong zhoukan [Eastweek], Hong Kong, no. 39 (May 26, 2004), pp. 26–28; also, Sing Tao Daily [Xingdao ribao], May 26–27, 2004. 24. Donald Tsang filled out the remainder of his predecessor Tung Chee-hwa’s second term (2005–2007); and was then selected to serve a full five-year term (2007–2012). 25. Green Paper on Constitutional Development (HKSAR Government, July 2007), paragraphs 2.05–2.09. 26. Alan Leong, “Policy Platforms: The Democratic Government We Want,” Jan. 15, 2007 (www.competitionforce.hk/democrat_eng.php). 27. South China Morning Post, June 24, 2007; Gladys Li’s column, Ming bao [Ming Pao Daily News], June 30, 2007. 28. China Daily, June 7, 2007; also, Ming bao [Ming Pao Daily News], June 8, 2007. 29. Wu Bangguo speech text, Wenhui bao [Wen Wei Po], June 7, 2007. 30. According to the Basic Law, Annex I, the Election Committee is composed of 800 people divided into four groups of 200 each from the following sectors: (1) industry, finance, commerce; (2) the professions; (3) labor, social services, religion; (4) political leaders including all Hong Kong’s NPC deputies, all legislators, representatives chosen by the Heung Yee Kuk–council for Hong Kong’s original rural residents, representatives from district councils, and representatives from the Hong Kong contingent to the National Committee of the Chinese People’s Political Consultative Conference who are used to top up group four. 31. South China Morning Post, June 27, 2007. Ma died suddenly in August, after a 3-year battle with cancer. 32. Xin bao [Hong Kong Economic Journal], Hong Kong, Nov. 25, 2003; Ming bao [Ming Pao Daily News], Dec. 28, 2003. 33. The other two Green Paper options were to retain the functional constituency seats, or to elect the entire body directly beginning in 2012, which has now been ruled out by Beijing’s December 2007 decision.

Two Systems Becoming One: The 2047 Timetable 34. South China Morning Post, Nov. 20, 2007. 35. China Daily, July 19, 2007. 36. Full candidate lists and election results, Wen Wei Po, Nov. 20, 2007. 37. The CCP’s “underground” organization was revealed by former NCNA head, Xu Jiatun, after his defection to the United States. According to Xu’s 1993 account, CCP members in Hong Kong and Macao combined had numbered just over 6,000 a decade earlier. More than half were local; the others were mainlanders working in Chinese-owned organizations and enterprises. The local party organization, the Hong Kong-Macao Work Committee, had operated under the cover of NCNA Hong Kong branch since 1947. Party leadership was exercised up the chain of command through the Guangdong provincial CCP hierarchy until 1978, when the committee was placed under central party authority. See Xu Jiatun, Xianggang huiyilu [Hong Kong Memoirs], (Taipei: Lianhebao, 1993), vol. 1, pp. 66–79. 38. Suzanne Pepper, “Hong Kong Joins the National People’s Congress: A First Test for One Country with Two Political Systems,” Journal of Contemporary China, 8: 21 (1999), p. 320. 39. Ibid., p. 335. 40. South China Morning Post and Wen Wei Po, Jan. 26, 2008, and Ming Pao, January 27, 2008. 41. Ming Pao, January 16, 2008; South China Morning Post, January 17, 2008. 42. Luoshi minzhu xianzheng, tuidong Zhongguo fazhi: women dui guojia fazhan de ruogan yijian [Some of Our Opinions on Implementing Democratic Constitutional Government and Promoting the Rule of Law in China], Democratic Party, Hong Kong, November 1997, 24 pp. 43. “Bu de renxin de canxuan ‘zhenggang’” [An Election Platform without Popular Support], Wenhui bao [Wen Wei Po], Nov. 11, 1997. 44. “Ping mou zhengdang ‘canxuan yijianshu’” [Criticizing a Certain Political Party’s “Election Manifesto”], Wen Wei Po, Nov. 7, 1997; “Liangfen zhenggang, yige mudi” [Two Political Platforms, One objective], Wen Wei Po, Nov. 12, 1997. See also, Wen Wei Po, November 1997, passim. 45. Margaret Ng’s speech, Legislative Council, Official Record of Proceedings (Hansard), May 30, 2007, pp. 7686–87. 46. Bernard Chan, “Letter to Hong Kong,” Dec. 23, 2007 (http://www.rthk.org.hk/rthk/radio3/lettertohongkong/20071223.html ).

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Part II The Legal-Constitutional Dimensions

6 A Decade of Hong Kong Basic Law Actualization Zhenmin WANG

Introduction The Basic Law is the mini-constitution of the Hong Kong Special Administrative Region (HKSAR). Article 31 of the Chinese Constitution (1982) provides that the State may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law, as enacted by the National People’s Congress (NPC) in light of the specific circumstances. The implication of Article 31 is that the NPC may create, for a special administrative region, a social system that is completely different from the one in mainland China. The Chinese Constitution not only safeguards socialism in mainland China, but also permits capitalism in certain special Chinese territories. This is the constitutional origin of the Hong Kong Basic Law. The Basic Law is the constitutionalization of the Joint Declaration on the Question of Hong Kong concluded by the PRC and the UK in 1984. China’s basic policies toward Hong Kong were elaborated by the PRC government in the Joint Declaration. These basic policies encompass, primarily, the principles of “One Country, Two Systems,” “Hong Kong People Run Hong Kong” and “High Degree of Autonomy.” China promised in the Joint Declaration that it would make a Law to implement these policy commitments so that these basic policies remain unchanged even if there is a change of leadership. 155

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As Hong Kong’s post-1997 constitutional document, the Basic Law was enacted by the NPC in 1990. In nature, it is a national law that asserts legal force over the entire Chinese territory including mainland China. On the other hand, the Basic Law is applied primarily locally in Hong Kong. Thus the implementation of the Basic Law comprises of two aspects. The first is the actualization of the Basic Law through Hong Kong’s local judicial and legal mechanisms. The second is the enforcement of the Basic Law through China’s national constitutional and legal mechanisms. A related question is the interaction, or connection, between these two enforcing mechanisms of the Basic Law.

Basic Law Actualization Through Hong Kong’s Judicial and Legal Mechanisms Under the common law system, the judiciary is the main institution that implements acts and ordinances. According to the Basic Law, the HKSAR is vested with independent judicial power, including that of final adjudication. The judicial system previously practiced in Hong Kong is maintained except for those changes consequent upon the establishment of the Court of Final Appeal of the HKSAR. No new difficulty is posed to Hong Kong’s courts in enforcing local ordinances, which they had done for many years under British rule. However, in enforcing the Basic Law, the Hong Kong judiciary has met unprecedented challenges.

The Challenge from the Establishment of the Court of Final Appeal The first challenge arises because of Hong Kong’s new power of final adjudication. For the first time in history, Hong Kong people may settle their disputes entirely by themselves. This is an important component of the policies of “One Country, Two Systems,” “Hong Kong People Run Hong Kong” and “High Degree of Autonomy.” Before 1997 the power of final adjudication belonged to the Judicial

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Committee of the British Privy Council (BPCJC). The BPCJC was replaced by the newly-established HKSAR Court of Final Appeal in July 1997. The Beijing-based Chinese Supreme People’s Court does not have jurisdiction over the HKSAR. Therefore, final adjudication becomes a brand-new issue for the Hong Kong legal profession, especially for the new HKSAR judiciary. The power of final adjudication creates significant changes in Hong Kong’s political-legal system. With this new power, the function, scope and ability of the Hong Kong judiciary have been substantially strengthened. The Hong Kong judiciary not only has the power to implement local laws, but also is empowered to carry out the main responsibility of enforcing the Basic Law – the HKSAR’s new constitutional law. Despite so many difficulties, the past decade has witnessed the successful practice of final adjudication in Hong Kong. It is believed that the Court of Final Appeal has the ability and qualification to exercise this important autonomous power. In his January 8, 2007 speech at the Ceremonial Opening of the Legal Year 2007, HKSAR Chief Justice Andrew Li pointed out that: The Court of Final Appeal has been in operation for just over nine and a half years. The experience since its establishment has shown that far greater use of our own final appellate court has been made compared to the use that was made of the Privy Council. . . . We have traveled some distance and have gained useful experience. The Court is of course judged by the quality of its jurisprudence. That quality is best judged by others, including the legal profession and academic lawyers. However, I have every reason to believe that in its first decade, the Court has made good progress in establishing its stature. With more time and practice, the HKSAR judiciary will be more confident in exercising its final adjudication power as through its judgments, it is developing a new constitutional jurisprudence which can be applied to adjudicate issues arising from the implementation of the Basic Law, and at the same time to uphold long-cherished common law values.

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The Need to Develop Constitutional Expertise The highest court in any country or region has to address many constitutional questions from time to time. During the last stage of a judicial proceeding, constitutional elements of the case at issue inevitably arise for consideration. The judges sitting in the final appellate court are widely seen as constitutional judges. Prior to 1997, Hong Kong’s legal profession did not need to place a major emphasis on constitutional law. The colonial legal profession’s practices focused mainly on ordinary civil and criminal cases. Since Hong Kong began to exercise the power of final adjudication after the 1997 handover, the local legal profession has to substantially develop constitutional expertise. Judicial review cases were infrequent before 1997. In particular, parties and their lawyers seldom raised constitutional issues during court proceedings. But since 1997, the most striking judicial development has been the fast increase in judicial review proceedings and the rapid evolution of public law. According to HKSAR Chief Justice Andrew Li, . . . in 2001, leaving out the right of abode claims, the number of judicial review proceedings commenced numbered 116. It dropped to 102 in 2002, increased from 125 in 2003 to 146 in 2004. In 2005, it stood at 149. Whilst the number appears to have settled down at around 150, the range of areas covered by judicial review proceedings has broadened considerably in recent years. Inevitably, from time to time, there would be high profile challenges and the courts’ decisions on them would have important political, social and economic repercussions for society. Obviously this is a major challenge for the Hong Kong judiciary. To settle these judicial review disputes, more constitutional expertise is required of both judges and lawyers. Many constitutional cases do not present purely “legal” issues. They may be closely related to political, economic, social and even cultural questions. To better cope with these new issues, constitutional lawyers have to consider their potential political, economic, social and even cultural significance.

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The general public also needs to adjust its understanding of judicial review. As Chief Justice Li pointed out: . . . it is important for the public to understand the courts’ proper role. On judicial review, the courts do not assume the role of the maker of the challenged decision. The courts are concerned and only concerned with the legality of the decision in question, adjudged in accordance with common law principles and the relevant statutory and constitutional provisions. It follows that the courts' judgment can only establish the limits of legality. The courts could not possibly provide an answer to, let alone a panacea for, any of the various political, social and economic problems which confront society in modern times. Within the parameters of legality, the appropriate solution to any political, social or economic problem can only be properly explored through the political process. Such problems are usually complex involving many dimensions and there are no easy or ready solutions to them. It is only through the political process that a suitable compromise may be found, reconciling the conflicting interests and considerations in question and balancing short term needs and long term goals. The responsibility for the proper functioning of the political process in the interests of the community rests with the Administration and the Legislature.1

The Relationship with the Chinese National Constitutional and Legal System Based on the Basic Law and the “One Country, Two Systems” principle, most provisions of the PRC Constitution do not apply to the HKSAR. Only twelve national laws that are listed in Annex III of the Basic Law are applicable to Hong Kong. Hong Kong is allowed to maintain its common law system and judicial

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independence from the mainland Chinese judiciary. However, in order to apply the Basic Law, the HKSAR legal profession naturally need to understand China’s national constitutional and legal systems. This poses the following challenges: a. The Basic Law is the expansion and extension of the PRC Constitution in Hong Kong. It was enacted by the Chinese national legislature, and as such, when disputes concerning the Basic Law arise, it is useful to take into account of the Chinese constitutional doctrine and legal interpretative philosophy. b. Some provisions of the PRC Constitution directly apply to the HKSAR, such as those addressing the national governmental system, the national defence system, the foreign affairs system, and the national constitutional and legal interpretative system. It is not necessary for the Basic Law to repeat the provisions regarding these national systems. Therefore, Hong Kong lawyers need to understand these national systems, even if they are not incorporated into the Basic Law. c. Although the HKSAR and the PRC mainland retain their respective differing legal systems, and the two legal systems are independent from each other, certain legal and judicial cooperation arrangements must be put in place. This requires that mainland Chinese and Hong Kong’s legal professions learn from each other in order to establish an effective legal and judicial cooperation mechanism between the two independent jurisdictions. Moreover, such a dialogue between the two legal professions is helpful to the implementation of the Basic Law.

Basic Law Actualization Through PRC National Constitutional Mechanism Since the Basic Law is a national law with legal effect over the entirety of China, the PRC central authorities also have the responsibility of implementing the Basic Law.

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First of all, the PRC central authorities must ensure that all departments and localities abide by the Basic Law. The past ten years have witnessed that China does honour its commitments to Hong Kong, evidenced in the following respects. The socialist system and policies are not practiced in Hong Kong. Hong Kong continues to be a thriving international capitalist city and the way of life remains unchanged. Hong Kong exercises a high degree of autonomy and enjoys executive, legislative and independent judicial power, including that of final adjudication. No department of the Central Government, nor any province, autonomous region, or municipality directly under the Central Government, has ever interfered with the affairs of the HKSAR. Hong Kong administers its own affairs in accordance with the Basic Law. It is clear that the implementation of the Basic Law on both sides of the border has been very successful. On the part of the national authorities and in the legal sphere, the Standing Committee of the National People’s Congress (NPCSC) is chiefly responsible for enforcing the Basic Law by way of interpreting relevant provisions of the Basic Law.

From the UK Privy Council Judicial Committee to the PRC National People’s Congress Standing Committee Prior to Hong Kong’s handover to China in 1997, under the common law regime, the power of legal interpretation and adjudication in colonial Hong Kong was vested in the same body: the court was both the adjudicatory as well as the interpretive body. The interpretation took place within the judicial process only, and was part of judicial activity. Before the handover the power of final adjudication belonged to the Judicial Committee of the British Privy Council (BPCJC). The BPCJC was the highest body for the interpretation of laws of Hong Kong. The interpretation of laws by Hong Kong courts was not final; dissatisfied parties could appeal to the BPCJC for final interpretation. After the handover, however, the interpretation of laws in Hong Kong underwent significant changes: in addition to the continued interpretive powers vested in the Hong Kong courts, the power to interpret the Basic Law is exercised by the NPCSC.

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After Hong Kong’s handover, the BPCJC’s power of final adjudication and final interpretation of laws is transferred, pursuant to the Basic Law, to two bodies: the power of final adjudication is vested in the newly established HKSAR Court of Final Appeal, while the power of final interpretation of the Basic Law is reserved by the NPCSC. China adopts a system where the standing committee of the highest body of State powers is charged with the interpretation of the Constitution and laws. The power to interpret the Constitution and laws belongs to the NPCSC. The interpretation by the NPCSC is final and authoritative which must be obeyed not only by all administrative bodies and social organizations, but also be followed by judicial organs in deciding specific cases. Subject to this condition, the NPCSC authorizes the PRC Supreme People’s Court to give judicial interpretations on the application of laws and regulations in deciding cases. When dealing with issues concerning the interpretation of the Basic Law, national legislators had to consider not only the interpretive system in mainland China, but also the interpretive regime under Hong Kong’s common law system. The final outcome of compromise was Article 158 of the Basic Law which states that pursuant to the PRC Constitution, the power to interpret the Basic Law as well as the power to interpret all other Chinese national laws belongs to the NPCSC. This is consistent with the national interpretive system and reflects the “One Country” requirement. In the meantime, the interpretive regime under Hong Kong’s common law system was preserved, with the HKSAR courts being authorized by the NPCSC to interpret the Basic Law when deciding cases. However, if a provision to be interpreted relates to matters within the jurisdiction of the Central Government or to Central-HKSAR relations, the HKSAR Court of Final Appeal shall, before a non-appealable final judgment is rendered by a HKSAR court, petition the NPCSC for interpretation of the provision at issue. When a HKSAR court applies the said provision, the interpretation by the NPCSC shall be followed. But previous judgments are not affected. If the NPCSC decides to interpret certain provisions of the Basic Law, it must consult its Committee for the Hong Kong Basic Law.

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The above interpretive system is specially and carefully designed. It integrates Hong Kong’s judicial interpretive regime with the mainland’s NPCSC-led interpretive system, satisfying concurrently the requirements of “One Country” and “Two Systems.” The interpretation by the NPCSC of constitutional law for Hong Kong is a major post-handover change in Hong Kong’s constitutional and legal system. This is also an important national mechanism to actualize the Basic Law at the national level.

The Post-Handover Establishment of the NPCSC Interpretation System Since 1997 the NPCSC has interpreted the Basic Law on three occasions, covering four provisions. The first time was on June 26, 1999, when the Ninth NPCSC adopted the Interpretation Concerning Article 22, Clause 4 and Article 24, Clause 2 (3) of the Basic Law of the HKSAR of the PRC, and interpreted the definition of HKSAR permanent resident and procedures concerning HKSAR permanent residence for mainland residents. The second time was on April 6, 2004 when the Tenth NPCSC adopted the Interpretation Concerning Article 7 of Annex I and Article 3 of Annex II of the Basic Law of the HKSAR of the PPC, and interpreted the procedure for revising the election methods for the 2007 HKSAR Chief Executive and 2008 HKSAR Legislative Council members. The third time was on April 24, 2005 when the Tenth NPCSC adopted the Interpretation Concerning Article 53, Clause 2 of the Basic Law of the HKSAR of the PRC and interpreted the term of office of the new HKSAR Chief Executive upon the resignation of the incumbent Chief Executive. The interpretations by the NPCSC were small in number but profound in their impact.

The Nature of NPCSC Action to Interpret the Basic Law According to the PRC Constitution, the NPCSC is the country’s standing legislative body as well as the permanent body of the country’s highest organ of State powers. Besides its legislative functions, its constitutional duties also include interpreting the

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Constitution and laws. According to the Chinese theory of constitutional and legal interpretation, the power to interpret laws is ancillary to the highest state power. The power to interpret the Constitution and laws is a power of the NPCSC, distinct from and equally important as its legislative, supervisory, resolution-adopting and appointment/removal powers. The NPCSC is both a legislative body and a body for final legal interpretation. Its law-interpreting act is neither judicial nor legislative, but rather a special legal interpretative activity in nature. Since the NPCSC appears as both a legislative body and a law-interpreting body, some people may think that the integration of legislative and interpreting functions into one body creates conflict of interests. However, it is not crucial whether the same body is in charge of both legislation and interpretation. The crux of the matter is the need to separate the two functions and perform them through separate procedures, as in the case of the British Parliament − the UK’s highest legislative organ as well as the UK’s highest law-interpreting body and court of final adjudication. Although these functions are integrated in the same Parliament, the law-interpretation (final adjudication) power is exercised by the House of Lords’ Appellate Committee (or the Privy Council Judicial Committee), while the House of Commons is vested with law-making power. The two Houses exercise these two powers separately and independently. Under the Chinese legal interpretive theory, the purpose of law-interpretation is to ascertain the legislative intent and precise meaning of legal provisions, and apparently the legislative body has a clearer understanding of the precise meaning of legal provisions when compared to other state bodies. Moreover, from a procedural standpoint, the NPCSC’s legislative function and its law-interpreting function are currently exercised separately. Under the common law system, judgments rendered by the courts, including the court’s interpretation of laws by way of its judicial decisions, become precedents. Courts must follow prior judicial decisions and interpretations in deciding similar cases – this is known as “stare decisis.” Pursuant to Article 158 of the Basic Law, even the NPCSC gives interpretations with respect to a certain provision of the Basic Law, the judgment by Hong Kong court is

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preserved based on the principle of “non bis in idem” or “res judicata,” but the precedential force of the Hong Kong court’s interpretation of the Basic Law comes naturally to an end upon the NPCSC’s interpretation. As in the case of the first Interpretation by the NPCSC on June 26, 1999, the effect of the January 29 judgment by the Court of Final Appeal was not negated, the rights acquired by the parties under the Judgment remained effective and the Judgment had the force and effect of law prior to the NPCSC’s interpretation on 26 June; once the NPCSC made the differing interpretation, only the precedential force of the Judgment, not the Judgment itself was terminated. It should be noted that, even under the English common law system, with respect to issues involved in a case in question, if the legislature has enacted or amended the law changing the judicially-established rules affecting the issues in question, the court must, in deciding similar cases, be bound by the laws so enacted or amended. This is another principle in common law, known as “statutory law takes precedence over case law.” The overriding of precedents by legislation occurs frequently in common law regions and countries.

The Procedure for the Interpretations of the Basic Law by the NPCSC Unlike its regular legislative procedure, the interpretation procedure adopted by the NPCSC is special in the following ways. The first difference lies in the initiation of the interpretive procedure. According to the Basic Law and other relevant laws, there are two bodies empowered to potentially initiate the NPCSC’s interpretive mechanism: one is the Court of Final Appeal of the HKSAR, the second is the State Council requesting the NPCSC to interpret the Basic Law. The State Council’s request to interpret the Basic Law by the NPCSC may be based on the State Council’s own consideration, or may be based on a petition by the HKSAR government. Of the three occasions over the past 10 years where the NPCSC interpreted the Basic Law, on two occasions (in 1999 and 2005) the procedure was initiated on the State Council’s request based on the HKSAR Chief Executive’s petition. Of course the

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NPCSC can act on its own initiative to interpret the Basic Law. The 2004 interpretation arose on the NPCSC’s own initiative as decided at the NPCSC Chairmen’s Meeting. Second, the NPCSC has a general law-interpretation procedure. Section Four, Chapter Two of the Law on Legislation specifically provides for the “interpretation of laws.” The NPCSC Working Procedure on the Interpretation of Laws adopted at the Twelfth Chairmen’s Meeting of the Tenth NPCSC in 2004 further specifies and regularizes detailed working procedures for the interpretation of laws. When interpreting the Hong Kong Basic Law, the NPCSC, in addition to complying with these procedural requirements, meticulously made certain special arrangements. For example, prior to the interpretation of the Basic Law by the NPCSC in 2005, the NPCSC designated senior officials to hold “discussion sessions” in Shenzhen to hear opinions of the Hong Kong people, particularly the opinion of the legal community including persons who were opposed to interpreting the Basic Law or who held a different view on interpreting the Basic Law. Third, another aspect where interpretation of the Basic Law by the NPCSC differs from its interpretation of other laws is that the Committee for the Hong Kong Basic Law under the NPCSC must be consulted. This is a necessary step in the NPCSC’s interpretation of the Basic Law. Of the 12 members of the Committee for the Hong Kong Basic Law under the NPCSC, half are from the mainland, the rest from Hong Kong including representatives of the legal community who are expected to bring to NPCSC’s attention relevant opinions of the Hong Kong community particularly those of the legal profession, thereby allowing the NPCSC in its interpretation of the Basic Law to attend to Hong Kong’s special circumstances under its common law system.

The Norms and Methodology for the Interpretation of the Basic Law by the NPCSC With respect to the norms and methodologies for legal interpretations, the Hong Kong legal community is accustomed to understanding the Basic Law from the common law perspective. Under the common law system, one school of thought requires the

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judge to interpret laws according to the literal meaning of the provisions, that is, emphasising the “plain meaning” of legal provisions, in contrast to the approach in civil law system where the judge tends to apply an interpreting methodology focusing on seeking the purpose of the legislation. However, under the common law system, one important task for judges in legal interpretations is also to ascertain the intent of the legislature. Nevertheless, there are alternative approaches to the task, commonly known as the “literal approach” (adopting the strict literal and grammatical construction of the words, heedless of the consequences) and the “purposive approach.” The latter means to interpret words according to their ordinary and natural meaning only to the extent of producing no absurd result and to promote and carry out the ascertained legislative intent, and, when necessary, interpret “by filling in the gaps,” i.e., by inserting written words into the provision. This is of course not dissimilar to the civil law method of interpretation. There has been, however, a diversity of opinions in Britain as to the specific application of these approaches. The NPCSC’s interpretation of the Basic Law adheres to the civil law system’s general types of norms and methodology for legal interpretation, emphasising the pursuit of the original meaning and legislative intent of statutory provisions. These two philosophies of legal interpretations will obviously produce differing results. For example, in 2005, after the resignation of HKSAR Chief Executive Tung Chee-hwa, on the issue of whether the replacement Chief Executive’s term of office should be the remainder of Chief Executive Tung’s term, or a full five-year new term, from the perspective of the common law’s interpretive norms and methodology, the term is obviously five years, whereas based on the civil law system’s interpretive methodology, the term is the remainder of Tung’s term, which was two years. Hong Kong is not the first place in the world where a common law region became part of a civil law jurisdiction. For political and economic reasons, Britain decided to join the European Community in 1972, now known as the European Union (EU). Britain’s membership meant partial relinquishment of its sovereignty, which, to the conservative British, was a “revolution of sovereignty,” necessarily followed by constitutional transformations as well as the

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ensuing impingement on the traditional common law, reflected primarily in the differing norms of law interpretations. With respect to the different law-interpretation norms and methodology in continental Europe, some British judges supported the interpreting methodology employed by the civil law judges, while others opposed 2 it. For example, legal interpretation in the civil law system has the gap-filling function which, from the view of some common law jurists, is not at all interpreting, but rather amending the law. In interpreting the Treaty of Rome, the European Court “has disregarded the actual words of the Treaty. It has filled in gaps. It has altered the meaning of words. It has done what it thinks is best to be done. It has acted more as a legislator than as an interpreter. 3 All of it completely shocking – to the old-fashioned English.” After intense debates on the two “approaches” and extended periods of adjustments, the British legal community had to compromise. Speaking on this issue, Lord Denning indicated: All it means that judges do not go by the literal meaning of the words or by the grammatical structure of the sentence. They go by design or purpose which lies behind it. When they come upon a situation which is to their minds within the spirit – but not the letter – of the legislation, they solve the problem by looking at the design and purpose of the legislature – at the effect which was sought to achieve. They then interpret the legislation so as to produce the desired effect. This means they fill in gaps, quite unashamedly, without hesitation. He also pointed out: The literal method is now completely out of date; it has been replaced by . . . the purposive approach. In interpreting the Treaty of Rome (which is part of our law) we must certainly adopt the new approach. Just as in Rome, you should do as Rome does. So in the European community, you should do as the European 4 Court does.

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Similarly, the NPCSC’s interpretation of the Basic Law may differ from the interpretation by a HKSAR court. As China’s body of highest State powers concurrently exercising the legislative function, the NPCSC is charged with the interpretation of the Basic Law. There should be no surprise at all if the interpretation by the NPCSC “fills the gap in the statutory provisions,” just as the 1996 interpretation by the NPCSC regarding the application in Hong Kong of the Law on Nationality has filled in the gaps in the Law on Nationality, which did not address the nationality issue of Hong 5 Kong residents.

Relationship between the Two Basic Law Implementing Mechanisms: Dynamics between NPCSC Basic Law Interpretation & HKSAR Final Adjudication It is clear from the above analysis that on the Hong Kong side, the HKSAR Court of Final Appeal is the main body that implements the Basic Law by way of interpreting the Basic Law and adjudicating cases. At the national level, on the other hand, it is the NPCSC that is responsible for enforcing the Basic Law by way of interpreting relevant Basic Law provisions when necessary. Article 158 establishes the bridge between the local and national mechanisms for implementing the Basic Law. Under the common law system, the power of final legal interpretation and the power of final adjudication are exercised in a unified manner by the same highest court (the court of final adjudication). Under China’s constitutional system, however, the power of final legal interpretation and the power of final adjudication are exercised not by the same body but rather by two separate bodies, i.e. the NPCSC and the Supreme People’s Court. In mainland China, the NPCSC is not considered to have impinged − by virtue of exercising its power of final interpretation of laws – upon the power of final adjudication held by the Supreme People’s Court, because the NPCSC engages only in the final interpretation of laws without adjudicating cases in place of the Supreme People’s Court. The separate exercise of the power of final legal interpretation and the power of final adjudication is an important

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characteristic of the civil law system and is of common occurrence in 6 civil law countries and regions. Similarly, with respect to the Hong Kong Basic Law, the “power of final interpretation” belongs to the NPCSC, but the “power of final adjudication” belongs to the HKSAR Court of Final Appeal. The separation of the “power of final interpretation” from the “power of final adjudication” not only is consistent with China’s constitutionalism and legal system, but also is a remarkable integration of “One Country” and “Two Systems.” Precisely in this sense, the NPCSC does not impinge upon the power of final adjudication held by the HKSAR Court of Final Appeal. The NPCSC is not the “court of final adjudication,” but rather only exercises the power of final interpretation of the Basic Law. It only “interprets” without “adjudicating,” and thus does not decide cases in place of the SAR courts, leaving the power of final adjudication to the HKSAR Court of Final Appeal. Therefore the interpretation of the Basic Law by the NPCSC does not undermine judicial independence in Hong Kong. Under the “One Country, Two Systems” arrangement, China has only one body that exercises the power of final interpretation of the Constitution and its laws, i.e., the NPCSC, but so far there are three bodies that exercise the power of final adjudication, i.e. the Supreme People’s Court in Beijing, and the two SAR Courts of Final Appeal in Hong Kong and Macao respectively. Among these three courts of final adjudication, no one is subordinated to another, and each one exercises its own power of final adjudication in its respective jurisdiction.

Conclusion Although Hong Kong is allowed to maintain its own legal and judicial systems after the handover, a significant “constitutional revolution” did take place in Hong Kong in the past decade. Hong Kong has brand new constitutional documents: the Basic Law and the PRC Constitution. The full actualization of the Basic Law requires efforts by both Hong Kong local and Chinese national authorities. Both the NPCSC and the Hong Kong judiciary have

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treated with utmost seriousness their respective constitutional obligations in implementing the Basic Law. It takes time for the legal profession in Hong Kong to become familiar with and accustomed to the new constitutional framework. The past decade saw the initial accumulation of experiences in this regard. The common law system in Hong Kong and the civil law system in mainland China do and will co-exist harmoniously under the “One Country, Two Systems” formula. The PRC central authorities recognize the extraordinary importance for Hong Kong to preserve its common law system. The strong tradition of rule of law is an invaluable asset and advantage for Hong Kong which deserves careful preservation, and as such, China will not do anything to harm the rule of law and judicial independence in Hong Kong. The question now is how to accommodate the two legal and judicial systems under one constitutional framework. While the process may be painful, with more time and practice, there is every reason to believe that this issue will be successfully resolved by the Hong Kong and mainland Chinese legal professions. A teaching by Confucius may be particularly relevant and useful in this regard: “Gentlemen always get along with each other without compromising their values and principles.” I remain confident that in implementing the Basic Law, the legal and judicial systems in Hong Kong and mainland China can co-exist and co-develop in one country without loss or harm to either side.

Notes 1. The Chief Justice’s speech at Ceremonial Opening of the Legal Year 2006, January 9, 2006, Hong Kong. 2. J.E. Levitsky, “The Europeanization of the British Legal Style” (1994) 42 American Journal of Comparative Law 347. 3. Lord Denning, What Next in the Law (London: Butterworths, 1982) at 293. 4. Lord Denning, The Discipline of Law (London: Butterworths, 1979), pp 15−16, 20−21. 5. On May 15, 1996, the Eighth NPCSC adopted the Interpretation Concerning Several Questions on the Application of the Law on Nationality of the People’s Republic of China in the HKSAR. Considering

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China’s Hong Kong Transformed: Retrospect and Prospects Hong Kong’s historical background and current conditions, the Interpretation provides that all Chinese compatriots in Hong Kong, whether or not holders of a “British Dependent Territory Citizen Passport” or a “British National (Overseas) Passport,” are citizens of China. However, beginning with July 1, 1997, while they may continue to use British government-issued valid travel documents (including the “British National (Overseas) Passport”) to travel to other countries and regions, they are not entitled, in the HKSAR and elsewhere in the People’s Republic of China, to British consular protection by virtue of holding the above British travel documents. The same approach is adopted to deal with the nationality issue for Chinese citizens in the HKSAR who have permanent residence rights in foreign countries. Thus the gap in applying China’s Law on Nationality in HKSAR was filled by way of law interpretation. In 1999 the NPCSC made similar special arrangements for the nationality issue of Macau residents after Macau’s return to China. 6. For example, in China’s Taiwan region, the “Council of Grand Justices” is charged with interpreting the “Constitution” and unifying the interpretation of laws and ordinances, but does not have the power of final adjudication. The “Supreme Court” and the “Supreme Administrative Court” have the power of final adjudication, but do not have the power to interpret the “Constitution.” The European continent also adopted essentially the similar approach, with only minor differences in each country based on its own circumstances. See Chen Ai’e (陈爱娥) et al, “The Judiciary and Constitutional Interpretation” (司法与宪法解释), in Modern Public Law Review (I) (当代公法新论（上）) (Taipei: Angle Publishing, 2002), p. 711. See also Li Nien-Tsu (李念祖), Judges’ Constitution (司法者的 宪 法 ) (Taipei: Wunan Publishing, 2000). See also D.P. Kommers, “Germany: Balancing Rights with Duties,” in J. Goldsworthy (ed), Interpreting Constitutions, A Comparative Study (Oxford: Oxford University Press, 2006), p. 172.

7 The Rule of Law and Economic Development in the Hong Kong SAR Douglas W. ARNER Berry F. C. HSU*

Introduction Article 109 of the Hong Kong Basic Law mandates the government of the Hong Kong Special Administrative Region (HKSAR) to provide an appropriate economic and legal environment for the maintenance of the status of Hong Kong as an international financial center. Article 110 also stipulates that the monetary and financial systems of the HKSAR shall be prescribed by law. There are a number of other provisions facilitating the continuation of Hong Kong as an international financial center, in particular through the protection of property rights, the maintenance of the integrity of its independent taxation system and legal tender, as well as the assurance of the sustainability of the existing polices on free foreign exchange control, free port, and free trade.1 According to the World Bank, the rule of law is a pillar of sustainable and equitable economic growth.2 The 1997–98 Asian financial crisis illustrated that economic development is not sustainable without an effective application of the rule of law.3 In achieving economic development, legal and judicial reforms are critical components of the process.4 For the purpose of attracting investors, the stability of the political system should be supported by the certainty of law in property rights protection. Based on this 173

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rationale, one can conclude that the rule of law is significant for economic growth that is vital to the consolidation of the status of Hong Kong as an international financial center. The Basic Law has incorporated a number of provisions in providing a legal infrastructure that is essential for a financial center.5 To ensure the free flow of information, civil rights including the freedom of speech, of the press, and of publication are constitutionally guaranteed under Article 27. The basic elements of the rule of law as espoused by English jurist Albert Venn Dicey (1835–1922) have also been implemented under the Basic Law, which provides that everyone shall be equal before the law and shall be free from arbitrary power of the state, in pursuant to Articles 25 and 29. This chapter addresses the importance of the rule of law in developing Hong Kong as an international financial center with special focus on judicial independence. First, the notions of the rule of law are discussed. Then the relationship between the rule of law and economic development is examined. As the rule of law is an important pillar in safeguarding the provisions of the Basic Law in maintaining Hong Kong’s leading position in international finance, the local implementation of the rule of law is critically assessed.

Notions of the Rule of Law There is no consensual definition of the rule of law as it may mean different things to different people depending on their cultures, social backgrounds and political systems. Western constitutional theorists often associate the relationship between democracy and judicial review with that between democracy and the rule of law.6 It also has been regarded as one of the cardinal features of the common law judicial system, demanding general acceptance of law by the government. Dicey outlined this doctrine by stating the predominance of law over the exercise of arbitrary power, and the importance of equality before the law, and its derivation from individuals’ rights as determined by the courts.7 Using these criteria to evaluate the implementation of the rule of

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law in Hong Kong would no doubt be arriving at a negative conclusion, as Western democracy is not yet fully entrenched in Hong Kong even though it is guaranteed by Hong Kong’s constitutional framework. Some may even argue that at least full democracy is not an absolutely necessary component of the rule of law. There are numerous ways of formulating the theoretical notions of the rule of law, depending on the respective ideologies of the theorists. Basically, the core meaning of the rule of law is that the law must impose reasonable limits on the state and every member of the ruling elite.8 Various notions of the rule of law can be classified into “thin” and “thick” types depending on the requirements.9 The “thin” type focuses on the formal or instrumental aspects of the rule of law, including those features being essential for the effective operation of a legal system regardless of the nature of governance and the legal system. This formal theory of law has three basic components, namely the conceptual, instrumental, and axiological ones.10 In terms of governing the relationship between the state and its citizens the ideal set of rules should not only be made open to the public, but also be coherently interpreted and applied. Any deviation from those rules by the state or the citizens should be adjudicated only by independent tribunals after due process. These conceptualized attributes are then institutionalized in the form of rules by the legislatures, administrative bodies, and courts.11 Under the thin notion the laws have to be general, publicly assessable, prospective, clear, consistent, understandable, stable, and enforceable.12 The formal aspects of law mainly serve the objectives of upholding the values of a legitimate government, the certainty of the law, and prohibition against the use of arbitrary power.13 The “thin” type shuns its relationship with substantive aspects of the law, e.g. human rights and western democracy.14 Insofar as the formal criteria of the law are fulfilled, there is rule of law. Advocates of the “thick” type, on the other hand, argue that a formal theory is nevertheless an obstacle to laws with detrimental content, as these laws are often manifestations of substantive arbitrariness.15 This type stresses upon the essentiality of the rule of law by going beyond the “thin” type.16 It incorporates into the fundamental elements of the thin notion elements of economics,

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politics, and morality, e.g. free-market capitalism versus central planning, democracy versus one-party dictatorship, and human rights versus so-called “Asian values.”17 It goes beyond the legality of the law by requiring it to be just in respect of certain fundamental elements in accordance to which the “thick” type of the rule of law can be further subdivided.18 The liberal and democratic version of the rule of law in general confirms with the concept of free market capitalism and the liberal interpretation of human rights. Economic development beyond a certain basic level is increasingly seen as dependent upon the development of an effective mechanism for contract enforcement and dispute resolution, and that a rule of law system is important to the arms-length development of long term commercial and financial transactions.19 At a general level, the earliest modern studies of the determinants of economic growth identified a strong correlation between the “rule of law” and per capita growth.20 These analyses were weak in terms of identifying with any practical precision the ways in which legal reform might be affected, given that the measures used to identify “rule of law” variables were basic and the subjective components such as commercial indexes of sovereign risk were included. The law and finance school asserts that there exists a significantly causal link between the origins of law or the means by which a national system of law has been created, and the nature of the development of a financial system.21 Certain scholars further suggest a causal relationship that flows from financial development to economic performance, although most of them accept that such links are unlikely to be unidirectional.22 While not unanimous, these studies generally suggest that finance often has a positive co-relation with economic growth, although (contrary to popular belief) there is no accepted school of thoughts theoretically asserting that the primary causal flow is from economic growth to financial development.23

The Rule of Law and Economic Development The political system and the economic system function in close parallel, even though the connection is not commonly acknowledged

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by political theorists. Certainly, the relationship between politics (or governance) and the economy has been a key interest of Adam Smith, as well as Karl Marx, and more recently John Keynes, Friedrick Hayek and Milton Friedman. Although politics and economics had become distinct disciplines over the twentieth century, by the end of the millennium the interaction between governance and economics was again addressed, as a result of both the lessons learnt from the process of transition from centrally planned to market economies and the failures for development models to focus too heavily on economic policy. Issues of governance and appropriate political structure have been of interest since the development of the first stationary agricultural settlements with specialized human activity over ten thousand years ago and the subsequent development of writing systems appropriate to their administrative and governance structures. The construction of a “perfect” society and its constituent systems of governance necessary for attaining the former has been a focal topic of interest to many writers for years, including Plato, Confucius, Aquinas, Locke and Marx.24 The role and development of financial institutions have become an integral part relatively recently in the disciplines of law, finance and economics, although each of which is directly concerned with important issues that constitute both the problem and its explanations. Since the late 1980s, the significance of finance to many aspects of economic development has well been recognized, and on the basis of which the nature of financial institutions and infrastructure is commonly considered to be susceptible to both the quantitative and qualitative analysis of the legal and economic theories. Nonetheless, as Shleifer and the others have identified, many differences exist between extant economic and governance models around the world.25 The ensuing question arises as to what may be the suitable ones among all available options, and to what extent those choices may bring the disadvantage to certain individuals or interests. For new institutional economists such as Robert North and many writers in the law and economics schools, governance systems must provide for two fundamental features to support a market economy, regardless of its ideological basis and the consequences.

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First, the governance system needs to provide for clear and usable property rights. Second, it must provide for a usable and fair mechanism for contracts enforcement. Both sets of literature agree that these conditions are essential in imperfect markets where there involve accepted transaction costs. While there appears to be an agreement as to the need to satisfy these basic points, the type of governance structure that best provides the two aforesaid foundations for a market economy is however less apparent.26 According to Mancur Olson in Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships (2000), the development of a democratic system, on top of the potential provision for usable property rights and distinct enforcement of contracts, may nevertheless become subject to inefficient outcomes due to the inherent conflicts of interest among different groups within the society. Some recent empirical researches have begun to confirm these ideas, the results of which appear to be supportive,27 in the sense that a national governance structure is important to, not only the provision for property rights and enforcement of contracts, but also the human capital development. However, even though some governance structures are clearly not conducive like those run by short-term autocrats who behave essentially in the same way as stationary bandits, there is no clearly preferable model at present. Both autocratic and democratic governance systems can support a market economy, and both of them may provide for institutional choices that do not result in efficient, wealth-maximizing outcomes for a given economy. In the absence of a fully democratic system in Hong Kong, the “thin” notion of the rule of law should be strictly adhered to. An independent judiciary is, therefore, indispensable to safeguard the Basic Law provision to facilitate its continuation as an international financial center in protecting property right and contract enforcement.

Judicial Independence in Hong Kong There are three issues in examining judicial independence in the HKSAR context: (i) Do the “judicial independence” provisions in

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the Basic Law override its other provisions that maintain the previous system of appointment and removal of members of judiciary other than judges? (ii) Are deputy magistrates and deputy High Court judges validly appointed? and (iii) Whether or not the “judicial immunity” provisions in the Magistrates Ordinance (Cap 227) and the District Court Ordinance (Cap 336) should be repealed as being inconsistent with the provision in the Basic Law which provides immunity from legal action to all members of the judiciary?

The Basic Law Framework Judicial independence is a cardinal feature of the Basic Law, as has been expressly provided for in three separate provisions namely Articles 2, 19, and 85. The repetition of the reference to exercising judicial power independently demonstrates the important role expected of the judiciary by the PRC National People’s Congress. The Basic Law provides that the judiciary must exercise its power independently, free from any interference, that its members enjoy judicial immunity, and that judges be given tenure to ensure their independence, in pursuant to Articles 85, 88, and 89. However, as regards members of the judiciary other than judges, Article 91 of the Basic Law maintains the previous system of appointment and removal. Accordingly, under the Magistrates Ordinance, District Court Ordinance, and High Court Ordinance, the Chief Justice appoints deputy magistrates and deputy District Court and High Court judges respectively, and the Chief Executive appoints permanent magistrates by warrant and temporary High Court judges as recorders.

The Common Law Jurisprudence In Valente v The Queen [1985] 2 SCR 673, the Supreme Court of Canada spelled out the essential conditions for judicial independence: (i) security of tenure; (ii) financial security; and (iii) institutional independence. Relying on this case and another Canadian case,

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Reference re Territorial Court Act [1997] Carswell NWT 24, par 126, the Scottish High Court of Justiciary, in Starrs and Chalmers v Ruxton [2000] JC 208, considered the appointment of temporary sheriffs (judges) to supplement the work of their permanent counterparts as a “constitutional innovation.” It adopted the test in these two Canadian cases, i.e. whether or not there is a real risk that a well-informed observer would think a temporary judge might be influenced by his hopes and fears as to his prospective advancement. It held that it is insufficient to rely on practice. The court denied that the practice of following removal procedures for temporary judges identical to those for their permanent counterparts was a sufficient safeguard. Accordingly, it held that the one-year appointment at the pleasure of the Lord Advocate did not give an appearance of independence. In Hong Kong, magistrates may be appointed on a permanent basis or by way of a fixed-term contract as stipulated in the appointing warrant. The power to appoint also includes the power to dismiss or suspend. Not only is there no guarantee that, in the later case, the contract will be renewed, a warrant appointing a magistrate may be revoked at any time by the HKSAR chief executive with any cause in accordance with section 5(5) of the Magistrates Ordinance. In a speech delivered in Hong Kong in June 1998, Mr Justice Kirby of the Australian High Court considered the appointment of temporary judges objectionable in principle as they clearly lack judicial independence. 28 On appearances, the appointment for part-time and temporary judges is incompatible with the “judicial independence” provisions in the Basic Law, as it is likely to be perceived that these members of the judiciary would subconsciously read the minds of those who may remove or re-appoint them at their pleasure. Probationary or temporary appointments for judges are inconsistent with numerous international conventions and declarations, including the Beijing Statement of Principles of the Independence of the Judiciary. The Territorial Court Act case provided the wisdom where one should not be able to use the judicial role as a means of material self-aggrandisement and that is exactly what one could be tempted to do by a temporary appointment knowing that it is merely temporary.

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The Legacy Inherited from Colonial Hong Kong In England, the judicial system encompasses deputy judges and recorders. This system was adopted by colonial Hong Kong and inherited by the HKSAR. The advantages of this system in alleviating the workload of permanent judges should be weighed against its flaws. Great Britain is now a signatory state of the European Articles of the Convention for the Protection of Human Rights and Fundamental Freedoms, which provide in particular for the rights of the accused to a fair trial by “an independent and impartial tribunal.” In the light of Starrs and Chalmers, the Lord Chancellor had issued a consultation paper on reform of deputy High Court judges and recorders. Now given the fact that judicial independence is a cardinal feature of the Basic Law, the previous system of appointment and removal of members of the judiciary other than judges ought to be reviewed. Should the “judicial independence” provisions in the Basic Law override the provision maintaining the previous judicial system in the event of any inconsistency? Appointment for part-time and temporary members of the judiciary may also lead to the following abnormalities: • The principal sources of income for deputy magistrates, deputy judges, and recorders are generally derived from their private professional practices. They are at liberty to accept instructions from the secretary for justice and influential businesses in their capacity as legal practitioners. • Appeals from magistrates’ courts lie to the Court of First Instance. When a deputy High Court judge appears as a counsel in magistrates’ court, the pressure on the magistrate may be palpably felt. • The same is true when a deputy judge acting as counsel asks for favor on behalf of a client from the learned friend on the other side of the bar table. • The choice of venue for prosecution is the privilege of the secretary for justice. In borderline cases, the prosecution may choose the magistrates’ courts, whose members do not enjoy security of tenure.

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Article 88 of the Basic Law provides that judges of the courts of Hong Kong are appointed by the chief executive on the recommendation of an independent commission composed of local judges, persons from the legal profession and eminent persons from other sectors. This provision, as part of the constitutional framework designed to safeguard the independence of the judiciary, was implemented by the Judicial Officers Recommendation Commission Ordinance. The commission, which appoints judges, must be independent and, in pursuant to Article 92, it must also consider the judicial and professional qualities of the candidates. The Basic Law distinguishes between judges and other members of the judiciary without defining them.29 Its drafting committee must have had in mind s 3 of the Interpretation and General Clauses Ordinance, which defines “judges” and includes within the term deputy High Court judges and recorders, but not magistrates, District Court judges, and registrars. It is legitimate to rely on an ordinance to identify which judicial officers are “judges,” either because it was part of the previous system recognized by the Basic Law or because ordinary legislation may properly supplement or clarify a constitutional provision. For that reason, magistrates, District Court judges and registrars are not “judges” while deputy High Court judges and recorders are. As “judges” under the Basic Law, the latter group should be appointed by the chief executive. However ironically, under the High Court Ordinance, the chief justice continues to appoint deputy High Court judges. The Basic Law maintains the colonial judicial system except those changes consequent upon the establishment of the Court of Final Appeal, and retains the previous system of appointment and removal of members of the judiciary other than judges, as specified in Articles 81 and 91. Therefore, subject to both the contrary provisions of the Basic Law such as the “judicial independence” provisions and the condition that offices were held prior to the turnover, other members of the judiciary, e.g. magistrates, District Court judges, and deputy District Court judges, may now still continue to be appointed to exercise judicial power in the same manner as under the previous system even though they are not labeled as “judges.” However, the same cannot be said for deputy magistrates, offices of which were commenced only in 1999.30

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Article 85 of the Basic Law provides that members of the judiciary are immune from legal action in the performance of their judicial functions. The judicial immunity provided by the Basic Law covers all members of the judiciary in the performance of their judicial functions. However, the Magistrates Ordinance and the District Court Ordinance provide lower standards of judicial immunity than that enjoyed by the superior courts. Section 125 of the Magistrates Ordinance protects magistrates from action for any act done in the execution of his or her duty with respect to any matter within his or her jurisdiction, unless such act was done maliciously and without reasonable and probable cause. Besides, section 126 of the Ordinance stipulates that for any act done by a magistrate without or in excess of his or her jurisdiction, there is no need to prove that the act was done maliciously and without reasonable and probable cause. Similarly in accordance with section 71 of the District Court Ordinance, judges in the District Court enjoy judicial immunity in the absence of malicious and reasonable and probable cause. These provisions are in line with the established common law doctrine that only superior court judges enjoy full judicial immunity. The Basic Law, however, makes no differentiation between superior and inferior courts and extends judicial immunity to all courts and all members of the judiciary, including magistrates and registrars. Therefore, these ordinances provide merely the minimum safeguards for magistrates and District Court judges. A better approach would be to repeal the relevant provisions in the above two ordinances and allow the question to be regulated by the Basic Law. Judicial independence is a notion involving the separation of powers, which is based on the concept that each branch of government should enjoy a degree of independence from the others. The guarantee of the judiciary as an independent branch of government in Hong Kong goes beyond the fundamental doctrine that each branch of government should perform its own functions independently. The judiciary should be given sufficient power to sustain its existence and repel interference from the executive and legislative branches of government. In colonial Hong Kong, the separation of powers concept was murky. Having inherited this legacy, the relevant ordinances in the HKSAR still allow:

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• a Recorder to be concurrently appointed as the Chairman of the Town Planning Appeal Board – an administrative body and as the Chairman of the Board of Review (Inland Revenue) – a quasi-judicial body; • a Court of Appeal Judge to be appointed as Chairman of the Electoral Affairs Commission – an administrative body; • a member of the Legislative Council to be appointed as deputy Chairman of the Board of Review (Inland Revenue) – a quasi-judicial body and as a Chairman, Appeal Tribunal Panel (Buildings) – an administrative body. In fact these appointments have been the reality within the past three years. Judicial review of or appeal from the above administrative or quasi-judicial bodies lies to the Court of First Instance of the High Court. These appointments would put all the puisne High Court judges in an awkward and embarrassing situation, when they are called upon to adjudicate on decisions made by their own peers or their senior colleagues. The public may have a reasonable apprehension that the puisne High Court judges might not be independent in reviewing decisions made by their senior colleague.

Conclusion Historically, it was the rule of law rather than democracy which propelled Hong Kong’s economic development. In post-WTO China, international firms have increased their presence in Hong Kong taking advantage of its superior legal system. However, for judges’ guidance sake, mainland China has adopted a Code of Ethics, which is required to be displayed prominently in front of every courthouse. Section 21 of the Code stipulates in particular that judges should be careful not to socialize with lawyers. In strong contrast, the relevant ordinances in the HKSAR allow part-time judges to work as lawyers and its judicial code of ethics is still on the drawing board. Since the transplantation of the common law system to colonial Hong Kong in 1841, its constitutional documents have not provided for judicial independence other than securing the tenure of Supreme Court and

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District Court judges. 31 However, after more than 160 years of development, the concept but not the practice of judicial independence of the HKSAR at present seems to be lagging behind that of mainland China, which only started to develop its legal system from scratch twenty-five years ago after the Cultural Revolution (1966–1976). Traditionally the main advantages of the HKSAR over mainland China are its infrastructure and judicial system, but yet Shanghai and other major Chinese cities are now catching up, and sometimes surpass, the HKSAR in infrastructure development. Can the HKSAR count on the superiority of its rule of law forever?

Notes * Acknowledgment is given to Hong Kong Lawyer and Hong Kong Law Journal for publishing our earlier works on judicial independence. Our discussions on judicial independence in this article should refer to our works published by Hong Kong Lawyer. 1. Articles 105, 108, 111, 112, 114 and 115, Basic Law of the Hong Kong Special Administrative Region. 2. World Bank, Legal and Judicial Reform: Strategic Directions (Washington, D.C.: Legal Vice-Presidency, 2004), p. 8. 3. See D. Arner, M. Yokoi-Arai & Z. Zhou, Financial Crises in the 1990s: A Global Perspective (London: British Institute of International and Comparative Law, 2002). 4. World Bank, Initiatives in Legal and Judicial Reform (Washington, D.C.: Legal Vice-Presidency, 2004), p. 8. See generally D. Arner, Financial Stability, Economic Growth and the Role of Law (New York: Cambridge University Press, 2007). 5. See generally B. Hsu, D. Arner, M. Tse & S. Johnstone, Financial Markets in Hong Kong: Law and Practice (Oxford: Oxford University Press, 2006). 6. M.W. Dowdle, “Of Parliaments, Pragmatism, and the Dynamics of Constitutional Development: The Curious Case of China,” 23(2002) New York University Journal of International Law and Policy 1, p. 17. 7. R. Cotterrell, The Sociology of Law (London: Butterworths, 1984), pp.168-9; O.H. Phillips & P. Jackson, Constitutional and Administrative Law (London: Sweet and Maxwell, 1987), pp. 33–9.

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China’s Hong Kong Transformed: Retrospect and Prospects 8. Peerenboom, China’s Long March Toward Rule of Law, op. cit., p. 2. 9. Ibid., p. 3. 10. R. Summers, “A Formal Theory of the Rule of Law,” 6(1993) Ration Juris 127 at p. 129. 11. Ibid., pp. 129–30. 12. Ibid., p. 135. 13. Ibid., p. 131. 14. Ibid., p. 135. 15. Summers, op. cit., p. 140. 16. Ibid., p. 135. 17. Ibid., p. 135. 18. Peerenboom, China’s Long March Toward Rule of Law, op. cit., p. 3. 19. Arner, op. cit. 20. Notably R. Barro “Economic Growth in a Cross Section of Countries” (1991) 106 Quarterly Journal of Economics 2, pp. 407-43; “Determinants of Economic Growth: a Cross-country Empirical Study” (Boston: MIT Press 1997), pp. 26–28. 21. Notably T. Beck, A. Demirguc-Kunt & V. Maksimovic, “Financing Patterns around the World: The Role of Institutions,” World Bank Policy Research Working Paper 2905 (Oct. 2002); T. Beck & R. Levine, “Legal Institutions and Financial Development,” World Bank Policy Research Working Paper 3136 (Sep. 2003); R. La Porta, F. Lopez-de-Silanes, A. Shleifer & R. Vishny, “Law and Finance,” 106 Journal of Political Economy 1113 (1998); idem., “Legal Determinants of External Finance,” 52 Journal of Finance 1131 (1997). 22. E. Glaeser, R. La Porta, F. Lopez-de-Silanes & A. Shleifer, “Do Institutions Cause Growth?” NBER Working Paper no. 10568 (Jun. 2004).; R. King & R. Levine, “Finance and Growth: Schumpeter Might be Right”, 108 Quarterly J. Econ. 717 (1993); R. Levine, “Financial Development and Growth,” 35 Journal of Economic Literature 688 (1997); R. Rajan & L. Zingales, “Financial Development and Growth,” 88 American Economic Review 559 (1998). 23. See generally Arner, op. cit. 24. B. Hsu and D. Arner, “WTO Accession, Financial Reform and the Rule of Law in China,” 7:1(2007) The China Review, pp. 54–9. 25. See S. Djankov, E. Glaeser, R. La Porta, F. López-de-Silanes & A. Shleifer, “The New Comparative Economics,” Journal of Comparative Economics (Dec. 2003). 26. Hsu and Arner, op. cit.

The Rule of Law and Economic Development in the Hong Kong SAR 27. See E. Glaeser, R. La Porta, F. López-de-Silanes & A. Shleifer, “Do Institutions Cause Growth?” NBER Working Paper no. 10568 (Jun. 2004). 28. In the International Bar Association Human Rights Institute Conference. 29. Articles 91–93. 30. Section 13 of the Magistrates Ordinance, No. 21 of 1999. 31. Article XVIA, Letters Patent.

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Part III The Economic and Social Dynamics

8 The Hong Kong Economy Since Reversion Yun-Wing SUNG*

The Hong Kong economy has gone through many ups and downs in the decade of its reversion to China since mid-1997. In the short six years from mid-1997 to 2003, Hong Kong went through two full scale economic recessions and one near-recession. The first recession was triggered by the Asian financial crisis starting late 1997, and Hong Kong had five consecutive quarters of negative growth. After the recovery and boom from 1999 to 2000 fueled by the tech bubble, the Hong Kong economy suffered a second recession from mid-2001 to early 2002 due to the bursting of the tech bubble and the September 11, 2001 terrorist attack on the USA. A recovery led by exports started in the second half of 2002. The recovery was interrupted by the outburst of SARS (severe acute respiratory syndrome) in the second quarter of 2003, and the Hong Kong economy had a near recession with one quarter of negative growth. However, the SARS epidemic was brief, and the export-led recovery gained momentum in the second half of 2003, helped by a weak US dollar and the measures of the PRC Central Government to boost the Hong Kong economy. While the Hong Kong economy has been growing rapidly since mid-2003, Hong Kong’s per capita GDP only regained the 1997 level at the end of 2006. Hong Kong had lost close to a decade of economic growth. Hong Kong had about the worst economic performance among the East Asian economies during the last decade. Given the breath-taking developments of mainland China’s economy, the risk of marginalization of the Hong Kong economy cannot be 191

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discounted. Hong Kong has yet to succeed in its transformation towards a knowledge based economy. Despite the recent stellar performance of Hong Kong’s financial sector, the sector is not immune from marginalization. One month after HKSAR Chief Executive Donald Tsang promised in March 2007 to strengthen Hong Kong as the region’s incontestable premier financial center during his campaign for a second term, the market capitalization of mainland China’s stock markets surpassed Hong Kong’s as Beijing lifted the moratorium on listing of A shares in the mainland stock market.1 China’s rapid economic development has rapidly narrowed the gap between Hong Kong and the mainland in skills and also in infrastructure. Hong Kong faces a loss of competitiveness. Hong Kong’s hitherto unchallenged position as the gateway to China started to erode in the mid-1990s just before the 1997 handover. For instance, the share of China’s trade handled by Hong Kong as entrepôt trade peaked at 41% in 1996 but has declined sharply to 15% in 2007. While the 1997 appears to be a watershed for the performance of the Hong Kong economy, the seeds of Hong Kong’s post-1997 malaise were sown in the heady pre-1997 prosperity. In the lengthy period of transition from the signing of the 1984 Sino-British Joint Declaration to the 1997 reversion, the elites of Hong Kong spent their energies on speculation in real estate, or in getting foreign passports as a hedge against the 1997 political uncertainty. Few worried about erosion of competitiveness. The long prosperity before 1997 had generated a huge economic bubble, which was unwittingly exacerbated by a clause in the 1984 Sino-British Joint Declaration restricting the annual lease of land to 50 hectares. The clause was inserted by China to forestall a possible pre-emptive attempt on the part of the departing British colonial administration to lease excessive amounts of land, leaving too little land for the post-1997 HKSAR government. The clause was intended to ensure a smooth transition. Ironically, it led to a huge real estate bubble, which proved to be a most destabilizing factor in Hong Kong’s reversion. In itself, the bursting of the bubble would at most lead to an economic recession. Hong Kong had serious real estate bubbles

The Hong Kong Economy Since Reversion

before, e.g., in 1981, and the economy managed to recover in 1984. Hong Kong’s prolonged economic malaise in the post-reversion era cannot be accounted for entirely by the bursting of the real estate bubble, or by the Asian financial crisis, or by the slowdown of the US economy in 2001. Hong Kong faces a loss of competitiveness, and improvement in economic performance would require a fundamental restructuring of its economy. Unfortunately, the HKSAR government is ill-equipped to deal with the economic crisis. The Sino-British discord over Governor Chris Pattern’s electoral reform proposals before the reversion led to “elite fragmentation” as both London and Beijing tried to win over the Hong Kong elites.2 Tung Chee-hwa, the first HKSAR chief executive, failed to build a strong coalition as a result of his limited political experience.3 The HKSAR government was inexperienced and its ability to manage the economic crisis was severely limited. The erratic responses and policies of the Tung administration have compounded the economic malaise.

Relocation of Manufacturing and Competitiveness The opening of China in 1979 naturally led to the reintegration of the Hong Kong economy with its hinterland. There is a huge wage-gap between Hong Kong and the mainland and Hong Kong has relocated its less skill intensive activities to the mainland, first in manufacturing and then in services. Through outsourcing, Hong Kong gains through specializing on the more skill-intensive processes. This leads to productivity gain, as the relocation of low-end services would free Hong Kong’s manpower for high-end services such as financial services, order-taking, logistics, and headquarters functions. As Hong Kong is a developed economy, it should concentrate on the knowledge-intensive part of the production chain, following the example of New York and London. However, productivity gain by outsourcing low-value added activities (whether labor-intensive manufacturing or low-end services) is once-for-all. The process would eventually lead to the

193

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outsourcing of all low-value activities that could be relocated, and there would be no more productivity gain through outsourcing. Sustained growth would require continuous improvement in efficiency and technology. Without such improvements, Hong Kong would not be able to maintain its lead in skills, and outsourcing would only lead to the hollowing out of the Hong Kong economy. According to the most update study on improvements in total factor productivity in Hong Kong (or efficiency gain in layman’s language), Hong Kong’s performance was the best among the Asian Four Dragons from 1980 to 1990, but became the worst during the entire 1990s.4 There was little pressure to improve efficiency in the pre-1997 boom as easy money could be made through speculation. This deterioration in the rate of efficiency gain in 1990s Hong Kong was an important factor in its long economic malaise since late 1997. Fortunately, Hong Kong’s efficiency gain recovered from 2000, and Hong Kong’s performance was the best among the Asian Four from 2000 to 2004.

Economic Restructuring in Hong Kong In the early stage of China’s opening, Hong Kong enjoyed a near monopoly in producer services (e.g., trading, financing, and containerization) due to the Marxist bias against services. Through outsourcing, Hong Kong built a vast manufacturing base in Guangdong that depended on Hong Kong for producer services. The share of China’s trade re-exported via Hong Kong rose from 4% in 1979 to around 40% in the mid-1990s. Due to the very rapid expansion of producer services in Hong Kong, economic restructuring in Hong Kong was exceedingly smooth before the mid-1990s. Though manufacturing employment fell from a record of 998,323 in 1981 to 306,400 in 1997, so many new jobs were created in producer services that total employment rose from 2.39 million to 3.17 million in the same period. The unemployment rate was less than 3.5% throughout the period. However, China began to liberalize external investments in ports and other service sectors after Deng Xiaoping’s 1992 southern

The Hong Kong Economy Since Reversion

tour to push further economic reforms. Hong Kong’s foremost conglomerate, Hutchison Whampoa, quickly invested in container ports in South China. Since the mid-1990s, Hong Kong faces increasing competition from mainland Chinese ports. As mentioned above, the share of China’s trade re-exported via Hong Kong has since declined sharply since 1996. The year 1996 can be taken as a watershed in Hong Kong’s economic integration with the mainland: Hong Kong has started to lose its near monopoly in producer services since the mid-1990s. Low-end services began to relocate to the mainland, and job creation in Hong Kong slowed down. Economic restructuring is less smooth, and Hong Kong has to upgrade its skills to avoid economic hollowing.

Hong Kong: From a “Dragon” Economy to the Laggard of East Asia As mentioned above, Hong Kong has the worst economic performance in East Asia in the last decade. Once an economic “dragon,” Hong Kong has become the sick man of East Asia. Figure 1 shows the 1997 to 2007 per capita GDP index from of the Asian “four dragons” (in nominal US dollars, using 1997 as the base year). Though the per capita GDP of South Korea dropped precipitously during the Asian financial crisis, the South Korean economy rebounded rapidly. By 2007, South Korean per capita GDP was 72% higher than that in 1997. While Singapore and Taiwan also suffered from the Asian financial crisis and the September 11 terrorist attack, both regained their 1997 level of per capita GDP in 2004. Hong Kong did not regain its 1997 level of per capita GDP till 2006. By 2007, the per capita GDP of Singapore and Taiwan were respectively 39% and 20% higher than that in 1997, while that of Hong Kong was only 10% higher than that in 1997. Hong Kong had by far the worst performance among the Asian Four. Figure 2 shows the 1997 to 2006 per capita GDP indices (in nominal US dollars) of the Southeast economies of Indonesia, Malaysia, Philippines, and Thailand. All these four economies were

195

China’s Hong Kong Transformed: Retrospect and Prospects

Figure 1. Indices of Per Capita GDP (in USD) of the Asian Four Dragons (1997=100) 180 Hong Kong S. Korea

160

Singapore Taiwan

Index

140

120

100

80

60 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2006

2007

Figure 2. Indices of Per Capita GDP (in USD) of Selected Southeast Asian Countries (1997=100)

160

Indonesia Malaysia

140

Philippines Thailand 120

Index

196

100

80

60

40 1997

1998

1999

2000

2001

2002

2003

2004

2005

The Hong Kong Economy Since Reversion Figure 3. Per Capita GDP of US, UK and Asia Four (USD) (1997=100)

50,000

45,000 USA 40,000 UK 35,000 Singapore

USD

30,000

Hong Kong

25,000

S. Korea

20,000

15,000

Taiwan

10,000

5,000

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

0

hard hit by the Asian financial crisis, but they have recovered faster than Hong Kong. Indonesia, Malaysia, and Thailand regained their levels of 1997 per capita GDP in 2004, and Philippines did the same in 2005. In comparison, Hong Kong had the slowest recovery. Figure 3 shows the absolute levels of per capital GDP (in US dollars) of the Asian Four and the USA and UK from 1980 to 2007. Hong Kong’s per capita GDP surpassed that of the UK in 1993. The ratio of the per capita GDP of Hong Kong to that of the USA rose from 36% in 1985 to 89% in 1997, showing that Hong Kong was rapidly catching up with the USA. However, this ratio declined rapidly to 65% in 2007, reflecting the poor economic performance of Hong Kong after the reversion. The per capita GDP of the UK and Singapore surpassed that of Hong Kong in 2002 and 2004

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respectively, and their per capita GDP by 2007 were respectively 59% and 19% higher than that of Hong Kong. These comparisons highlighted that plain fact that Hong Kong needs fundamental economic restructuring to regain competitiveness.

The Four Key Industries of Hong Kong In response to Hong Kong’s prolonged economic malaise, the HKSAR government has focused attention on the development of “four key industries”: 1. 2. 3. 4.

Financial services, Tourism, Trading and logistics, and Professional services and other producer services.

Tables 1 and 2 show the contributions of the four key industries to GDP and employment in Hong Kong from 1996 to 2006. Trading and logistics has long been the largest industry. In 2006, its contributions to GDP and employment were 27% and 25% respectively. Corresponding figures for tourism were only 3.2% and 5.2%, showing it is a small industry. Those for financial services were 15.9% and 5.5%, showing that the value-added per worker was 2.9 times the economy average. For professional services and other producer services, the corresponding contributions were 10.5% and 11.3%. This chapter will focus on the two industries most crucial to the future of Hong Kong, namely, trading and logistics and financial services. Trading and logistics is the largest industry, and its past growth has been very robust. In fact, trading and logistics has been the most important growth engine for Hong Kong since China’s opening in 1979. Contrary to popular belief, trading and logistics, instead of the mainland’s Individual Tourist Scheme (IVS), is the main factor behind Hong Kong’s strong economic recovery since late-2003. The tourism industry is just too small. As for professional services and other producer services, its share in Hong Kong’s GDP has declined from 12.4% in 1996 to 10.5% in 2006.

(B) Outbound

(A) Inbound

Import and export trade

Wholesale trade

48.5

9.1

Source: Census and Statistics Department, Hong Kong.

Four Key Industries = (1) + (2) + (3) + (4)

(B) Other producer services

3.3

ʳ

(A) Professional services

4.0

17.4

1.2

12.4

(B) Logistics

ʳ

18.7

22.7

0.7

2.5

(4) Professional Services and Other Producer Services

ʳ

(A) Trading

(3) Trading and Logistics

ʳ

3.1

10.3

(1) Financial services

(2) Tourism

1996

Percentage share (%)

47.9

9.5

3.6

13.1

3.8

17.0

1.1

18.1

21.9

0.6

2.0

2.6

10.3

1997

46.5

8.8

3.5

12.3

3.9

17.4

1.0

18.5

22.4

0.6

1.5

2.1

9.8

1998

46.3

7.1

3.4

10.5

4.2

17.2

1.1

18.3

22.5

0.7

1.6

2.3

11.0

1999

48.3

6.8

3.4

10.2

4.5

18.5

0.9

19.4

23.8

0.7

1.6

2.3

11.9

2000

48.2

7.0

3.3

10.4

4.3

19.0

1.0

20.0

24.3

0.7

1.5

2.2

11.3

2001

50.0

7.0

3.3

10.4

4.5

19.8

1.0

20.7

25.2

0.8

2.0

2.8

11.6

2002

51.7

6.8

3.6

10.4

4.9

20.8

0.9

21.7

26.6

0.7

1.6

2.3

12.4

2003

Table 1. The Four Key Industries in the Hong Kong Economy – Percentage Share to GDP

53.8

6.9

3.8

10.6

5.4

21.5

1.0

22.5

27.9

0.8

2.2

3.0

12.3

2004

55.5

6.9

3.8

10.7

5.2

22.7

0.9

23.6

28.9

0.8

2.4

3.2

12.8

2005

57.0

6.8

3.8

10.5

5.0

21.4

0.9

22.4

27.4

0.7

2.5

3.2

15.9

2006

The Hong Kong Economy Since Reversion 199

Import and export trade

NA

NA

Source: Census and Statistics Department, Hong Kong.

Four Key Industries = (1) + (2) + (3) + (4)

(B) Other producer services

3.4

ʳ

(A) Professional services

NA

16.3

NA

(B) Logistics

ʳ

2.5

18.7

NA

NA

(4) Professional Services and Other Producer Services

ʳ

Wholesale trade

(A) Trading

(3) Trading and Logistics

(B) Outbound

NA

NA

(2) Tourism

(A) Inbound

4.9

(1) Financial Services

ʳ

1996

Percentage share (%)

NA

NA

3.6

NA

NA

16.2

2.5

18.7

NA

NA

NA

NA

5.4

1997

43.0

6.4

3.4

9.8

6.2

15.7

2.6

42.7

6.5

3.4

9.9

6.0

15.7

2.3

18.0

24.0

24.5 18.3

0.6

2.6

3.2

5.5

1999

0.7

2.7

3.4

5.4

1998

43.3

6.7

3.8

10.5

6.1

15.9

2.3

18.1

24.2

0.7

2.7

3.4

5.3

2000

43.3

6.7

3.9

10.6

6.0

15.7

2.2

17.9

23.9

0.7

2.8

3.5

5.4

2001

43.8

6.7

3.9

10.7

5.7

15.5

2.2

17.7

23.4

0.7

3.6

4.3

5.5

2002

44.5

7.0

4.0

11.0

5.8

15.9

2.1

18.0

23.9

0.8

3.6

4.4

5.3

2003

45.1

7.0

4.0

11.0

5.9

16.1

2.2

18.3

23.3

0.8

3.9

4.7

5.2

2004

Table 2. The Four Key Industries in the Hong Kong Economy – Percentage Share to Total Employment

46.1

7.0

4.1

11.1

6.0

16.4

2.3

18.7

24.7

0.8

4.1

4.9

5.4

2005

46.6

7.1

4.2

11.3

6.2

16.3

2.1

18.5

24.6

0.9

4.2

5.2

5.5

2006

200 China’s Hong Kong Transformed: Retrospect and Prospects

The Hong Kong Economy Since Reversion

The future of the trading and logistics sector is, however, highly uncertain due to the high cost of Hong Kong’s port and the intense competition from ports in the Pearl River Delta. The container throughput of Shanghai surpassed Hong Kong’s in 2007, and that of Shenzhen will soon surpass Hong Kong. In comparison, Hong Kong’s competitiveness in financial services appears to be more secure, and the HKSAR government has placed high hopes on the development of Hong Kong as an international financial center. Yet, as mentioned above, Hong Kong’s position as an international financial center is not incontestable.

Trading and Logistics From 2001 to 2007, Hong Kong’s container throughput only grew at the average annual rate of 5.1%, indicating severe cargo diversion to Shenzhen ports. However, Hong Kong’s trade grew at the average annual rate of 10.6%, showing that Hong Kong has shifted towards higher value cargo, e.g., air cargo or high-end cargo that requires intensive logistics support. Moreover, Hong Kong’s offshore trade (trade handled by Hong Kong firms but not going through Hong Kong) also grew rapidly in the period. Offshore trade appears under export of services instead of visible trade. The best measure of offshore trade is exports of trade-related services, which have grown at the average annual rate of 11% in the period. As offshore trade uses an external port (e.g., Shenzhen port) rather than the Hong Kong port, it is not directly affected by the competitiveness of the Hong Kong port. Despite continuing brisk growth in Hong Kong’s trade, the rate of value-added generated per dollar of trade in recent years has decreased substantially due to competition from mainland Chinese traders and ports.5 Since 2006, the rapid growth of Hong Kong’s trade is not sufficient to generated commensurate growth in value added or income. While the value added or income generated by trading and logistics grew at the brisk average rate of 7.7% per year from 2002 to 2005, the growth slowed down to a mere 1.4% in 2006. The share of trading and logistics in Hong Kong’s GDP rose

201

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China’s Hong Kong Transformed: Retrospect and Prospects

from 21.9% in 1979 to a peak of 28.6% in 2005, but declined to 27.4% in 2006 due to the sharp fall in the rate of value-added generated per dollar of trade. Trading and logistics, the largest pillar of the Hong Kong economy, is under serious threat. In addition to the decline in the rate of value added per dollar of trade, Hong Kong’s trade growth is likely to slow down as the hyper-growth of China’s trade is unsustainable. Table 3 compares the average annual rate of growth of mainland China’s trade with that of Hong Kong. From 1979 to 1996, Hong Kong’s trade grew at the rate of 19% per year, exceeding mainland China’s growth of 14% per year. It was the period when Hong Kong had a near-monopoly in producer services. From 1996 to 2001, mainland China’s trade growth slowed down slightly to 12% per year as a result of the Asian financial crisis, and Hong Kong’s trade growth plummeted to a pitiable 0.8% per year, indicating severe trade diversion to mainland ports. From 2001 to 2007, mainland China’s trade growth accelerated to 27% per year, mainly a result of WTO entry, and Hong Kong’s trade growth also recovered to 11% per year. Hong Kong’s trade growth was still much slower than mainland China’s, indicating continuous cargo diversion. Hong Kong is having a smaller share of a bigger and expanding pie. The size of Hong Kong’s slice is growing only because the size of the pie is growing very fast. If China’s trade growth would slow down from the neck-breaking rate of 27% per year to the more normal pre-Asian financial crisis rate of 14% per year, then Hong Kong’s trade growth would likely stagnate. Table 3. Annual Growth Rate of External Trade in Mainland and Hong Kong Period

Mainland

Hong Kong

1979–1996

14%

1996–2001

12%

0.8%

2001–2007

27%

10.6%

19%

Source: Mainland data were obtained from China Customs Statistics, National Bureau of Statistics of China; Hong Kong data were obtained from Hong Kong External Trade, Census and Statistics Department, Trade and Industry Department, various issues.

The Hong Kong Economy Since Reversion

In the long run, it is highly unlikely that mainland China’s trade will grow at the neck-breaking rate of close to 30% per year. China is already the world’s third largest trading nation, and is projected to surpass the USA and Germany to become the world’s number one soon. Protectionist sentiments in the USA and the EU against mainland China’s exports are running high, and Beijing is taking various measures, such as cutting export tax rebates, to slow down her export growth. A slowdown in mainland China’s trade growth is inevitable. Continuing high growth in Hong Kong’s trade, including Hong Kong’s offshore trade, is very unlikely. Though the HKSAR government has undertaken various measures to facilitate cross-border trucking, shipping a container via the Hong Kong port is some US$300 more expensive than that via Shenzhen ports. Sixty percent of the excess cost is due to the higher cost of cross-border trucking, which is monopolized by Hong Kong truckers as mainland truckers are not allowed to enter Hong Kong. Liberalizing cross-border trucking is the most effective means to lowering the costs of using the Hong Kong port, but protecting the livelihood of Hong Kong’s 12,000 container truck drivers is of high priority to the HKSAR government. The major political parties in Hong Kong have chosen to protect local truckers even though they know that, without liberalization of trucking, Hong Kong’s container throughput will soon be surpassed by Shenzhen and will fall further behind that of Shanghai. As mentioned above, Hong Kong has some success in developing higher value cargo such as air freight and goods that require intensive logistics support. As can be seen from Table 3, the share of logistics to GDP has increased from 3.8% in 1997 to a peak of 5.4% in 2004. However, in Guangdong’s 11th Five-Year Plan (2006–10), development of logistics is given high priority, and there will be increasing competition in logistics between Hong Kong and Guangdong. Moreover, Hong Kong’s air cargo is also under competitive pressure from Guangzhou’s new airport. In May 2007, China and the USA agreed to double flights between the two countries in two years. This would further undercut the status of Hong Kong as China’s premier air hub. In fact, the share of logistics in Hong Kong’s GDP has already declined the peak of 5.4% in 2004 to 5.0% in 2006. In a nutshell, the strong boost of trade to Hong

203

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China’s Hong Kong Transformed: Retrospect and Prospects

Kong’s economic growth since the inauguration of China’s open-door policy in 1979 is likely to weaken or even disappear in the long run.

Financial Services The HKSAR government targets financial services as the focal point of Hong Kong’s economic development. Hong Kong’s performance is particularly impressive in IPO (initial public offering), mainly from mainland companies. In 2006, Hong Kong has surpassed New York to be a close number two to London in terms of total funds raised through IPO, and also overtook Toronto and Frankfurt to rank sixth in equity market capitalization.6 In the mid-March 2007 report of the City of London Corporation on the competitiveness of 46 financial centers in the world, Hong Kong was ranked third after London and New York.7 According to the report, among Asian cities, Hong Kong is most likely to emerge as a global center, while Shanghai and Tokyo are unlikely to become global centers. In contrast, an earlier report released by the City of London Corporation two years ago suggested that there was no clear leader among the Asian centers, the Hong Kong’s prospect as a global financial center has clearly risen. It must be emphasized, however, that whether Hong Kong will really become a global financial center is by no means certain. Competition among Asian cities is keen. Singapore is a close competitor, while Shanghai has good long term potential. In financial services, Hong Kong’s global rank is only impressive in IPO. The size of New York’s financial services sector is roughly seven times Hong Kong’s in terms of value-added.8 It is clear that Hong Kong still has a long way to go. Hong Kong’s strength as a financial center is very uneven. While Hong Kong is strong in equity market and IPO, Hong Kong’s debt market is miniscule: Only 2% of the UK’s and 1% of US’s in 2006.9 Despite Hong Kong’s effort to develop the debt market, its growth from 1996 to 2006 is much slower than those of the UK and the US. As for the foreign exchange market, turnover in Hong Kong is just

The Hong Kong Economy Since Reversion

4% of the world total, and Hong Kong ranks behind Singapore.10 Hong Kong share of the global derivatives turnover is also small. Unlike Shanghai, Hong Kong does not have commodity futures. Except for IPO and equities, Hong Kong’s financial markets lack both depth and breadth. Hong Kong is also weak in innovations in financial instruments such as financial derivatives and asset securitization due to a lack of financial institutions and talents.11 Presently, Hong Kong only acts as a regional distribution center for innovative products developed in London or New York.

Decline of Banking and Rise of Capital Market In recent years, the demand of mainland Chinese enterprises for loans from Hong Kong banks has fell greatly because China itself has ample savings and, with banking reforms, mainland banks are increasingly capable of catering to the needs of non-state enterprises. From 1997 to 2002, the foreign currency loans of Hong Kong banks fell by 80%. In 1997, Hong Kong was number one in syndicated loans in East Asia, ahead of Japan and Australasia by a wide margin. However, as China’s demand for syndicated loans fell after the Asian financial crisis, both Japan and Australasia rapidly surpassed Hong Kong in syndicated loans in recent years. Hong Kong has turned into more of a domestic rather than regional banking center.12 Though mainland’s fund raising through Hong Kong banks fell greatly, mainland enterprises have flocked to the Hong Kong stock market in recent years to raise equity capital. This is not because the mainland is short of funds. Through listing in Hong Kong, mainland enterprises can signal to international and domestic investors that their stocks are of good quality, enabling them to raise more funds in the domestic stock market. Though the mainland stock markets have surpassed Hong Kong’s since April 2007 in turnover and market capitalization, more mainland enterprises will continue to list in Hong Kong to acquire a reputation before listing in the domestic market. In serving mainland China’s financial needs, Hong Kong has

205

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China’s Hong Kong Transformed: Retrospect and Prospects

switched from indirect financing (bank loans) to direct financing through the equity market. China’s economic reforms have reached a stage whereby large SOEs (State Owned Enterprises) can securitize and raise capital in the stock market. The primary purpose of securitization is to promote enterprise reforms and economic reforms. Raising capital is secondary as China is not short of capital. Listing in Hong Kong has the advantage that the enterprise has to comply with international accounting standards and come under the continuous scrutiny of international investors. This is important for improvement of corporate governance. The rapid transformation of Hong Kong’s financial sector from indirect financing and banking to direct equity financing in the decade since 1997 is a testimony to the flexibility and resilience of Hong Kong’s financial sector. The decline for loans led to a lot of hardship in the banking industry. Besides the 80% decline in foreign currency loans already mentioned, the number of licensed banks also fell from 186 in 1997 to 138 in 2006.13 Many Japanese banks left Hong Kong. The surviving banks have to diversify from traditional lending into financial supermarkets. Despite the consolidation of the banking industry, the share of Financial Services to GDP has risen from 10.3% in 1997 to 12.8% in 2005, and rose further to 15.9% in 2006. This is a tribute to the dynamism of Hong Kong’s Financial Services. There has been a tendency for financial systems to evolve from a banking-oriented stage to an equity-market leading stage and then to a securitization stage.14 The USA and the UK are in the third stage while Japan is still in the first stage. The rapid transformation of Hong Kong from the first stage towards the third stage since 1997 is a sign of strength.

Hong Kong As a Center of Wealth Management In the early years of China’s opening, Hong Kong’s main role as a financial center was raising funds for mainland’s development. After nearly three decades of breathtaking economic development, the mainland has the largest foreign exchange reserve in the world since

The Hong Kong Economy Since Reversion

2006. The mainland has a high and rising savings rate, reaching 45% by 2006. Hong Kong’s role as a financial center will increasingly shift from fund raising to wealth management for the mainland. It is no accident that Hong Kong’s fund management business has more than trebled in size from 2000 to 2005, rising from HK $1,485 billion to HK $4,526 billion. Hong Kong is fast becoming an important regional fund management center, especially for mainland China funds. Hong Kong’s fund management business is highly international. In 2005, 63% of the business involves non-Hong Kong investors, and the assets managed include very substantial amounts outside Hong Kong/China and also outside Asia.15 The Renminbi is likely to be close to fully convertible in a few years. It has often been thought that this would help Shanghai to develop its international financial business and threaten the uniqueness of Hong Kong. While this is true to a certain extent, it must be stressed that the convertibility of the Renminbi will give a big boost to Hong Kong as a wealth management center as mainland wealth can flow freely to Hong Kong. In May 2007, Beijing announced the relaxation of its QDII (Qualified Domestic Institutional Investor) scheme. The scheme, introduced in April 2006, allowed domestic and foreign banks to invest up to US$14.2 billion for their clients in overseas assets. However, after one year, only US$400 million of the quota was used as the scheme was restricted to bonds and foreign currency products that have low returns. The relaxation in May 2007 allowed qualified banks to invest up to half of their QDII funds in stocks. Initially, investment is restricted to Hong Kong-traded stocks as the mainland has regulatory agreements with Hong Kong, but the scheme is expected to be expanded to other markets. On May 15, 2007, the first trading day after the announcement, Hong Kong stock prices and turnover both set new records. 16 This limited liberalization on mainland’s capital outflow shows the great potential benefit of the convertibility of Renminbi for Hong Kong. For wealth management, secure legal protection is of utmost importance. Moreover, the development of financial markets is highly dependent on a clean, transparent, and even-handed regulatory environment. Though Shanghai is rapidly developing its

207

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financial institutions, a reputable legal framework and transparent regulatory system takes time to evolve and mature. Given the corrupt and cumbersome bureaucracy in mainland China, the development of an international financial center and wealth management center will be difficult. In mainland China, a reputable legal and regulatory system necessitates political reforms that are more time-consuming and risky than economic reforms. As an international financial center, Hong Kong has a fundamental edge over other mainland Chinese cities in the rule of law, clean and transparent governance, and the free flow of information. As long as Hong Kong can maintain its world-class standard in market regulation and quality of financial services, the prospect of Hong Kong as an international financial center is bright.

Conclusion While the mainland China market has provided the main impetus to the rapid development of Hong Kong’s financial industry, dependence on the China market also exposes Hong Kong to swings in China’s policy. For example, the through-train investment scheme (allowing mainland retail investors to invest in Hong Kong-listed stocks) that was first announced in autumn 2007 has led to a sharp rise in the Hong Kong stock market, only to be followed by a sharp fall when the scheme was shelved towards the end of 2007. To avoid over-dependency on the China market, the HKSAR government has promoted links to the Islamic market and is building an Islamic financial platform. While Hong Kong has good potential to become a global financial center, Hong Kong should not risk putting all its eggs in one basket. Moreover, the financial sector yields too little employment as its share in total HKSAR employment in 2006 was only 5.5%. Lopsided concentration in financial services will undermine social stability. While Hong Kong aspires to be a global financial center like New York, it should note that New York’s economy is quite diversified. It is a global center for creative industries such as media, publishing, fashion, advertising,

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film-making, and arts. It has a high quality and growing health-care industry, and dynamic high tech industries such as software development, internet services, and biomedical research, plus being a hub of world class tertiary education institutions. It has often been alleged that a major stumbling block to Hong Kong’s transformation into a knowledge-based economy is the low international rank of Hong Kong in education. In the 2006 World Bank dataset on the Knowledge Index with data for 2003 and 2004, Hong Kong’s rank in education was 65th among 128 economies. Hong Kong has low scores for both secondary school and tertiary enrolment.17 In terms of the Education Index of the United Nation’s Human Development Index, Hong Kong’s rank was also low: 71st in 2003, even behind that of Philippines. This is attributable to a low school enrolment ratio.18 Yet, international rankings of education indices can be misleading because such rankings are not adjusted for the quality of education, which is relatively high in Hong Kong. According to the Programme for International Student Assessment (PISA), Hong Kong students ranked among the top 10 jurisdictions in all the four areas of assessment – mathematics, science, problem solving, and reading. Hong Kong’s universities also rank fairly high in global rankings. Hong Kong also has a very pluralistic education system with many international schools. In comparison with other economies, a relatively large number of Hong Kong youths are educated in some of the best schools and universities in the USA and the UK. Moreover, school attendance rates in Hong Kong have increased rapidly in recent years, to a level comparable to Singapore in 2005.19 The crux to Hong Kong’s transformation into a knowledge-based economy is the availability of talents. As long as Hong Kong remains an attractive place for talents, the relocation of manufacturing or services will not imply the hollowing out of the Hong Kong economy, as enough new, high value-added activities will develop to sustain economic growth. Despite high costs and poor air quality, Hong Kong remains an attractive place for talents due to its international connectivity, pluralism, diversity, protection for civil liberties and human rights. Hong Kong universities attract an increasingly large number of gifted mainland students, a majority

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of them prefer to work in Hong Kong after graduation. Prominent mainland artists, musicians, and athletes have acquired Hong Kong residency. The fact that the senior positions in high-tech finance in Hong Kong are dominated by expatriates underlines Hong Kong’s openness and international connectivity. Moreover, quite a few of Hong Kong’s overseas educated youth talents are making their way up in the financial markets of London and New York. Hong Kong has access to a diverse diaspora of talents world wide. In a sense, Hong Kong’s future prosperity will depend on its ability to tap talents in the mainland, in Hong Kong’s diaspora, and in the international arena.

Notes * This chapter is a revised and updated version of the author’s article “The Hong Kong Economy and Its Financial Sector” published in Yue-Man Yeung ed., The First Decade: The Hong Kong SAR in Retrospective and Introspective Perspectives (Hong Kong: Chinese University Press, 2008). The research is supported by the Hong Kong Institute of Asia-Pacific Studies, Chinese University of Hong Kong. The author wishes to thank Mr. Wing Tse and Miss Jessie Pang for their able research assistance. 1. Hong Kong Economic Journal, April 12, 2006. 2. Siu-kai Lau, “From Elite Unity to Disunity: Political Elite in Post-1997 Hong Kong,” in Gungwu Wang and John Wong, eds., Hong Kong in China: The Challenges of Transition (Singapore: Times Academic Press, 1999), pp. 51–60. 3. Siu-kai Lau, ibid., pp.61-70. 4. Hongyi Li, Xiangdong Wei and Danyang Xie, “Competitiveness of the Hong Kong Economy: A Study on Productivity Growth, Unit Labour Costs & Structural Changes in Export Composition,” (Bauhinia Foundation Research Centre, May 2007), pp. 10–11, (http://www.bauhinia.org/publications.htm). 5. Yun-Wing Sung, “Economic Contributions of Hong Kong’s External Trade Sector: Input-Output Analysis” (mimeograph). Also see Yun-Wing Sung, “The Evolving role of Hong Kong as China’s Middleman”, in Lok Sang Ho and Robert Ash, ed., China, Hong Kong and the World Economy, (Basingstoke and New York: Palgrave, 2006), pp. 152–169. 6. Kwok Leung Tse, “Recounting the Development of Hong Kong’s Financial Centre in the Past Decade,” Economic Review, Bank of China

The Hong Kong Economy Since Reversion (Hong Kong) Ltd., May 2007, p. 2, (http://www.bochk.com). 7. City of London Corporation, “The Global Financial Centres Index,” March 2007, (http://cityoflondon.gov.uk/Corporation). 8. Jian Ying, “Hong Kong Should Focus on Knowledge-based Service Industries,” Economic Review, Bank of China (Hong Kong) Ltd., May 2006, p. 3, (http://www.bochk.com). 9. George S.K. Leung, “HKSAR as a Regional and Global Financial Hub,” presentation at the Symposium on the Making of China’s Hong Kong: Retrospect on HKSAR’s First Decade & Prospects Ahead, (Ming Chan and Peter Fong, organizers, at the School of Professional and Continuing Education, University of Hong, Hong Kong, April 27–28, 2007. 10. Ibid. 11. Tse, “Recounting the Development of Hong Kong’s Financial Centre in the Past Decade,” p. 4. 12. Leung, “HKSAR as a Regional and Global Financial Hub.” 13. Tse, “Recounting the Development of Hong Kong’s Financial Centre in the Past Decade,” p. 3. 14. Ibid., p. 4. 15. Leung, “HKSAR as a Regional and Global Financial Hub.” 16. South China Morning Post, May 15, 2007. 17. Enright, Scott & Associates, “Hong Kong’s Competitiveness: A Multidimensional Approach,” Bauhinia Foundation Research Centre and Enright, Scott & Associates, Hong Kong, September 26, 2006, p. 27, (http://www.bauhinia.org/publications.htm). 18. Ibid., p. 55. 19. TeamOne Economist Ltd. “Review of HK’s Socio-Economic Progress: A Quantitative Assessment,” Bauhinia Foundation Research Centre, December 2006, Slide 57, (http://www.bauhinia.org/publications.htm).

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9 New Generation, Greening Politics and Growing Civil Society Yan-yan YIP Christine LOH

Hong Kong’s civil sector is “highly dynamic, innovative and resourceful.”1 This is the observation of The Study of the Third Sector Landscape in Hong Kong (The Study) commissioned by the Central Policy Unit of the Hong Kong Special Administrative Region (HKSAR) government in 2002. Now six years later, Hong Kong’s civil society is arguably even more so. Its development has not only witnessed growth in the number of groups established, but have also seen an increase in the range of issues non-governmental organizations (NGOs) take up. The blossoming of civic groups in Hong Kong is a natural phenomenon of a maturing society in evolution, as its citizens become better capacitated to deal with a variety of social issues. However, how civil society deals with the matters that concern them is related to the politics of that society. The environment within which civil society functions in Hong Kong have much to do with the disconnection and disarticulation of the city’s political system that leaves the executive, the legislature and civil society disconnected from each other. In terms of constitutional design, the HKSAR is quite unique in the world. Elections based on universal suffrage only return half the members of the legislature and do not return the government. The political system also entrenches elections based on occupations (known as functional constituencies) to return the other half of the legislature. Moreover, functional elections dominate the selection of the head of government (known as the chief executive), who is selected by a 213

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committee of 800 people. Moreover, in these functional elections, corporate voting dominates.2 In the Hong Kong political system, the legislature is designed to be weak, and the concept of separation of powers does not apply. The chief executive cannot be a member of a political party by law.3 Instead, the executive is powerful in constitutional terms but is disconnected from the legislature and people, and the importance of political party is deliberately handicapped. In view of a weak party system, there is no ruling party in Hong Kong, and thus the executive has to work within a system where his governing ideas do not have to be tested through going to the people, and where the vital institutional link with the legislature is not joined-up. Moreover, the values of the first chief executive – a conservative business tycoon – were not shared by the Hong Kong community.4 His successor is much better at manipulating the political system being a veteran civil servant, but his vision of the future is coming under increasing question, as the new generation of citizens reaching a critical mass appears to aspire to other things than those on offer. The gaps in aspirations between this new generation and those in power and the inability of the political system to deal with the gaps pitch civil society and the political establishment against each other, on top of which the values of the Chinese Communist Party (CCP) present an additional layer of complexity to the city’s politics. This chapter first gives a brief overview of Hong Kong’s civil society, describes its development and how NGOs function to fulfill their missions (with specific reference to environmental civic groups, as the environment has become a major area of civic interest, and related areas in urban planning, urban design and heritage conservation), before assessing the future of civil society development in Hong Kong.

Hong Kong’s Evolving “Third Sector” In using the term “civil society” or “NGOs,” we refer to a distinct organizational sector with its own identity and characteristic features. This sector is also referred to as the “Third Sector” to set itself apart from the government and the market. Its vitality comes

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from shared values among the actors rather than by their desires to gain direct political power or commercial interests. People come together to further their collective values. The history of civil society development is part of the history of the city’s political and social development. In the early days, civic groups in Hong Kong were usually understood to be voluntary agencies doing mainly religious, educational or welfare work of a charitable nature to help the sick and the poor. Religious bodies provided and wealthy people funded all kinds of services that the colonial authorities did not adequately supply. This was basically the perspective of NGOs up until the late 1970s despite the formation of numerous community groups and trade unions as early as between 1841 and 1911.5 Even when the colonial government began to provide more social services in the 1970s, the role of NGOs continued to be very important.6 Hong Kong witnessed a new phase of NGO development from the early 1980s. As Britain and China started their negotiations over the return of Hong Kong’s sovereignty to China, the Hong Kong community was forced to weigh-up many issues concerning their future. It was not possible anymore for Hong Kong to remain the “depoliticized” place that it was once said to be. Moreover, with the introduction of District Board elections in 1982 and functional elections for a number of seats to the Legislative Council, politics became much livelier as alternative and opposition voices began to surface. A number of political groups emerged during this period of time.7 The Tiananmen crackdown in 1989 and the first ever direct elections to the Legislative Council in 1991 prompted a major change in people’s attitudes towards political participation. Democracy came to be seen as essential to safeguard Hong Kong’s liberal way of life resulting in yet more groups being formed to push for a faster pace of democratic reform, as well as to promote human rights and the rule of law.8 Moreover, from 1983 onwards, the CCP also increased its “united front” work in Hong Kong in order to put in place the post-colonial political establishment. This force, referred to as the “pro-Beijing” or “leftist” camp before 1997, and the “pro-government” camp after the Handover, also nurtured a range of “united front” organizations, including political parties, in preparation for taking power.9

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It may be said that there are three main cleavages in Hong Kong politics today – the first has to do with the political contest on the issue of pace and direction of democracy; the second has to do with the pursuit of social justice concerning the wide wealth-opportunity gap between the “haves” and the “have nots”; and the third has to do with what makes a “good society” in the eyes of the new generation of Hong Kong citizens. Moreover, the background against which politics take place is the fact that the people have become better educated and city life has taken on a cosmopolitan flavor by the late 1980s with Hong Kong becoming an international service and financial center. Since the conclusion of the Sino-British negotiations on the future of Hong Kong, many more people have spent time not only travelling outside the city but also living overseas for an extended period, and that experience is beginning to have an impact on what they considered important in social development as hundreds of thousands of people return to Hong Kong.10 New issues for Hong Kong, such things as a clean environment, good urban planning, heritage conservation, equal opportunities, media freedom and animal welfare are now regular public discourse fodder.11 New NGOs have been formed to work on issues locally, as well as beyond the city’s own borders. Today, NGOs are no longer just seen as providers of charitable services but as advocates of alternative visions to those of the establishment. With ease of electronic communication, NGOs can easily tap into a large reservoir of worldwide ideas and information, and coupled with a community that is investing in community endeavors even during economically tough times, there seems to be little doubt that the “Third Sector” will continue to grow and evolve in Hong Kong. The question is whether the evolution of Hong Kong politics will help to better connect formal political activities to those of the informal activities by the NGOs. .

A Snapshot of Hong Kong’s NGOs The Study of the Third Sector Landscape in Hong Kong noted that there were approximately 16,660 NGOs in Hong Kong in the early

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2000s. The size of NGOs in Hong Kong varies according to what they do. There are very small NGOs with just a handful of activists to district-based groups providing services in small localities in which there are over 10,000 members. Indeed, over 70% of Hong Kong NGOs serve members primarily, while the rest serve the public at large. The Study found that around 52% of NGOs serve neighborhoods or districts within Hong Kong, while 44% serve the whole of Hong Kong.12 Interestingly, there is no legal form dedicated to NGOs in Hong Kong equivalent to economie sociale in France, or non-profits in the United States. NGOs in Hong Kong are usually established through various means but most of them are formed as societies, companies or trusts. There is no government restriction on governance for most of the “Third Sector” in Hong Kong in terms of size or composition of its governance board. However, for those NGOs receiving substantial public funds for provisions of services, such as those in the welfare and health services sector, provisions are made for appointment of certain government representatives to oversee NGOs’ management. The largest source of operating income for NGOs came from government funding (28%) was not surprising since so many NGOs provided basic welfare services to the community. Other major sources of income were membership fees (18%) and private donations and sponsorship (15%). The Study estimated conservatively that there were at least 3.7 million people out of a population of about 6.8 million who were members of NGOs, but numbers could in fact be very much greater.13 However, only about 47% of NGOs have tax exempt status.14 The Study found a total of between 150,000 and 372,000 people work in NGOs in Hong Kong, generating expenditures of HK$18.59 billion and HK$27.36 billion as of October 2002. That translated to 4.6% and 11.4% of total employment and 1.5% to 2.2% of GDP in 2002. Thus, in terms of size, the NGO sector is comparable to the manufacturing sector, construction industry or transport, storage and communications sector. Contributions made by volunteer labor in the Third Sector ranged from HK$52.9 to HK$83.3 million in 2002. Moreover, The Study estimated 550,000 to 710,000 Hong Kong residents participate in some sort of volunteer activities, which contributed

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greatly to Hong Kong’s overall quality of life and opportunity for personal development. Even at the lower end of the estimate, the number of volunteers equated to about 15.7% of the total workforce.15 The importance of the Third Sector in Hong Kong can also be seen from the services it provides to the people. The Study estimated that each person living in the city received an average of 4.3 times a year some service from NGOs in areas which the government and commercial sectors did not provide.16

Green Politics: New Groups, New Focuses and New Values To use CIVICUS’17 definition, “the arena, outside of the family, the government and the market where people associate to advance common interests” is referred to as civil society.18 In Hong Kong, the concept of civic society has taken hold to a greater extent after 1997.19 More Hong Kong people have only started to refer the NGO sector as civil society in recent years and the number of relevant research conducted has surged in Hong Kong. The terms NGOs, civic sector, Third Sector and civil society are often used interchangeably. In reviewing the post-1997 decade of NGO development in Hong Kong, there are two aspects that are important to note. The first has to do with the values and assumptions of the establishment; and the second has to do with the style of politics and governance they perpetuate, both of which have inspired greater civil society activism. The first phenomenon could be associated with the Tung Chee-hwa administration (1997–2005), where the elites’ fears of the “free lunch” led to policies that reduced public services substantially during the Asian Financial Crisis (1997–1999). During the crisis, the policy choices of the political establishment prioritized such things as capital expenditure on a Disneyland theme park but cut back on recurrent spending on soft infrastructure (such as education and healthcare) and public services in the belief that hardware spending produces construction jobs but fails to forge ahead on human development. Even today, the 2008–2009 Budget shows that even

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when the government has substantial surpluses, it hesitates to increase recurrent spending but prefers to invest in capital spending.20 The “free lunch” mindset and fear to invest in human development has resulted in hospital services being pulled-back, patients not having the use of new equipment and drugs, and universities having insufficient funds to up-keep equipment and laboratory instruments and pay competitive rates to hire international staff. In 2003, Hong Kong became the epicenter of the outbreak of a new infectious disease – SARS (severe acute respiratory syndrome) – which debilitated the city for three months, when many normal activities were curtailed. The inability of the HKSAR government to take actions that resonated well with the public compounded its legitimacy deficit and turned the situation into an explosive crisis of legitimacy.21 Moreover, on July 1, 2003, Hong Kong people went out in force to protest against the government’s push for the passage of the controversial Article 23 legislation, which led to calls for a faster pace of democratic development, and the eventual resignation of Tung as chief executive in March 2005, but also provoked Beijing to look more closely at how to prevent such outpouring of civic discontent again. During this period of time, civil society was highly engaged with more people and private resources going into community-building initiatives via increasing philanthropic endeavors.22 Indeed, SARS and the July 1, 2003 protest marked the turning point of civil society development in post-Handover Hong Kong. The July 1 protest was a self-mobilized event showing that individuals and groups could come together relatively quickly to defend their way of life when the Hong Kong community felt threatened. 23 It re-energized Hong Kong’s third sector and new civic groups were established to call for universal suffrage, political accountability and good governance.24 Some other new groups were also formed to provide platforms for people to deliberate societal issues 25 while a number of think thanks have been formed to conduct public policy research.26 It may be said that civil society had responded to the events by taking on systemic issues in politics and policy from the thinking to the action end of the spectrum. At the same time, the Hong Kong community is beginning to

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articulate a quality of life it wishes to see. This vision is related to a desire for a cleaner and healthier environment and good urban planning that leads to a more convivial city. Environmental and planning issues are also often related, which provides opportunities for the NGOs to collaborate. Before the 1997 handover, there were already a number of green groups in Hong Kong promoting environmental protection, such as the long-established Conservancy Association, WWF (Hong Kong), Friends of the Earth (Hong Kong) and Green Power.27 Over the past decade, the number of green groups has grown and the issues they take up have widened to include urban planning, harbor protection, clean air, conservation and climate change. Important examples of green groups’ activities since 1997 include:28 • Long Valley: The Conservancy Association led a successful fight in a 3-year battle to save Long Valley in Sheung Shui. The rail company had planned to develop a spur line in Lok Ma Chau, which would have bisected Long Valley, an important ecological area. • Victoria Harbour: The Society for Protection of the Harbour (SPH) began its fight to protect Victoria Harbour from reclamation in 1995. In 2003, it took the Town Planning Board to court over the Wan Chai North reclamation and won. Since then, it had fought several court cases concerning Central and Wan Chai.29 Moreover, other groups have joined the fight for improved waterfront design, and even business groups have shown sustained interest. • Hunghom Peninsula: Five green groups, including Conservancy Association, Friends of the Earth (Hong Kong), Green Peace (China), Green Power and WWF (Hong Kong), joined efforts and succeeded in demanding developers (New World Development and Sun Hung Kai Properties) give up the plan to demolish the brand-new Hunghom Peninsula compound of residential blocks that they said was wasteful of resources. • Central Police Station: The Tourism Commission planned to earmark the old Central Police Station for commercial activities. A variety of NGOs opposed the plan leading to

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•

•

•

•

•

•

a rethink of how to preserve the site and buildings appropriately. Tamar Government Headquarters: Civic groups joined forces but failed to get the HKSAR government to rethink its plan to move the Government Headquarters to the Tamar site. “Walled” Buildings: NGOs objected to the granting of planning permission that enables large blocks of flats to be built along the waterfront producing massive “walled” effect that are visually intrusive and could also prevent air circulation in urban areas. While a judicial review failed, there has been a rethink in how to avoid the “walled” effect. Lautau Island: Various green groups opposed the government’s Lantau Concept Plan and put forward an alternative vision. Star Ferry Terminal and Queen’s Pier: The HKSAR government’s Central Reclamation Plan led to the destruction of the Star Ferry Pier and Queen’s Pier. Civic groups demanded their preservation in the summer of 2006 and while they failed, the extent of public support they received surprised the government and the establishment, and forced government ministers to pay attention to heritage preservation.30 Wan Chai Market and Lee Tung Street: Groups opposed the HKSAR government’s plan to sell the market site, as well as to demolish Lee Tung Street (better known as Wedding Card Street) even though the Town Planning Board had already approved the plan. Air Pollution: HKSAR government’s failure to acknowledge the poor air quality in Hong Kong and take action led to the formation of new groups to raise public awareness and even to take the government to court. NGOs also produced research to demand a shift in government policies to improve air quality. Business groups have argued that Hong Kong’s poor air quality has affected the city’s competitiveness in recruiting and keeping international talent.

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• Climate Change: NGOs and even business groups have been ahead of the government in raising concerns and awareness. While the government’s attitude is that Hong Kong is a small carbon emitter in the world, civil society’s argument ranges from Hong Kong’s responsibility to business interest for Hong Kong to be competitive in a carbon-constraint world. The greatest number of new NGOs formed in recent years relate to urban planning and design. These include Citizens Envisioning@Harbour, People’s Council for Sustainable Development, Friends of the Harbour, Designing Hong Kong Harbour District, Designing Hong Kong, Harbour Business Forum, SEE Network, Local Action, Green Sense, Heritage Hong Kong and all the relevant professional institutes – such as the Institute of Planners and the Institute of Architects – have also been a part of the public discourse.

Green Politics in the HKSAR: New Ways of Getting Things Done Mobilizing via the Internet and New Media Mobilization via the Internet has become a powerful tool for civil society. Other tools have remained important, such as submitting responses to the HKSAR government and organizing public education or community campaigns. The Internet is an additional means for groups to disseminate information and raise public awareness quickly and at low cost.31 With blogs and “YouTube” becoming popular, the Internet has become an even more frequently used and useful tool for civic society to conduct bottom up mobilization.32 The Star Ferry case is a good example of active journalism via the Internet and internet mobilization. InmediaHK (www.inmediahk.net/public/index) was used to capture and transmit the thinking of the people who were engaged in the preservation of the Star Ferry Clock Tower and Queen’s Pier. It was through internet postings and SMS messages

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that people obtained information about what happened to the Star Ferry Clock Tower and when to go to the Star Ferry site. 33 Decisions were made virtually over the Internet. This new way of organizing and mobilizing individuals and groups poses a new challenge to the establishment as it has the capability of being very fast and wide although it is probably not yet seen as a threat.

Collaborating More Often Among Civic Groups and with Other Professionals Forming alliances to pursue a common cause is not new, but what is new in Hong Kong is the extent of civil society’s alliances. Activism today has fused the passionate with the cool-headed and experts with community organizers and funders. For example, the “Stop and Rethink Alliance” was a network of individuals and 13 civic groups (not limited to green groups) to raise concerns about the HKSAR government’s proposed plans to relocate its headquarters to the Tamar site. The Alliance included planning and transport experts, public health experts, scientists, lawyers, architects, landscape architects, policy experts, economists and business people. They were able to raise questions about government plans and to put forward alternatives for the whole waterfront area. Indeed, their central message was to call for holistic planning and design rather than piecemeal development. Board alliances are now quite common and have extended to air quality campaigning. Civic groups including think tanks34 and the business sector35 have actively engaged in urging for cleaner air in the region. Scientists and public health experts have also involved in this call for government’s actions.36 Seminars and workshops have been organized to provide more information and engage stakeholders to deliberate possible solutions. Overseas experts have also been invited to share knowledge and experience. Forming alliances increases the weight and chance of civil society getting heard by the establishment. As civil society groups become much more expert, they do pose a challenge to the political elites, especially when they are not as well prepared as they should be in substantive debate. Avoiding public debate is one strategy to

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avoid having to directly engage with civil society but over time, this strategy can only alienate civil society. There is a habit among establishment circles to accuse NGOs for opposing government action “for the sake of opposing” when in fact there is a refusal to engage or a disinterest in alternative ideas. The reluctance is often rooted in dramatically different worldviews between the establishment and NGOs but the politics of Hong Kong do not provide the space for them to be articulated and debated. While the green groups, urban planning and heritage conservation groups are not parts of the “pro-democracy” camp, their natural inclination tends to put them in the broad democratic camp. In the selection of the chief executive in 2007, identifiable members of some of these groups stood for election to the sub-sectors that selected the chief executive. They pledged to give their nominations to challenger Alan Leong, a legislator and barrister from the Civic Party to Donald Tsang, the incumbent chief executive, which enabled Leong to get over a hundred nominations in order to get to the selection starting block. 37 The CCP has traditionally regarded the “pro-democracy” camp with suspicion of coming under the influence of “foreign forces.” In its effort to slow down Hong Kong’s democratic movement, many united front bodies had been formed as NGOs, which go into action when required, such as when they are needed to make submissions to government consultations on democratic reform. 38 These united front bodies do not otherwise appear to engage on substantive public affairs issues but with their presence in the politics of Hong Kong, they present another of disconnect.

Using the Town Planning Process There has been a change in the ways how civil society interacts with the authorities especially in urban planning and heritage conservation issues. Some of the recent examples are illuminating of NGO behavior particularly in how they used the town planning process: • In 2006, Yuen Long residents submitted their application to the Town Planning Board to propose that the land at

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West Rail Yuen Long Station (which was designated for commercial and residential development) be declared open space. They submitted another application in 2007 to propose to rezone the site (an adjacent transport interchange) for government institution and community use after the Town Planning Board rejected their first application.39 • In 2006, Heritage Hong Kong submitted an objection to the Town Planning Board opposing an earlier rezoning of the Central Police Station and also applied for a height limit on the future development of the site. Heritage Hong Kong launched a judicial challenge in 2007 against the Town Planning Board for holding a secret meeting during which references that were part of an objection to the rezoning plan for the site were changed.40 • In 2007, the Central and Western Concern Group sent an application to the Town Planning Board proposing rezoning of the Former Married Police Quarters site at Aberdeen Street for community use rather than for high-rise blocks.41 • In 2007, in view of the demolition of the Chinese classic style King Yin Lei mansion on Stubbs Road, the Conservancy Association requested the HKSAR government to declare the mansion as a proposed monument 42 and later submitted an application to the Town Planning Board to rezone the site.43

Taking the Judicial Path As NGOs were frustrated that they could not get the political establishment to focus on policy matters, they either had to take the legal route when opportunities present themselves or they had to rely on protest. There has been an increase in the number of applications for legal aid for judicial reviews in recent years,44 and the number of judicial reviews filed in Hong Kong is also on the rise.45 This is also a sign of disconnection in the political process. The more established green groups have not used the legal route but

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the newer ones have been quite aggressive in challenging the establishment. For example, SPH successfully applied for a judicial review over the Wan Chai North reclamation plan in March 2003 as it believed that the plan violated the Protection of the Harbour Ordinance.46 Since then it has gone to court on several occasions establishing important precedents, including its most recent case on the government’s proposed “temporary reclamation.” 47 Green Sense sought judicial review to challenge the HKSAR government’s decisions to allow “walled” buildings to be built in West Kowloon in 2007.48 The leadership of the former includes lawyers with a strong capacity to take the legal route. Their judicial review cases have been meticulously prepared. Green Sense is a new NGO with young members and few resources. Nevertheless, Green Sense was not shy to take the legal route in the “walled” building case. Another example is the application made by Clean Air Foundation Limited and lawyer David Gordon Oldham in mid-2007 asserting that the HKSAR government had failed its duty in guaranteeing the right to life of all residents, as entrenched in the Basic Law.49 The legal route is far from ideal for NGOs because it is expensive and time consuming. It is also constraining in what can form the part of a judicial review but this route is important because there may be no alternative from the perspective of the NGOs, when the political establishment has other priorities, and the legislature and politicians are not tuned into their concerns.50 Public protest is far from ideal either since it is not possible to protest all the time and small turnouts can be used as an excuse by the government that the matter has little public support. However, the government can be surprised when caught by the Zeitgeist – such as in the Star Ferry Pier protests, when they should have caught the change in public aspirations earlier had it been watching for the rise of new issues.

But There Is Much Frustration . . . What has happened in the ten years after the handover has shown clearly that Hong Kong’s civil society is playing an increasingly

New Generation, Greening Politics and Growing Civil Society

important role in the city’s governance and development. However, there are still worrying aspects in the civil society movement in Hong Kong. Hong Kong’s civil society faces challenges. In the study, The Hong Kong Special Administrative Region: A Vibrant but Loosely Organized Civil Society, a CIVICUS Civil Society Index Report for the HKSAR, conducted by the HKSAR Civil Society Index Research Team in 2006, concluded that Hong Kong’s civil society is “vibrant but loosely organized.” 51 Limited resources have always been a problem for civic groups, which affects how they plan their work and collaboration with others in the community. Single-issue civic groups are not uncommon in Hong Kong and these groups may go inactive shortly after the government has taken some actions (be those actions encouraging or disappointing ones). Civil society does not only act as a watchdog of the government and business, it is also a partner in governance. The blossoming of civil society in Hong Kong is ironically a result of an extremely awkward political system, and most of the time, civil society in Hong Kong is pitched against the regime. There is little trust between the two sectors as their worldviews and outlooks are so different. This will not change unless those in power become more willing to engage on specific issues and be open to the fact that there are different visions and ideas in civil society. The alternative visions and ideas do, however, represent competition to the official ones but Hong Kong politics do not provide for them to get a good hearing through a joined-up political process. This will not change unless the disarticulated nature of the political system is reformed. The danger for the HKSAR government is that by sidelining voices they do not wish to engage with, they may be surprised occasionally by stronger public reactions to specific issues. In the Hong Kong system, where the executive is unelected and essentially chosen by Beijing, as well as supported by a group of elites who have been brought to the system, there may be many viewpoints and perspectives that those in power should listen to that are excluded.

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Notes 1. “Content and Overview,” The Study of the Third Sector Landscape in Hong Kong. Central Policy Unit, HKSAR Government. August 24, 2004, p. 15 (http://www.cpu.gov.hk/english/research_reports.htm, downloaded on February 26, 2008). This study was conducted in 2002 and results published in 2004. 2. For a full account of functional constituencies in Hong Kong, see Civic Exchange, ed., Functional Constituencies in Hong Kong: A Unique Feature of Hong Kong Legislative Council (Hong Kong: Hong Kong University Press, 2006). 3. Section 31 of “The Chief Executive Election Ordinance” states that winning candidate needs to declare he is not a member of political party and he “will not do any act that has the effect of subjecting himself to the discipline of any political party during his term of office.” 4. Hong Kong Transition Project, Half-way to Where? The Electoral Structures and Public Opinion Contexts: 2004 Legislative Council Election, August 2004 (http://www.hkbu.edu.hk/~hktp/halfway/ halfway.pdf). This survey was commissioned by local public policy think tank Civic Exchange. 5. See note 1. According to the same study, 50% of religious bodies now found in Hong Kong were formed between 1912 and 1975. 6. Wai-fung Lam and James Perry, “The Role of the Nonprofit Sector in Hong Kong’s Development,” Voluntas: International Journal of Voluntary and Nonprofit Organisations, 2000, 11:4, p. 368. 7. Political groups formed such as Meeting Point, the Association of Democracy and People’s Livelihood, and the Hong Kong Affairs Society. 8. For example, the United Democrats of Hong Kong, Hong Kong Human Rights Monitor and the Hong Kong Human Rights Commission. 9. “Pro-Beijing” forces formed Democratic Alliance for Betterment of Hong Kong, which also absorbed the Hong Kong Progressive Alliance, while the Hong Kong’s business establishment formed the “pro-business” Liberal Party, which became a part of the “pro-regime” loyalist camp after 1997. 10. Hong Kong Transition Project at Hong Kong Baptist University has been conducting longitudinal surveys on Hong Kong people’s attitudes toward local public affairs and one of the tracking questions they ask is to find out if respondents have lived abroad. See Hong Kong Transition Project, Hong Kong Constitutional Reform: What do the People Want? December 2005 (http://www.hkbu.edu.hk/~hktp/CR/CR_Dec05.pdf, downloaded on March 3, 2008). This survey was commissioned by local public policy think tank Civic Exchange. 11. As Hong Kong people have become wealthier to buy pets, the problem of care has grown like the abandonment and abuse of animals. New groups

New Generation, Greening Politics and Growing Civil Society have been formed to provide shelter and to fight for the authorities to deal with animal abuse, such as Society for Abandoned Animals (1997) and Animal Earth (2006). 12. See note 1. 13. Ibid., Chapter 15, p. 439. The estimated range was from 3.7 million to 8.3 million. 14. Ibid., Chapter 15, pp. 425–426. NGOs have to apply separately to the Inland Revenue Department for tax exempt status after incorporation. 15. Ibid., Chapter 15, pp. 443–444. 16. Ibid., Chapter 15, p.442. 17. CIVICUS: World Alliance for Citizen Participation is an international alliance of members and partners that constitute an influential network of organizations at the local, national, regional and international levels, and span the spectrum of civil society. For more information about CIVICUS, please visit: http://www.civicus.org/new/default.asp?skip2=yes. 18. “Civil Society Index – Methodology,” CIVICUS, (http://www.civicus.org/ new/CSI_Methodology.asp, downloaded on February 27, 2008). 19. In his 2000 Policy Address, Chief Executive Tung Chee-hwa used the term “Third Sector” to refer to not-for-profit and voluntary organizations in the community. In his 2001 Policy Address, for the first time Tung mentioned “civil society” (only once). 2000 Policy Address, October 2000, paragraph 98; and 2001 Policy Address, October 2001, paragraph 88. 20. The 2008–09 Budget, February 27, 2008 (http://www.budget.gov.hk/ 2008/eng/speech.html, downloaded on March 3, 2008). 21. Ian Scott, Political Change and the Crisis of Legitimacy in Hong Kong (Hong Kong: Oxford University Press. 1989), pp. 289–305. 22. In the period 1998 to 2002, 50% of philanthropic intermediaries now found in Hong Kong were formed. See note 1, chapter 15, pp. 424–425. 23. Robert Chung and Joseph Man Chan, A Revelation of 1 July: Internet Mobilization Gives New Life to Democracy (http://hkupop.hku.hk/ english/columns/columns24.html). 24. The new groups included 71 People Pie, Civic Act-Up, Article 45 Concern Group, “Bounceback Hong Kong” and People’s Council on Sustainable Development. 25. Groups formed such as 30S Group, Roundtable and Professional Commons. 26. Think tanks formed include Civic Exchange (2000), SynergyNet (2002), Savantas Policy Institute (2006) and Bauhinia Foundation Research Centre (2006). 27. Conservancy Association was established in 1968 (the one environmental NGO with the longest history). WWF was established in 1961 and its

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China’s Hong Kong Transformed: Retrospect and Prospects Hong Kong chapter was established in 1981. Friends of the Earth (Hong Kong) and Green Power were formed in 1983 and 1988 respectively. 28. “Heritage versus concrete,” South China Morning Post, July 1, 2007. 29. The Society for Protection of the Harbour has fought seven legal challenges against the government and the Town Planning Board over reclamation decisions and won 6 of them, including a Court of Final Appeal decision on reclamation and obtaining indemnity costs for fighting a public interest case, which set a precedent in Hong Kong. 30. Legislators also took this issue on board. Ho Loy, active in protecting the Star Ferry Clock Tower and Queen’s Pier, took part in the December 2007 Legislative Council Hong Kong Island By-election. Her major platform was heritage conservation. It is regarded that the demolition of the Star Ferry Clock Tower was the starting point of the collective memory “campaign.” 31. Political and social leaders were slow to explore the potentials of cyber power before 2003. Rikkie Yeung, “The emergence of new media in Hong Kong politics,” The Hong Kong Journal, October 2007, No. 8 (http://www.hkjournal.org/archive/2007-winter/2.htm, downloaded on February 27, 2008). 32. Ibid. 33. Ivan Choy, “Star Ferry, The beginning of a new social movement?” Ming Pao, December 22, 2006. 34. For example, non-profit local public policy think tank Civic Exchange has published numerous research findings on air pollution, the associated health and economic costs and possible solutions since 2006. 35. The Hong Kong General Chamber of Commerce and the Business Coalition on the Environment launched a project called “Project Clean Air.” 36. Scientists and public health experts include scholars from Chinese University of Hong Kong, Hong Kong University of Science and Technology and the University of Hong Kong. 37. Ambrose Leung, “Alan Leong hits 100 targets to run in poll for chief,” South China Morning Post, January 31, 2007. 38. All the submissions are available on HKSAR Government’s website at http://www.cmab.gov.hk/cd/eng/past/index.htm. See also Carine Lai and Christine Loh, From Nowhere to Nowhere: A Review of Constitutional Development, Hong Kong 1997–2007. (Hong Kong: Civic Exchange, 2007), p. 74. Another example is the public consultation on West Kowloon Cultural District. It was found out that about one-eighth of the 30,000 public comment cards turned out to be submitted in identical envelopes with similar mailing labels and containing very similar comments. See Teddy Ng, “Poll Fraud Suspected in West Kowloon Consultation,” The Standard, October 8, 2005.

New Generation, Greening Politics and Growing Civil Society 39. Yvonne Liu, “Residents seek rezoning of station site,” South China Morning Post, June 10, 2006; and Chester Yung, “New bid to stop skyscrapers at Yuen Long station site,” South China Morning Post, August 23, 2007. 40. Una So, “Heritage group steps up battle over rezoning of police station,” The Standard, September 12, 2008. 41. Chloe Lai, “Petition delivered in move to block high-rises at historic site,” South China Morning Post, February 24, 2007. Chief Executive Tsang announced in his Policy Address in October 2007 that the site will be removed “from the List of Sites for Sale by Application for a year and proposals will be invited on its revitalization.” See Donald Tsang, 2007–08 Policy Address, paragraph 53. See also Olga Wong, “Police quarters site off sale list,” South China Morning Post, October 11, 2007. 42. The King Yin Lei mansion was declared as a proposed monument under the Antiquities and Monuments Ordinance for 12 months on September 15, 2007. 43. See Town Planning Board, Minutes of the 363rd Meeting of the Metro Planning Committee, December 14, 2007, (http://www.info.gov.hk/tpb/ en/meetings/MPC/Minutes/m363mpc_e.pdf, downloaded on February 28, 2008). The Antiquities Advisory Board supported the proposed declaration of King Yin Lei as a monument in late February 2008. The Development Bureau is proceeding to take action to declare King Yin Lei a monument and seek the Chief Executive’s approval for the designation of the mansion as a monument by notice in the Gazette. See http://www.legco.gov.hk/yr07-08/english/panels/ha/ha_hec/papers/ha_hec 0222cb2-1105-1-e.pdf, downloaded on February 28, 2008. 44. The number of applications increased from 138 in the 2002–03 financial year to 212 in 2006–07. Polly Hui, “Judicial review legal aid bids on the rise,” South China Morning Post, March 3, 2008. 45. The number of judicial review proceedings was 116 in 2001 and went up to 149 in 2005 and the number has been about 140 per year in recent years. More importantly, the number of cases in which the HKSAR government is involved rose from less than 100 in 2004 to 130 in 2005 and 128 in 2006. “Chief Justice’s speech at Ceremonial Opening of Legal Year 2006.” HKSAR Government Press Release, January 9, 2006 (http://www.info.gov.hk/gia/general/200601/09/P200601090137.htm, downloaded on March 3, 2008). See also Polly Hui, “Judicial review legal aid bids on the rise,” South China Morning Post, March 3, 2008; and Polly Hui, “Hearing impaired,” South China Morning Post, March 3, 2008. 46. Town Planning Board vs. Society for Protection of the Harbour Limited, FACV No. 14 of 2003. Judgment was handed down on January 9, 2004. 47. Published in HKSAR Government Gazette on July 27, 2007, the Permanent Secretary for Transport and Housing proposed to carry out extensive “temporary reclamation” in the middle of the harbor opposite

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China’s Hong Kong Transformed: Retrospect and Prospects the Wan Chai harborfront. See PWP ITEM No. 6579 Central-Wan Chai Bypass and Island Eastern Corridor Link (GN. 4767), (http://www.gld.gov.hk/cgi-bin/gld/egazette/gazettefiles.cgi?lang=e&year= 2007&month=7&day=27&vol=11&no=30&gn=4767&header=1&part= 0&df=1&nt=gn&newfile=1&acurrentpage=12&agree=1&gaz_type=mg, downloaded on February 28, 2008). 48. Carol Chung, “Residents fail in bid to block ‘great wall’ job,” The Standard, July 5, 2007. 49. The High Court rejected their application on the ground that the applicants were challenging HKSAR government policies. From the High Court’s perspective, matters of policy are not matters for the court. 50. The courts are concerned and only concerned with the legality of the decision in question. They could not provide answers to political, social and economic problems that confront the society. See “Chief Justice’s speech at Ceremonial Opening of Legal Year 2006,” HKSAR Government Press Release, January 9, 2006 (http://www.info.gov.hk/ gia/general/200601/09/P200601090137.htm, downloaded on March 3, 2008); and Polly Hui, “Hearing impaired,” South China Morning Post, March 3, 2008. 51. Hoi Wai Chua, Joseph Chan, Elaine Chan, Kam Tong Chan and Kin Man Chan, The Hong Kong Special Administrative Region: A Vibrant but Loosely Organized Civil Society, CIVICUS Civil Society Index Report for the Hong Kong Special Administrative Region, PRC, Hong Kong: 2006.

10 Social Conflict in Hong Kong After 1997: The Emergence of a Post-modern Mode of Social Movements? Alvin Y. SO

During the political transition from British colonial rule to Chinese Special Administrative Region (SAR) in 1984–1997, the predominant form of social conflict in Hong Kong was its democracy movement, focusing on the pace and the scope of democratization. This is because before the July 1, 1997 handover, there was deep anxiety in Hong Kong society that the mainland Chinese Communist party-state would intrude into Hong Kong internal affairs. The democracy movement was therefore being seen as an effective means to build up a highly autonomous Hong Kong to safeguard its own interests and lifestyle. In this regard, most of the pre-1997 conflicts centered around such issues as the direct election of the Hong Kong SAR (HKSAR) chief executive and the number of Legislative Council seats that should be directly elected, and the enactment of a bill of rights as well as establishment of the Court of Final Appeal. The Democratic Party was riding high on this democratic, anti-Communist sentiment and had become the most powerful party in the Legislative Council during the final colonial era. The focus of HKSAR social conflicts suddenly shifted after the handover from political to economic during 1998–2003. This shift occurred because the mainland Chinese authorities had generally upheld the “One Country, Two Systems” principle and avoided 233

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directly interfering in HKSAR internal matters before mid-2003. Subsequently, when the anxiety of mainland intrusion faded away, the Democratic Party had lost its main cause and suffered a decline in importance in electoral politics. On the other hand, a new kind of economic conflict rose to the forefront soon after the mid-1997 handover. During the late 1990s, Hong Kong people were worried about the worsening of their economy, the growing size of government budget deficits, rising taxes, increasing unemployment, falling stocking and real estate prices, etc. The Asian financial crisis arrived in Hong Kong in autumn 1997 soon after it became the HKSAR. As Francis Lui reported, stock prices plummeted by as much as 60% from the peak in July 1997 to the bottom in August 1998.1 The property market was also in deep trouble. The sharp decline in real estate value had exceeded the 50% mark in many instances, effectively causing investors to revert their long-held belief that the property value in Hong Kong could only appreciate upward. On the income side, the real-term GDP per capita went down by 7.8% in 1998, a negative growth phenomenon almost unknown to Hong Kong that had never experienced a year of declining GDP in its recent history. During this economic recession, the negative impacts of industrial restructuring (from labor-intensive industry to service industry) and industrial relocation (from Hong Kong to the Pearl River Delta in South China) were brought to the forefront, as Hong Kong experienced its highest unemployment rate of 8.7% in decades. Suddenly, the labor market became very tight with a serious loss of job opportunities. The ranks of unemployed rose drastically from 71,200 in 1997 to an unprecedented 275,800 in mid-2002 and peaked at a record high of 300,000 in mid-2003. The number of garment factories dropped from 3,000 in 1997 to only 1,500 in 2002, a drop of 50%.2 Middle-aged manual workers were hit hard the most, as their factories had moved out of Hong Kong and they were too old to be retrained to work in the service sector or in the high-tech industries. Instead of boosting about their vacations in other Asian cities or the decoration of their homes, Hong Kong folks’ main concerns in this period soon became how to find and keep a job, how to cover their children’s tuition, and how to payoff credit card debts, rents, and

Social Conflict in Hong Kong After 1997

mortgages on time. There had been an expansion of the number of people that were in bankrupt, homeless, unemployed or on welfare. Social inequality has been increasing, as the poor were becoming poorer in terms of income distribution. What is new in the post-1997 era is that unemployment and job insecurity have also expanded to the middle class sector, including white-collar office workers, public sector staff, managers, and professionals. They too faced the dire threat of losing their jobs, suffering cuts in salaries and fringe benefits, and reducing their promotion prospects in the midst of downsizing the government and corporate restructuring. Many middle class managers and professionals have become “new poor,” as they have been downgraded into negative asset holders during the property bust that wiped up their life-long savings.3 The situation facing the PCCW workers in 2002 aptly illustrates the plight of Hong Kong workers after the handover. On November 19, 2002, telecom giant PCCW announced salary cuts of at least 10% for its workers in the latest move to reduce costs. The plan was outlined to 3,000 staff following the announcement that a new subsidiary would be formed next year to take over support and management work. Under the plan, 75% of workers would have to take a pay cut of at least 10% if they want to join the new company, Cascade Limited. Unionists claimed that there would be a 20% cut for some workers. Those who reject it will be laid off in January. Then, the next day PCCW suddenly the firing of 529 staffers to conclude a massive lay-off program that trimmed almost 1,900 jobs in the past 12 months. “We are shocked,” said PCCW staff association chair Terry Ip, “Just yesterday they found a new company and promised us a good future, but today they slashed 500-plus staff.”4 The HKSAR administration quickly followed suit and implemented public sector reform to trim down the size, to cut cost and to increase the productivity of the civil servants. The growing budget deficits in the early 2000s provided the HKSAR state a strong rationale to carry out such reforms as restructuring, consolidation, subcontracting, and privatization, especially under the slogan of enhancing Hong Kong’s competitiveness in the global market.

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The “Hong Kong Dream” has thus been shattered in the post-1997 era. Hong Kong people began to doubt the belief that Hong Kong was full of opportunities because no matter how hard they worked now they still could not avoid experiencing downward mobility. There was a decline of Hongkonger identity too, as they had nothing left to be proud of in being a Hong Kong person in this economically depressing situation. Instead, a deep-rooted anxiety has emerged in Hong Kong society, worrying whether Hong Kong would soon be out-competed by Shanghai and Singapore, whether Hong Kong could find a way to get out of the economic recession, and whether Hong Kong would lose its global city status in the near future. What makes the post-1997 situation worse than before is that legitimation crisis of the HKSAR state is superimposed onto this economic recession. Although the colonial administration suffered a crisis of legitimacy due to its lack of determination in pushing for democratic reforms, 5 the colonial civil bureaucracy generally enjoyed a high reputation for efficiency and integrity. However, as Anthony Cheung points out that since the handover the HKSAR bureaucracy quickly lost its legitimacy.6 First, there was the incompetence and the scandals of some civil servants as revealed in the chaotic handling the late 1997 “bird flu” epidemic, the functional breakdown of the new Chek Lap Kok international airport in mid-1998, and the “short piling” scandals in public housing construction in July 2000. Agnes Ku shows how the myth of administrative capacity of the Hong Kong state had become so badly shaken since the handover that the once highly praised civil service was re-characterized and even publicly taunted as incompetent, arrogant, inefficient, unresponsive to popular sentiments, and lacking real public accountability.7 Second, HKSAR chief executive C. H. Tung, as Hong Kong’s first home-groomed leader, took personal blame for his administration’s poor performance. While a decent and honest person, Tung’s own dubious democratic legitimacy as the non-popularly elected inaugural HKSAR leader was further weakened by his overtly pro-Beijing slant on sensitive political matters and very narrow, pro-big business sympathies on domestic socio-economic policies. When people demanded decisive leadership

Social Conflict in Hong Kong After 1997

during the 1997–98 Asian financial crisis, Tung failed to take charge decisively and did not respond with effective counter measure to relieve the suffering populace, especially the grassroots. Third, the Tung administration was plagued by its wavering on key public policies. For example, Tung first promised in 1997 to offer 85,000 units of public housing annually in order to solve housing shortage, but later he quietly withdrew this policy without informing the Hong Kong public. Then he declared a slow down on the sales of public housing units in order to revive the depressed private housing market. The Tung administration then revealed that it had no intention to continue the construction of public housing units. After the public housing policy had been shifted back-and-forth several times, Hong Kong populace began to lose their trust in the government because it was impossible to know what the administration’s real stand on critical issues. Damaging scandals, the lack of strong leadership, and the wavering on key policies had greatly weakened the HKSAR state. Instead of providing effective leadership to bring Hong Kong out of recession, the Hong Kong state itself had become part of the problem. Furthermore, since the Hong Kong state has been dominated by neo-classical economists, its plan to rebuild Hong Kong is mostly consisted of cutting expenditure (like the cut on welfare and education), increasing the productivity of civil servants, increasing revenue intake through hiking the prices of social services (like medical care), privatizing public utilities companies like the MTR, and subcontracting social services, etc. These economic policies might save cost and cut expenses, but how they would affect the wellbeing of Hong Kong people and Hong Kong’s social cohesion was seldom taken into consideration. In order to justify the cuts in budget or its policy of exclusion, the HKSAR state put a negative label onto the groups affected by the policy. For example, CSSA (Comprehensive Social Security Assistance) recipients were said to have abused the system so their social security benefits should be cut in order to push lazy people into the job market. Civil servants were said to be over-spoiled and it is time for them to work as hard as their counterpart in the private sector. Secondary school teachers were said to be outmoded in their knowledge, so they needed to take an English language proficiency

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test to prove their worth. New working-class immigrants were said to have created a heavy burden on Hong Kong’s welfare system, and their immigrant quota should be cut in order to make room for professional immigrants who could take up high skill jobs. As a result, whenever a budget-cutting or exclusive policy came into being, a new negative group in Hong Kong society was singled out to be condemned. Needless to stress, this strategy of negative labeling was highly detrimental to social cohesion and communal solidarity, for it had created a new politics of resentment through which one social group after another became a scapegoat to take turn in being blamed for causing Hong Kong’s problems. Prolonged economic recession, downward mobility, social polarization, anxiety about Hong Kong’s future, the de-legitimation of state, and socially divisive policies had prompted various kinds of public demonstrations and social movements in the HKSAR. A unique characteristic of the protests in this period was that they were often society-wide. Not only they included the protests of students and political activists (like they did when campaigning for democracy before 1997), it was now expanded to include protests from such groups as the workers and grassroots folks (factory workers, construction hands, restaurant employees, the elderly and welfare recipients, the unemployed), civil servants (office workers, policemen and firemen), new middle class professionals (doctors, lawyers, social workers, teachers and, journalists), old middle class (small factory owners, property owners), and new immigrants. The five protests that took place on 25 June 2000 epitomized the explosion of social protests in post-colonial Hong Kong. The first protest involved more than 1,000 doctors, who staged the biggest protest of its kind in a decade against the state’s reform to revamp the medical profession’s grading structure. The protesters said the reform would waste resources and undermine morale and quality of patient service. The group staged an hour-long silent protest at the Hospital Authority headquarters on Argyle Street, Kowloon City. The second protest was waged by about 1,300 frontline social welfare workers who marched from Wan Chai to government headquarters in Central to protest the new lump-sum funding system for non-governmental organizations.

Social Conflict in Hong Kong After 1997

The third protest involved 300 residents, who marched along Nathan Road in Yau Ma Tei to oppose the soon-to-be-established Urban Renewal Authority’s excessive land resumption power and its unfair compensation. In the fourth protest, the pro-business Liberal Party led more than 2,000 people in the so-called “Save Our Assets” march in Central. The march was aimed to highlight the plight of flat owners and entrepreneurs in small and medium-sized companies whose assets had depreciated by half since the autumn 1997 Pan-Asian financial crisis. Some carried placards accusing Executive Council convener Leung Chun-ying, a vocal defender of Tung’s policy to produce 85,000 new flats each year, of shattering the property market. Finally, in the fifth protest, about 1,200 people, including many mainlanders and students, demonstrated over the right-of-abode issue. A group of hardcore protesters stayed overnight outside the Court of Final Appeal. Violence broke out and 12 protesters were hurt in a confrontation with police when they refused to disperse the next morning. It is amazing that there could be as many as five large-scale protests on one single day in 2000! The five protests from doctors, social workers, community residents, property owners, and new immigrants epitomized the spread of conflict to various socio-economic forces in Hong Kong society. A further disturbing sign was that such conflicts were becoming more violent. Labor unionists have warned of social instability in the face of worsening economic situations. “The seeds of unrest have been sown,” said the Confederation of Trade Unions.8 When angry construction workers seeking unpaid wages stormed a site office in Yau Tong in July 2002, their violent clash with the police set alarm bells ringing in the corridors of power. Also, there was a serious arson attack at the Immigration Office, killing two and injuring over 50 persons. With the expansion of economic conflicts soon after the 1997 retrocession, with the first HKSAR government under C.H. Tung becoming part of the problem, with a trend toward more violent-prone conflict, this accumulation of conflicts finally led to the large-scale July 1, 2003 protest that raised Hong Kong social movement to a new height.

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The July 1, 2003 Anti-National Security Bill Protest The protest against the national security bill in Hong Kong led to the largest indigenous social movement in Hong Kong history.9 On July 1, 2003 over half a million people, about one-tenth of Hong Kong’s adult population, took to the street for over six hours under very hot and humid weather to protest the impending enactment of a national security bill that many saw as detrimental to Hong Kong’s existing civil liberties. To protect the national security of the People’s Republic of China (PRC), the proposed law that would proscribe a wider range of activities Hong Kong as “subversive” acts, has its constitutional foundation in Article 23 of the Basic Law, the HKSAR mini-constitution as it stipulates: The Hong Kong Special Administration Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People’s Government, or theft of state secrets, to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit organizations or bodies of the Region from establishing ties with foreign political organizations or bodies. From a social movement perspective, this mid-2003 protest is significant not only because it is the largest indigenous social movement in Hong Kong history nor because it revitalized the local democracy movement, but because it signifies the emergence of a new post-modernist mode of social movement in Hong Kong. Kin-man Chan may be the first social scientist who used the label of post-modern style of mobilization to characterize the July 1, 2003 protest. Chan explains: “unlike the traditional mode of mobilization, the post-modern style of mobilization in Hong Kong relies more on the media and social network supported by information technology. Civic organizations, especially those with professional backgrounds, play crucial roles in shaping public

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discourse so that media messages can be framed according to the movement’s rationale and objective. . . . The result is a livelier, spontaneous, and creative style of protest . . . ”10 Building on Chan’s insight, the following is a more systemic attempt to use the July 1, 2003 protest as a case study to spell out the general characteristics of a post-modernist mode of social movement in post-colonial Hong Kong: •

•

•

Goal. In terms of goals, post-modernist movements tend to focus on general societal-wide values (like promoting civil rights/social justice/environmental protection for the whole society or for other societies) and go beyond the confine of narrow economic, self-interest (like wages/ salary increase for a particular industrial sector or occupation) . For example, the July 1 protest was aimed to protect the civil rights of all Hong Kong residents, not just for the demonstrators. Participant. In terms of participants, post-modernist tend to be more inclusive, more open, more diversified, and appeal to different classes, sexes, ethnicities, nations. Thus the participants of a post-modernist movement come from different backgrounds. For example, the participants of the July 1 protest include Catholics and Protestants, journalists, academics, librarians, social workers, lawyers, human rights activists, actors, artists, school teachers, university students, negative-equity homeowners, welfare recipients, and the various civic organizations which represent them. Organization. Whereas modern movements (like labor movements) create hierarchically organized mass organization, post-modern movements tend to be anti-bureaucratic, anti-authority, and loosely organized. Thus, post-modern movement organization is small, highly autonomous and independent from one another. For example, the Civil Human Rights Front (CHRF), which organized the July 1 protests, was composed of 30 diversify social activists organizations including 4 human right groups, 10 political parties/groups, 3 professional

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•

•

•

unions, 7 feminist, gay, and lesbian groups, 6 religious groups, 4 labor groups, 3 student groups, and 3 groups in support of labor and the democracy movement in mainland China. Strategy. Postmodern organizations, being so diversify, could have a problem in formulating a long-term coherent strategy and systematic tactics for the movement as a whole. For example, during July 1 protest, the membership view of CHRF held different views on Article 23 legislation, with April 5th Movement (a local Trotskyite group) wanted to purse a more radical course of action and direct confrontation while the moderate Democratic Party preferred holding more consultation and discussion. Pattern of Mobilization: Planned or Spontaneous? Therefore, post-modern movements are seldom planned or tightly organized. Instead, they are characterized by spontaneous, creative action. Each participant and each organization would choose its own mode of demonstration. For example, the signboards and banners in the July 1 protest were made by the participants, not by the organizers. The assorted music bands, dramas, dances and even a funeral march turned the protest into a seemingly joyful and even festive event. Pattern of Mobilization: Information Technology. With the movement organizations being so small, independent, and disorganized, how could they effectively mobilize such a large turnout as 500,000 in the July 1 protest? A distinctive trait of post-modern movement is that it relies on the internet or new communication technology to mobilize participants. In the case of July 1 protests, beside the usual discussion on bulletin boards and personal e-mails, a large number of political jokes, commentaries and information about the national securities bill were circulated before July 1, 2003, urging the people to bring along friends and family members to join in the public demonstration before it was too late to stop the enactment.

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•

Pattern of Mobilization: Mass Media. Since post-modern movements are small and disorganized, they do not have many resources to mobilize for action. But post-modern movements usually receive media coverage that serves to articulate their goals and to communicate/publicize their ideas with the general public. The July 1 protest was supported by Apple Daily (one of largest-circulated local Chinese newspapers) and by the popular Commercial Radio phone-in programs that help to shape public discourse and provide a platform to debate civil right issues.

It is the superimposition of economic conflict and political conflict that triggered the massive turnout of 500,000 protesters on July 1, 2003. In early 2003, the SARS (Severe Acute Respiratory Syndrome) epidemic engulfed Hong Kong, leading to school closures, widespread screening for fever at the airports and other checkpoints for travelers, the strict isolation of infected cases and the quarantining of those exposed to known cases. Restaurants, cinemas, and hotels were turned into empty places during the SARS infection period when the WHO (World Health Organization) imposed a travel advisory for Hong Kong as an infected area in April 2003, further bringing Hong Kong’s economy to its nadir. This SARS crisis was aggravated by the Tung administration’s initially slow response and inept crisis management. Thus one protest banner called for an independent enquiry into the SARS crisis while another demanded the HKSAR government to account for the 297 persons who had died from SARS. Lee and Yun remark that “without the epidemic, it would have been hard to mobilize half a million Hong Kongers on the street.”11 In response to this largest scale protest in Hong Kong, the PRC Central Government changed its previous non-intervention stand and adopted a more active role in steering Hong Kong economy and politics since 2003. First, Beijing extended various practical measures to uplift the depressed HKSAR economy and also strengthen the integrative links between Hong Kong and the mainland. These economic measures included (1) an individual tourism scheme for many mainlander to visit Hong Kong (and

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Macao) on a personal basis without having to join group tours. This scheme aimed at reviving Hong Kong’s travel industry after the SARS epidemic; (2) expanding the CEPA (Closer Economic Participation Arrangement) that provided better-than-WTO terms for 18 HKSAR services and trades to do business in mainland China, including law, accountancy, medical, banking, insurance, transport and tourism. The CEPA also provided 1,087 Hong Kong-made products with tariff-free entry into the mainland market; (3) a Pan-Pearl River Delta (Pan-PRD) Regional Cooperation and Development Forum between Hong Kong and Macao plus nine mainland provinces. As a result of these economic packages, Hong Kong has experienced an upturn in its economy since late 2003. The growth of Hong Kong’s GDP was around 8% in 2004, 7% in 2005, and 5% in 2006. In the 2005–2006 fiscal year, the HKSAR government budget attained a huge surplus of HK$4.8 billion (US$744 million), a clear sign of economic rebound. Politically, Beijing through the National People’s Congress (NPC) ruled out universal suffrage direct election for the HKSAR chief executive in 2007 and direct election for all members of the Legislative Council in 2008. These rulings were intended to restrict the scope and slow down the pace of HKSAR democratization.12 Socially, Beijing wished to promote a stronger sense of Chinese national identity for Hong Kong citizens. The “leftist” organizations have been busy in promoting patriotic education in school, organizing exchange trips between mainland and Hong Kong students, inviting the Chinese Olympic medalist to visit Hong Kong, installing a short clip on Chinese national song and culture just before the TV evening news program.

New Types of Social Movement Since July 1, 2003 Economic recovery and the increasing intimate economic, political, social interactions with mainland China since July 1, 2003 has led to the following new types of social movements in Hong Kong:

Social Conflict in Hong Kong After 1997

Social Movements to Share the Fruits of Prosperity In 2007, construction workers, nurses, teachers, and social workers have launched strikes to demand better terms amid a booming economy. The protesters were disgruntled that wages have not risen in tandem with the economic upturn, as many had started off with low pay and shortened contracts, having been employed only after the 1997–98 Asian financial crisis. The issue was exacerbated by a recent civil service pay rise of around 5%, which did not apply to some of those employed after the crisis due to different employment terms. Thus the strikers demanded higher wages, more benefits, and better employment conditions so they could also share the fruits of prosperity in the booming economy.

Social Movements to Preserve Local Cultural Heritage Also, Hong Kong’s social movement took a cultural turn. In 2006 and 2007, a new group called “Local Action” tried to prevent the HKSAR government from demolishing such historical sites as the Star Ferry Terminal and the Queen’s Pier. Since these public places were familiar sights to many local people as public space sites full of collective memory (of daily experience in the post WWII era when these two structures were built). For the movement participants, culture doesn’t mean national cultural but rather local culture; it is the local community’s culture that Hong Kong people had experienced that the movement participants want to preserve. Using the discourse on cultural awakening and heritage preservation, the movement participants also want to “reclaim the public space” from the administration and the developers, to promote people’s participation in community and societal planning, and to nurture community autonomy, so the grassroots can preserve the local lifestyle and reinforce their sense of belonging that helps to identify Hong Kong as their home. In this respect, this movement to preserve cultural heritage can be seen as a local reaction to the increasing extensive and intensive socio-economic integration with mainland China since 2003.

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Social Movements Concerning Mainland and Global Affairs Apart from having a new movement to address Hong Kong local, community issues, there are also new movements to protest against the sweatshops in mainland China as well as to protest against the WTO holding its 6th ministerial meeting in Hong Kong. In 2005, a new organization called Students and Scholars against Corporate Misbehavior (SACOM) was formed. Its aim is to monitor corporate behavior and to advocate for worker’s rights in China. Before the opening of Hong Kong Disneyland in 2005, SACOM identified themselves as “Disney Hunter” and launched the “Looking for Mickey Mouse Conscience Campaign” to accuse Disney let its toy subcontractors to violate workers’ rights on mainland China. The mainland workers making Disney toys are overworked, underpaid, exposed to dangerous toxins and forced to live in filthy conditions. SACOM releases a survey of such Disney suppliers every month and collects signatures from consumers around the world to support workers’ rights in mainland China. In addition, a new Hong Kong People’s Alliance (HKPA) on WTO was formed to protest at the WTO Ministerial Conference in Hong Kong during December 13–18, 2005. The HKPA encompassed regional groups like Asian Student Association, Asia Monitor Resource Center, Christian Conference of Asia, and Korean Farmers Organization as well as many local organizations (like the Confederation of Trade Unions that acted as the local coordinating organ). The HKPA held marches, sponsored cultural events at night, and opened public rallies at the WTO ministerial meeting. The WTO protests ended up with a violent clash between Hong Kong police and Korean protesters, left 137 people injured and 944 demonstrators arrested. The clash was described by the international media as the worst in Hong Kong in 30 years.13

Toward a Post-modern Mode of Social Movements? Although the July 1, 2003 mass protest has showed traces of a post-modern mode of social movement, it is only through the post-2003 collective actions mentioned above that bring many

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characteristics of the post-modernist mode of social movements to the forefront. First, these post-2003 movements are much more dependent on high-tech to spread their messages and to mobilize participants than before. Their websites are much better designed: full of attractive photos and video clips, lively commentaries, discussion articles, local new reports. Such news reports, photos, and video clips are constantly updated so the audience can keep up with the latest events and join the latest activities. They even have their own online media such as Citizens’ Radio Hong Kong and InmediaHK. These websites served as a bulletin board for the activities and as a forum to clarify issues, to plan tactics and strategies, to network with friends, to appeal for actions, and to evaluate outcome. These websites have become a new mode of communication and mobilization among activists and ordinary network internet users for collective action. Second, these post-2003 movements are much more disorganized and spontaneous than before. For example, the following passage was posted in one of the website: “Local Action is a loose alliance emerging out of the struggle of the Star Ferry Pier. It is hardly called organization. Membership is not stable but we are all kind and active people despite difference in action style.” Iamchong Ip, an activist, also comments that “most actions were planned right at the site without very clear rules or regular procedures, although those having communication online might have some sort of consensus. The civic groups in support of them felt confused but also amazed by their strong motivation to take action. Some more moderate or conservative groups saw the activists as unorganized mobs without strategies.”14 Third, the post-modernist mode is distinguished by its lack of a grand narrative or lack of a single and unifying ideology (like modernization or globalization). In particular, post-modern activists do not seek solutions from modern science, experts, or the state offices but depend mainly upon the local, the community, and the grassroots to solve the problems. In this respect, the cultural preservation movement fit the post-modern description very well, for it includes many more discourses than the preservation of cultural heritages (like the reclaiming the public space, participatory

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democracy in city and policy planning, universal suffrage in 2012, improvement of people’s livelihood, etc.) and it could be seen as a local movement to defend local culture, local community and local autonomy from intensifying mainland intrusion and Hong Kong developers who wish to turn these sites into modern high rise blocks and glitzy shopping malls. Finally, while Hong Kong’s social movements in the past are pretty peaceful and tend to use a moderate strategy (including petition, negotiation, press conference, rally, etc.) to appeal to the government, a new mode of protest emerged in the post-July 1, 2003 period. The campaigns to save the Star Ferry Terminal and Queen’s Pier, for example, showed that the participants, who, though not wishing to deliberately provoke confrontation, are not afraid to engage in direct confrontation with the police if necessary. They are also not inclined to work with the existing pressure groups, political parties, and other formal channels. In this respect, the post-2003 social movements are more radical because they distrust the established movement organizations and the existing power structure, and they are not hesitate to go outside the existing channel to push for their causes. What explains the emergence of this new post-modern mode of social movements in the post-2003 period? Apart from the structural reasons like economic recovery and the increasing integration with mainland China which triggered a stronger local identity among many Hongkongers to defend their interests, it may be due to the emergence of a new generation of young activists. According to Iam-chong Ip, these young activists are “marginal members in most civic or community organization, they explored the possibility for a new brand of politics on the street and the internet.”15 They are exposed to post-modern writings when they study in the universities, they are usually very familiar with information technology and tend to rely on this kind of virtual platform for networking and mobilizing people not affiliated with any civic groups. The career of this younger generation of marginal middle class is threatened by the influx of mainland students and professionals into Hong Kong after 2003. Thus they use the discourse of cultural heritage to protect their local communities and their life styles.

Social Conflict in Hong Kong After 1997

Conclusion This chapter focuses on the social conflict in Hong Kong during 1997–2007. It shows that during the first few years after Hong Kong became a Special Administrative Region of China, the dominant pattern of social conflict in Hong Kong was economic. This is due to the negative impact of the pan-Asian financial crisis and the Chinese Central Government’s non-intervention policy toward Hong Kong. Nevertheless, the first HKSAR government under C. H. Tung made a serious mistake in its unyielding push to enact the national security law, leading to the protest of 500,000 on July 1, 2003. This mass protest is significant for it signifies the birth of the post-modern form of social movements in Hong Kong. The social movements since 2003, for example, are characterized by anti-modern traits like the preservation of cultural heritages, informal and loose movement organizations, relying on internet and other information technology for mobilization, and spontaneous tactics. This post-modern turn since 2003 is a result of economic recovery, the quickening of economic integration between Hong Kong and mainland China, the increasing intervention of Hong Kong political affairs by the mainland government, and the birth of a new generation of young, marginal middle class. As such, what is the implication of a new mode of post-modern social movement? This post-modern mode of social movement helps to induce a new wave of political activism into Hong Kong society. They opened up new frontiers for social movements (like cultural heritage preservation campaigns and the cross-border labor rights advocacy for workers in mainland China), raised new slogans (like anti-administration-big business collusion), and helped to usher a younger generation into the movements. The future of this post-modern mode depends very much on whether it can cooperate with the existing social movement organization (like the Democrat Party), with the existing power structure and elites (like the legislative councilors), or with the existing social movements (like the democracy movements). Since this mode of post-modern social movement emerged only after 2003, it is too early to tell whether they will grow to become a profound political force to shape the history of Hong Kong as a part of China.

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Notes 1. Francis Liu, “Hong Kong’s Economy since 1997,” in Ming K. Chan and Alvin Y. So, eds., Crisis and Transformation in China’s Hong Kong (Armonk: M. E. Sharpe, 2002), pp. 242–256. 2. Hong Kong Catholic Commission for Labour Affairs, Community Economic Development: A Way Out for the Unemployed and Marginal Workers? (Hong Kong: Hong Kong Catholic Commission for Labour Affairs, 2003), pp. 6–7. The 2003 figures are from Ming Chan and Shiu-hing Lo, Historical Dictionary of the Hong Kong SAR and the Macao SAR (Lanham: Scarecrow Press, 2006), p. 200. 3. Ming-Kwan Lee, “Whither Hong Kong’s Middle Class,” in Gungwu Wang and John Wong, eds., Hong Kong in China: The Challenges of Transition, (Singapore: Times Academic Press, 1999), pp. 231–244. 4. South China Morning Post, November 21, 2002, p.1. 5. Ian Scott, Political Change and the Crisis of Legitimacy in Hong Kong (Honolulu: University of Hawaii Press, 1989). 6. Anthony B. L. Cheung,, “Transformation of the Civil Service System,” in Ming K. Chan and Alvin Y. So, eds., Crisis and Transformation in China’s Hong Kong (Armonk: M.E. Sharpe, 2002), pp. 166–189. 7. Agnes S. Ku, “Postcolonial Cultural Trends in Hong Kong: Imagining the Local, the National, and the Global,” in Ming K. Chan and Alvin Y. So, eds., Crisis and Transformation in China’s Hong Kong (Armonk: M.E. Sharpe, 2002), pp. 343–362. 8. Ming-Kwan Lee, “Whither Hong Kong’s Middle Class,” in Wang Gungwu and John Wong, eds., Hong Kong in China: The Challenges of Transition, (Singapore: Times Academic Press, 1999), pp. 231–244. 9. Ngok Ma, “Civil Society in Self-Defense: the Struggle against National Security Legislation in Hong Kong,” Journal of Contemporary China, 14 (2005), pp. 465–482. 10. Kin-man Chan, “Civil Society and the Democracy Movement in Hong Kong: Mass Mobilization with Limited Organizational Capacity,” Korea Observer, 36: 1 (2005), pp. 167–183. 11. Dominic T. S. Lee and Yun Kwok Wing, “Psychological Responses to SARS in Hong Kong: Report from the Front Line,” in Arthur Kleinman and James L Watson, ed., SARS in China: Prelude to Pandemic? (Stanford: Stanford University Press, 2006), pp. 133–147. 12. Yongnian Zheng and Sow Keat Tok, “Beijing Responds to Hong Kong’s Democratization Movement: From Bureaucratic Control to Political Leadership,” Asian Affairs: An American Review, 33: 4 (2007), pp. 235–255. 13. Sonny Shiu–Hing Lo, “The Politics of Policing the Anti-WTO Protests in

Social Conflict in Hong Kong After 1997 Hong Kong,” Asian Journal of Political Science, 14: 2 (2006), pp. 140–162. 14. Iam Chong Ip, “Beyond Civil Society: A Case Study of Media Activism and Historical Preservation,” Paper presented at OUR Media-NUESTROS Medios VI International Conference, Sydney, Australia (April 9–13, 2007), p. 7. 15. Iam Chong Ip, ibid., p. 13.

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11 Post-1997 Hong Kong Media: A Decade of Change, Competition and Contradiction Tuen-yu LAU Raymond CHENG

It has been an eventful ten years for the Hong Kong media since the sovereignty transfer in 1997. During this decade of change, when the “One Country, Two Systems” concept was implemented, the press have been actively reporting Hong Kong’s dynamic political, economic, social and cultural developments. However, in the context of intense competition and other factors, the media have sometimes contradicted their conventional role in a number of ways, including the failure to act as the “messenger” but rather becoming themselves advocates or agents of change. The traditional journalistic theory, Mirror’s Theory – which assumes that media are simply a mirror reflecting what happens – is not adequate to explain the changing role of post-1997 Hong Kong media. Sometimes, the images reflected in the mirror, that is the content carried, are distorted by the Hong Kong media’s deliberate choice of perspectives. Therefore, when we examine the post-1997 Hong Kong media, we find them as multiple-role players. What roles have they played? Can they still maintain the marketplace of ideas and, thus, ensure the continued existence of freedom of speech? Many important events are used as cases in this chapter to illustrate the changing role of the media in the HKSAR. The print media form the main examples, especially newspapers, as their sheer 253

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large number and the relatively low regulatory restrictions they face (in comparison with the electronic media) have ensured they are reasonably representative of Hong Kong media.

Five Levels of Analysis The Pamela Shoemaker and Stephen Reese conceptual framework, which offers a systematic way to analyze factors affecting content carried in the media, is employed here to help chart an overall picture amid the details of these cases. The Shoemaker and Reese model consists of five levels.1 Figure 1. Shoemaker & Reese Model

Ideological Level Extra-media level Organization level Media routine level Individual level

Source: Pamela J Shoemaker & Stephen D Reese, Mediating the Message: Theories of Influence on Mass Media Content (London: Longman, 1991)

The first level is the ideological level, which means that the media’s philosophy and operations are determined by ideology subscribed by each country. Obviously, the communist and capitalist ideologies are different, and the “One Country, Two Systems” ideology prescribed by the Chinese leaders for the Hong Kong after 1997 will be a challenging issue, especially for the media. The question often asked is: When would the Hong Kong media system play the role of the government’s mouth piece, just like the media in mainland China serving the Communist Party?

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The second level is the extra-media level, on which ideology will decide the market structure and economic system of the media. Basically, in a market where the media use either a subscriber-based or an advertiser-supported model to support operating modes, the degree of competition will affect ownership and the media’s market behavior. Simultaneously, this will impact the media’s organizational culture (third level) as owners may have their own political and personal stand on the way the media operate. So at these three levels, the media’s content will be affected by those concerns. Factors at the fourth level, the media routine level, may sometimes come into play as well. That means the way news are gathered as well as the conditions and restrictions they operate under would affect the event coverage and thus the content could be problematic. For example, inaccurate reporting may happen because there is not enough time to double check the information gathered. Or an individual journalist may lack adequate training to reach the required professional standard. The fifth and last level, the individual level, will be a crucial factor in the overall five-level conceptual framework. The ethical and professional standards of an individual will sometimes distort the impacts of the first four levels, and this individual news professional will do things according to his or her personal judgment and belief. In analyzing the Hong Kong media since the handover, there are many cases of identified contradictions – or media “sins” – that the HKSAR media have committed.

(1) Ideological Level: Different Interpretation of “One Country, Two Systems” Hong Kong practices the “One Country, Two Systems” model, meaning that though the Special Administrative Region is under Chinese sovereignty, it is supposed to preserve its capitalistic operations and lifestyles. Press freedom is guaranteed under Article 27, Chapter III of the Basic Law as “Hong Kong residents shall have freedom of speech, of the press and of publication.”

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As Hong Kong had been a British colony for 155 years since 1842, can ideologies be changed? Is there a possibility of merging Hong Kong’s and mainland China’s ideologies? The hope of Hong Kong people is that as China moves toward capitalism and Hong Kong moves towards the PRC’s ideology, then the two will merge eventually. The late Chinese leader Deng Xiaoping set a 50-year time frame to allow this scenario to happen, when he said that the pre-1997 Hong Kong lifestyle should remain unchanged for 50 years after 1997. On the other hand, Chinese leaders would naturally ensure that as Hong Kong is now part of China, Beijing is firmly in control. Figure 2. Different Interpretation of “One Country, Two Systems”

Hong Kong People’s Expectation

Hong Kong

Successful merger

China

Chinese Leaders’ Expectation

China Hong Kong

While both the Chinese leaders and Hong Kong people think that Hong Kong is part of China, their perceptions are different. Chinese leaders perceive Hong Kong as a subset of China, as China exercises sovereignty over Hong Kong. However, some Hong Kong people believe that even as Hong Kong integrates with mainland China, some local elements should maintain their distinct identities

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different from the mainland. This crucial difference in perspective is very important to understand almost all the conflicts and arguments between Beijing and Hong Kong.

July 2003 Protest Coverage: Lack of Neutrality in Creating Rather Than Reporting News Against the background that a lot of Hong Kong people perceive themselves as being more influential that Beijing believes them to be, there was a rare occasion in 2003 that strong public opposition against an unpopular law provoked not just the biggest mass demonstration since 1997 but also extraordinary editorial decisions by some newspapers. Five years after the handover, the HKSAR government decided to enact a national security law (as stipulated in Basic Law Article 23) that would give the authorities wide powers to crack down on a wide range of activities deemed threatening to the PRC state. Amid widespread opposition to this law, a mass rally occurred on July 1, 2003, the sixth anniversary of the handover, to protest against the law and to air public dissatisfaction with the lackluster governance of HKSAR chief executive Tung Chee-hwa. On that day, Apple Daily (a Chinese language newspaper founded in 1995 as the flagship paper of the Next Media group that has a daily circulation of 309,000 in 2007, ranking second behind Oriental Daily News among paid newspapers) strongly encouraged the people to participate in the protest, a move that was partly responsible for raising the turnout to half a million. Apple Daily run on its front page a headline: “Go to the street, we will not disperse until we see you there!”2 Its lead story of the day read “This is a historic appointment. Bad law is harming Hong Kong, citizens must resist! This afternoon, hundreds of thousands of citizens will fill up Victoria Park, bearing the heat and march toward government headquarters. . . . If you don’t come out marching today, when will you ever stand up for yourself? See you at 3 pm at Victoria Park.” Apple Daily was not the only paper taking a stance. Ming Pao, widely regarded as a middle class, intellectual paper, ran this headline on the same day: “People from different paths will converge, equip yourselves with your own armor to take to the

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streets.”3 Its leading story started with: “Today is the sixth anniversary of Hong Kong’s handover, and at least 100,000 people are expected to choose an “alternative” way to mark this event, by attending a rally against Article 23 to express their dissatisfaction.” Yet this was balanced with reportage from another angle: “Premier Wen Jiabao yesterday, responding to questions about the rally, said ‘we hope Hong Kong can create a stable environment beneficial to foreign investment.’” Reporting on the same news event, other papers offered less value-laden angles. The South China Morning Post, Hong Kong’s top English language paper, ran the headline “Mass turnout expected for historic protest.”4 Soon after this rally of half a million protesters, chief executive Tung Chee-hwa accepted the resignation of secretary for security Regina Ip, the cabinet official responsible for the planned legislation (which was withdrawn by Tung two months later). This mass protest was a political earthquake that decimated the Tung administration and eventually led to Tung’s own resignation in March 2005, 27 months before his second term expired. What does the July 2003 protest mean in the analysis of Hong Kong media? Traditionally, communication theory says that media are agenda-setting, but some media contradict that theory. They encouraged active participation of Hong Kong affairs. Thus, the Hong Kong media are not just a mirror reflecting what happens. From an ideological perspective, it reflects a difference between the Hong Kong media and the Chinese leaders. There is still a need to bridge this major gap of understanding.

“City of Protests” It is interesting to see what happened to the media one year later in 2004 when there was another mass rally starting from Victoria Park on July 1. Apple Daily’s front page that day was headlined “See you at Victoria Park, people’s footprints can create the road to democracy.”5 The paper also detailed the rally arrangements, such as where and when which political party and pressure group should assemble. Meanwhile, most other papers were more “objective.” Ming Pao, which called on its readers to march a year ago, ran the

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headline “Should we go to the rally?”6 The Hong Kong Economic Times featured the headline: “Whether to go marching or not, there are many issues to consider.”7 On the other side, Sing Tao quoted an editorial from Beijing’s organ China Daly that urged the Hong Kong folks to “maintain harmony.”8 Such waves of protests led to an image of Hong Kong as a “City of Protest.” A Reuters report in 2007, quoting police figures, said Hong Kong people held more than ten thousand public meetings, marches and protests over the past five years, re-enforcing a popular view that the former British colony had become “a City of Protests.”9 The report added the trend showed growing civic activism in the territory since reverting to Chinese rule. It still remains quite a controversial matter for public debate whether the media should encourage people to participate in the protests as Apple Daily has done. As it turned out, the July 1 rally has since 2003 become a regular annual event. The Chinese Central Government was first shocked but has since followed public opinions more closely. The push for democracy may be the personal philosophy of some media owners like Jimmy Lai of Apple Daily, but it is possible that the adoption of such a political orientation call for a more democratic system can also be a way to bring in higher circulation, which will translate into profits. This is the classic saying of “meeting the needs of your consumers.” For the media, they deliver the dishes the people want. It has been said that “One of the most profitable commodities in the modern world is human attention. Whoever can harvest it in wholesale quantities can make money in kind.”10

(2) Extra-media Level: Competition of Ideas as well as Businesses The extra-media level also means the market structure of the media industry. The media market in Hong Kong is highly competitive, and after several ownership changes of some major papers, the media have been more concentrated under the domination of a few key players. Such market changes have changed the performance and behavior of the media in Hong Kong.

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For a city with about seven million people, Hong Kong has 19 daily newspapers, which is many more than most cities in the United States. In terms of ideological stance, since the colonial era, Hong Kong continues to have pro-Beijing media (Ta Kung Pao, Wen Wei Po), and supposedly non-political affiliated media (Sing Tao Daily,, Oriental Daily News, South China Morning Post, Hong Kong Economic Journal, Ming Pao, etc.) In reality, many papers have distinct political stance, which is often practiced implicitly.

Impact of the Rise of Free Dailies One of the biggest structural changes in the post-handover media market in Hong Kong is a surge of “free” newspapers, which are purely advertising supported. The three widely circulated free Chinese-language daily newspapers in Hong Kong took away 14% of the market share of regular paid newspapers in 2007, although the leading paid papers have regained ground to a certain extent.11 The four free daily newspapers are: Metro Daily (launched in 2002), Headline Daily (launched in 2005), AM 730 (launched in 2005) and The Standard (English language, turned into a free paper in 2007). The Standard, which has been lagging the South China Morning Post for decades, claimed its free edition now has more readers than its old rival. Headline Daily and The Standard are both part of the Sing Tao group. AM730 is a privately owned paper controlled by Sze Wingching (owner of one of Hong Kong’s two biggest real estate agencies Centaline) and has extensive property related advertising. Metro Daily is part of Metro International, which publishes free daily newspapers in 21 countries. As an example of the free papers, Metro Daily is distributed free-of-charge from Monday through Friday in subway stations and other popular commercial and residential areas. Its readership profile is attractive to advertisers, as they have high consuming power: (a) 84% of readers are aged 18–44, (b) 45% male and 55% female and (c) 75% are employed. With keener competition for advertising dollars, the newspapers must work harder to find ways to meet the needs and interests of the readers. The three free Chinese language dailies have a total of 10% of the advertising market share, in the first six months of 2006.

Post-1997 Hong Kong Media

According to Winston Chan, Metro Daily’s chief editor, it is successful because it is free, its content is clean, which is based on factual and not sensational reports.12 Newspapers mostly affected by the free papers were small, general interest newspapers. Papers less affected are those with a clear target readership, such as business papers like Hong Kong Economic Journal and Hong Kong Economic Times, and the leading English language daily South China Morning Post. Of the 19 newspapers, 8 belong to publicly listed companies, that means they have to deliver profits to satisfy shareholders and maintain their stock prices. (See Appendix for the 19 daily newspapers in Hong Kong with their own characteristics and strengths.) Four are pro-Beijing newspapers and their goal is to be the PRC’s official mouth pieces, while profit-making is not the overwhelming concern. Yet, to be an effective propaganda and public opinion tool, they need to have large circulation. One freely distributed newspaper is linked to the Fa Lun Gong, which is a sect banned in mainland China. In financial year 2006–07, Apple Daily was the most profitable among the listed newspaper companies, making HK$344 million (US$44 million). The Oriental Daily made HK$123 million (US$16 million) while Ming Pao earned only HK$23 million (US$3million). Sing Tao made HK$178 million (US$23 million) while Hong Kong Economic Journal made HK$120 million (US$15 million). South China Morning Post, part of the Kerry Group that owns the Shangri-La hotels, made HK$339 million (US$43 million). As an example of the newspapers’ breakdown of income, Hong Kong Economic Journal’s 2006–07 advertising revenue amounted to HK$562 million (US$72 million) or 67% of its turnover, but its circulation income was just HK$125 million (US$16 million). A BNP research report said cost of paper made up 16% of its total cost.13 Fierce competition means media companies must go for a “people-oriented” approach to please their readers or audiences to maintain stable and impressive revenues. At the extra-media and market structure level, the Hong Kong media must deliver content to meet the needs of the Hong Kong people. Most do not have permission to enter the mainland China market, but Hong Kong

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media companies have made mainland China-related news content a major component, and some media have set up bureaus in mainland China, which are authorized by the Chinese Central Government.

(3) Organization Level: Media Organizational Culture and Proprietor’s Ownership Philosophy When considering the media at an organization level, one must look at its culture and mission. Crucial questions that needed to ask include how the organizations are structured? What is their editorial policy? How is the policy enforced? And what differences does it make to media content? In terms of the impact at the organization level, one must examine whether the media are publicly or privately owned. If it is public ownership (those media are publicly listed companies), does it mean it is profitability and the bottom line first? Will the operation process be more transparent? What if a media company is privately owned? In the tradition of Chinese media, it is called an “intellectual run newspaper”, that means that the publisher or owner wants to create a constructive impact on society with their own learning, ideas, ideals and valued as intellectual-scholars, and the printed media are used as a means to achieve this end. Who should be the final decision maker, business-minded managers or editors? What is the role of individual managers within the established organizations? Today, the media are widely considered a means to achieve the end of profit-making. In the United States, there is a general phenomenon that MBAs rule the newsroom, and editors are hamstrung by the “bottom line” approach.14

(4) Media Routines Level Sometimes, it is merely routine and mechanical news gathering that causes errors in news content. C. R. Bantz15 argues that a newsroom resembles a “news factory” that divides tasks into trunks at different stages along the “assembly line,” hence the term assembly-line

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journalism was coined. Routines are those patterned, repeated practices that media workers use to do their jobs. In the media, as in other industry, there are sources of routines and the interactive dynamics among: processors/consumers/suppliers: • Raw products include news and drama series • Suppliers are producers and writers • Consumers are readers and viewers News media companies have to consider what is acceptable to the consumer, what is the organization capable of processing, and what raw product is available from suppliers? At the media routine level, news value acts as routines, and an incident becomes news if it has prominence/importance, human interest, conflict/controversy, is unusual, timely, or has proximity to the audience. These news values have been dominating the news content in Hong Kong media.

Conflicts at the Media Routines Level In relation to the handover and its aftermath, many incidents have given the journalists lots of “conflicts” to report on, such as: • Pre-1997, what is the future of Hong Kong and preservation of its existing lifestyles? • Post-1997, can we trust that the PRC leaders will not intervene in Hong Kong matters? • Within Hong Kong internal politics, can the best interests of the people be protected? • The rise of party politics in local elections and the HKSAR chief executive elections. As the drama of Hong Kong politics unfolds each day, the media have endless sources of incidents to report on. In this case, the Hong Kong media play a role as agenda setter. However, many Hong Kong media report these political events in a soap opera fashion, by trivializing the “actors” (politicians, government officials and legislators) and giving them nicknames, because this approach makes the story more entertaining and at times more juicy. Thus, the people’s attention is distracted from the “real issues.”

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Biased Election Day Special Supplement One example of the media’s blatant political slant is during the fiercely contested Legislative Council Hong Kong Island constituency seat by-election between former chief secretary Anson Chan and former secretary for security Regina Ip, held on December 2, 2007. In that afternoon, Apple Daily distributed a free special supplement on the election, but only in Hong Kong Island where the election was held, under the headline “Mrs. Chan is in danger of losing, as the ‘iron’ pro-China votes flood in.”16 The purpose of this special supplement was obviously to drive voters to vote for Mrs. Chan, and in the end, she won by a landslide. Jimmy Lai, Apple Daily’s boss, was among Chan’s biggest donors, giving HK$200,000 (US$25,600) to her campaign.17 The expenditure for the special supplement was not included in Chan’s officially filed campaign spending. The newspaper’s move was widely criticized: as Apple Daily is a territory wide paper, why was the special supplement distributed only in Hong Kong Island where the election took place? Many felt it was a kind of partisan campaign material disguised as “news,” thereby compromising the integrity of the news industry. Whatever their political stance, the media should be fair. Apple Daily’s election day special supplement for Anson Chan has clearly contradicted this principle. The pro-Beijing Tai Kung Pao said in its commentary “The paper distributed large quantities of extra editions and produced a fake political drama.”18 With the debate on democratization a hot item in politics, the HKSAR government and in particular chief executive Donald Tsang placed a higher importance on public opinion, and took a new approach on how to deal with the media. Tsang appointed veteran journalist and media expert Andy Ho as his press coordinator. Ho, formerly a political journalist at leading newspapers like Ming Pao and South China Morning Post, is very polished and knows how the local media works. Tsang also appointed Lau Sai-leung, a former magazine editor and once head of research at the Democratic Party, the leading opposition party, as a Central Policy Unit full time member. In a speech for the Hong Kong News Awards presentation ceremony in 2008, Donald Tsang said newspapers played an

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important role in the formulation of government policies – “As a people-oriented government, we need to catch up with the pulse of the public and follow closely the people’s needs. In-depth reporting by newspapers and sharp commentaries can enlighten the government when it formulates polices.”19

Checkbook Journalism that Damaged Media Credibility Politics is of course not the only area the media are interested in. The media are always keen on a sensational human interest story, but sometimes it is overdone. There was an incident in 1998 that damaged the credibility of the media in an almost unprecedented way: checkbook journalism in the case of Chan Kin Hong. The story began after a woman, heartbroken by her husband’s extramarital affairs on the mainland, threw her two young sons out of the window from their 14th floor public housing flat and then jumped off to commit suicide. The husband was Chan Kin Hong, a cross-border truck driver. After the tragedy, Chan was seen to continue patronizing prostitutes and his endeavors were prominently reported in graphic details by many Chinese newspapers as well as the two free television channels TVB and ATV.20 It was later found out that Apple Daily paid Chan HK$5,000 (US$640) to continue his lifestyle so that the paper could get photos for the news report.21 The revelation brought widespread condemnation. The government’s media regulatory body received over 300 complaints against TVB and ATV as well as Apple Daily and Oriental Daily News. The Hong Kong Journalists Association received over 60 complaints, and said such “checkbook journalism” was ridiculous, a blatant abuse of press freedom and a serious damage to the credibility of the media.22 On November 10, 1998, Apple Daily owner Jimmy Lai apologized in a front page full-sheet statement published in his paper, admitting they were wrong with such practice.23 A survey by the Democratic Party found over 90% of the people polled found paying Chan Kin-hong to “perform the show” to create news was unacceptable, and 52% did not trust the media. However, it is noteworthy that about 60% said they would not boycott newspapers that produced such contents.24 This and other

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cases of checkbook journalism featured media that paid to create “news,” which contradicted the most elementary principles of journalistic integrity. Because of the intense competition, some journalists forgot their professional standards and ethics as they try to get “exclusive news,” but was the price too high? With incidences like that, how credible was the Hong Kong media? According to a University of Hong Kong poll, credibility of the Hong Kong media went on a decline after the handover. Figure 3. Credibility Rating of Hong Kong News Media, 1997–2008 6.6

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Sensationalism: Sex Photos Swamping Front Pages Another incident showed that the HKSAR media continued to adore sensationalism. For a relatively conservative, mainly Chinese society like Hong Kong, the sex photo scandal in early 2008 took both the media and the community by storm. Rarely has there been any news that intrigued much of the press for so long. Nicknamed the Sex Photo Gate, the sex photo story monopolized the front pages of most Chinese papers for weeks from late January through February 2008.

Post-1997 Hong Kong Media

It broke out on the front pages of the populist papers on January 29, 2008 when pop singer/actor Edison Chen appeared in several sex photographs with two singer/actresses, which were initially circulated on the internet and appeared in newsgroups. One actress was Gillian Chung, of the popular girls group Twins. The Sun’s front page headline reads “Suspected fake sex photos of Edison Chen, Gillian Chung and Bobo Chan appear on the Internet, EEG (Chung’s agency) called the police.”25 Meanwhile Ming Pao reported the incident under the headline of “Gillian Chung’s nude photo appears on the internet, said to be fake, academic says uploading may be illegal.”26 These photos showed explicit, intimate scenes between the girls and Chen. Soon, more and more photos came out, involving more actresses, including another well known actress Cecelia Cheung. Newspapers, as well as other media, were glued to their internet screens to wait for the latest nude pictures, and would prompt report any as breaking news. The saga dragged on until Edison Chen, who was initially abroad, returned to Hong Kong and held a press conference to apologize for the damage caused to everyone, especially the girls concerned. He also announced he would quit the local entertainment industry, although he did not rule out a showbiz career elsewhere.27 During this period, it seemed like decency and morality had collapsed, and the police sent out confusing, mixed messages as to whether it was legal to possess the photos. Initially, Police Commissioner Tang King-shing said it might be illegal to be found in possession of such sex photos. Then after widespread criticisms concerning freedom of information, Assistant Commissioner of Police Wong Fook-chuen said sharing of the pictures among friends through e-mail would not be an offence.28 In an apparent attempt to stop the escalation of the incident, the police quickly arrested a 29-year-old man Chung Yik-tin who uploaded one image. Though not the source of the photos, he was detained for two weeks. Yet Chung’s arrest raised issues concerning freedom of information and speech for internet users. On February 10, 2008, hundreds of protesters held a mass rally from Victoria Park to Wanchai Police Headquarters in support of Chung and against discriminatory law enforcement on Internet users.29

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Later, an alleged “real” source was identified and arrested. It turned out that Edison Chen, who had stored large numbers of such photos on his laptop computer, sent it to a shop for repair. A shop staff discovered the photos, made copies and later distributed them. The man was arrested and charged with “dishonest use of computers with criminal intent.” The photo that Chung uploaded was later founded by the government’s tribunal on obscenity to be merely “indecent” rather than “obscene” so he had to be released. This whole case shows that there is a need to protect the citizens, and the media have performed their duties by openly arguing the case for the alleged victim and urging for his release. This incident shows the righteous side of some of the Hong Kong media. Yet, many commercial media exploited the story for weeks, and added as much spice as they could, generating interest and boosting circulation. People in commercial districts would gather in front of newsstands and discuss the latest magazine and newspaper covers, and some issues were sold out within hours. Even the normally respectable South China Morning Post, following its initial lukewarm treatment of the fiasco, sometimes wrote about the news in a less than serious manner.30 It was left to perhaps the least commercial of newspapers, the English language China Daily, to come out with the moral lesson in an editorial – “While Hong Kong enjoys freedom of the press, the incident has also revealed this freedom was abused. The media must not ignore the enormous social responsibility that comes with the freedom of press, they enjoy today, but some media entities in Hong Kong went out of their way to profit from the incident by blowing it out of proportion. That is gross dereliction of their duty as a social utility.”31 While many readers may be delighted to see the naked bodies of famous actresses (albeit pixilated at the private parts), it is highly debatable whether newspapers should spoon feed them with this sort of content on the front pages every day. Newspapers have a duty to report news and public affairs that really matter to readers, but the media’s adoration of these sensational but trivial sex photos have contradicted the media’s higher duty, as other important news were relegated to lesser coverage or ignored during the sex photo gate period.

Post-1997 Hong Kong Media

Paparazzi Abuse – Illegal Privacy Intrusion Paparazzi style stories pepper the news content in Hong Kong media all the time. It is more like watching soap operas on a daily basis, but some such effort raised concerns as to monitoring issues and punishment for “off-the-limit” newsgathering by the media. It is nothing new that reporters always swamp celebrities, but when they break the law to do it, to a very sick individual, and at strictly out of bounds places, then it becomes utterly unacceptable. In 2006, an Indonesian domestic servant employed by Eastweek magazine’s deputy chief editor sneaked into the Intensive Care Unit at Queen Mary Hospital to film sick actress Lydia Shum (who later died in 2008) with a pinhole video camera. Arrested on the spot, the maid was later sentenced to four weeks behind bars for breaking hospital by-laws on taking pictures in hospitals, but she refused to reveal who was behind her actions.32 The magistrate’s verdict said her actions were carefully prepared and executed, constituting a gross invasion of privacy.33 Even though the maid worked for Eastweek’s deputy chief editor, the magazine issued a statement saying its management knew nothing about it.34 Because of the maid’s silence, the police lacked hard evidence to charge her employer or the magazine. Such conduct contradicted an important journalistic principle that the press should not cause harm to individuals, and there was certainly no great public interest to even remotely justify that. Eastweek was also involved in another controversy in 2002 when it published a nude photo of famous actress Carina Liu Jia Ling, allegedly taken while she was kidnapped, and this caused an outcry from the acting and creative media professionals.35 Led by Jackie Chan, many actors and actresses staged a protest to demand legislation to protect their privacy. Public pressure was so strong that the magazine was forced to suspend publication. The police later arrested some Eastweek staffers, including several editors whose conduct contradicted every journalistic norm.36 The magazine later changed ownership to re-emerge under the Sing Tao group.

Downfall of the Head of RTHK An almost comical incident in 2007 led to the resignation of Chu

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Pui-hing, head of Radio Television Hong Kong (RTHK), a personal tragedy in which the local media played a pivotal part. Thunder struck on July 6, 2007, when almost all Chinese newspapers had the same front page story and photograph of Chu hiding behind a “karaoke girl” on a street in Hong Kong. Apparently it was an accident, as some reporters had gone to the scene to interview pop singer Kenny B but spotted Chu by chance. The incident, though private in nature, damaged the integrity of RTHK’s leader, and by extension, RTHK’s image. Chu, a reputable media veteran, had been leading the government funded television and radio station in its effort to retain autonomy against forces that wanted to turn the station into the administration’s propaganda machine. The significance of this incident is that RTHK is a government department that receives government funding directly. Yet, RTHK is operating on the BBC model with editorial autonomy from the government. Some pro-Beijing public figures believe that RTHK, being government funded, should serve as an official propaganda vehicle for the authorities. A government sponsored review report of public broadcasting in Hong Kong suggests that RTHK should not be transited to become the future public broadcasting corporation of Hong Kong. But RTHK staff insisted they should be allowed to become an agency with editorial independence in the future. This issue in itself shows the ideological conflicts within and outside the media, and should be watched closely as developments unfold.37

Credit Where It Is Due: What Have the Media Done Right? Competition means breaking news will sell papers and magazines. For whatever their misgivings, the Hong Kong media have also served their function as a watchdog in monitoring the government. Apple Daily, for example, broke the news in March 2003 that the then financial secretary Antony Leung bought a new Lexus sedan at HK$790,000 in January, just ahead of an increase in registration tax for new vehicles that was introduced by Leung himself.38 The paper broke the news after receiving a complaint, and all the other papers followed the story closely, making it front page item for days.39 Despite such public exposure of seemingly improper

Post-1997 Hong Kong Media

ministerial conduct involving serious conflict of interests, chief executive Tung Chee-hwa declined Leung’s resignation but only reprimanded him in March 2003. Yet Leung continued to come under severe criticism for months and eventually resigned in July 2003. This is a case of the impact and power of public opinion and the media’s relentless efforts to serve its role as the “Fourth Estate.” Apple Daily was keen in this role. In mid-2000, it revealed major impropriety involving an elected legislator when it published evidence of corruption by Gary Ching Kai-nam, a prominent politician in the pro-Beijing Democratic Alliance for Betterment of Hong Kong, who later resigned and went to jail.

(5) Individual Level Finally, the focus is on the individual level of the Hong Kong media: the journalists themselves. In terms of intrinsic factors, Hong Kong’s journalists more or less fit Lambeth’s (1986) professional roles.40 They work full-time. They are often, but not exclusively, trained by the journalism schools of local universities. There is no formal entry barrier. Because of the economics of the media industry, the salary for journalist is generally lower than people in many other professions- such as government, finance, teaching- who have a similar education background. However, many journalists join the profession to fulfill personal aspirations such as a sense of mission to serve society. Indeed, most journalists work long hours with inadequate resources and other support, but they continue to perform in a professional and ethically way.

Self-Censorship Does self-censorship exist in Hong Kong? This is a question that will not find an easy answer, mainly because media workers who are censored are usually too concerned about speaking up for fear of losing their jobs. Former chief secretary Anson Chan said in 2008 that “self censorship in the media has become insidious, so it is difficult to

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estimate that how much critical analysis is suppressed in even politically neutral publications.” She added “newspapers undergo ‘unwilling’ self-censorship. If they are critical about the Hong Kong or the China government, the result may be difficulties in attracting advertisements or related revenue.”41 Speaking to Singapore’s Todayonline, Anson Chan “likened freedom of the press to a ‘fragile flower’ – with journalists under pressure to self-censor, up against media-averse officials or, conversely, a government that ‘tries to get in first with its own version and slant on events.’” She argued “no financial centre can function if you don’t have up-to-the-minute, accurate, unbiased reporting of information, because if you hold back on information, how can you function?”42 Though it is difficult to have proof, many people feel self-censorship definitely exists in the HKSAR and a number of organizations have conducted surveys on the issue. According to the Hong Kong Journalists Association’s 2007 annual report that refers to the results of a Lingnan University public opinion survey, 58% of journalists thought current press freedom in Hong Kong was less than it was at the time of the 1997 handover. Among them, 73% believed that self-censorship was the most important indicator of decreased press freedom and a major issue being confronted by the trade. It was thought that media self-censorship was not only here to stay, but was getting worse. According to a University of Hong Kong survey, close to half the respondents – a 10-year record high – believed Hong Kong’s news media perform self-censorship. A further 61% noted that media are apprehensive about criticizing the Central Government, a record high since 1998. Within the trade, 30% of journalists admitted self-censorship in handling news, up from 21% in 1996. Traditionally, external politically-motivated censorship pressures fell into four categories – verbal threats by officials, advertising sanctions against “unfriendly” publications by mainland enterprises in Hong Kong, pressures exerted by Beijing on other local businesses operated by the parent company in mainland China, and restrictions of reporting trips to the mainland. Furthermore, there were commercial pressure such as advertising boycott and change of media ownership. Internal pressure includes intervention by non-editorial staff or newsroom managers.

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Figure 4. Whether the Local Media Practiced Self-Censorship 1997–2008 60%

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The HKJA annual report also said the most common cases of self-censorship included playing down negative news items concerning the PRC Central Government (21%), playing down news items that the Central Government may regard as sensitive (21%), playing down negative news items concerning the media owner or his related interests (16%), playing down negative news items concerning businessmen or corporations which have significant influence over their advertising revenue (13.%), as well as playing down negative news items concerning the HKSAR government (14%). However, the Hong Kong government’s view contradicted the other findings: “The media reports freely in Hong Kong, commenting extensively and liberally on local and external matters, and on government policies, programmes and activities. The free press in Hong Kong, with their rights and freedoms protected by the Basic Law and the Hong Kong Bill of Rights, is the most effective safeguard against self-censorship.” 43

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Figure 5 People’s Satisfaction with the Freedom of the Press in Hong Kong, 1997–2008 80% 70%

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Citizens Radio Censored A setback for press freedom and freedom of speech in Hong Kong happened when a radio station, Citizens’ Radio, run by pro-democratic activist and former legislator Tsang Kin-shing, nicknamed “the bull,” was banned by the government and taken to court. The government also sued veteran democrat Sze-to Wah for appearing on air for the station. However, pro-Beijing lawmaker Choy So-yuk had appeared on air on March 6, 2006 talking about environment protection and taxes, but she was not charged, nor was Executive Council member Anthony Cheung who appeared on June 6, 2006. The case is highly controversial, as a judge has ruled in favor of Citizens Radio, agreeing that the Basic Law allows Tsang to operate the station on the ground that parts of a law which gives the chief executive “unfettered and unchecked” power to control who can conduct radio broadcasts in Hong Kong were ruled

Post-1997 Hong Kong Media

unconstitutional by a magistrate, who said they curbed freedom of speech as guaranteed by the Basic Law.44 However, the Justice Department quickly requested the judge to suspend the ruling, and has filed an appeal to higher court. Despite the government’s ban, several serving Legislative Council members had since held public broadcasts on Citizens’ Radio, with further broadcast planned in future while the officials vowed to enforce the law and bring them to justice. The case is important because it could determine whether it is the people, or the government that decides who could operate a radio station, an important medium. Of course, Citizens Radio is more than simply a media matter, the case has a political flavor as operators and supporters of Citizens’ Radio are mainly pro-democracy politicians. Citizens’ Radio describes its actions as “civil disobedience.” Many local media are sympathetic to Citizens’ Radio, while the government’s claim that illegal radio operations interfere with the radio waves of ambulances have generally not been proven. Ming Pao said in an editorial that “unless community radio threatens public safety, privately run radio stations should be treated leniently.”45 The story is developing on several fronts, with some people hoping that outdated laws governing radio broadcast would be changed to allow more freedom concerning radio operations. Meanwhile, former radio talk show host Albert Cheng, who has become a legislator known to be friendly with chief executive Donald Tsang, has applied for a license to start a new radio station. The case of Citizens’ Radio reminds us that, despite the apparent free, competitive market in the industry, there are laws governing the media. But the question is: who are these laws serving, is it the government or the people?

Protection of Journalists: The Ching Cheong Case Operating in a difficult environment, there are also minefields that journalists must thread carefully. A potentially danger area is reporting on China, as reflected by the case of Ching Cheong, a veteran reporter who received a five-year jail term in mainland China after being convicted of spying for Taiwan. His case had a

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chilling effect on Hong Kong journalists working in mainland China. Ching, the chief China correspondent for Singapore’s Straits Times, was detained in the mainland in April 2005 and was eventually released on parole in February 2008, after serving past the halfway mark of his sentence, taking into account time served pending trial. He was a former senior editor at the pro-Beijing Wen Wei Po, and he left the newspaper after the June 4, 1989 Tiananmen Incident.46 After his release and return to Hong Kong, Ching publicly insisted he had never knowingly spied. Ching resumed working for the Straits Times in early April 2008, but his case still leaves many unanswered questions.

Concluding Remarks In analysis the HKSAR media by looking at their conducts and products at different levels, from ideological to media routine to individual levels, it is clear that in the face of intense competition, the Hong Kong media have at various times contradicted their traditional role and committed a number of significant “media sins” such as the following: • Creating and promoting a political event rather than reporting the July 1, 2003 protest (an Ideological Level journalistic sin); • Publishing biased election day special supplement as breaking news (an Extra Media – Organisational Culture Level journalistic sin); • Checkbook journalism in the Chan Kin Hong incidental (a Media Routine Level journalistic sin) • Sensationalism – the Edison Chen sex photo scandal (a Media Routine Level journalistic sin) • Illegal intrusion of privacy – the Lydia Shum case (a Media Routine Level journalistic sin) • Publishing the nude photo of alleged rape victim Carina Liu – a Media Routine Level journalistic sin).

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And of course, there are contradictory views concerning self-censorship in Hong Kong. Among the many factors that influence the Hong Kong media, the ideological level must be the most high profile to the outside world, if only because the 1997 handover also brought political and ideological changes. However, the main changes in the media since the handover have mainly stemmed from competitive pressure – to win readership and market share. Most contradictions, or “sins” in the HKSAR media occurred at the media routine level, when news workers and companies made serious ethical or professional mistakes when they did their work. The background is the cut-throat competition that pushes the media to the limits- to the extent that they feel that they must go the extra mile to succeed, or just to survive. Why did media workers do that? There may be several reasons for such “sins.” Economic survival is one. There are also the changes in the industry structure of the media that further squeezed traditional participants. Moreover, there is no professional body that can legally enforce standards. Because there is no formal entry barrier to the media job, and different media companies have different policies and practices, the conduct of media workers in Hong Kong can vary widely.

Role of New Media and Technologies So far the main focus here has been on the traditional media, especially newspapers. Yet, the rise of new technologies and media has gradually changed the rules of the game in the media and political developments in Hong Kong. The significance of new media, such as mobile phones with multiple functions and online news, blogs and other information transmitted via the internet, is that they prove the media are not the sole agent between the source and the receivers. For example, some social advocates use internet radio to express their opinions and connect with their constituents with calls to action. They bypass the restrictions on and limitations of the traditional media. Also, it means that the target audiences are highly segmented, and there is a need to find a mix of methods to reach different age groups.

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Newspapers’ Recent Business Concerns Newspapers are also businesses, so one cannot ignore the commercial aspects of the media and external developments that affect them. Many papers have made aggressive moves to win more market share. Sing Tao has launched two free papers. Hong Kong Economic Times has expanded its revenue streams by launching magazines, many of which are very successful in their segments, such as U-magazine (travel/leisure), e-zone (IT) and i-Money (finance and investment). Apple Daily has become a major player in Taiwan with its Taiwan edition, and Ming Pao Weekly announced it would also launch a Taiwan edition. The decision by the Hong Kong Stock Exchange to repeal the mandatory requirement for listed companies to publish their notices in full in newspapers (to be replaced by publishing on the company’s own website) have negative impacts on the revenue of many newspapers, especially the English papers and the business focused Chinese papers. In March 2008 that Hong Kong Economic Times saw its revenue tumble 92 per cent in January and February of 2008 while Hong Kong Economic Journal experienced a 90% drop. The Standard saw its revenue from this source slide by 89%, while the South China Morning Post’s decline was 78%, the companies announced. Newspaper publishers are facing a tough time in 2008, with newsprint costs climbing to a decade high due to a global shortage of paper. Various cost pressures, including waste material shortages and high energy costs, have prompted paper sellers to raise their prices.

What Makes News? It is particularly sad that on the day following Ching Cheong’s release from mainland jail and return to Hong Kong, many local Chinese language newspapers, including the two best sellers Apple Daily and Oriental Daily News, chose minor developments in the Edison Chen sex photo scandal as their lead story, though others like the South China Morning Post, Ming Pao and Metro Daily led with Ching’s release.

Post-1997 Hong Kong Media

In the above analysis, the influential Apple Daily is heavily featured, but it is by no means the only paper that committed journalistic “sins” since the handover. Another mass-circulated newspaper, Oriental Daily News, has also been criticized by the community for many media malpractices, such as when it decided to stalk a judge after he ruled against the paper, a case that ended with a five million Hong Kong dollars fine for the company and its chief editor landed in jail for four months on two counts of contempt of court convictions.47 Despite the many “sins” that the Hong Kong media knowingly and unintentionally committed, Hong Kong media’s overall coverage of news and events in Hong Kong after 1997 have on the whole been comprehensive and extensive. Because of the very keen competition among the print and electronic media, many media need to take risks or define a “user-friendly” approach to maintain their users (either readers or audiences) numbers. After all, their continued existence depends very much on the revenues (either through subscription of advertising) they can generate, but the print and electronic media are facing a trend of users decline. Globally, newspaper readership has been declining since the 1960s because of the rise of radio and television as the major source of news. Now, radio and television (perhaps except specifically dedicated cable television news channels) also face the issue of audience decline. The rise of the internet has changed the media usage behaviour of many people, especially the younger generation. Therefore, as we monitor the changes of the HKSAR media, we need to pay attention to the demographic breakdown of the users. Looking ahead, as one tries to follow the changes in Hong Kong media, one must look at the issues at each of the five levels in the Shoemaker and Reese model, which are: 1. At the ideological level – whether the differences between the PRC mainland authorities and the Hong Kong public will be narrowed further or even merge at certain points in the future. 2. At the market structure and economic system level – whether fewer media (be they print, electronic or new media) can find ways to co-exist. The degree of competition will affect the “marketplace of ideas.”

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3. At the organizational level – whether there will be far-sighted organizational culture that will do things that are not solely for profit-making. 4. At the media-routine level – whether media professionals will have more control of the news gathering process. 5. At the individual level – whether individual media professionals can maintain their ethical and professional standards. These are the key trends to watch and the conceptual framework to use to examine media changes in Hong Kong. From the news practitioners’ perspective, they want to see more events happening: with more events, there will be more excitement in terms of working in the profession. From the media owners’ perspective, fewer competition, better cost control and higher profits will mean a stronger reason to exist. But they must prepare to meet the challenges of the new media as an increasingly important source of news and information distribution. From the news users’ perspective, they want to have a marketplace of ideas so that they can digest and analyze the various and conflicting viewpoints for their own consumption and interpretation. As long as Hong Kong remains a vibrant society – politically, economically, socially and culturally, the media will continue to play an active role in the HKSAR’s overall development. Because Hong Kong is a part of China, the changes in the role of media in mainland China will also affect Hong Kong’s media development. The Hong Kong media have played an important role in the implementation of the “One Country, Two Systems” concept since the sovereignty transfer. Further trial and error will be part of the process of seeing the concept become reality rather than just rhetoric.

Notes 1. Pamela J. Shoemaker and Stephen D. Reese, Mediating the Message: Theories of Influence on Mass Media Content (London: Longman, 1991). 2. Apple Daily, July 1, 2003. 3. Ming Pao, July 1, 2003.

Post-1997 Hong Kong Media 4. South China Morning Post, July 1, 2003. 5. Apple Daily, July 1, 2004. 6. Ming Pao, July 1, 2004. 7. Hong Kong Economic Times, July 1, 2004. 8. Sing Tao, July 1, 2004. 9. “Hong Kong: City of Protest,” Reuters, June 6, 2007. 10. Ben Bagdikian, The Media Monopoly (Boston: Beacon Press, 1983). 11. South China Morning Post, August 31, 2006. 12. www.3cnn.com, October 2006. 13. Hong Kong Economic Times, June 27, 2007. 14. Douglas Underwood, When MBAs Rule the Newsroom (New York: Columbia University Press, 1995). 15. C. R. Bantz, S. McCorkle & R. Baade, “The News Factory” Communication Research. No. 7 (1980). 16. Apple Daily “Special Election Supplement,” December 2, 2007. 17. Hong Kong Economic Journal, February 5, 2008. 18. Tai Kung Pao, commentary, December 31, 2007. 19. South China Morning Post, April 29, 2008. 20. Various media reports during mid to late October 1998, such as Sing Tao, October 21, 1998. 21. Ming Pao, October 30, 1998. 22. Sing Tao, October 30, 1998. 23. Apple Daily, front page, November 10, 1998. 24. Ming Pao, November 9, 1998. 25. The Sun, January 29, 2008. 26. Ming Pao, January 29, 2008. 27. South China Morning Post, February 22, 2008. 28. ZD Net Asia, Feb 13, 2008. 29. South China Morning Post. February 11, 2008. 30. South China Morning Post, March 20, 2008. 31. China Daily, 29 February, 2008. 32. Apple Daily, October 7, 2006. 33. South China Morning Post, November 2, 2006. 34. Ming Pao, November 2, 2006.

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China’s Hong Kong Transformed: Retrospect and Prospects 35. Eastweek, October 29, 2002. 36. The Standand, March 11, 2003. 37. Sing Tao, July 7, 2007. 38. Apple Daily, March 9, 2003. 39. Sing Pao, March 18, 2003. 40. Edmund B. Lambeth, Committed Journalism: An Ethic for the Profession (Bloomington: Indiana University Press, 1986). 41. Ming Pao, April 5, 2008. 42. Singapore’s Todayonline, April 5, 2008. 43. Hong Kong government statements issued on March 27, 2008 in response to a British government report on Hong Kong. 44. South China Morning Post, January 9, 2008. 45. Ming Pao, April 20, 2008. 46. Ming Pao, February 6, 2008. 47. Hong Kong High Court ruling, June 23, 1998.

Appendix Daily Newspapers Published in the Hong Kong SAR 1. Apple Daily (蘋果日報 ) – part of a listed company 2. Hong Kong Commercial Daily (香港商報 ) – Pro-Beijing 3. Hong Kong Daily News (新報 ) – owned by an entertainment tycoon 4. Hong Kong Economic Journal (信報財經新聞 ) –80% owned by a telecom tycoon, 20% by its journalist-founder 5. Hong Kong Economic Times (香港經濟日報 ) – a listed company 6. Ming Pao (明報 ) – a listed company 7. Oriental Daily News (東方日報 ) – a listed company 8. Sing Pao Daily News (成報 ) – now in financial trouble, repeated delays in paying wages 9. Sing Tao Daily (星島日報 ) – a listed company with worldwide editions 10. The Sun (太陽報 ) – a listed company, part of the Oriental Daily Group 11. Ta Kung Pao (大公報 ) – Pro-Beijing 12. Wen Wei Po (文匯報 ) – Pro-Beijing

Post-1997 Hong Kong Media 13. South China Morning Post – leading English newspaper, a listed company 14. China Daily Hong Kong Edition – a PRC newspaper in Hong Kong

Free Daily Newspapers 15. The Standard– English newspaper, part of Sing Tao Daily Group 16. am730 – owned by the boss of a leading real estate agent 17. The Epoch Times (大紀元時報 ) – linked with Fa Lun Gong 18. Headline Daily (頭條日報 ) – part of Sing Tao Daily Group 19. Metropolis Daily ( 都 市 日 報 ) – part of Metro International of the Netherlands

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Part IV External and Comparative Perspectives

12 Can Taipei Influence Beijing’s Policy Toward Hong Kong? Sonny Shiu-hing Lo

Introduction While the Chinese Central Government in Beijing views the Hong Kong model of “One Country, Two Systems” as applicable to the resolution of Taiwan’s future status that ideally would mean the island’s peaceful reunification with mainland China, little research has been directed at whether the Republic of China (ROC) on Taiwan can influence the policy of the People’s Republic of China (PRC) toward the Hong Kong Special Administrative Region (HKSAR).1 This chapter attempts to fill in the gap in the existing scholarly literature by assessing whether Taiwan has exerted any influence on Beijing’s policy toward the HKSAR.2 It will argue that while Hong Kong’s “One Country, Two Systems” experience since 1997 has little influence on the long process of wooing Taiwan into the PRC political orbit, Taiwan has an invisible impact on Beijing’s approach to the HKSAR. In other words, Taiwan is arguably like a tail that can wag the mainland dog’s vigilance and attitude toward HKSAR democratization.3

The Unattractiveness of Hong Kong’s “One Country, Two Systems” Officially speaking, the Taipei regime, both the then ruling Democratic Progressive Party (DPP) under President Chen Shui-bian 287

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(2000–2008) and the recently rebounded Kuomintang (KMT or the Nationalist Party) under newly elected President Ma Ying-jeou has repeatedly rejected the Hong Kong model of “One Country, Two Systems” for Taiwan. In terms of official status, the Taipei regime has constantly argued that Hong Kong is merely a special administrative region of the PRC, and that the ROC on Taiwan should not be relegated to the lower sub-national/regional status like Hong Kong. From Taipei’s perspective, the island’s history is a far cry from both colonial Hong Kong and Macao. Taiwan has been a de facto, albeit not de jure, nation-state recognized by nearly two dozen countries in the world. The existence of Taiwan/Taipei cultural and economic/trade offices in many foreign countries that officially recognize the PRC as the sole legitimate Chinese government, such as the United States, United Kingdom, Australia and Canada, symbolizes the island’s quasi-diplomatic status in the world. Although the United Nations (UN) de-recognized the ROC Taipei regime after the November 1971 PRC official entry into the UN as the sole legitimate representative of China, Taiwan has also been participating in some international organizations, such as the APEC and WTO as a non-state level functional entity. From Taipei’s vantage point, it is both necessary and legitimate to assert its claim as a special entity politico-historically different from the much lower SAR status of post-colonial Hong Kong and Macao. Politically, Taiwan today practices Western-style liberal democracy where the president and the legislature are both regularly directly elected by ordinary citizen-voters through universal suffrage. Taiwan is arguably the most democratic polity among the four domains within Greater China – the PRC mainland, Taiwan, Hong Kong and Macao. The rotation of political party in power twice in Taiwan – first in 2000 led by the DPP and then the KMT’s 2008 return – is unprecedented in the Chinese historical and political development. Yet, the chief executives of the HKSAR and the Macao SAR are both elected by a Selection Committee composed of mostly pro-Beijing elites handpicked by Beijing’s representative, the Central Government Liaison Office in these two SARs. The HKSAR and MSAR chief executive elections are punctuated by Beijing’s political control to ensure the selection of a politically loyal leader in a supposedly pluralistic political setting.4 This “Hongkongized” or

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“Macaonized” method of chief executive election is a far cry from the direct universal suffrage that Taiwan voters elect their president. Nor do the Hong Kong and Macao political systems appeal to Taiwan. Hong Kong’s increasingly self-censored media after the 1997 retrocession, combined with relatively small political parties ranging from the Democratic Party to the pro-Beijing Democratic Alliance for Betterment of Hong Kong (DAB), are no match for the mass parties like the DPP and the KMT in Taiwan. The free-wheeling media in Taiwan are marked by political accusations, fierce debates and underground radios that spread rumors and even issued intimidating threats to politically popular politicians. The high degree of local political autonomy in Taiwan is very different from the more conservative and pro-establishment media in Macao, where political parties are even weaker than their Hong Kong counterparts. While Macao’s political parties constantly operate under the disguise of social groups that offer extensive constituency services, such as the pro-Beijing Federation of Trade Unions and the Federation of Kaifong (neighborhood) Associations, pro-democracy groups in Macao remain mosquito-size parties composed of a very tiny circle of intellectuals and political activists. Unlike Hong Kong where the pan-democratic camp is led by lawyers, the Macao democrats have traditionally been spearheaded by a group of conscientious and critical intellectuals without much support from the legal sector. In terms of civil society growth, Macao is the weakest as compared with Hong Kong and Taiwan. Although Hong Kong’s strong social groups in July 2003 succeeded in derailing the enactment of the Basic Law Article 23 – stipulated national security law intended to outlaw treason, secession, sedition and the theft of state secrets – its prominently self-censored and co-opted media are social aspects seen by most Taiwan people as politically undesirable. Media ownership in the HKSAR has since the handover titled toward pro-Beijing businessmen, directly or indirectly shaping the editorial stance and news coverage of the media organizations concerned. While the pan-democrats were the darlings of Hong Kong media in the 1980s colonial era, this has become a thing of the past. Since the retrocession, the pro-Beijing elites have increasingly occupied a more central role in news coverage and commentaries in almost all the

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Chinese language press while pan-democratic leaders have been marginalized in most media interviews. Media ownership in Hong Kong is now increasingly dominated by the patriotic elites who can discreetly reshape the editorial paradigms and orientations of their subordinates, especially the editors who exercise direct control over the inputs from frontline reporters. The very prominent involvement of Liaison Office officials not only in coordinating the electoral campaign of pro-Beijing candidates in local legislative and District Councils elections but also mobilizing patriotic voters to support the latter has proved to Taiwan that, politically speaking, the Hong Kong model of “One Country, Two Systems” is a sham. At the top level of the HKSAR regime leadership, all the political appointees and principal officials can be seen as loyal clients of both Beijing and the chief executive, whereas the pan-democrats are destined to be politically excluded from the policy-making bodies and powerful public institutions.5 The political “mainlandization” of both Hong Kong and Macao has definitely become a negative example of reunification with the mainland in the eyes of an overwhelming majority of the Taiwan populace. The first decade of the HKSAR governance, particularly the seven years under the leadership of inaugural chief executive Tung Chee-hwa (C. H. Tung), was marked by chaos and Beijing’s post-2003 intervention in the management of Hong Kong affairs. Tung’s maladministration, compounded by his group of cronysupporters who were intolerant of public criticisms, contributed much to his unpopularity. In turn, Beijing was plunged into the political necessity of voicing unconditional support of Tung by top leaders of the Chinese Communist Party (CCP). As such, Beijing was dragged into the HKSAR political scene. It was not until the July 1, 2003 mass protests that Beijing realized the severity of Tung’s misrule, his problematic governance and the urgency of preparing for the lackluster chief executive’s “dignified” exit. In mainland Chinese politics, “face” is regarded as of paramount importance. This is particularly true in Hong Kong’s case where Tung, handpicked by then PRC leader Jiang Zemin, was seen by most Hong Kong people as inept. Although a face-saving measure was adopted in March 2005 when Tung stepped down for health reason,

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it became obvious that the Hong Kong model of “One Country, Two Systems” has become a laughing stock in the eyes of Taiwan people. The selection of former civil servant Donald Tsang as the replacement chief executive to succeed Tung was viewed as a necessary step to win back the confidence of those Hong Kong people and Taiwan folks who seriously questioned the viability of the “One Country, Two Systems” formula. The much stronger political leadership of MSAR chief executive Edmund Ho meant that, at least until the May 1, 2007 labor protests against government corruption and flawed policies, Beijing had no need to openly buttress the Ho regime. The Ao Man-long corruption scandal broke out in late 2006 when the former MSAR Secretary for Land and Public Works was charged and later convicted of receiving huge bribes from land developers, laundering his ill-gotten money through overseas bank accounts and siphoning off his illegal proceeds via empty shell companies. While elite corruption remains quite serious in Taiwan, the ethical clean governance of the HKSAR can be a model for both Macao and Taiwan. The HKSAR’s vigorous anti-corruption mechanism stands out as a model for much of the world. Taiwan’s anti-corruption apparatus has traditionally been weak; the integrity of civil servants remains to be significantly improved, particularly the police force whose members frequently take bribes and behave improperly. If the MSAR police force has improved upon the colonial era’s police force that was as corrupt as its Hong Kong counterpart before the Independent Commission Against Corruption (ICAC) was established in 1974, 6 Taiwan’s police force remains rather like colonial Macao and pre-ICAC Hong Kong in ethical standards. Still the Macao security police is not free from corruption scandals; its acting bureau chief Li Siu-ping was, accordingly to July 2007 unconfirmed reports, arrested by the PRC Public Security Bureau for not only patronizing prostitution in the mainland but also for severely abusing a prostitute.7 The report questioned why the acting chief could still retain his post, implying that “redness” (political loyalty) seemed to be more important than and performance.8 Occasionally, a tiny minority of Macao police officers have misbehaved by taking bribes and engaging in illegal activities like extortion and laundering rackets. Overall, Macao civil servants

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appear to be less corrupt than their Taiwan peers. Although KMT presidential candidate Ma Ying-jeou promised during his spring 2008 election campaign that he would establish a new anti-corruption body to curb graft in Taiwan, it remains to be seen how he would transplant the ICAC’s key success factors into his island domain – a powerful Prevention of Bribery Ordinance, the agency’s high degree of respectability, independent status and sufficient manpower to pursue corruption suspects. Yet, Ma’s determination to adopt a Hong Kong model of clean government is unquestionable as can be seen in his emphasis on the integrity and ethics of civil servants during his May 20, 2008 presidential inauguration speech.9 The rule of law in the HKSAR is the most important asset and successful governing experience that Taiwan can learn from. The HKSAR’s rule of law entails the essential ingredients of not only the equality of all before the law but also the political neutrality of an independent judiciary from court judges to procurators/investigation officers. In Taiwan, however, a few prosecutors were accused by Ma Ying-jeou as harboring partisan political bias in their legal actions.10 While some prosecutors in Taiwan upheld political neutrality and high professional standards by pursuing controversial cases without fear or favor like the financial scandals involving President Chen Shui-bian’s relatives, the 2007 prosecution against Ma’s alleged public expenses irregularities as Taipei city mayor stemmed more from political calculations rather based on solid legal evidence. Ma was eventually cleared of all such charges in the original court verdict as well as by Taiwan’s higher and highest court in two subsequent appeals filed by the unyielding prosecutors. From Taipei’s perspective, the rule of law in the HKSAR has been undermined by at least three instances of Basic Law interpretation by the Standing Committee of the National People’s Congress (NPCSC). The first interpretation was made by the SCNPC in mid-1999 over the right of abode of mainland Chinese in the HKSAR; the second one in early 2004 over the pace and scope of HKSAR democratic reform; the third one in early 2005 over the tenure of office of the replacement chief executive. Furthermore, the NPCSC on December 29, 2007 announced its decision on the “timetable” for the direct election of the chief executive (2017) and

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the entire Legislative Council (2020). Even with 2017 as the earliest possible date for the direct election of the HKSAR chief executive, Beijing would unlikely forfeit its influence over the composition of the Selection Committee that would elect the next chief executive in 2012 and would in 2017 become the organ for chief executive candidates’ nomination (in effect pre-screening). For the Taiwan folks who have long enjoyed the direct election of their president since 1996, the HKSAR system represents a clearly negative example of retrogressive democratization under Beijing’s thumb. Politically and constitutionally, the Hong Kong version of “One Country, Two Systems” has already lost its appeal to Taiwan. Politically, HKSAR elections have undergone a certain degree of Taiwanization. The Hong Kong pan-democrats have developed a practice of visiting Taiwan in the final phase of electoral contests in order to observe and learn first hand from the island’s electoral campaigns. Traditionally, Taiwan’s elections have been marked by a high degree of voter participation, the utilization of various campaign vehicles ranging from colorful flags to expensive souvenirs, massive rallies (like rock concerts), frequent and common vote-buying practice, the use of negative campaign tactics to tarnish opponents and the eruption of electoral violence among partisan supporters. Any Taiwan-style electoral violence and lavish electioneering activities are outlawed and monitored by the Election Commission and the ICAC. The Hong Kong-style electioneering has been marked by extensive display of colorful banners and systematic mobilization of grassroots-level social group leaders and party branch organizers. Moreover, even the pro-Beijing forces, particularly the DAB, have attempted to “bribe” the voters through various gifts and extensive constituency services, such as snake soup dinners, free legal advice and low-cost sightseeing tours. The HKSAR political parties did borrow quite a few Taiwan-style campaign lessons for their keenly fierce electoral efforts. Hong Kong’s increasing economic dependence on the mainland seems to have sounded a death knell to its promised autonomy in the eyes of Taiwan’s pro-independence camp supporters and those imbued with a strong sense of Taiwan identity. The extensive and deepening reliance on Beijing for beneficial economic uplifting measure like the Closer Economic Partnership Arrangement (CEPA)

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and the mainlanders’ individual tourism scheme that were introduced in mid-2003 soon after the national security law enactment debacle reflected a continuation of the colonial mentality among many Hong Kong folks. Most Hong Kong people, except for those with a very profound sense of Hong Kong identity, believe that there is nothing wrong to become more dependent on the mainland for economic support as Hong Kong has been a part of China since 1997. High public expectations for Beijing’s preliminary “mainlanders investing in Hong Kong shares” scheme (also called the “Hong Kong shares through train” concept that was regarded as a “discriminatory” term by top PRC banking officials during the March 2008 annual NPC meeting) again reveals the extent that Hong Kong people wholeheartedly wish to seek mainland support for the HKSAR economy. From Taipei’s perspective, Hong Kong’s deepening economic dependence on the mainland would weaken its bargaining power vis-à-vis Beijing. During the spring 2008 presidential election campaign, in debating the desirability of the “cross-Strait common market” on Ma’s platform, DPP candidate Frank Hsieh argued that such “one China common market” would severely weaken Taiwan’s job market and agrarian sector due to the influx of mainland workers and massive import of mainland agricultural products. The KMT camp swiftly responded to the DPP charges by asserting that Ma’s victory would not entail drastic transformations through unrestricted import of mainland laborers and farm produce. In fact, the KMT in 2008 is very different from the KMT of the past. While the KMT in the 1972–87 Chiang Ching-kuo era still nominally entertained the hope for the ROC regime’s eventual recovery of and return to the mainland, the 1988-2000 Lee Teng-hui era moved the KMT closer to a tacit endorsement of Taiwan’s de facto separation from the mainland. The DPP victories in the 2000 and 2004 presidential elections pushed Taiwan further along the path of de facto, albeit not yet de jure, independence and socio-cultural detachment from the Chinese mainland. The prospects of the KMT recapturing the presidency meant that Ma Ying-jeou and his electioneering team must very carefully orchestrate their campaign rhetoric and platform that would highlight a strong identification with Taiwan’s interests, thus

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wooing the younger voters, middle and lower class electorate in the moderate non-partisan mainstream. It can be said that the KMT “Blue Camp” of 2008 has to some extent become a diluted version of the DPP-cored pro-independence “Green Camp,” especially with regard to its policy toward closer economic links with the mainland. Any overly intimate and extensive economic interactions with the PRC would risk portraying the KMT as selling out the interest of the Taiwan people and shifting Taiwan toward Hong Kong’s path of economic dependence on the mainland. As more mainland tourists will soon be permitted to visit Taiwan, the island’s economic dependence on the mainland will gradually increase, giving rise to the likelihood of the island’s economic “Hongkongization.” Such a prospect, however, would be devastating to Ma as president who must prevent the DPP’s return to power in 2012 and beyond. Hence, in his cross-Strait detente efforts, Ma would try his best to steer away from any economic over-dependence on the mainland. The Ma regime’s open-door policy to welcome mainland tourists could reduce Taiwan people’s concerns of economic independence by facilitating more extensive cross-Strait human interface to minimize mutual ignorance and mistrust while also meeting the urgent domestic need for a rapid economic rebound by tapping into the mainland market. This dialectical development will be a bone of contention between the ruling KMT and the opposition DPP.

Applicability of the Spirit of “One Country, Two Systems” Despite the fact that the governing aspects of both Hong Kong and Macao’s “One Country, Two Systems” experience have very little positive benefits to Taiwan, the spirit of the model could still be applied to help shape the island’s political future vis-à-vis Beijing. To put it simply, the spirit of building trust, agreeing to disagree, making compromise and mutual concession, and conflict resolution through peaceful means at the bargaining table should be applied creatively to promote a more harmonious evolution of

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mainland-Taiwan relations. The 1982-84 Sino-British negotiations over Hong Kong’s future proved that both Beijing and London could resolve their differences over a complex historical problem peacefully and rationally. This spirit culminated in the 1984 Sino-British Joint Declaration on Hong Kong that also laid a foundation for the 1987 Sino-Portuguese accord on Macao’s retrocession. The dispatch of secret emissaries across the Taiwan Strait may still be necessary to enable high-level and confidential Beijing-Taipei dialogues toward a significant breakthrough in extremely sensitive issues like defense-security de-escalation and space for Taipei’s international participation. While the PRC refuses to renounce the use of military force to deal with Taiwan for fear of any sudden emergence of a de jure Taiwan independence move on the island, Taipei has constantly demanded Beijing to abandon the use of force as a precondition for bilateral political negotiations. This deadlock cannot be easily broken. Nevertheless, some scholars (like US political scientist Kenneth Liberthal and HKSAR academic Ambrose King) have suggested a cross-Strait peace pact even though any bilateral de-militarization peace pact between Taipei and Beijing will be an unlikely short-term scenario. Still, Ma as presidential candidate had already proclaimed in early 2008 that he would adopt a “Three Nos Policy”– no reunification, no independence and no use of military force on Beijing-Taipei relations. This policy was reiterated in Ma’s March 20, 2008 presidential inauguration speech. It is clear that Ma’s policy anchorage is to perpetuate the status quo, a stance perhaps located somewhere between the early Lee Teng-hui detachment stance and the Chen Shui-bian regime’s deliberate separatist reorientation. Nor does the KMT regime wish to do anything that would provoke Beijing to deploy the People’s Liberation Army (PLA). The crux of the problem is whether the PRC’s Hu Jintao–Wen Jiabao leadership would continue to be politically patient with Ma’s status quo preservation policy. In the event that the Hu-Wen leadership becomes keen to carve a niche in Chinese history by settling the Taiwan problem decisively or if CCP hard-liners come to dominate Beijing’s Taiwan policy, then Beijing-Taipei relations could suddenly deteriorate in the future. Regardless of the future scenarios of Beijing-Taipei relations –

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

maintaining the status quo, achieving a security-political detente breakthrough, or exacerbating their relations – the spirit of agreeing to disagree, deepening mutual trust, forging more extensive functional interfaces, and reaching compromises and concessions must be maintained by all means. The principle of agreeing to disagree and the continuation of inter-system divergences mark the central tenets in the “One Country, Two Systems” concept, which is arguably tantamount to the realization by Beijing that a more “federalist” approach can be experimented in any future unification with the mainland process by using Hong Kong and Macao as the prototype models. Although the Taipei regime and most political elites have repeatedly labeled the political, economic and legal content of “One Country, Two Systems” as unacceptable and irrelevant to Taiwan’s case, they should step back to better appreciate the tinge of federalist ingredients and potentials embodied in the formula. If some shade of federalism is a vital dimension of the post-colonial experiment unfolding in Hong Kong and Macao, despite Beijing’s sometimes less than smooth and adroit application or the Tung regime’s lackluster record in the HKSAR, Taiwan’s democratically elected rulers should grasp the new found opportunity amid cross-Strait detente to turn the formula in a way that can help to reshape Beijing’s Taiwan policy as well as Beijing’s policy toward the HKSAR and Macao. In other words, constructive engagement with Beijing through dialogue and an enlightened process of give and take will perhaps maximize Taipei’s bargaining power vis-à-vis Beijing. In the short run, more extensive cross-Strait human interactions would enhance cooperation and stability in the Beijing-Taipei dynamics. Some Taiwan folks, including businessmen, have long demanded that the “three direct links” should be substantially expanded so that Taiwan’s stagnant economy during the Chen Shui-bian era would be stimulated by opening the door to mainland investment and tourists. Realpolitik and Taiwan’s dismal economic performance in the last years of the Chen regime have served as a rude awakening to many Taiwan voters who are now seeking to gain similar benefits of Hong Kong’s closer economic links with the mainland since 1997. Yet, the anticipated increase in human and economic interactions across the Taiwan Strait will yield both

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opportunities and conflict-ridden prospects. The opportunities for economic rebound, political negotiations, social interactions, cultural exchanges and political dialogue will help to pave the ground for an eventual significant breakthrough on the crucial security front. On the other hand, the prospects of increased economic dependence on the mainland, breakdown or impasse in political negotiations, socio-cultural conflicts and even unexpected military skirmishes cannot be ruled out entirely. The dialectical nature of increased social, human and economic interactions between Beijing and Taipei will continue to mark their delicate and problematic relationships in the foreseeable future.

Taiwan’s Influence on Beijing’s HKSAR Policy Prior to Hong Kong’s shift to the PRC orbit in July 1997, Taipei began to minimize its influence in Hong Kong. The United Daily News local edition in Hong Kong ceased publication, thus depriving Taiwan of a good quality newspaper that could interact with the Hong Kong public. Taipei supporters in Hong Kong were also split between the pro-New Party (pro-unification) advocates and pro-Lee Teng-hui (pro-detachment) factions. This internal strife was later translated into a more explicit division between the much larger pro-KMT “Blue Camp” partisans and rather small pro-DPP “Green Camp” of pro-independence supporters. It was unfortunate that Taiwan’s politics negatively impinged on its supporters in Hong Kong. A few pro-KMT District Board members, moreover, were involved in political scandals shortly after Hong Kong’s retrocession, thus diluting public support of the pro-KMT politicians in the HKSAR. In the first decade since 1997, there was no sign to show that the pro-KMT forces managed a political comeback in local politics and electoral contests. Although reportedly the pro-Taipei forces did mobilize their supporters to vote for and support the pan-democratic camp during local elections, their activities tend to be implicit and clandestine to avoid provoking Beijing’s political sensitivity. Similarly, during the mid-2003 anti-Article 23 mass

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protests the local pro-Taipei forces had mobilized a few supporters to air express their views in the Legislative Council solicitation of public opinion and to join the demonstrations.11 Influence from Taipei’s pro-independence leaders did arouse Beijing’s concern. For instance, in March 2000 when the Hong Kong Cable TV interviewed the DPP’s vice president-elect Annette Lu, a senior official (Wang Fengchao) of the PRC Central Government Liaison Office openly warned the local media not to disseminate any such pro-Taiwan independence view. This clearly reflected Beijing’s great alarm about the likely influence of Taiwan’s then ascending pro-independence politicians on Hong Kong. Taiwan’s politico-economic model of development also has a significant bearing on the PRC path of development in the long run. To some extent, Taiwan’s free-wheeling capitalism, along with the Hong Kong and Macao developmental model of a globalized market economy, is now implemented in the PRC mainland. Politically, Taiwan’s system of democratic politics and county-level administrative autonomy serves as a possible alternative option for the PRC’s political reform under Chinese Communist Party (CCP) leadership. Beijing views the Taiwan politico-economic model with extreme alarm and caution. Any full-scale implantation of the Taiwan’s politico-economic development model into the mainland would run the risk of endangering the power monopoly of the ruling CCP. Multi-party competition in a pluralist arena is seen as a dangerous experiment that would erode the CCP power. The Taiwan model, if extensively transplanted to the HKSAR, might also yield the remote possibility of an aggressively pro-local autonomy Hong Kong leader who would defy the order from and ignore the wish of the PRC Central Government. While there is virtually no Hong Kong person who advocates Hong Kong’s independence from the mainland, the ability of Hong Kong’s Beijing-defiant and anti-communist democrats capturing a very large share of the total votes and hence legislative seats in local elections is a realistic possibility. Such a scenario might alarm Beijing for the emergence of a certain kind of democratically-mandated assertive “localism” in the HKSAR that could seem somewhat resembling a partial “Taiwanization” of Hong Kong polity. Hence, the Tung regime soon after the handover changed the electoral system into a

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proportional representation system to ensure the pan-democrats would remain a legislative minority.12 If Beijing is keen to prevent Hong Kong from being “Taiwanized” or becoming more fully democratized in a Western liberal mode, it should worry about the political spin-off effects of Taiwan’s maturing democracy on the HKSAR. After all a Western-style genuinely liberal and pluralistic polity in the HKSAR could in the longer term perhaps trigger a domino chain effect on the mainland, spreading democratic ideals and populist aspirations from Guangdong in the south to other regions such as Xinjiang and the Tibet Autonomous Region. The potential for a “Taiwanization” of HKSAR polity and eventually even the mainland’s own political system continues to pose a serious threat to the ruling CCP’s power monopoly and Chinese national security. Compounding such a possible “Taiwanization” potential threat is the involvement of foreigners and foreign countries in propping up the Taipei regime and in influencing HKSAR local elections. Traditionally, the Beijing officialdom has developed a high degree of sensitivity toward any perceived foreign interference in its domestic affairs that include Hong Kong, Macao and Taiwan matters. The 1989 Tiananmen Incident, according to official PRC perspective, involved considerable external inputs that aimed at subverting the ruling CCP regime. Under such political logic, Hong Kong democratization along Taiwan’s path would open the door to more foreign influence, and also would yield the opportunity of deeper infiltration into the mainland in a “Trojan Horse” conspiracy. If the domino impact of Western-style democratization is seen as absolutely undesirable and politically subversive, then any attempt by Taipei in trying to shape HKSAR domestic politics and elections would be sternly opposed by Beijing. If Ma Ying-jeou’s KMT is reverting to its old and pre-1997 policy of tacitly supporting the Hong Kong democratic camp in future legislative and District Councils elections, the underground CCP in the HKSAR will surely be fully mobilized to support the pro-Beijing forces. As a result, HKSAR elections might resemble a hidden tug-of-war between the CCP and the KMT in the coming years. Taiwan’s electoral politics that yielded the DDP victories hardened Beijing’s attitude toward democratic reform in the HKSAR,

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especially in spring 2004 when the Taiwan presidential contest gave Chen Shui-bian a second term of office. The still clouded assassination attempts at Chen and running mate Annette Lu plunged the Taiwan political arena into chaos and generated sympathy votes for the DDP to facilitating Chen’s victory. Beijing was confronted with the explosive scenario of another DPP regime which turned out to be more unsettling than the Lee Teng-hui era. Hence, in early 2004 when Taiwan’s presidential contest result was against the wish of PRC, which was disturbed by the prospect of another four year of the pro-independence DPP in charge of Taiwan, Beijing also adopted a more hard-line stance on Hong Kong democratization. The NPCSC’s third Basic Law interpretation in April 2004, this time on the pace and scope of HKSAR political reform, meant that Beijing had to step directly in to ensure the weak Tung regime could effectively resist the popular demands for accelerated pace and expanded scope of local democratization. Thus, Beijing’s rejection of HKSAR electoral reform for 2007-08 was shaped by its consideration of the Taiwan scenario. Hong Kong, in the eyes of Beijing, could not proceed democratically along the Taiwan path where a democratically elected leader armed with a legitimate popular mandate could become a strong and assertive “localistic” advocate versus Bejing’s command. Hence, the fear of “Taiwanization” of Hong Kong’s polity was and is real. During the March 2008 Taiwan presidential campaign, both the DPP’s Frank Hsieh and the KMT’s Ma Ying-jeou expressed their view on Tibet and Hong Kong. On March 17, two days after the violent clashes between the mainland paramilitary police and the Tibetan rioters in the Tibet Autonomous Region, Hsieh openly said that “Tibet’s today will be Taiwan’s tomorrow.” 13 Ma swiftly responded to Hsieh’s remarks by asserting that Tibet is very different from Taiwan. Ma called for Beijing to allow Tibet “autonomy” as with the case of Hong Kong. Indeed, the PRC officialdom has always insisted that Tibet is an inalienable part of China and the application of the HKSAR model to Tibet is out of the question.14 Yet, Beijing avoided responding to Ma’s remarks that autonomy should be granted to Tibet. Beijing’s deliberate silence at that juncture perhaps reflected its wish to avoid undermining Ma’s electoral prospects. Officially, Beijing also believes that the Tibet

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Autonomous Region has already enjoyed autonomy, but it refrained from criticizing Ma’s comment for the sake of facilitating his electoral victory. It is unclear whether Ma and his government would fully reverse the DPP’s policy of abandonment of active engagement with the HKSAR. During the Chen Shui-bian era, the Taipei regime had assigned Hong Kong to the backburner while the local pro-Taipei forces remained too weak with inadequate funding as to constitute a viable political force in local elections. Arguably, a more proactive Taiwan policy toward Hong Kong should be adopted. It entails the revival of the pro-Taiwan forces in the HKSAR in the form of new resources to support, for example, the publication of a new daily paper, training local democrats to compete with the pro-Beijing forces in offering constituency services, and even tacitly funding the grassroots-level activists in the democratization struggle. The poor performance of the Hong Kong democrats in the 2007 District Councils elections was attributable to various factors, such as the economic pragmatism of voters, the success of the pro-Beijing forces in mobilizing their supporters and grooming young candidates, the high popularity of the Tsang administration, and arguably the lack of sufficient political tutelage, electoral guidance and manpower support from Taiwan’s supporters and agents in the HKSAR. It can also be argued that given the very weak and relatively aging pro-Taiwan forces in Hong Kong, they could by no means rescue the local democrats, who were the primary target of political retaliation from the pro-Beijing camp led by the DAB. While many defeated candidates of the DAB continued to work in their constituencies shortly after the pro-Beijing camp’s defeat in the 2004 District Councils elections, many elected democrats from 2004 to the campaign period of the 2007 District Councils elections were drowned with success and failed to increase their political sensitivity to the constant threat from their political foes. While the KMT in Taiwan was preparing for its own political comeback in the 2008 presidential elections and had little time to help the Hong Kong democrats, the ruling DPP failed to impart the skills of constant electoral campaigns to them. Needless to say, the DPP itself became overwhelmed by its success in the 2000 and 2004 presidential elections. The DPP from 2000 to 2004 perhaps was similar to the

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

Hong Kong democrats from 2004 to 2008 when both of them failed to prepare sufficiently for the inevitable politico-electoral retaliation from their die-hard opponents. Nevertheless, it appears that an in-built conservative proclivity for passive, little action approach has been adopted by Taipei’s policy-makers toward Hong Kong. In terms of democratization, Taiwan as the first Chinese territory that effectively practices liberal democracy should play a greater role in fostering democratization in both the HKSAR and Macao, the other off-shore Chinese domains whose populace have been enjoying considerable freedom under the rule of law with a high level of education and income. Yet, conservatism and caution have long dictated Taipei’s policy toward the HKSAR. After all, any enactment of the Basic Law Article 23-stipulated national security bill in Macao and Hong Kong in the near future could mean that overt Taiwan official support of the local democracy forces would run the risk of being labeled seditious activities. The irony is that if Taiwan is recognized by Beijing as an indispensable part of China, then Taiwan’s open support of Hong Kong and Macao pro-democracy forces is arguably “non-foreign,” contrary to the proposed bill outlawing sedition and treason committed by local persons in league with “foreigners.” Indeed, due to concerns for the “Taiwanization” of Hong Kong, any such Taiwan influence upon Hong Kong’s pro-democracy movement may well be seen by Beijing as politically subversive to the CCP party-state. As long as Taipei does not want to negotiate with Beijing over the island’s prospects for reunification with the mainland, it has tacit influence over the way in which Beijing deals with Hong Kong. By continually ridiculing Hong Kong’s slow pace and limited scope of democratization, as Chen Shui-bian did during Taiwan’s January 2008 Legislative Assembly elections, Beijing may be compelled to treat HKSAR democratization in a more innovative manner. The December 29, 2007 NPCSC decision on the possibility of direct election of the HKSAR chief executive in 2017 and the entire legislature by 2020 could also be a move implicitly targeted Taipei to lure it closer to the mainland Chinese orbit. At the very least this decision can counter Taipei’s repeated criticisms (from both Blue and Green camp) that a full decade after the handover, Beijing still

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refuses to set a timetable for HKSAR democratization. Although Taipei might see such direct election as a likely political farce controlled by Beijing, the NPCSC decision on the pace of HKSAR democratization has partially silenced the critics of Beijing’s glaring democratic deficit toward Hong Kong. If this was indeed the case, then Taipei actually did cast a hidden impact in inducing the recent more positive PRC approach to Hong Kong democracy. Paradoxically, if Taipei eventually opts to adopt a policy of negotiation with Beijing on the cross-Strait political issues, Hong Kong’s democratization would perhaps lose its outside stimulus. In the event that Taipei and Beijing sit down at the negotiating table to hammer out a solution for their future relationship, the HKSAR “One Country, Two Systems” model could ironically lose its residual appeal to Taiwan people. So long as Taipei refuses to negotiate with Beijing over the island’s political future, Hong Kong’s democratization can be seen as a show case to silence Beijing’s critics and to enhance Taipei’s confidence in the mainland’s political tolerance. Taipei’s influence on Beijing’s policy toward HKSAR democratization is arguably a double-edged sword. In early 2004, Taiwan electoral results served as a negative example behind Beijing’s rejection of Hong Kong’s demands for 2007–08 direct elections. But the December 2007 NPCSC decision on a direct election timetable for the chief executive and the entire legislature reflected the hidden Taiwan factor. If the HKSAR system is to be projected as a “successful” post-unification integrative model, then its further democratic evolution has to proceed forward gradually and continuously to silence the external critics. Of course, the 2007 NPCSC decision cannot be interpreted as having only Taiwan as the ultimate target of Beijing’s united front efforts as this has also served to settle Hong Kong’s long standing debate on democratic reform. In effect, Beijing hoped to pressure the HKSAR pan-democratic camp into accepting the limited political space allotted by the Central Government and also uplifting the local pro-Beijing forces (from the democratic deficiency charges) in the September 2008 Legislative Council elections with this very timely and carefully orchestrated decision to achieve multiple political objectives. Taipei’s policy of no negotiation with the mainland in the short run may have a positive impact on Hong Kong’s pace and scope of

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

democratization. Once Taipei and Beijing attain political normalization in their regime to regime relationship, the external utility of the Hong Kong and Macao models of “One Country, Two Systems” will be lost. Yet, this does not mean that Taipei-Beijing negotiations will become a zero-sum game for HKSAR democratization. Even if Taipei starts negotiating with Beijing over the island’s political future, the Taipei negotiators could still be able to use the “Hong Kong card” to pressure Beijing for fuller HKSAR democratization. However, in the course of such Taipei-Beijing détente, it is doubtful whether Taipei would spend its bargaining time to advance Hong Kong democracy, for it must first concentrate on catering to Taiwan domestic interests rather than branching out to push for Hong Kong’s democratic progress as an indirect way to promote democracy in mainland China. Still, as Ma’s May 2008 inaugural speech emphasizes, the more critical divide separating the two shores of Taiwan Strait is in the realms of values – freedom, democracy and the rule of law that Taiwan remains very different from the PRC mainland. Any accelerated economic interactions between Taipei and Beijing after Ma’s presidential inauguration would propel the mainland to undergo a silent revolution. Taiwan’s economic and socio-political values, such as its free market economy, civil liberties and political pluralism, would perhaps acquire a legitimate foothold in the mainland, penetrating deeper into the Chinese mainlanders’ psyche. If the “Hongkongization” of South China has already been accelerated since the 1990s, particularly after the mid-2003 mainlanders’ individual tourism scheme, then economic rapprochement between Taipei and Beijing would likely have tremendous impact on the PRC coastal region and major cities like Shanghai where half a million Taiwan folks now reside (out of a mainland total of 1.6 million, some 7% of Taiwan’s total population of 23 million). Some mainland visitors to Taiwan will perhaps appreciate Taiwan’s vibrant civil society, including the assertive local media and a higher degree of societal freedom, especially if the Taipei authorities can carefully and skillfully conduct united front tactics on them. From Beijing’s perspective, intensified economic ties with Taiwan would in the short run narrow the mainland-island gaps and create more conducive

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conditions toward eventual peaceful reunification between the two in the long run. This objective, however, runs the risk of ushering in a much wider “Taiwanization” of the mainland. Ma Ying-jeou’s appeal to mainlanders on democratization in his May 2008 inauguration speech reveals his grand vision wish to democratize the PRC to the fullest extent as the necessary prerequisite for unification. This political challenge is bound to be resisted by the PRC leaders, especially the hard-liners who regard Ma’s vision as subversive to the mainland’s one-party polity.

The HKSAR Role in Beijing-Taipei Relations: The Need for Reform After Hong Kong’s retrocession, Taipei’s representatives in the HKSAR have often complained of the difficulties in trying to forge closer relationships with post-colonial Hong Kong. For one thing, the HKSAR government has remained extremely cautious in any dealings with Taipei, deferring to the PRC Central Government for guidance and approval. This stance is understandable. Yet, Hong Kong has traditionally harbored a rather negative attitude toward Taiwan’s academic qualifications. For example, universities in the HKSAR overwhelmingly regard mainland students as of paramount importance while down grading the importance of attracting Taiwan students to their campuses. Such public-sector and private-sector attitudes toward Taiwan are unfortunate unless Beijing actively encourages Hong Kong elites to interact with Taiwan in a bolder and more proactive manner. The Chu Hai College of Higher Education, for example, should be ideally upgraded into university status upon proper academic accreditation with the support of the HKSAR and Beijing authorities as a useful bridge linking the HKSAR and Taiwan. The Hong Kong ruling elites should readjust their in-built (since the British colonial era) bias toward Taiwan students, Taiwan institutions and Taiwan’s education system in general. They simply ignore that the Hong Kong model was also designed to facilitate Beijing-Taipei interactions. Shortly after Ma’s became Taiwan’s president-elect, the HKSAR

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

government vowed to improve the Hong Kong-Taipei ties – a long overdue move. In contrast, the Macao local authorities appear to be more flexible and relaxed in their interactions with the Taipei representatives. In Macao where many elites including regime officials have Taiwan academic degrees and other qualifications, the Macao-Taipei exchanges tend to be more intensive and conducive than Hong Kong in promoting the of “One Country, Two Systems” gains to Taiwan. In fact, Macao has served as an effective middleman between Taipei and Beijing on functional issues such as an accord on chartered flights between the two sides. Some Macao civil servants and professionals were also trained in Taiwan. This is quite different from Hong Kong whose “Greater Hong Kong” mentality perhaps prevented the HKSAR from forging a closer relationship with Taiwan as a part of China. In January 2008, Jeff Wang, the director of the Chung Hwa Travel Service, Taipei’s de facto chief representative in Hong Kong, complained publicly that Taiwan officials found it more difficult to obtain visas to visit the HKSAR than that to visit the mainland.15 The Hong Kong official attitude toward the “One Country, Two Systems” is that any politically sensitive issue must be deferred to Beijing – a position that is understandable but indicative of the lack of political socialization in the British colonial era and the continuation of an anti-political conservatism among the psyche of the Hong Kong ruling elites. On the granting of visas that facilitate Taiwan officials’ interactions with their Hong Kong counterparts, the HKSAR officialdom should facilitate them while bearing in mind the bottom line of following Beijing’s lead with full communication. The patron-client relations between the powerful patron Beijing and the loyal client Hong Kong should ideally not constitute on obstacle to substantial improvement in Taipei-Hong Kong relations. Unfortunately, the still pseudo-colonial and overly cautious attitudes of Hong Kong bureaucrats serve as a hindrance to such interactions, not to mention the idea of increasing the number of Taiwan students to study in Hong Kong. One must not forget the fact that Ma Ying-jeao and his wife were both born in Hong Kong. Ideally, the HKSAR elites in both the private and public sectors should invite him to visit Hong Kong, thus generating a golden opportunity for Beijing-Taipei

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rapprochement and a breakthrough détente in their political relations. It remains to be seen whether the Hong Kong elites will have such political wisdom, acumen and boldness to do so. It will be a test case showing the extent to which the HKSAR is being utilized more effectively as a special part of China to facilitate Beijing-Taipei interface. Traditionally, Macao has been playing a critical role in repatriating those Taiwan criminals from the mainland to Taiwan.16 The Hong Kong police force has traditionally been interacting with a representative in the Chung Hwa Travel Service so that two-way communications can be facilitated. In an era of globalization, cross-border criminals in Greater China are increasingly using the porous borders in the mainland, Hong Kong, Macao and Taiwan to engage in illicit activities, such as money laundering, human smuggling, drugs trafficking, kidnapping and extortion. Hopefully, the police in the mainland, Hong Kong, Macao and Taiwan will set up regular communicative mechanisms to more directly and effectively tackle cross-border crime. This mechanism is easier said than done. But given political will and endorsement from both Beijing and Taipei, the law enforcement authorities could share a common objective of maintaining law and order in Greater China and come up with a more pragmatic approach to combat cross-border crime. As more mainlanders are visiting Taiwan, cross-Strait crime is bound to increase, like money laundering and the use of counterfeit Renminbi. The mainland, Taiwan, Hong Kong and Macao law enforcement agencies will need to strengthen their cooperation and coordination to meet the challenge of rising cross-border crime waves. In the wake of the KMT’s return to power in Taiwan, Hong Kong politics are going to be impacted by the Taiwan factor. In April 2008, a number of pro-Taipei politicians in Hong Kong, such as Yuen Long District Councillor Mak Yip-shing and legislator Chan Wai-yip, formed a group named Democratic Front that raised the pro-Taipei banner – a phenomenon reminiscent of the now-defunct One Two Three Alliance, a pro-Taipei group that vowed to support the “one China,” two places’ coexistence and the co-prosperity of three regions of Hong Kong, Taiwan and mainland China. It can be anticipated that more pro-Taipei activists in Hong

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

Kong will participate in local elections more openly as there is nothing illegal for them to advocate a pro-Taipei position, which is no longer equivalent to a pro-independence stance immediately after Ma Ying-jeou’s victory in March 2008. The Taiwan factor therefore is going to shape Hong Kong’s electoral participation to some extent, with more pro-Taipei Hongkongers upholding the Taiwan banner and supporting the pro-democracy movement in a much bolder manner. In fact, more KMT flags could be seen in the pro-democracy parade supportive of the official reversal of the mainland verdict on the 1989 Tiananmen tragedy on June 1, 2008 although only 900 to 1,000 Hong Kong people participated in it.

Conclusion and Prospects Taiwan surely can influence Beijing’s policy toward Hong Kong dynamically. Negatively, the re-election of Chen Shui-bian in March 2004 served to harden Beijing’s policy stance toward HKSAR democratization. The “Taiwanization” of Hong Kong’s political system is seen as a serious threat to CCP rule in the PRC. It may even have a domino effect on the mainland, stimulating separatist movement in sensitive regions such as Tibet and Xinjiang. However, the attempt to silence Taiwan critics of Hong Kong’s “One Country, Two Systems” arguably was one of the factors shaping the NPCSC decision on a timetable for the direct election of the HKSAR chief executive and the entire HKSAR Legislative Council. Before Hong Kong’s retrocession to the PRC, Taipei actually had adopted a proactive and assertive policy to aid the local pro-democracy forces and publicize the pro-Taipei perspective in Hong Kong. Unfortunately, nearer the Hong Kong handover, Taipei changed its Hong Kong policy from activism to passivism, while at the same time plunging the pro-Taipei forces into factionalism due to internal political strife and partisan struggles in Taiwan. The Chen Shui-bian regime largely abandoned Hong Kong in its policy agenda, thus missing a golden opportunity to enlighten Hong Kong people about Taiwan’s rapid democratic development. Although the Kwang Hwa Cultural Centre regularly holds election and current

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events forums to educate the HKSAR public on various issues, Taipei’s policy toward Hong Kong has been largely relegated to the economic and cultural spheres. With the KMT back in the presidency, it is ripe time for Taipei to seriously and critically reassess its official stance on Hong Kong. If the PRC regards Taiwan as an inalienable part of China, it is then legitimate for Taipei to try its best to positively influence HKSAR political development. Taiwan’s experience in democracy can have positive impact on Hong Kong’s democratization, especially in the aspect of educating Hong Kong people about the workings of Taiwan-style democracy and imparting the electoral campaign skills to the Hong Kong democrats. Indeed, the Taiwan elites themselves have to strengthen their own democratic practice, including the need to instill stronger administrative ethics and clean government among the civil servants, the need for all prosecutors to abide by the principle of political neutrality without partisan prejudice, and the urgency of upgrading anti-corruption efforts on the line of HKSAR’s ICAC. At the same time, the HKSAR public and private sectors should reassess their inherent conservative, if not outright negative, attitudes toward Taiwan. Well-qualified Taiwan students should become prime recruitment targets by Hong Kong’s universities, just like high quality mainland students. More official and semi-official interactions between the HKSAR and Taiwan as well as between Macao and Taiwan, can be enhanced so that their “One Country, Two Systems” showcase effects can be maximized. The integrative and harmonizing potentials of the “One Country, Two Systems” model are huge, but unfortunately the HKSAR ruling elites lack the grand political vision and genuinely enlightened foresight fully actualize them, not to mention their inadequate acumen and boldness. While the governance aspects of the HKSAR “One Country, Two Systems” model should not be applied mechanically to reshape Taiwan’s political future, its spirit of trust-building, agreeing to disagree, and making compromise and concessions should boldly be applied to the peaceful resolution of the cross-Strait problems. In short, the dynamics of Beijing-Taipei relations are multi-faceted and the ruling elites in Beijing, Taipei and Hong Kong must maximize the potentiality of the “One Country, Two Systems” formula,

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

especially its implicit federalist elements that may yield a more accommodative “One Country, Multi-systems” option for Greater China unity. From the perspective of central-local relations or centerperipheral dynamics, the case of Beijing-Hong Kong interactions has proved that Taiwan, as a part of China, does have an impact – both positive and negative – on HKSAR democratization. Taiwan has also a direct bearing on the ways in which Beijing has been dealing with Hong Kong’s political reform. Beijing hardened its stance toward HKSAR democratization in early 2004 but then softened its position in early 2008, in part reflecting the PRC’s assessment of the realpolitik implications of Taipei’s electoral-mandated regime change As Ma Ying-jeou emphasizes the value differences between Taipei and Beijing, what he implies is that both Beijing and Hong Kong have to catch up politically and democratically with Taiwan. Yet, Beijing sees Taiwan-style democratization in both the mainland and Hong Kong as politically undesirable and institutionally unacceptable. Undoubtedly Taiwan’s closer economic interactions with the PRC are going to “mainlandize” the island’s economy by making Taipei economically much more dependent on Beijing than ever. Since the PRC has been very skillful and successful in using economic enticements to promote its united front effort toward Hong Kong, Taipei will likely facing a similar process of “mainlandization” economically like the case of Hong Kong after mid-1997.17 Although Ma and his KMT peers are keen to maintain Taiwan’s political distance from the mainland, avoiding at least for the next four to eight years any official regime to regime reunification talks with Beijing that could easily upset Taiwan’s mainstream public and would definitely be bitterly opposed by the Green Camp hardcore who still harbors strong pro-Taiwan independence sentiment, Taipei’s policy of interacting extensively with the Beijing through functional exchanges is akin to walking on a precarious tight rope in the coming years. On the one hand, the KMT wishes to push the Chinese Communist leadership to politically democratize the mainland – an ideal which cannot be easily achieved given the the PRC’s entrenched tradition of authoritarianism. The PRC’s political

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reform has so far been ruling party-led from top down, incremental, piecemeal and very limited in scope. On the other hand, Taipei also participates in a gamble that could eventually transform its economy into an appendage to the mainland. The rise of a global China with its economic power means that Beijing’s united front work on the KMT and Taiwan people may well be intensifying in the near future. As a result, the contradictions between the KMT and the DPP would likely become even more acute over the island’s identity and destiny within the larger cross-Strait context. If Taiwan’s multi-fold relations with the mainland are fast becoming closer without the need for Hong Kong as a reference model or interface linkage channel, then the supposed demonstration effect of Hong Kong’s “One Country, Two Systems” experience on Taiwan is losing its appeal. Since early 2005, Beijing’s leaders have rarely mentioned the “One Country, Two Systems” model when dealing with Taiwan in its pursuit of the much cherished peaceful reunification. As such, Beijing’s policy toward Hong Kong would have little impact on Taiwan, which has developed a new policy toward the mainland under Ma’s reign. The Taipei versus Beijing political tug-of-war that parallels their intensifying socio-economic interfaces will persist. As long as Taipei and Beijing are still deeply divided by value differences, notably their divergent views on the desirability and necessity of democracy, human rights, civil liberties and the rule of law, Beijing’s Hong Kong policy will arguably be shaped by Taipei’s domestic political transformations and leadership orientations. Taiwan’s domestic political changes, especially any possible shift to favor the pro-independence forces in future elections, would likely re-ignite Beijing’s hard-line policy toward Hong Kong’s democratic reform. The persistent refusal of the ruling KMT to talk with the Chinese Communist Party over reunification issues and the appeal of Taipei to Beijing to democratize Hong Kong would perhaps have some positive impact on HKSAR democratization. Beijing would perhaps refrain from making Hong Kong’s democratization look retrogressive so as to appeal to Taiwan for opening reunification talks. Yet, if Taipei negotiates with Beijing on a peace pact and even an accord on the future political accommodation of the two sides, Hong Kong’s democratization will become politically less significant

Can Taipei Influence Beijing’s Policy Toward Hong Kong?

in the cross-Strait equation. The neglected role of Taiwan in Beijing-Hong Kong dynamics will continue to unfold in the years to come. The extent to which Taipei can influence Beijing’s policy toward Hong Kong depends mainly on the Taipei leadership’s strategic objectives toward both the mainland and HKSAR democratization and partly on Beijing’s reactions to Taipei’s domestic political transformations and leadership calculations.

Notes 1. For Beijing’s policy toward Hong Kong, see Wu Guoguang, “Identity, Sovereignty, and Economic Penetration: Beijing’s responses to offshore Chinese democracies,” Journal of Contemporary China, 16: 51 (May 2007), pp. 295–313. He argues that Beijing socially utilizes the imposition of Chinese identity, politically emphasizes the mainland’s sovereignty over Hong Kong, and economically induces and co-opts Hong Kong people to counter the local tide of democracy. A more optimistic review of Beijing’s Hong Kong policy is Zheng Yongnian and Tok Sow Keat, “Beijing’s Response to Hong Kong’s Democratization Movement: From Bureaucratic Control to Political Leadership,” Asian Affairs (New York), 33: 4 (Winter 2007), pp. 235–255. 2. For a Taiwan perspective on the “One Country, Two Systems,” see Byron S. J. Weng, “’One Country, Two Systems’ From A Taiwan Perspective,” Orbis, 46: 4 (Fall 2002), pp. 713–731. 3. For provocative views arguing Hong Kong as the tail that wags the mainland Chinese dog, see Andrew Scobell, “Hong Kong’s Influence on China: The Tail that Wags the Dog?,” Asian Survey, 27: 6 (June 1988), pp. 599–612, and Michael DeGolyer, “Hong Kong tail wags dog,” The Hong Kong Standard, May 17, 2007. 4. Sonny Shiu-Hing Lo, The Dynamics of Beijing-Hong Kong Relations: A Model for Taiwan? (Hong Kong: Hong Kong University Press, 2008). 5. Bruce Kwong, “Patron-Client Politics in Hong Kong: A Study of the 2002 and 2005 Chief Executive Elections,” Journal of Contemporary China, 16 : 52 (July 2007); also Bruce Kwong, “Patron-Client Politics and Elections in Hong Kong,” (PhD thesis, Department of Politics and Public Administration, University of Hong Kong, 2004.) 6. For Macao’s bureaucratic reform, see Sonny Shiu-Hing Lo, Political Change in Macao (London: Routledge, 2008). For Macao’s police reform, see Bruce Kwong, “Police Reform in Macao,” paper presented at the Hong Kong Political Science Association annual conference, December 1, 2007.

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China’s Hong Kong Transformed: Retrospect and Prospects 7. For details, see http://www.renminbao.com/rmb/articles/2007/8/14/ 45247n.html, access date: March 12 2008. 8. Ibid. 9. TVB news (Hong Kong), May 20, 2008. 10. Sonny Shiu-Hing Lo, “The Politics of Controlling Heidao and Corruption in Taiwan,” Asian Affairs, vol. 35, no. 2 (Summer 2008), pp. 59–82. 11. Personal observation of the Legislative Council’s hearings on the Basic Law Article 23 in early 2003. The pro-Beijing groups fully mobilized their supporters to express very similar views in the hearings. 12. For the details of the adoption of the proportion representation system in the HKSAR shortly after its return to the PRC, see Shiu-Hing Lo and Wing-Yat Yu, “The Politics of Electoral Reform in Hong Kong,” Journal of Commonwealth & Comparative Politics, 39: 1 (July 2001), pp. 98–123. 13. TVB News (Hong Kong), March 17, 2008. 14. For a contrary argument on the applicability of some elements of the HKSAR model to Tibet, see Barry Sautman and Sonny Lo, The Tibet Question and the Hong Kong Experience (School of Law Occasional Paper, University of Maryland, 1995). Ma Yingjeou also supported Tibet’s autonomy in his March 17, 2008 media interview when he cited the Dalai Lama’s wish for Tibet’s autonomy within the PRC. Yet, the Dalai Lama seems inconsistent in his remarks and behavior. The March 2008 Tibet riots were, in Beijing’s eyes, instigated by Tibetan radicals and “the Dalai Lama clique.” Verbally, the Dalai Lama denounced the CCP’s “cultural genocide” in Tibet – a claim quickly refuted by Beijing. The Dalai Lama’s inconsistency only hurt the cause of the Tibetans who use peaceful means to achieve Tibet’s autonomy. The complexities of the 2008 Tibet riots that spread to other Chinese provinces illustrated the Dalai Lama’s inability to rein in the radical elements in his own camp, like Tibetan Youth Congress which criticized him as being “weak” in refusing to boycott the Beijing Olympics Games. For the Tibetan Youth Congress argument, see RTI (Taiwan) Radio, March 15–16, 2008. 15. Gary Cheung and Fanny Fung, “Visas hard for Taiwanese officials to get, says envoy,” South China Morning Post, February 14, 2008. 16. Sonny Shiu-Hing Lo, The Politics of Cross-Border Crime in Greater China: Case Studies of Mainland China, Hong Kong and Macao (Armonk, New York: M. E. Sharpe, 2008). 17. For details on the mainlandization of Hong Kong economy and polity, see Shiu-hing Lo, The Dynamics of Beijing-Hong Kong Relations: A Model for Taiwan?, chapter 2, and also Ming K. Chan and Shiu-hing Lo, Historical Dictionary of the Hong Kong SAR and the Macao SAR (Lanham: Scarecrow Press, 1996), pp. 61–67, 170–173.

13 A Comparative Perspective on Hong Kong Democratization: Prospects Toward 2017/2020 Larry DIAMOND

Eleven years after the establishment of the Hong Kong Special Administrative Region, the great unresolved question about Hong Kong’s future remains the nature of its political system. And the more specific question in Hong Kong – as in most of the world’s political systems that are nondemocratic – is whether the society is ready for democracy, and whether, when, and how it can achieve democracy, even if it is in most cultural, economic, and social senses more than “ready” for it. In 2004, the National People’s Congress (NPC) in Beijing determined that Hong Kong was “not yet ready” for full democratic government, and on this basis rejected appeals for full universal suffrage to directly elect the chief executive in 2007 and the LegCo in 2008. This it had the legal right to do under one interpretation of the Basic Law, which establishes “selection of the chief executive by universal suffrage” (“upon nomination by a broadly representative nominating committee”) as only an “ultimate aim,” subject to the “actual situation in the HKSAR” and “in accordance with the 1 principle of gradual and orderly progress.” In December 2007, as I discuss below, the Standing Committee of the NPC (the NPCSC) kicked the democratization of Hong Kong further down the road, setting 2017 and 2020 as the earliest dates by which universal suffrage for the chief executive and the LegCo respectively could be achieved, and leaving a number of questions of the democraticness 315

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even of these somewhat distant elections still unanswered. My first purpose here is to assess, from the standpoint of comparative democratic theory, the claim that Hong Kong is “not yet ready” for democracy, even the somewhat constrained level of democracy that might initially be permitted under the Basic Law. I will show that from a comparative standpoint it is impossible to find a basis for claiming that Hong Kong is “not yet ready” for democracy, other than the obvious fact that its desired political evolution into a democracy is liable to the constitutional veto of a larger political entity that is “not yet ready” to have it become a democracy – with the subversive implications that larger system fears Hong Kong’s democratization would generate for the stability of its own authoritarian rule. I will then go on to weigh the real problem, which is political and therefore concerns the possible mode of transition and manipulation of the balance of power and fear.

Is Hong Kong “Ready for Democracy”? Since the “Third Wave” of democracy began in 1974, well over 90 countries have undergone transitions to democracy. Some of these new democracies have broken down, but most have not. As a result, about 120 states today – or roughly three in every five independent states – are democracies. This means that they can choose their leaders and replace their leaders in free, fair, competitive elections, with universal suffrage, and that those elections confer real power and authority to govern on those parties and individuals that get elected. It also means that there is sufficient freedom of expression and organization so that political parties, interests, and movements can compete in a serious (even if not purely fair) manner in between and in the run-up to elections. It does not necessarily mean that there is a strong rule of law, effective control of corruption, genuine checks and balances, sound macro-economic management, and thus good governance. Electoral democracy can exist (at least for a time) in a context of bad governance, but it is very hard to get comprehensively good governance, with a genuine rule of law, in the absence of electoral democracy. Indeed, vertical accountability – the

A Comparative Perspective on Hong Kong Democratization

ability of citizens to speak freely, hold their leaders accountable, and make them responsive to broad popular preferences – is such an important element of good governance that it is really not possible to get fully good governance without democracy. (Thus even the World Bank Institute identifies political “voice and accountability” as one of its six dimensions of good governance). There are several ways to look at the question of whether Hong Kong is “ready” for democracy. One way is to look at the conditions that sustain democracy and ask whether there would be a good prospect of sustaining democracy if it were installed. Another way is to examine the political culture of the society – the prevailing attitudes and values – to determine whether there is a strong societal desire for democracy. This can also serve the first approach, since a preponderance of democratic attitudes and values is certainly one highly favorable condition for democracy. A third way is to look at the larger geopolitical context and ask whether power relations outside the system’s control will permit it to become a democracy. It is this third angle that is the most problematic and hence that I will focus on the most, in the context of pondering how Hong Kong might become a democracy.

The Conditions for Democracy If we examine the principal structural conditions for democracy, the claim that Hong Kong is not intrinsically ready for democracy becomes (from a sociological standpoint) untenable. One of the most durable conditions for democracy, and still one of the better ways of predicting whether a democracy will survive, is the level of economic development. No democracy has ever broken down at a level higher than what Argentina had in 1975 – about $9300 (in 2004 Purchasing Power Parity, or PPP, dollars). Hong Kong’s current per capita income is now about four times higher than that – far, far beyond the threshold of economic development that appears 2 to provide immunity from democratic breakdown. In fact, if we look at the broader (and I think more meaningful) indicator of socioeconomic development, the UNDP’s latest Human

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Development Index, Hong Kong ranked twenty-first in the world in 2005 – just behind the UK, New Zealand, and Italy, and ahead of 3 Israel, Greece, Korea, and even Germany. Hong Kong’s level of socioeconomic development (by this measure) is higher than every one of the new Central and East European democracies that have been admitted into the European Union in this decade, and higher as well than a number of other now stable democracies, including South Korea (hereafter, Korea), Portugal, Chile, Uruguay, and Costa Rica. In all, it has a higher level of development than 100 existing electoral democracies in the world. And it is the richest and most developed society in history that is not governed by an electoral democracy. (Singapore is the only other one that comes close, and from a developmental perspective, it is also an extraordinary anomaly). Most societies that have experienced transitions to democracy as a result of economic development and the attendant transformation of values and social structure have done so at levels of economic development far below Hong Kong’s today. For example, when Korea made its transition to democracy in 1987, its per capita income (in 2004 PPP dollars) was about $8,500 – less than a quarter of Hong Kong’s current per capita gross national income. When their democratic transitions began, Taiwan (in 1987) was a little higher than Korea, and Chile (in 1989) was somewhat lower. When the dictator Francisco Franco died in 1975 and a transition to democracy began, Spain’s per capita income (in 2004 PPP dollars) 4 was $13,000, putting it in the ranks of more developed countries. But all of these levels of development were much lower (by a factor of several times) than Hong Kong’s. There is no precedent in world history for such a developed society still needing to make a transition to electoral democracy. It is worth emphasizing other features of contemporary Hong Kong that social scientists would consider highly favorable to democratic success and stability. Hong Kong is not deeply divided along ethnic or identity lines. In fact, the deepest division in the society is a political one, on the question of electoral democracy itself. But political (or economic, that is class) divisions are always easier to negotiate and manage than identity divisions.

A Comparative Perspective on Hong Kong Democratization

In addition to a highly developed economy, Hong Kong also has a strong rule of law and highly developed state structures. Scholars of democratization and political development, going back to Samuel Huntington and forward to Juan Linz and Alfred Stephan, and most recently Francis Fukuyama, have emphasized the importance for democracy of an effective state (including a professional civil service), that is able to control violence, manage the economy, and administer public services efficiently and transparently. By these counts, Hong Kong is one of the readiest systems in the world for democracy. In the latest World Bank Institute (“Governance Matters”) measurements, it ranks in the 89th percentile in terms of political stability, 94th in government effectiveness (in terms of the quality and neutrality of the civil service and the quality of policy formulation), 90th percentile in the rule of law, 93rd in corruption control, and 100th in regulatory quality, meaning, by the methodology of the World Bank, that Hong Kong is the best in the world at formulating “policies and regulations that permit and promote private sector development” (see Table 1). Moreover, as we see in Table 1, Hong Kong’s relative standing on each of these measures has steadily improved since the initiation of the SAR in 1997, on some measures quite dramatically. Only on the measure of “voice and accountability” does Hong Kong lag well behind other societies (especially other economically developed systems), scoring most recently in the 65th percentile. It is possible to argue that Hong Kong is doing so well because it is not a democracy, and that introducing electoral democracy will only mess up these exceptional governance scores. There are three possible rejoinders to this serious objection. First, this is quite a different argument than the claim – which I believe I have shown here to be untenable – that Hong Kong is not developmentally ready for democracy. Second, there is no evidence that governance generally deteriorates following a transition to democracy. In the systems most similar to Hong Kong in development and culture, Korea and Taiwan, we see a mixed picture: Since the governance measures began to be compiled in 1996, Korea has generally improved or maintained its scores on the different measures of governance, under a democratic system, while Taiwan has shown a

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China’s Hong Kong Transformed: Retrospect and Prospects Table 1. Quality of Governance in Hong Kong

Governance Indicator

Voice and Accountability

Political Stability

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

Year

Governance Percentile Rank Score Standard (0–100) (–2.5 to +2.5) Error

2006

64.9

+0.55

0.20

2002

51.4

+0.12

0.21

1998

46.6

–0.13

0.29

2006

88.9

+1.16

0.24

2002

73.6

+0.78

0.24

1998

64.4

+0.56

0.27

2006

93.8

+1.76

0.19

2002

87.7

+1.28

0.18

1998

81.0

+0.93

0.16

2006

100.0

+1.95

0.20

2002

93.2

+1.54

0.21

1998

99.0

+1.78

0.27

2006

90.5

+1.45

0.15

2002

83.8

+1.11

0.15

1998

83.3

+1.02

0.17

2006

92.7

+1.71

0.14

2002

90.8

+1.45

0.15

1998

86.4

+1.30

0.16

Reproduced from Daniel Kaufman, Art Kraay, and Massimo Mastruzzi, Governance Matters VI: Governance Indicators for 1996-2006, World Bank Policy Research Working Paper NO. 4280, July 2007, http://info.worldbank.org/governance/wgi2007/sc_chart.asp.

more uneven pattern, due in particular to the corruption scandals and political polarization under the DPP government of President Chen Shui-bian. But precisely because it is a democracy, Taiwan achieved dramatic electoral alternation in the March 2008 presidential election, and I believe this will result in significant improvement in some of its governance indicators. Moreover, while

A Comparative Perspective on Hong Kong Democratization

opponents of the democratization of Hong Kong may cite the poor record of Chen Shui-bian’s government in stimulating Taiwan nationalism, populism, political division, and instability as justification for deferring democracy, Hong Kong is a lot more like Korea than Taiwan in its underlying cleavage structure. Also, its state structures are today much stronger and less politicized than Taiwan’s were under the one-party rule of the KMT in 1996. More globally, one can point to better rates of economic growth and patterns of governance in the democracies than the dictatorships of Africa, and sustained or improved governance in some of Latin America’s emerging democracies, such as Chile, Uruguay, and (to a lesser extent) Mexico over the last decade. The third response to the intrinsic claim for the superiority of non-democratic rule is that it is really for the people of a society – not its self-appointed (or externally chosen) rulers to decide what kind of political system is best for them, and how to weigh competing values. If there is a risk of diminished governance in some arenas as a result of better governance in others (more voice and accountability, for example), then the people ought to assess the risk and weigh what they value most. But here, too, if we look at political values in Hong Kong, we see that they are substantially democratic. When surveyed at the end of 2001 by the Asian Barometer, residents of Hong Kong showed some of the highest levels of rejection of authoritarian regime options of seven East Asian political systems surveyed (including also Korea, Taiwan, Japan, Mongolia, Thailand, and the Philippines). Explicit commitment to democracy lagged behind the established democracies of Asia, but this was still expressed by a majority of the population. And on most measures of political values in Hong Kong, substantial majorities expressed a democratic tendency: for example 90 percent agreed that people with little or no education should have as much say in politics as those with high education; 69 percent disagreed that “the government should decide whether certain ideas should be allowed to be discussed in society;” and two-thirds also rejected the notion that “government leaders are the 5 like the head of a family; we should all follow their decisions.” Moreover, education, income and youth are all strongly positively 6 associated with democratic value orientations in Hong Kong. Thus,

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as the society becomes richer, better educated and as generational change works its way through the society, the desire for democratic modes of governance is likely to grow. If we compare Taiwan and Hong Kong, we find that on most clusters of democratic values, the mass public in Hong Kong is as democratic as that in Taiwan, and Hong Kong elites also compare favorably to their peers in Taiwan. Not surprisingly, supporters of pro-democracy political forces in Hong Kong manifested more pro-democratic values than did citizens who support pro-China political forces, but the differences are not 7 large, especially at the mass level.

Models and Constraints of Transition It should be clear, then, that the limits to democratization in Hong Kong do not derive from its intrinsic “lack of readiness” for democracy. By comparative or theoretical calculation examining the level of socioeconomic development, the cultural cleavages in the society, the level of state capacity and effectiveness, the rule of law, and the attitudes and values of the people, Hong Kong seems about as “ready” to receive and sustain democracy as any society that has become democratic in recent decades. There is one major problem. Unlike any other of these societies that has become democratic, Hong Kong seeks to do so as a semi-autonomous unit of governance within a larger non-democratic system. And not just a “non-democratic system” but a highly authoritarian regime which has none of the features of democracy that Hong Kong has enjoyed for some time – a multiparty political system; free and fair, multiparty elections for at least a portion of the system-wide legislature; and relatively high levels of civil liberties, including press freedom, freedom of association, and freedom of speech. It is important for objective observers to be analytically clear, even if parties to the controversy must take strident or stylized positions to mobilize their followings, reassure their allies, or tiptoe past uncomfortable realities. The big constraining reality is that Hong Kong’s transition to democracy can, under the Basic Law, be blocked indefinitely by Beijing, while it claims that the Hong Kong SAR is still “not yet ready” for full democracy, that “gradual and

A Comparative Perspective on Hong Kong Democratization

orderly progress” means whatever pace of very incremental evolution Beijing will allow, “in light of the actual situation” as the Beijing authorities frame and interpret it. To be sure, indefinite postponement of full democracy by Beijing would be inconsistent with the spirit of the Basic Law, at least, and specifically articles 45 and 68, which proclaim democratic election of the chief executive and the Legislative Council “by universal suffrage” as “the ultimate aim.” As one Hong Kong democrat privately observed to me, “Constitutional power unconstitutionally exercised is but force under a different name. Of course, there is no legal remedy in China against such an abuse by the highest organ of state power, but that does not give it a legal right to do so.” Beyond the constitutional veto power of the Beijing authorities at any moment in time is the fact that powerful segments of the administrative and business elite in Hong Kong have been willing to go along with and support – indeed have welcomed – Beijing’s go-slow approach, and thus the Beijing veto is not purely an external imposition but enjoys some vocal and potent internal support within Hong Kong itself. Hong Kong democrats must find a way to address and alleviate the anxieties of these critical weighty constituencies within Hong Kong. The basic political problem in Hong Kong today is that pro-Beijing forces are unwilling to concede that Hong Kong is in every sense but one long since “ready for democracy,” while pro-democracy forces have failed to recognize that in that last sense – the political and constitutional balance of power and authority – Beijing can block the SAR’s transition to democracy indefinitely (if they wish, beyond 2017 and 2020, and quite possibly for decades, or at least until China itself becomes a democracy). Unless Hong Kong pro-democracy forces figure out a way to change the current polarized power game that finds democrats on one side demanding democracy now – that is universal suffrage in the next rounds of elections (2012) – while pro-Beijing forces take a variety of go-slower approaches (which, even in the best light, leave ambiguous just how democratic Hong Kong would be allowed to be by 2020), the transition to genuine democracy will continue to be deferred or diluted (again, unless the political system for the rest of China undergoes significant democratization).

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There are basically three models of transition to democracy, as Samuel P. Huntington explained in his famous work, The Third 8 Wave. One model is imposition from above – what Huntington calls transformation – by an authoritarian regime that is holding most of the cards. This was essentially the mode of transition in Taiwan, Mexico, Spain, and Brazil. The opposite mode, replacement, occurs much more infrequently, when an authoritarian regime loses its resolve or the commitment of its support base (particularly in the military) as a result of a dramatic failure, such as defeat in war (Argentina and Greece), the flight of its people (East Germany), the inability to pay its soldiers and civil servants (Benin), or some kind of military (Portugal) or electoral revolution. The latter mode has occurred in the Philippines in 1986 and more recently with the “color revolutions” in Serbia, Georgia, and Ukraine. In these circumstances, regimes miscalculated, thinking they could rig or prevail in manipulated elections, and democratic forces outlasted and outmaneuvered them. The third mechanism is a negotiated transition – what Huntington calls transplacement – between an authoritarian regime that remains too powerful to be pushed out and a democratic opposition that has become too mobilized and resourceful to be suppressed without costs that the regime does not wish to (or cannot) bear. Such negotiated transitions between regime and opposition have been the norm, characterizing the transitions in Korea, much of Central America, Uruguay, Poland, Czechoslovakia, Mongolia, and South Africa. (There is also a fourth mode, foreign intervention to overthrow the dictatorship, as in Grenada and 9 Panama, but no Hong Kong democrat seriously contemplates that). My premise here is that the only way a transition to democracy is going to happen in Hong Kong is through a negotiated bargain. The Communist regime in Beijing has no interest in initiating or imposing it; that is usually an option taken either because the ruling elite judges that it needs to extricate itself from power or more often because values have changed over time and the regime leaders come to believe that democracy is best for their country. China’s political leaders will only initiate or enthusiastically oblige a true democratic transition in Hong Kong if they have resolved to implement it throughout the Chinese political system. That may happen, but it is not on the political horizon in China, and so for the coming ten to

A Comparative Perspective on Hong Kong Democratization

twenty years, at least, Hong Kong will only break the constitutional stalemate and achieve universal suffrage for a fully democratically elected parliament and a democratically elected chief executive if China’s Communist Party leaders agree. And they will only agree if they think their critical interests and those of their allies in the industrial, commercial, and financial sectors have been reasonably respected and protected. This point may seem obvious, but I do not think its implications have been fully pondered and grasped by Hong Kong pro-democracy forces. They are in a weak position politically. In other situations where democratic civil societies and opposition parties pressed forward transitions to democracy, authoritarian regimes were weak or on the defensive, and usually under significant international pressure to democratize or at least liberalize. None of that is the case today, either with the larger political system of China or with the specific regime in Hong Kong. It would be nice if democrats of the world would unite and demand that Hong Kong be allowed to become a democracy, but the world’s democratic governments and societies cannot even agree on whether and how to press China to: improve its own still very repressive human rights situation; stop condoning genocide in Darfur; stop supporting and enabling the brutal dictatorship in Burma; and so on. Since Hong Kong does not have a human rights emergency as in Darfur or Burma, and does not suffer the kinds of systemic constraints on freedom and egregious violations of civil liberties that other citizens of the PRC suffer, the world does not feel much urgency in pressing for democracy in Hong Kong. Sadly, the people of Hong Kong are on their own. Thus, unless political forces in Hong Kong find a way to bridge their differences and agree on a compromise plan and timetable for democratic transition, the situation is likely to remain stuck short of democracy for a very long time, possibly even well beyond 2017 or 2020, for three reasons. First the December NPCSC decision permitted but did not mandate universal suffrage by 2017 and 2020 respectively. The lack of a firm commitment (indicated by the use of the word “may” rather than “will” or “must”) is (understandably) a major issue for the democratic opposition in Hong Kong, and seriously handicaps it in future negotiations. Second, the (tentative,

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permissive) commitment in 2017 is to “universal suffrage” for election of the chief executive. Universal suffrage is of course one component of a democratic, free and fair election, but not the only component. In addition to many other requirements that could be 10 noted, democratic elections require open and free access to the ballot on the part of potential competing candidates and parties. More than anything else, that is what remains indefinitely in doubt in Hong Kong. Given that the decision to implement universal suffrage must happen by consensus, and under the Basic Law, one is left to presume that Beijing and establishment forces in Hong Kong will insist upon retention of some kind of nominating committee (probably similar in composition to the current election committee) to vet candidates that will be allowed to stand for the position of chief executive. Unless some kind of consensus can be fashioned on this question, and on the electoral system for a fully directly elected LegCo, and on the transitional arrangements until 2017–2020, hopes for democratic change could be frustrated for much longer. Thus, the real dialogue that is needed now is serious negotiations between pro-democracy and pro-China forces within Hong Kong to find common ground. There is a parallel to the negotiated democratic transitions that O’Donnell and Schmitter discuss in their seminal work, Transitions from Authoritarian Rule. They argue that all transitions in the 1970s and 80s began with a split in the regime between hardliners and softliners, which was then widened and exploited by intensified mobilization by democratic civil society and opposition forces, and then pushed forward to democratic transition when the moderates (softliners) on the regime side and their counterparts on the pro-democracy side sat down and negotiated with one another. This was often a complex and delicate game, in which opposition mobilization could generate sufficient alarm on the part of the regime to realize that it had to find a way out, while moderate opposition willingness to talk – and, crucially, the capacity of moderate opposition leaders to wind down mobilization at crucial moments, to command their civic followings – led to successful negotiations for democratic transition. It is important to stress that typically, democratic forces initially won at the bargaining table – in Poland, in Chile, in South Africa – less than they would have gotten if the authoritarian regimes had

A Comparative Perspective on Hong Kong Democratization

just collapsed, as they did in Argentina, Greece, and the Philippines. Instead, the democrats had to settle for transitional periods and in some cases lengthy periods in which certain “authoritarian enclaves” or prerogatives (for example, for the military in Chile) were preserved. It is quite likely that a constitutional bargain in Hong Kong will preserve less than fully democratic practices for some transitional (hopefully not long) period of time. This is already apparent from the insistence on 2017 and 2020 as the earliest possible dates for universal suffrage, and is implicit as well in the mechanism for electing a chief executive. But against a longer (really, only moderately long) sweep of history, these aspects of deferred democratic gratification proved to be fairly temporary in these other cases. South Africa’s majority party only had to put up with mandated power-sharing for five years. In Chile, the military’s prerogatives and insulated powers lasted longer, but have gradually given way as democratic governments became stronger and more self-confident, and as the society (including some of the old support base for General Augusto Pinochet) shifted more emphatically in favor of modern, real, unconstrained democracy.

Implications for a Negotiated Transition in Hong Kong Morally any democrat in the world must feel great sympathy for those in Hong Kong who have demanded universal suffrage and full democracy in 2007 and 2008 – or at least by 2012. From the perspective as well of empirical democratic theories of the conditions for democracy, that achievement seems long overdue, and anything less seems patently unnecessary and unfair. But from the standpoint of the comparative politics of transition, Hong Kong democrats appear to lack a favorable tactical situation to achieve their goal. Unless they broaden their coalition, they could be making this demand and losing out for several more electoral cycles to come. Sometimes, democrats must swallow hard and compromise for something less than what is morally due them but more than they can otherwise achieve by civic mobilization and moral appeals alone.

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There are obvious points for compromise, and they involve two sets of issues: the timetable for achieving full universal suffrage, and the structure of the democratic system that would result. The broad lessons from other democratic transitions – to the extent they are applicable – suggest the following points. First, pro-democracy forces will be more effective in pressing for a genuine transition to democracy to the extent that they can unite in a strong, coherent political and civic coalition that is capable of negotiating with pro-Beijing or “pro-system” forces, including the government of the HKSAR. Second, if pro-democracy forces cannot unite for negotiations, a breakthrough might nevertheless be facilitated if a prestigious and politically weighty subset of the pro-democracy camp were to opt for pragmatic negotiations with their moderate and compromise-seeking counterparts on the pro-Beijing side. Third, it will help if pro-democracy forces demonstrate from time to time the capacity to mobilize large numbers of demonstrators and other expressions of mass popular sentiment for democratic change, but the moderate bloc must exercise the moral authority and political discipline to cease mobilization as well as ignite it. Fourth, the near-term tactical goal must be the achievement of an internal agreement in Hong Kong among the major political players: the pro-democracy forces, the pro-Beijing political forces (including leading elements of the business community), and the government. Only if the major actors in Hong Kong come to a compromise agreement on the timing and structure of a democratic transition are the Beijing authorities likely to judge that “actual political conditions” have evolved to the point where Hong Kong is “ready” for democracy. Fifth, pro-democracy forces probably have no choice at this point but to accept in principle the dates of 2017 and 2020, and focus on the key issues of what the interim electoral arrangements will look like in 2012 and (for the LegCo) 2016, and how the universal suffrage elections will be structured from 2017 and 2020 on. Sixth, democrats would do well to focus on practical initiatives to get from the current system to full democracy. In a policy essay

A Comparative Perspective on Hong Kong Democratization

before the December 2007 NPC decision on Hong Kong’s constitutional development, former Secretary for Security Regina Ip proposed incremental steps for opening up the election of the chief executive. She proposed direct election of the chief executive in 2012 among candidates nominated by a Nominating Committee that would involve a very considerable expansion in the size (and electoral base) of the current Election Committee for Chief Executive (to 1800 members), and some threshold of support needed from the Nomination Committee in order for a candidate to contest for election (ten percent overall and in each of the four sectors of the Election Committee). Her fallback or compromise position (in the event full universal suffrage for the chief executive could not be obtained in 2012) was to expand the current Election Committee in 2012, and then make it a nominating committee in 2017 for choosing candidates for the universal suffrage election. Pro-democracy forces object that such requirements for nomination could give any one functional sector a veto to block the candidacy of a pro-democracy candidate for chief executive, but her proposal could serve as a basis for negotiation among diverse camps in Hong Kong. For example, an expanded Election Committee for 2012 could be better than the current one. And it could also be a bridge to a more democratic future. If such an expanded committee were retained for the first direct chief executive election, in 2017, it might help to build broad confidence in the process, after which its role would be gradually relaxed or abandoned entirely. The key is that democrats must stress that any continued restrictive use of a nomination committee departs from democratic principles and norms and can only be acceptable as a transitional confidencebuilding arrangement, with a clear date for its termination (or its transformation into a merely nominal procedure). Seventh, creative thinking is needed for the mode of transiting to a fully directly elected LegCo as well. A variety of institutional options should be tabled and discussed, both publicly and in private negotiations among the major political forces in Hong Kong. Prior to the December NPCSC decision, Regina Ip proposed to increase the size of the body from 60 to 80 members in 2012, if a fully directly elected LegCo could not be achieved by that year. The additional twenty seats would be elected by universal suffrage from

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PR lists (proportional representation) put forward by political parties or groups of candidates. This would increase the percentage of democratically elected seats to a clear majority and would then give way in 2016 to a democratic mixed system of fully universal suffrage (like that in many established and new democracies). Under this permanent system, the functional constituencies would disappear and half of the 80 LegCo seats would be elected from the geographical constituencies and half from the party or group lists (contesting Hong Kong-wide). It appears that Beijing is adamant about preserving the 50-50 split of functional and geographical constituency seats in the LegCo until 2020. But there could be other ways of moving gradually, through the 2012 and 2016 elections, to a fully democratically elected legislature in 2020. This could involve, as Professor Kin-man Chan of the Chinese University of Hong Kong has proposed, starting in 2012 to alter the nature and representativeness of the 11 functional constituencies. Some are also proposing to add ten more LegCo seats and have the five new functional constituency seats represent very broad constituencies. The proposed step that would move the furthest in a democratic direction, it appears, would be to draw these five additional functional constituency seats from among the existing elected district council members. Chi-Keung Choy has built on this by also recommending that in the subsequent two LegCo elections functionally similar constituencies be merged and progressively enlarged, with 18 of the proposed 35 functional constituency seats being drawn from one large “District Council” constituency (using the preferential system of the single transferable 12 vote). These are practical and innovative ideas worthy at least of a hearing. The larger strategic principle for transition is this: Negotiations between different camps in Hong Kong could essentially trade incremental reforms up to 2020 and a definite commitment to full universal suffrage for LegCo elections in 2020 in exchange for acceptance of that delayed date, consensus behind the timetable, and thus enhanced “governability” in Hong Kong affairs between the current moment and 2020. We return, however, to the core problem, which is that Hong Kong democrats appear at the moment to be in a structurally weak bargaining position, which is further weakened by their own

A Comparative Perspective on Hong Kong Democratization

divisions. Their ability to bargain for a clear commitment to democratic transition (rather than partial or pseudo-democracy) would be enhanced by three things. First, they need to unite as much as possible around a practical strategy for negotiation. Second, they need to augment their political and thus negotiating power by winning more of the seats that are realistically available to them and mobilizing broader civic support and consciousness. And third, they need to reach out to more conservative and pro-Beijing political forces, build trust, and explore practical possibilities for achieving consensus on these transitional arrangements. Hong Kong does have one advantage, if political forces are smart enough and flexible enough to seize it. Differences over timing and increments of power are easier to settle, if competing parties and factions put aside their pride and fixed positions and agree to bargain, than are deeper-seated, more symbolic and emotive differences over identity. In this respect, Taiwan has faced in the last decade a seemingly more intractable problem than Hong Kong. Yet even in Taiwan, a corner has been turned, with the 2008 election victory of Ma Ying-jeou, toward reconciliation and moderation on this dangerous issue. If a much more deeply divided Taiwan can make progress on such an explosive issue, then Hong Kong should be able to do so as well. There are many ways of “splitting the difference” between a democratic transition date of now or the next election, versus in five years, twelve years, or some indefinite and constantly receding future horizon. There are many ways of allocating seats among forms of election and groups in society. Hong Kong, in other words, is at a point in its political and economic development when it should be possible for people of imagination and good will to strike a viable constitutional bargain. Such a bargain is more conceivable now than five years ago precisely because there are political forces that have the trust and respect of Beijing who are sincerely looking for a way to move Hong Kong to democracy. This is a new and critical development. These new political forces are not agents of the Beijing authorities, but Beijing is watching closely how their ideas and proposals fare. If the political battle lines continue to be drawn starkly into two camps – real democracy now or never – while creative transitional proposals are spurned, Hong Kong is likely to remain mired in its stalemate. If

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Beijing sees that political forces are reaching across previously polarized lines to come to a flexible common ground that delivers eventual democracy while offering established interests reasonable grounds of confidence, it might draw the conclusion that “gradual and orderly progress” has indeed taken place in Hong Kong, and that “the actual situation” in the HKSAR has finally reached a point where a firm commitment can be made to a timetable for democratic transition. If that is truly to be a transition to democracy, the timetable must involve not just prospective or permissive but definite dates, on the foreseeable horizon. And it must guarantee not only full, universal suffrage for the election of the legislature and the executive, but – sooner or later – the right of all political parties to contest for the position of chief executive.

Notes 1. Article 45 of The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, http://www.info.gov.hk/ basic_law/fulltext/. 2. Hong Kong’s 2006 per capita gross national income (GNI) is $38,200. World Bank Indicators Online. 3. United Nations Development Program, Human Development Report 2007–2008 (New York: UNDP, 2007), p. 2229, Table 1. 4. These comparisons and other domestic drivers of democratization are considered in greater detail in Larry Diamond, The Spirit of Democracy: The Struggle for Freedom Throughout the World (New York: Times Books, forthcoming January 2008), chapter 4. 5. Andrew J. Nathan, “Political Culture and Diffuse Regime Support,” Asian Barometer Working Paper No. 43, 2007, http://www.asianbarometer.org/newenglish/publications/workingpapers/n o.43.pdf, Tables 1a, 4a. 6. Ibid., Table 5, page 31. 7. Alfred Ko-wei Hu, “Attitudes Toward Democracy Between Mass Publics and Elites in Taiwan and Hong Kong,” Working Paper No. 9, Asian Barometer, 2003, http://www.asianbarometer.org/newenglish/ publications/workingpapers/no.9.pdf. 8. The Third Wave: Democratization in the Late Twentieth Century (Norman, OK: University of Oklahoma Press, 1991).

A Comparative Perspective on Hong Kong Democratization 9. Ibid., chapter 4, pp. 109–163. On negotiated transitions, see also Guillermo O’Donnell and Philippe Schmitter, Transitions from Authoritarian Rule: Tentative Conclusions about Uncertain Democracies (Baltimore: Johns Hopkins University Press, 1986). 10. See Diamond, The Spirit of Democracy, pp. 24–25, and Jorget Elklit and Palle Svensson, “What Makes Elections Free and Fair?” Journal of Democracy 8 (July 1997): 32–46. 11. Ming Pao, January 8, 2008. 12. Ming Pao, April 24, 2008.

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14 The Hong Kong SAR at Ten Years and Prospects for the Future James B. CUNNINGHAM

As a resident of Hong Kong for only a little more than two years, I feel a bit reticent about forecasting Hong Kong’s future – especially in such experienced company. But ten years ago observers far more knowledgeable than I were warning of Hong Kong’s imminent demise. Two or three years before the 1997 return of Hong Kong to China, there was a surge of concern in the international press over the territory’s future: dire predictions and expressions of worry were the common currency of public discussion. In June of 1995, Fortune magazine ran the cover story: “The Death of Hong Kong.” In looking at this magazine cover twelve years later, I recall Mark Twain’s comment when someone told him that his obituary had been published in New York. He responded, “The reports of my death are greatly exaggerated.” Happily, such gloomy predictions – even by experts – were quite far off the mark. It is with this in mind that I venture here to comment on the last ten years and prospects for the future, from an American perspective. I would like to state unequivocally from the outset that my government wants Hong Kong and the “One Country, Two Systems” model to succeed. Before and since 1997, the implementation of this historic experiment has been of great interest to the international community. Just as a prosperous, stable and confident China is in the US national interest, so also is a prosperous, stable and confident Hong Kong. The US has a measurable stake in 335

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Hong Kong’s success. As Asia’s world city, Hong Kong plays an important role which benefits China, the US and many others in the globalized, interdependent twenty-first century. America itself has no small stake in Hong Kong. It is our fifteenth largest export market. 60,000 US citizens reside here, and a million more Americans visit each year. 1,200 US firms have local and regional offices here – which, by the way, employ 10% of Hong Kong’s work force. US direct investment in Hong Kong totals 38 billion US dollars.

The Past Ten Years The United States believes that “One Country, Two Systems” has been a success for Hong Kong and for China. The Chinese Central Government has generally respected its commitment in Hong Kong’s Basic Law to preserve a “high degree of autonomy” for Hong Kong and to maintain the integrity of its distinct economic, legal and social systems. After ten years of Chinese sovereignty, Hong Kong remains the most open and developed part of China. The Chinese Central Government has acted over the years in concrete ways to support Hong Kong’s economic development and prosperity. The Closer Economic Partnership Arrangement, the introduction and expansion of the individual visitor scheme, the growing cooperation within the Pan-Pearl River Delta region and the liberalization of rules on the use of Renminbi in business and finance remain important elements of Hong Kong’s past and future economic success. Hong Kong’s role as an international financial center has strengthened in the last ten years. Hong Kong’s market capitalization is now three and a half times what it was in 1997. The territory is the number one source of capital for China, raising 43 billion dollars US in 2006. Hong Kong remains an important economy which exercises active membership in the World Trade Organization and in the Asia-Pacific Economic Cooperation (APEC) forum. Once again this year, for the thirteenth straight year, the Heritage Foundation recognized the Hong Kong SAR as having the

The Hong Kong SAR at Ten Years and Prospects for the Future

highest level of economic freedom in the world. Recently, the Japan Centre for Economic Research ranked Hong Kong first out of 50 world economies in 2006 in the areas of competitiveness, internationalization, and finance. To be sure, Hong Kong, like much of the rest of Asia, has faced its share of trials in the last ten years. But Hong Kong has been able to rebound – decidedly so. Economic growth over the last three years has been strong (GDP grew by 6.5% in 2006), and polls show the Hong Kong people are generally optimistic about the future and about their role in China. Importantly, though, Hong Kong serves as an example of more than just an economic success story. Hong Kong remains a model Chinese society that observes the rule of law, follows free and fair market principles, allows unfettered entrepreneurial activity, and respects freedom and human rights, including religious freedom. Its political system is evolving, and public participation in civic affairs is growing. Despite this overall good track record, we also remain concerned about occasional events and possible trends that some observers believe may present troubling precedents or undermine the high degree of autonomy promised in Hong Kong’s Basic Law and the 1984 Sino-British Joint Declaration. One of these is a widely-held public perception that Hong Kong’s press increasingly practices self-censorship in reporting or commenting on issues of high political sensitivity to the PRC Central Government. Over the years there have been several instances, as you well know, of intervention or interpretation by the Central Government that have raised questions. Such interventions, while infrequent, can undermine public and international confidence in Hong Kong’s autonomy and competitiveness. That said, our evaluation of the progress over the past ten years is positive: Hong Kong is an open, vibrant, and sophisticated society. It has much to contribute to China, and to offer to the rest of the world as an international city. The United States shares that optimism and congratulates the Hong Kong SAR on its tenth anniversary on being on the path to success.

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Issues Facing Hong Kong But as in the stock market, past results are not guarantees of future success. Hong Kong faces the difficult issues that all modern societies grapple with: Economic, political and demographic. And with an economy that is based on services, logistics and tourism, it will face stiff competition to maintain its value-added. In a rapidly changing global economy, success will go to those who are able continually to adapt to new circumstances, and to place themselves on what a mentor of mine used to describe as “the right side of history.” The pace of change is accelerating, challenging all developed societies and in many cases developing ones as well. Tony Blair in a speech in Hong Kong in November 2007 used the term “permanent modernization” to describe this phenomenon of change as a constant factor of life. This is quite new, and all of us and our children will have to learn to deal with it. Hong Kong over the past years has proved its adaptability. When we look at Hong Kong’s prospects, the question becomes whether it is capable and willing to continue to adapt and evolve. Hong Kong has survived and thrived over the years by repeatedly adapting to changing economic and political circumstances, and redefining itself. It must continue to do so to remain stable, prosperous and competitive. In a rapidly changing global economy, the status quo is not enough. Good governance and public engagement are necessary for success, not optional. Difficult decisions need to be made, and executed. Hong Kong is no exception. This brings us inevitably to the political issues that confront Hong Kong. Hong Kong’s economy is a living example of the success brought by freedom, competition, and individual choice. We believe that its political system would also benefit from these. In our view, the political legitimacy and accountability that comes from a competed and democratic political life are core components of modern, competitive and stable societies. Over time, good governance and stability without democracy are illusory. Because of this, my government has long supported universal

The Hong Kong SAR at Ten Years and Prospects for the Future

suffrage in Hong Kong, as promised in the Basic Law. We believe it necessary, for both Hong Kong and the mainland, that Hong Kong set out on the path toward governance strengthened by popular elections within a democratic system that meets international standards. The sooner this happens, the better. My government does not support any particular electoral model, timetable for reform, or candidate. We believe that greater democracy, now in Hong Kong and over time in the rest of China, will support China’s peaceful development. There is no one way to build democracy, and it will be more difficult on the mainland than in Hong Kong. But building democracy will contribute to Hong Kong’s enduring stability and prosperity, and that is of value to China itself, and this region of the world. While the 2007 Chief Executive selection process limited participation by the people of Hong Kong, elements of the process – in which the candidates debated issues during live television broadcasts – showcased an important change in Hong Kong’s political development. We welcome the Chief Executive’s stated intention to resolve the issue of universal suffrage during his tenure, and wish him every success in his efforts. As the debate evolves, we would hope to see genuine dialogue and early political reform that will sustain Hong Kong’s prosperity, stability and good governance. There are of course two elections coming up, one for District Councils, and one for the LegCo seat left vacant by the untimely passing of DAB leader Ma Lik. The LegCo campaign in particular is drawing considerable international attention due to the two leading candidates. In some respects, over the past few weeks some elements have tried to make the United States a factor in the campaigns. Several pro-Central Government newspapers and magazines started publishing commentaries in mid-October 2007 that Hong Kong was being subverted by a supposed plot by foreign forces to interfere in Hong Kong affairs. Some attempted to undercut political opponents by charging they are in collusion with foreign forces. Normally I would not even address this type of commentary. But there is a point here germane to the forecast you’ve asked me to make and I offer these comments in that context. Such allegations have no basis in fact, specifically in regards to

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the United States. Our activities in Hong Kong are the normal diplomatic activities that all countries, including the PRC, engage in around the world. Of concern however is the mindset and intent behind these allegations. They betray a xenophobia out of place in Asia’s World City. Were such thinking to take hold, it would be a bad omen for Hong Kong’s future. Substituting fabricated conspiracies and the politics of identity for discussion of substance is no way ahead. We in the US understand this – heaven knows we are tempted and seduced by this kind of politics from time to time ourselves – but generally we have recognized its destructive character. Such talk is detrimental to healthy political life, especially in a place like Hong Kong. Hong Kong has created itself as a mixing bowl, an entrepôt, a place where China meets the world. The very engagement of foreigners in Hong Kong has always been one of the defining elements of this special part of China. I have been fortunate to make dozens of Hong Kong friends in my time here; they are proudly Chinese, and see no contradiction between love of their country and the pursuit of Hong Kong’s economic and political development. It is because such views are common in Hong Kong, I believe, that “One Country, Two Systems” is working, despite the earlier doubts and the predictable difficulties, and will continue to work.

Prospects for the Future We remain as optimistic about Hong Kong’s prospects as we are in our assessment of Hong Kong’s last ten years. And this is not just the native optimism of Americans speaking. With its open, vibrant and sophisticated society, Hong Kong has much to contribute to China and the rest of the world as an international city. Its people continue to anticipate the future, and to plan for change. There is no doubt in my mind that it can continue to do so. Hong Kong continues to strengthen its role as an international financial center. It is strengthening its focus on its human capital and competitiveness. Increasingly it will serve as an avenue for mainland capital moving into new markets abroad.

The Hong Kong SAR at Ten Years and Prospects for the Future

Hong Kong maintains the core values that we believe contribute to success in the globalized world of the twenty-first century: a strong rule of law and an independent judiciary, fierce defense of free markets, openness to entrepreneurs, and respect for freedom and human rights, including religious freedom. Its political system is evolving and public participation in civic affairs is growing. International surveys of the world’s economies consistently place Hong Kong in the top ranks. There is no reason to believe that Hong Kong’s success in the last 10 years won’t continue in the next ten. The United States’ vision for Hong Kong’s future is bright indeed. We see a Hong Kong that is part of a prosperous, stable, and confident China, and which contributes to its country and the world by continuing to be a leading light in economic freedoms, civil liberties and respect for human rights. We see a Hong Kong that continues to adapt and respond to changes, a Hong Kong whose government has found the legitimacy that comes from popular elections. We envision a Hong Kong that draws strength from its Chinese heritage as well as its Western heritage, a Hong Kong that has found its own voice, and is a positive, dynamic force in China’s development on all fronts. That is the prospect for Hong Kong my country would like to see.

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Contributors

Ming K. CHAN. Research Fellow, Hoover Institution, Stanford University. He taught at the University of Hong Kong, 1980–97, and was Heath Visiting Professor at Grinnell College, 2006–07 and Cornell Visiting Professor at Swarthmore College, 1993–94. He also held visiting professorship at Mount Holyoke College, 2002–3, Duke University, 1989, UCLA 1979–80, and EL Colegio de Mexico in Mexico City, 1975–76. Born and educated through high school in Hong Kong, he received all his degrees in the US, including a Ph. D. in history from Stanford at age 25. He has published 11 academic volumes and over sixty scholarly articles/book chapters on Chinese history and Hong Kong studies. He is General Editor of the Hong Kong Becoming China multi-volume series published by M E Sharpe, New York with 13 titles issued during 1991–2004. His most recent books are: Crisis and Transformation in China’s Hong Kong (2002) and Historical Dictionary of the Hong Kong SAR & the Macao SAR (2006). Douglas W. ARNER. Associate Professor, Faculty of Law, University of Hong Kong. Professor Arner is concurrently Director of the Asian Institute of International Financial Law (AIIFL) at HKU Law Faculty where he also serves as Director of its LL.M. (Corporate & Financial Law) Program. He is also a Co-Director, Duke University–HKU Asia-America Institute in Transnational Law. Graduated from Drury University in Missouri with a B.A., he received his legal education at Southern Methodist University (J.D.) and the University of London (LL.M. and Ph.D.). His specialized areas are financial stability and development. He has served as a consultant with, among others, the World Bank, Asian Development Bank, and APEC. He is the co-author of Financial Markets in Hong Kong: Law and Practice (2006) and the author of Financial Stability, Economic Growth and the Role of Law (2007). 343

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Ronnie C. CHAN. Chairman, Hang Lung Group Ltd. and its subsidiary Hang Lung Properties Ltd., both publicly listed companies in Hong Kong. Actively in non-profits, philanthropic endeavors and educational organizations, Mr. Chan chairs the Executive Committees of the One Country Two Systems Research Institute and of the Better Hong Kong Foundation. He is a Vice Chair of the Asia Society and Chair of its Hong Kong Center, the Founding Chair and Chair Emeritus of the Asia Business Council, a former chair of the Hong Kong–United States Business Council, and a former governing board member of the World Economic Forum. He serves or has served on the governing or advisory bodies of several think tanks and universities, including the University of Southern California, East-West Center, Pacific Council on International Policy, Eisenhower Fellowships, and the Mansfield Foundation. Raymond CHENG. A graduate of the University of Leeds with a B.A., Mr. Cheng obtained his M.B.A. from Imperial College, University of London, and his Master of Journalism degree from the University of Hong Kong. An experienced journalist with extensive exposure, he was a senior reporter, producer and sub-editor in Hong Kong’s electronic media (ATV & TVB) and newspaper companies (Hong Kong Standard & SCMP.com) and was an editor with Standard & Poor’s commodities news. He had also served as Hong Kong General Chamber of Commerce’s publication manager, Benchmark Magazine’s managing editor, and a public relations firm’s editorial services manager. In addition, he was editor for two best-selling business books in Chinese. During 2002–07, Mr. Cheng was elected to the Hong Kong Journalists Association’s Executive Committee. In 2002, he received the Special Merit Award in the Human Rights Press Awards from Amnesty International (HK), Hong Kong Journalists Association and the Hong Kong Foreign Correspondents’ Club for a TV news feature program on racial discrimination in Hong Kong. James B. CUNNINGHAM. US Ambassador to Israel, August 2008–/

Contributors

US Consul General in Hong Kong, August 2005 to July 2008. Prior to his Hong Kong post, Ambassador Cunningham was Ambassador and Deputy US Permanent Representative to the United Nations, 2001–04, and Acting Permanent Representative, January to September 2001. Mr. Cunningham has spent much of his career working on European and security affairs, with broad experience in multilateral diplomacy. After early tours in Stockholm, Washington, Rome and the US Mission to NATO, he was appointed Chief of Staff to the NATO Secretary-General in January 1989. Mr. Cunningham graduated magna cum laude from Syracuse University, with degrees in political science and psychology. He is the recipient of the US State Department’s Superior, Merit & Performance Awards; the National Performance Review's Hammer Award for innovation in government management; and the President's Meritorious Service Award. Larry DIAMOND. Senior Fellow, Hoover Institution, and professor by courtesy of political science and sociology, Stanford University. Professor Diamond received all his degrees from Stanford, where he also coordinates the democracy program of its Center on Democracy, Development, and the Rule of Law. A founding coeditor of the Journal of Democracy, and codirector of the International Forum for Democratic Studies of the National Endowment for Democracy, Professor Diamond has advised the U.S. Agency for International Development, the U.S. State Department, the World Bank, the United Nations, and other governmental and nongovernmental organizations. During early 2004, he served as a senior adviser to the Coalition Provisional Authority in Baghdad. Among other publications, he is the author of Squandered Victory: The American Occupation and the Bungled Effort to Bring Democracy to Iraq (2005), Developing Democracy: Toward Consolidation (1999), Promoting Democracy in the 1990s (1995), and Class, Ethnicity, and Democracy in Nigeria (1989). His latest books are The Spirit of Democracy: The Struggle to Build Free Societies Throughout the World (2008) and Political Change in China: Comparisons with Taiwan (Bruce Gilley coeditor, 2008).

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Berry F. C. HSU. Professor, Real Estate and Construction Department, University of Hong Kong. Recipient of a B.Sc. and a LL.M. from the University of Alberta, an M.A. from the University of Oregon, and a Ph.D. from the University of London, Professor Hsu is professionally qualified as a Chartered Engineer (UK) as well as a Barrister and Solicitor (Supreme Court of Victoria, Australia and High Court of New Zealand). He is concurrently Deputy Director, Asian Institute of International Financial Law (AIIFL), Faculty of Law, HKU. Prior to his HKU appointment, he worked at the University of Alberta and the Hong Kong University of Science and Technology. His current research focuses on banking and financial law, and taxation. He is the author of The Common Law in Chinese Context (1991), A Guide to Hong Kong Taxation (1996), Laws of Banking and Finance in the Hong Kong SAR (1998), Laws of Taxation in the Hong Kong SAR (2001), and co-author of Financial Markets in Hong Kong: Law and Practice (2006). Tuen-yu LAU. Visiting Scholar, Center for East Asian Studies, Stanford University since mid-2007. Dr. Lau received his Ph.D. in mass media from Michigan State University, M.A. in communication from Stanford and B.Soc.Sci. in journalism & mass communication from the Chinese University of Hong Kong. He was a fellow of the Media Management & Entrepreneurship Program at the Poynter Institute for Media Studies, Florida, in 1987. Founding director of the Master of Communication in Digital Media Program at the University of Washington (Seattle), 2001–07, he taught at Purdue University, 1991–94, and was a visiting professor at the University of California (Los Angeles) and the University of Hong Kong. Since 2004, he has been a visiting professor at the College of Culture & Communication, Central University of Finance & Economics, Beijing. He conducted an EMBA course in media management at Fudan University, Shanghai in summer 2005. He worked as a media executive and consultant in Indonesia & Singapore, 1994-98 and served as journalist with TVB in Hong Kong, 1976–79 and 1982–84.

Contributors

Sonny Shiu-hing LO. Associate Professor, Political Science Department, University of Waterloo, Canada. During 1989–2004, Professor Lo taught at the University of East Asia (Macao), Lingnan College, the Hong Kong University of Science and Technology, and the University of Hong Kong. He obtained all his degrees from Canadian universities, including a University of Toronto Ph.D. A prolific scholar on the politics of Greater China with numerous articles in academic journals and several books including Political Development in Macau (1995), The Politics of Democratization in Hong Kong (1997), and Governing Hong Kong: Legitimacy, Communication and Political Decay (2001). His most recent books, all published in 2008, are: Political Change in Macao, The Dynamics of Beijing–Hong Kong Relations: A Model for Taiwan? and The Politics of Cross-Border Crime in Greater China: Case Studies of Mainland China, Hong Kong and Macao. Christine LOH. Chief Executive Officer, Civic Exchange, Hong Kong. Trained as a lawyer (LL.B., University of Hull & LL.M., City University of Hong Kong), Ms. Loh did not practice law but pursued a successful business career, 1980–92. First appointed to Hong Kong’s Legislative Council in 1992, Ms. Loh won elections in 1995 and 1998 to serve until mid-2000 when she chose not to seek reelection. Soon, she co-founded public policy think tank Civic Exchange and has since been at its helm. She chaired the Citizens Party, 1997–2000, and Friends of the Earth (HK) 1991–92/93–94; and is director, Hong Kong Exchanges and Clearing Ltd., 2006–09. Active in ecological protection, harbor conservation and democratic governance, her books include Hong Kong, “A High Degree of Autonomy,” and the Basic Law (1995), Getting Heard: A Handbook for Hong Kong Citizens (2002), Building Democracy: Creating Good Government for Hong Kong (2003), At the Epicentre: Hong Kong and the SARS Outbreak (2004), Functional Constituencies: A Unique Feature of the Hong Kong Legislative Council (2006), Being Here: Shaping a Preferred Future (2006), Reflections of Leadership: Tung Chee Hwa and Donald Tsang, 1997–2007 (2007), and From Nowhere to Nowhere: A Review of Constitutional Development Hong Kong : 1997–2007 (2007).

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Margaret NG. Member, HKSAR Legislative Council representing the Legal Functional Constituency since 1995. She was re-elected in 1998, 2000, 2004, and 2008. During 2004–08, Ms. Ng chaired the Legco Panel on Administration of Justice & Legal Services, and served as a member of the Panel on Constitutional Affairs, Panel on Security, and Panel on Home Affairs. A founding member of the Civic Party in the HKSAR, Ms. Ng sits on its Executive Committee. Her public service posts include the Central Policy Unit, 1989–90 and 1991–92, and the Town Planning Appeal Board. Educated in Hong Kong through her school years, Ms. Ng obtained her B.A. and M.A. from the University of Hong Kong, her Ph.D. in philosophy from Boston University, and her law degree from the University of Cambridge and PCLL from HKU. A barrister by profession, she has been a noted commentator and writer in both English & Chinese for the Hong Kong press since 1979. She worked in Ming Pao Daily News during 1985–90 as Deputy Editor-in-Chief and Publisher. The author of 12 volumes in Chinese, she is a regular contributor to the South China Morning Post. Suzanne PEPPER. American writer and long-time Hong Kong resident. A world renowned China research scholar affiliated with the Universities Service Center for China Studies at the Chinese University of Hong Kong, Dr. Pepper obtained her Ph.D. in political science from the University of California (Berkeley). She is the author, among other works, of Civil War in China: The Political Struggle, 1945–1949 (1978; 2nd edition, 1999), China’s Universities: Post-Mao Enrollment Policies and Their Impact on the Structure of Secondary Education (1984), China’s Education Reform in the 1980s: Policies, Issues, and Historical Perspectives (1990), Radicalism and Education Reform in 20th-Century China: The Search for an Ideal Development Model (1996) and Keeping Democracy at Bay: Hong Kong and the Challenge of Chinese Political Reform (2007). Sin-por SHIU. Member, Central Policy Unit, Hong Kong SAR Government since mid-2007. Mr Shiu was Deputy Secretary-

Contributors

General, Consultative Committee for the HKSAR Basic Law, 1985– 1990, and Executive Director, the One Country Two Systems Research Institute, 1990–2005. He was a Fellow at the Center for Business & Government, Kennedy School of Government, Harvard, 2005–06. Since 2006, he has been a Senior Visiting Fellow, School of Public Policy & Management, Tsinghua University. In 1998 the HKSAR government awarded Mr Shiu a Silver Bauhinia Star for public service that included member of the 10th National Committee of Chinese People’s Political Consultative Conference, Deputy Secretary General, the National People's Congress’ HKSAR Preparatory Committee, 1996–97, and a Hong Kong Affairs Adviser, the PRC State Council Hong Kong & Macao Affairs Office, 1993– 97. Born in China and educated through high school in Hong Kong, Mr. Shiu received his B.A. from the University of Wisconsin (Madison) and undertook graduate studies at the New York State School of Industrial & Labor Relations, Cornell University. Yun-wing SUNG. Professor and Chairman, Economics Department, Chinese University of Hong Kong. Since 2002 Professor Sung has been Associate Director, the Chinese University of Hong Kong’s Hong Kong Institute of Asian-Pacific Studies, where he has codirected its Hong Kong and Asian Economies Research Program since 1993. A part-time member of the Central Policy Unit, HKSAR government, 2001–05, his fields of expertise are international trade and economic development, Chinese and Hong Kong economy. Graduated from the University of Hong Kong with a B.Soc.Sc., he received his Ph.D. from the University of Minnesota. Since 2001, he has been the Editor of Asian Economic Journal. Author of numerous scholarly articles, his books in English include The China Hong Kong Connection: The Key to Chinese Open Door Policy (1991), Hong Kong and South China: The Economic Synergy (1998) and The Emergence of Greater China: The Economic Integration of Mainland China, Taiwan and Hong Kong, (2005), Alvin Y. SO. Professor, Social Sciences Division, Hong Kong University of Science and Technology. Hong Kong born and a

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Chinese University of Hong Kong alumnus, Professor So obtained his Ph.D. in sociology from the University of California (Los Angeles). He taught at the University of Hawaii before returning to Hong Kong. His research interests cover development studies, social classes and social conflict, historical and comparative sociology, and Greater China, Korea, and Japan. Besides many journal articles and book chapters, his ten academic volumes include: The South China Silk District: Local Historical Transformation and World Systems Theory (1986), The Hong Kong–Guangdong Link: Partnership in Flux (1995), Hong Kong's Embattled Democracy: A Societal Perspective (1999), and The Chinese Triangle of Mainland-TaiwanHong Kong: Comparative and Institutional Analyses (2001). His editorial portfolios have entailed: Associate Editor, Journal of World-Systems Research, 2003 – ; Co-Editor, Critical Asian Studies, 2001 – ; Co-Editor, Bulletin of Concerned Asian Scholars, 1997– 2000; and Managing Editor, Hong Kong Journal of Sociology, 1999–2003. Zhenmin WANG. Professor and Dean, School of Law, Tsinghua University, Beijing; member of the HKSAR Basic Law Committee and the Macao SAR Basic Law Committee of the Standing Committee of the PRC National People’s Congress. Professor Wang is also a Senior Research Fellow of the Institute for Hong Kong & Macao Affairs under the Development Research Center of the PRC State Council, which advises the central government on Hong Kong policy issues. Received his legal training in China with a doctoral thesis on the HKSAR Basic Law, he has been a frequent visitor to both the HKSAR and the Macao SAR, where his views often draw headline press coverage. Holder of various visiting appointments including Harvard, he has lectured on many overseas campuses. He was Vice President, Beijing Association of Constitutional Law. His teaching and research focus on constitutional and administrative law, legal reform and legal education. Among his recent scholarly publications in English is an article on the HKSAR Basic Law in Journal of Contemporary China, 16:52 (August 2007).

Contributors

Yan-yan YIP. Chief Operating Officer, Civic Exchange, Hong Kong. Born in Hong Kong where she was educated through undergraduate study, Ms. Yip graduated from the Hong Kong Baptist University with a B.A. in government and international affairs. She also obtained a M.Sc. in international relations from the London School of Economics and Political Science. In charge of project management at Civic Exchange, a major Hong Kong public policy think tank established in 2000, she is particularly interested in democracy related issues. Responsible for the release of various publications and project reports bearing the Civic Exchange imprint, Ms. Yip is the author of Clean Ngau Tau Kok Pilot Project: Final Report (2003).

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Asian values, 175 autonomy, 2, 7, 11, 24, 35, 50, 77, 122, 126, 161, 245, 247, 270, 289, 293, 299, 301–302, 336– 337 high degree of, 155–156

2012 (year), 12, 72, 74, 77, 87, 89– 91, 95, 117, 131–133, 139, 145, 247, 293, 295, 323, 327–330 2017 (year), 2, 6–7, 12, 23–27, 35, 39, 74, 87, 89–93, 114, 117, 123, 133, 139, 144, 148, 292– 293, 303, 315, 323, 325–329 2020 (year), 2, 6, 12, 23–25, 39, 91–93, 114, 117, 123, 139–140, 144, 146, 293, 303, 315, 323, 325–328, 330 2047 (year), 1, 3–4, 7, 19, 21–22, 29, 33, 35–39, 74, 113–115, 146–147

B Basic Law, 2, 3, 5–8, 11, 22–23, 27, 37–38, 50–51, 55, 60–61, 63– 65, 67–68, 70, 72–73, 76–77, 79–80, 82, 84, 90, 92–93, 98, 110, 114–116, 118–119, 120– 128, 136, 138–139, 155–157, 159–167, 169–171, 173–174, 178–183, 185, 226, 240, 255, 257, 273–276, 289, 292, 301, 303, 314–316, 322–323, 326, 332 336–337, 339 Article 23, 78, 123, 133, 219, 244 Article 158, 162, 164 final adjudication, 156–158, 161– 162, 164, 169–170 final interpretation by NPCSC, 6, 11, 12, 50–51, 60, 67–69, 73–74, 77, 120, 161–170, 292, 301, 315, 337 nature, 163 norms and methodology, 166–167 occasions, 163 procedures, 165–166 Beijing, 2–3, 6–12, 16, 20, 24–26, 29, 31–32, 34–35, 38–39, 52, 56, 61, 71, 73–74, 76, 80–83, 87–89, 92, 97–98, 100, 104,

A academic freedom, 101–102 accountability, 6, 23, 32, 61, 79, 102, 135, 219, 238, 317, 319, 321, 338 activists, 9, 31, 36–38, 55, 141, 147–148, 217, 238, 241, 247– 248, 274, 289, 302, 308 air quality, 209, 221, 223 Apple Daily, 243, 257–259, 261, 264–265, 270–271, 278–279, 282 Article 23 legislation, 78, 123, 133, 219, 244 Article 45 Concern Group, 60, 70 Asia’s World City, 36, 340 Asian financial crisis, 2, 27, 44, 50, 98, 103, 108, 173, 191, 193, 218, 234, 237, 239, 245, 249 Asian Four Dragons, 194–197 353

354

China’s Hong Kong Transformed: Retrospect and Prospects Beijing (continued) 105–107, 110, 114–127, 129, 131, 133, 135–136, 138–148, 157, 170, 180, 192–193, 203, 207, 219, 227, 229, 243–244, 253, 256–257, 287, 290–291, 293–294, 296–301, 303–304– 308, 310–315, 322–324, 326, 328, 330–332 leaders, 105, 138 officials, 144 pro–beijing, 11–12, 16, 24–25, 32, 81, 86, 88, 107, 115–119, 123, 125, 133–135, 138, 142, 144, 215, 236, 260–261, 264, 270–272, 274, 276, 284, 288–290, 293, 300, 302, 304, 314, 323, 328, 331 pro–Beijing newspaper, 125, 260– 261, 264, 282 Beijing–Taipei, 296–297, 306–307, 310 interactions, 306 relations, 296, 308, 310 BPCJC. See Judicial Committee of the British Privy Council Britain (UK), 8, 43, 62–63, 66, 77, 101, 127, 155, 161, 164, 167, 181, 197, 204, 206, 209, 215, 318

C capital market, 205 capitalism, 155, 176, 256, 299 CCP. See Chinese Communist Party Central and Western Concern Group, 225 Central (People’s) Government, 49– 50, 54, 56, 59, 62–63, 65, 68,

Central (People’s) Government (continued), 73–74, 84, 93, 107, 110, 122– 123, 125, 126, 143, 145, 161– 162, 191, 240, 243, 259, 262, 272–273, 287–288, 299, 304, 306, 336–337 CEPA. See Closer Economic Partnership Arrangement Chan Fang On–sang, Anson, 87–89, 109, 132–133, 264, 271–272 Chen Shui–bian, 99, 110, 118, 287, 292, 296–297, 301–303, 309, 320 Cheng, Albert King–hon, 122, 124, 126, 147, 149, 275 chief executive, 5–6, 40, 48–49, 51– 53, 55, 63–64, 91, 93, 99, 106– 107, 110, 119, 128, 134, 163, 165, 167, 179, 192, 213–214, 228–229, 313, 315, 323, 326, 329, 339 election, 12, 51, 60, 71, 74, 92, 128, 139, 289, 329 China’s national constitutional and legal systems, 159–160 Chinese Communist Party (CCP), 8, 10, 15–16, 113, 119–121, 130, 134, 139, 142–143, 214– 215, 224, 290, 296, 299–300, 303, 309 Chineseness, 16 Ching Cheong case, 275–276, 278 Citizens’ Radio, 247, 274–275 “City of Protests”, 35, 40, 258–259 civic organization, 241 Civic Party, 24, 60, 70–71, 86, 124, 224, 348 CIVICUS (World Alliance for Citizen Participation), 218, 227 Civil Human Rights Front, 241–242

Index civil liberties, 34, 68, 113–114, 209, 240, 305, 312, 322, 325, 341 civil service, 14, 28, 54, 79–80, 102, 133, 236, 245, 247, 319 civil society, 31, 35, 54, 57, 60, 65, 85, 213–215, 218–219, 222– 224, 226–227, 289, 305, 326 class, 11–13, 15, 23–26, 30, 32, 43, 60, 86, 89, 101, 241, 295, 318 inter–class conflict, 13 middle, 24, 26, 30, 32, 43, 60, 86, 89, 235, 238, 248–249 professional, 70 working, 25, 32, 238 Closer Economic Partnership Arrangement (CEPA), 3, 10, 49, 243–244, 293 common law, 53, 68, 156–157, 159, 161–162, 164–169, 171, 174, 179, 183–184 jurisprudence, 179–180 competition, 29, 31, 71, 104, 148, 195, 201, 203–204, 227, 253, 255, 259–262, 263, 266, 270, 276,–277, 279, 280, 281, 282, 299, 338 competitiveness, 104, 192–193, 198, 201, 204, 221, 238, 337, 340 Conservancy Association, 220, 225 conservation, 3, 18–19, 214, 216, 220, 224, 303, 307 Constitution (of PRC), 63, 142, 155, 159–160, 162–164, 170 constitutional development, 67, 70, 73, 89–90, 95, 124, 129–130, 140, 329 convergence, 1, 3–4, 7, 21–22, 36, 39, 115, 126 Court of Final Appeal, 60, 68, 73, 156–157, 162, 165, 169–170, 182, 233, 239

CPPCC. See People’s Political Consultative Conference credibility rating of news media, 266

D DAB. See Democratic Alliance for Betterment of Hong Kong DDP (Taiwan). See Democratic Progressive Party de-colonization, 52, 54 democracy, 26, 57–58, 61, 65, 67, 69–70, 72, 74–77, 80, 82–86, 89, 101, 106, 108–111, 116, 118, 120–122, 130–133, 139, 141–144, 174–176, 184, 215– 216, 233, 238, 240, 242, 248– 250, 258–259, 288, 300, 303– 305, 310, 312–313, 315–325, 327–328, 331–332, 338–339 readiness, 83, 315, 316, 317, 322, 323 conditions, 317 set–backs, 72–74 need for, 75 transition, 322, 324–327, 331 Democratic Alliance for Betterment of Hong Kong (DAB), 11–12, 25, 86–87, 117, 119, 130–134, 139–140, 147, 289, 293, 302, 339 democratic development, 116, 219, 309 Democratic Party, 11, 71, 76, 86, 132, 135, 142–143, 147, 235– 236, 244, 249, 266–267, 289 Democratic Progressive Party (Taiwan), 99, 287, 300–301 democratization, 6, 9, 12, 14, 22, 24, 24, 26,–27, 38–39, 57–63, 65,

355

356

China’s Hong Kong Transformed: Retrospect and Prospects democratization (continued) 67, 69, 71–73, 75–78, 80, 82, 84–85, 87–88, 94, 142, 233, 244, 250, 264, 287, 293, 300, 301–306, 309–313, 315–316, 319, 321, 323 democrats, 9, 11, 25–26, 60, 62, 66–67, 69, 71–79, 81, 83–88, 98, 102–103, 106–110, 116– 118, 120, 122–124, 126, 128– 133, 135–136, 140–141, 143, 145–148, 289–290, 293, 299, 302, 310, 323, 325, 327–328, 330 pan–democrats, 9, 11, 25–26, 67, 73, 98, 102–103, 106–110, 289–290, 293, 300 Deng Xiaoping, 97, 116, 118, 120– 121, 194, 256 District Board, 60, 66, 72, 78, 127, 298 elections, 215 District Council, 2, 5, 11, 51, 60, 66, 85–88, 90, 94, 122,127–132, 139–140, 146–147, 150, 290, 300, 302, 308, 330, 339 elections, 87, 129 district councilors, 2, 129–131, 140, 147

E East Asia, 3 7, 191, 195, 205, 321 economic crisis, 25, 28, 40, 193 dependence, 293–295, 298 development, 27, 173–177, 184, 192, 204, 206, 250, 299, 317–318 environment, 27, 80, 173–177 integration, 3, 48, 195, 247, 251 malaise, 23, 193,–194, 198 positioning, 48

economic (continued) relation, 48–49 restructuring, 12–13, 30, 194– 195, 198 Economic Times, 259, 261, 278, 282 economy, Hong Kong, 191–194, 199–200, 202, 209, 243 education reform, 3, 13, 20, 21 Election Committee, 23, 71, 81, 93, 117, 124, 128, 134–136, 139, 329 entrepôt, 192, 340 environment, 3, 18, 80, 85, 107, 173, 207, 213–214, 216, 220, 259, 275 environmental protection, 31, 81, 220, 241 Europe, 97, 101, 109, 113, 168 European Union (EU), 167, 318

F FC. See functional constituency Federation of Trade Unions (FTU), 12, 32, 289 financial center, 1, 173–174, 178, 192, 201, 204, 206–208, 216, 272, 336 services, 106, 193, 198–201, 204, 206, 208 free daily newspapers, 260, 283 market, 48–49, 100, 176, 305, 341 freedom of press, 101, 274 of speech, 174, 253, 255, 274, 275, 322 FTU. See Federation of Trade Unions

Index functional constituency (FC), 26, 53, 60, 66–67, 73, 80–82, 84, 87, 89–91, 93, 117, 128, 140, 191, 213, 330

G GDP. See Gross Domestic Product geographical constituency, 5, 66, 330 global financial center, 204, 208 globalization, 8, 17, 29, 36, 48, 247, 308 governance, 2, 9–10, 12–13, 22–23, 26, 31, 38, 77–80, 82, 113, 116, 138, 144, 175, 177–178, 206, 208, 217–219, 227, 259, 290– 291, 310, 316, 319–322, 338– 339 green groups, 220–225 Green Paper on Constitutional Development, 89, 124, 129– 130, 140 greening politics, 213 Gross Domestic Product (GDP), 27–28, 44–45, 57, 93, 191, 195–198, 201, 203, 206, 217, 236, 246, 337 Guangdong (Province), 15, 29, 49– 50, 134, 137, 194, 203, 300

H Hang Seng Index, 47 heritage conservation, 3, 18–19, 31, 214, 216, 221, 224 cultural, 245, 248, 249, Hong Kong as a bridge, 105, 113 Hong Kong Economic Journal, 260–261, 278, 282 Hong Kong Transition Project, 229 Hongkonger, 143, 236, 248, 309

Hongkongization, 295, 305 Hu Jintao, 296 human rights, 64, 84, 110, 137, 142, 145, 175–176, 181, 209, 215, 228, 241, 312, 325, 337, 341 Hu–Wen leadership, 296

I ICAC. See Independent Commission Against Corruption ICCPR. See International Covenant on Civil and Political Rights identity, 14–17, 19–22, 54, 59, 120, 148, 214, 238, 246, 250, 293, 312–313, 318, 331, 340 income distribution, 237 Independent Commission Against Corruption (ICAC), 100, 291, 293, 310 Index Education Index of the United Nation’s Human Development Index, 209 Hang Seng Index, 47 Human Development Index, 318 Knowledge Index, 209 initial public offering (IPO), 204–205 InmediaHK, 222, 247 international city, 59, 337, 340 International Covenant on Civil and Political Rights (ICCPR), 64-65, 84, 92–93 international financial center, 173, 174, 178, 208, 336, 340 international reality, 98–99 Ip, Regina, 87, 89, 133, 258, 264, 329

357

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China’s Hong Kong Transformed: Retrospect and Prospects

J Japan, 99, 105, 205–206, 321, 337 Jiang Zemin, 290 Joint Declaration on the Question of Hong Kong, 3, 5, 6, 14, 35, 43, 61–63, 76, 98, 155, 192, 296, 337 judges, 53, 69, 73, 123, 158, 167– 168, 179–185 Judicial Committee of the British Privy Council (BPCJC), 157, 161 judicial independence, 38, 70,114, judicial independence (Continued) 170–171, 174, 178–185 judiciary, 38, 53–54, 73, 137, 142, 156–158, 160, 170, 172, 178– 183, 292, 341 July 1 (2003) protest, 1–2, 5, 9, 23, 51, 62, 69–70, 74, 79, 86, 94, 117, 119, 125, 134–135, 157, 219, 235–236, 242–246, 248, 250–251, 257, 259–261, 278, 282–283, 290, 298

K KMT. See Kuomintang knowledge–based economy, 17, 209 Kuomintang, 288–289, 292, 294– 296, 298, 300–302, 308, 310– 312, 321

L laisse–faire government, 82 land, 16, 48, 85, 192, 224, 241, 291 legal environment, 173 legal system (of PRC), 160, 170 Legislative Council (LegCo), 5–6, 11–12, 24–26, 38, 60, 64,

Legislative Council (LegCo) (continued), 66–70, 73, 77, 79–81, 84–94, 114, 117–118, 122–123, 125– 130, 132–134, 136–137, 139– 141, 143–144, 146–147, 163, 184, 215, 228–229, 235, 246, 265, 277, 293, 299, 304, 309, 315, 326, 328–329, 330, 323, 339 by–election, 70–71, 85–88, 128, 132–133, 264 elections, 11–12, 24–26, 64, 73, 78, 85–88, 117, 122, 127, 129, 132, 139, 146, 304 legislative councilors, 38, 136, 144, 249 Leong, Alan, 51, 60, 70–71, 124– 126, 128, 137, 139, 224 Li Fei, 93 Li, Andrew, 157–159 Liberal Party, 11, 86, 118, 220, 222, 229, 241

M Ma Lik, 119, 128–130, 132, 143, 339 Ma Ying–jeou, 288, 292, 294, 300– 301, 306, 309, 311, 331 mainland China, 3, 8, 16, 27, 29–30, 33–34, 36, 97, 105–106, 108, 110–111, 114, 155–156, 162, 169, 171, 184, 191–192, 202–203, 205, 207–208, 244, 246–248, 250–251, 256–258, 263, 274, 277, 282, 287, 305, 308 mainlandization, 34, 134, 137, 290, 311 Mao Zedong, 120 media sins, 255, 279

Index Ming Pao, 74, 257, 258, 260–261, 264, 267, 275, 278, 282 mini–constitution, 155, 240 Mirror’s Theory, 253 mobilization, 11, 222, 240, 247, 249, 293, 326–328 modernization, 249, 338 moral dilemma, 98–99

N National People’s Congress (NPC), 2, 6, 60, 63, 67, 84, 114, 121, 126, 128, 134–140, 142, 144, 148, 155–156, 161, 179, 246, 294, 315, 329 National People’s Congress Standing Committee (NPCSC) interpretation of the Basic Law, 6, 11, 12, 50, 51, 60, 67, 68, 69, 73, 74, 77, 161–170, 292, 301, 315, 329, 337 new generation, 213 new media, 222, 277, 279–280 Ng, Margaret, 144 non-governmental organizations (NGO), 35–36, 54, 213–218, 220–222, 224–226 NPC. See National People’s Congress NPCSC. See Standing Committee of the National People’s Congress “Nylonkong”, 36

O One Country, Two Systems, 1, 3, 33, 35, 50, 56, 59, 99, 102, 111, 113–114, 125, 155–156, 159, 170–171, 236, 255–258, 282, 287–288, 290–291, 293, 295, 297, 304–305, 307, 309–310, 312–313, 335–336, 340

Oriental Daily News, 257, 260–261, 265, 278, 279, 282 outsourcing, 193–194

P pan–democratic, 11–12, 16, 24–25, 32, 107, 289–290, 298, 304 paparazzi abuse, 269 patriotic, 9, 11, 16, 75–76, 115–120, 131, 134, 136, 138–139, 246, 290 patriotism, 16, 75, 115–116, 118– 119, 129, 141–142, 145 Patten, Chris, 72, 78, 99, 137 Pearl River Delta (PRD), 7, 29, 49, 105, 201, 236, 246, 336 People’s Political Consultative Conference (CPPCC), 136 per capita GDP, 45, 191, 195–198 political integration, 114–115, 138– 139, 146 political reality, 53–54 political system, 11, 23, 52–53, 65– 66, 79, 115, 123, 135–136, 143, 151, 173–174, 176, 213–214, 227, 289, 300, 309, 315, 321– 325, 337–338, 341 positive non–interventionism, 13, 49 post–1997, 4, 50, 54–55, 109, 210, 254, 265 post–modern movements, 214, 242–243 poverty, 30, 81, 108 Power for Democracy, 86 pragmatism, 145, 302 PRD. See Pearl River Delta pre–1997, 3, 5, 22, 79, 107, 114– 115, 126, 134, 137, 192, 194, 235, 257, 300

359

360

China’s Hong Kong Transformed: Retrospect and Prospects price indices, 46 privatization, 13–14, 31, 238 professional services and other producer services, 198–200, professionals, 43, 237, 240, 250, 271–282, 307 pro–government, 61, 144, 215 proportional representation system for directly elected Legislative Council (LegCo) geographical constituency seats, 5, 300 Provisional Legislative Council, 5, 66, 77 public health, 3, 8, 14, 223 public opinion, 15, 74, 89, 261, 263, 266, 272, 274, 299

Q Qiao Xiaoyang, 92, 139, 148 Qualified Domestic Institutional Investor (QDII), 207 Queen’s Pier, 18, 19, 221–222, 247, 250

R real estate, 98, 109, 192, 236, 262, 285 realpolitik, 12, 22, 297, 311 Renminbi, 10, 28, 207, 308, 336 rule of law, 16, 34, 38, 58–61, 68, 70, 73, 76, 88, 137, 171, 173– 176, 178, 184–185, 208, 215, 292, 303, 305, 312, 316, 319– 320, 322, 337, 341 thin type, 175, 178 thick type, 175–176

S SARS. See severe acute respiratory syndrome

scandals, 10, 31, 236–237, 266, 276, 278, 291–292, 298, 320 self–censorship, 271–273, 277, 337 severe acute respiratory syndrome (SARS), 3, 9, 23, 28, 44, 49, 51, 78, 98, 103, 118, 191, 219, 245–246, 253 Shanghai, 29, 105, 185, 201, 203– 205, 207, 238, 305 Shao Tianren, 123 Shenzhen, 29, 103–105, 166, 201, 203 Shoemaker and Reese model, 254 ideological level, 254–255, 277, 279 extra–media level, 254–255, 259 organization level, 254–255, 262 media routine level, 254–255, 263, 277, 280 individual level, 254–255, 271, 276, 280 Sing Tao Daily, 259–261, 269, 282 Smith, Adam, 177 social conflict, 32, 39, 54, 233, 249 harmony, 81 injustice, 81 justice, 216 mobility, 21 movements, 233, 238–241, 244– 249 policy, 32 security, 239 stability, 61, 78, 81, 208 welfare, 241 socialism, 155 South China Morning Post, 258, 260–261, 264, 268, 278, 283 sovereignty, 1, 5, 39, 59, 61–63, 72, 75–77, 113, 115, 123, 167, 215, 255, 257–258, 282, 313, 336 speculation, 192, 194

Index Standing Committee of the National People’s Congress (NPCSC), 2, 6, 11–12, 24, 38, 60–61, 68–69, 73, 77, 89, 91–94, 114, 122–123, 148, 161–167, 169–170, 292, 301, 303–304, 309, 315, 325, 329 interpretation of the Basic Law, 6, 11, 12, 50, 51, 60, 67, 68, 69, 73, 74, 77, 161–170, 292, 301, 315, 329, 337 Star Ferry Pier, 221, 223, 226, 249 stock market, 2, 27, 44, 98, 192, 205–206, 208, 338 Supreme People’s Court (PRC), 157, 162, 169–170

Treaty of Rome, 168 Tsang Tak–sing, 119, 125, 131, 139 Tsang Yok–sing, 11, 131 Tsang, Donald, 2, 6, 11, 13, 23, 26, 49, 51, 71–72, 74, 81, 89, 91, 107, 119, 124–125, 128, 139, 192, 224, 266, 277, 291 Tung Chee–hwa (C. H. Tung), 2, 5–6, 9–13, 20–21, 23, 25–28, 30, 40, 48, 51, 54, 71, 78–79, 81, 99, 106, 133, 167, 193, 218–219, 221, 238–239, 241, 245, 251, 259–260, 272, 290, 297, 299, 301 administration, 6, 9–11, 13, 21, 24, 26, 28, 30, 79, 239, 245, 260

T Ta Kung Pao, 107, 125, 260, 282 Taipei, 287, 292, 294, 296–300, 302–312 Taipei–Hong Kong relations, 307 Taiwan, 21, 33, 39, 56–57, 99, 110, 118, 195, 277, 280, 287–313, 318–319, 320–321, 324, 331– 332 Taiwan Strait, 296, 297, 305 Taiwanization, 293, 299–301, 303, 306, 309 “The Death of Hong Kong”, 1, 40, 102, 335 Third Sector, 213–214, 216–218, 228 Three Nos Policy, 296 Tibet, 300–301, 309 tourism, 8, 10, 29, 48, 198–200, 220, 243–244, 294, 305, 338 Town Planning Board, 220–221, 224–225 town planning, 224 trading and logistics, 198–201, 202

U UK, 8, 43, 62–63, 66, 77, 101, 127, 155, 161, 164, 167, 181, 197, 204, 206, 209, 215, 318 unemployment, 13, 28, 30, 40, 194, 236, 237 rate, 45, 191, 195–198 United Democrats of Hong Kong, 229 united front, 215, 224 United States (US), 8–9, 21, 25, 33, 39, 105, 118, 191, 193, 195, 197, 203–204, 207, 217, 246, 261, 263–264, 266–267, 288, 296, 335–337, 339, 340, 341 universal suffrage, 2, 6, 55, 60, 62– 65, 67, 70, 72–74, 77, 80, 83– 84, 87, 89–94, 110, 114–115, 117, 119–120, 122–124, 127, 129–130, 132–133, 139–140, 142–145, 213, 219, 246, 249, 288, 315–316, 323, 326–330, 332, 339

361

362

China’s Hong Kong Transformed: Retrospect and Prospects Urban Council and Regional Council, 94 urban planning, 85, 214, 216, 220, 222, 224

V Vatican, 100 Victoria Harbour, 220

W wealth management center, 207–208 Wen Jiabao, 25, 296 Wen Wei Po, 107, 260, 276, 282

West Kowloon Cultural District, 25 World Health Organization (WHO), 9, 245 World Trade Organization (WTO), 3, 9, 49, 184, 202, 243, 245, 246, 288, 336 Wu Bangguo, 126

X Xinjiang, 300, 309

Z Zhang Xiaoming, 93