Politics in Hong Kong: Still on borrowed time
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Jun 22nd 2017 | HONG KONG
TWO decades ago a media circus descended on Hong Kong to witness its transfer, after a century and a half as a British colony, to Chinese rule. The handover on July 1st 1997 was an extraordinary, and for many, a poignant moment—not least for the people of Hong Kong, who had created a phenomenal economic success and who were now being placed in the care of a Leninist one-party state.
Britain’s acquisition of the “barren rock” of Hong Kong in 1842 after a brief, unequal war marked the rise not just of a small, aggressive, mercantile, maritime power but the ascent, in general, of the West. Equally, it marked the decline of a once-great civilisation. Hong Kong’s return brought the narrative full circle. For all the pomp, it was clear that Britain was just another so-so power, and China a fast-rising one that might one day eclipse the West. For the government in Beijing it was a moment of triumph: China was back.
On July 1st, in the same convention centre in which the handover ceremony was held, the country’s president, Xi Jinping, will join celebrations to mark the 20th anniversary of the handover—his first visit to the territory as China’s leader. He will preside over the swearing-in of Carrie Lam (pictured) as Hong Kong’s chief executive in place of “C.Y.” Leung Chun-ying. Mrs Lam, who previously served as head of the civil service, will be the first woman to lead the territory.
Mr Xi is certain to praise the success of “one country, two systems”, the formula China prescribed for Hong Kong. But he will be uneasy. Many people in Hong Kong are bitterly frustrated by their lack of say in how they are governed. And the growth of a “localist” movement in Hong Kong over the past five years, demanding self-determination or even independence, has greatly angered a Communist Party for which absolute sovereignty—ie, the regime’s security—is the bottom line.
Carrie Lam faces tough times ahead
China’s formula was intended to reassure Hong Kong that it could keep its capitalist economy, its independent courts and its politically liberal (if undemocratic) culture. Yet it will be lost on no one that Mrs Lam, like her predecessors, was chosen not by ordinary Hong Kong people but by 777 votes in a nominating process tightly controlled by the party. A striking feature of Mr Leung’s five years in office has been the growing sway and visibility of the central government’s organ in Hong Kong. Known as the Liaison Office, it was once low-key. Some now divine a parallel government operating in the territory.
Just as they will be on July 1st, the people of Hong Kong were mere extras 20 years ago. They had not been consulted about the terms of the handover, including the drafting of the territory’s new mini-constitution, the Basic Law, which promised a “high degree of autonomy” and a way of life that would remain unchanged for 50 years. A lack of confidence in Hong Kong’s future had prompted a rush to obtain full British or other Western passports and to find boltholes abroad.
Yet as the handover date approached, a generally positive mood prevailed among ordinary citizens. Opinion polling by Hong Kong University showed twice as many people satisfied with their lives as not. After all, China’s economy was beginning to take off. Indeed the whole region was booming. Hong Kong seemed extraordinarily well-placed to benefit. Early impressions of Chinese rule reinforced optimism. When the People’s Liberation Army crossed the border into Hong Kong, they disappeared into barracks. The goosestepping was confined largely to the convention centre (most people have yet to see a Chinese soldier on the streets).
Hong Kong remains distinct—not only the most prosperous part of China but also the freest. Hong Kong’s courts are still respected globally for their professionalism and unbiased rulings. The press still airs vigorous criticism of the local government and of China’s leaders. Political debate is vibrant and protest is permitted, including by organisations such as Falun Gong that are banned on the mainland. Hong Kong’s way of doing business has not noticeably eroded, despite an influx of Chinese “red-chip” companies raising capital in Hong Kong (its stock exchange is vying to attract them, see article).
But since the handover, and especially in the past five years, anxieties have grown. They have been fuelled by subtle changes in Hong Kong’s political culture (“mainlandisation”, as some describe it) and intrusions by the Chinese state. In 2015 Chinese secret police abducted a bookseller to the mainland; earlier this year they did the same to a Chinese tycoon.
Democrats complain about ever-more-blatant attempts by China to manipulate elections, journalists about self-censorship in the media and university staff about politically driven appointments. Lawyers fear an erosion of judicial independence caused by China’s efforts to make sure that the Basic Law is interpreted to suit the party’s political needs. Its latest constitutional pronouncement, in November, aimed to prevent two localist legislators from taking up their posts on the ground that they had deliberately garbled their oaths when they were sworn in. A court in Hong Kong was already considering the legality of their oaths; China wanted to stop it reaching the wrong decision.
At the time of the handover, The Economist expressed hope that Hong Kong would serve as a laboratory for political change on the mainland. “What if”, we asked, “Hong Kong takes over China?” Instead, over the past two decades, and especially under Mr Xi, the party has shut down dissent on the mainland. Politics there has grown only more illiberal. Protecting Hong Kong from this trend will require considerably greater vigilance by its government and people. The greatest risk, as one former senior official says, is that political and business elites in Hong Kong, rather than strongly making the case for Hong Kong’s autonomy, fawningly cede it to the Liaison Office, or to the party in Beijing.
In the past it was easier to argue that China risked damaging itself by interfering in Hong Kong. At the time of the handover, the colony, with a population of 6.5m (now 7.3m), had an economy equivalent to a fifth of that of the mainland, with its population of over 1bn. This may partly explain why, for the first few years after the handover, China let Hong Kong’s government rule much as it wished, as long as it did not challenge the mainland politically. Anson Chan, who represented continuity as civil-service chief under both the last British governor, Chris Patten, and the first chief executive, Tung Chee-hwa, says that not once in four years did she have contact with the Liaison Office as part of her work.
But China no longer feels so beholden to Hong Kong for its economic welfare. The territory’s GDP is now less than 3% of the faster-growing mainland’s. And as China’s economy rapidly becomes more integrated with the rest of the world, Hong Kong’s no longer looks so special to officials in Beijing. In his book, “A System Apart”, Simon Cartledge (formerly of the Economist Intelligence Unit, a sister firm of this newspaper) argues that Hong Kong’s economy is “stuck, with remarkably little change to show for the last two decades”. Trade and logistics, which are exemplified by Hong Kong’s container port, make up nearly a quarter of GDP, little different from the mid-2000s. Finance accounts for 17%—little changed either.
China, however, has changed a lot. In many ways it is now a rival. Ports in the city of Shenzhen just across the border now do more business than Hong Kong. And Hong Kong’s role as a financial hub is no longer as important to China as it once was. The bourses in Shanghai and Shenzhen do far more trade and are strengthening their links with global markets (see article).
The rise of an economically powerful China—one less bashful about asserting its authority in Hong Kong—has coincided with growing gloom in the territory about its own economy. When measured by GDP per head, Hong Kong’s performance over the past two decades has been respectable. It is worse than other Asian tigers (and Ireland, the Celtic tiger), but better than almost everyone else. Yet its boom days are over. In the 1970s Hong Kong’s annual GDP growth averaged 9%; in the 1980s, 7.4%. But from 1998 to 2016 it averaged just 3.3%. And during Mr Leung’s tenure, the figure was 2.3% (for annual rates, see chart). Even the one notable growth area, tourism, contributes mainly low-paying jobs and a huge influx of mainlanders whom many Hong Kongers resent. They call them “locusts” for the frenetic way they shop.
A slowdown is inevitable as any fast-growing economy matures. Yet many people are disgruntled. Inequality is rising, soaring property prices make it hard to afford a flat (nearly half of Hong Kongers live in public housing), and general satisfaction is sharply lower than it was a decade ago.
The economy has long been dominated by the same conglomerates and increasingly elderly tycoons. Property development is the most conspicuous example. A few giants are allowed a lock on a lucrative market because property is the government’s chief source of taxation. But other industries, often related to the developers, also operate as monopolies, duopolies or cartels. They include supermarkets, power, ports and aviation. From nothing, Shenzhen has given birth to such tech giants as Tencent, Huawei and ZTE; entrepreneurs in Silicon Valley salivate over the Chinese city’s prospects. Hong Kong has no such energy. Preserving wealth trumps creating it. A seventh of Hong Kongers are poor. On the streets at night old women collect cardboard to make ends meet.
With pinched prospects and inequality on the rise, it is hardly surprising that many feel the government is out of touch. There was an underappreciated economic dimension to the dissatisfaction expressed in the “Umbrella” protests in favour of free elections that blocked several major roads for more than 11 weeks in 2014. Similar sentiment was evident in elections for the Legislative Council (Legco) in September, in which localists secured a fifth of the popular vote, as well as in the underwhelming public reception of Mrs Lam’s elevation.
In Beijing, Hong Kong’s political mood is interpreted as rank ingratitude at best, treason at worst. Both the central government and Hong Kong’s pro-Beijing elites long to turn Hong Kong back to what they like to call an “economic” city, putting politics back in the bottle. That is wholly to miss the point. China’s efforts to keep Hong Kong’s economy running as it did in colonial days have compounded the local government’s political problems today.
Under the British, the government was pro-business but not of business. Since 1997 business interests have been baked into the political system (Mr Tung, the first chief executive, was a shipping magnate). Conflicts of interest have multiplied. Cronyism has grown. To date, the tenures of all chief executives have ended in ignominy or failure. The government has been reluctant to foster change. It could have tried to broaden the tax base so as to reduce its dependence on property. To broaden its appeal, it could have sought to let political parties be represented in government. It has done neither.
In office, Mrs Lam will struggle to break with this legacy. Though a hard-working bureaucrat, her cosy relations with the central government undermine her credibility locally. She is prone to curious gaffes, such as admitting she did not know where to buy lavatory paper. Above all, she is struggling to bring together a competent administration. As a gulf of legitimacy grows between the government and the governed, able people from outside the bureaucracy are less willing to take cabinet positions. Mrs Lam can always recruit members of the civil service into political posts, but that drains a respected service of competent and experienced administrators.
One unwelcome consequence of the mess is that the baneful presence of the Liaison Office is even more likely to grow. As it is, the central government’s outpost has abandoned any pretence at remaining low key. It provides loans to businesses. It has bought up Hong Kong’s largest publishing house and book-chain owner. (Titles critical of the party have, of course, been removed.) It openly lobbied for Mrs Lam to be endorsed by Hong Kong’s tame election committee. Some analysts believe it influenced her decision to choose Hong Kong’s immigration chief—whose relations in that capacity with mainland authorities had been central to his work—as her future chief secretary, despite his lack of administrative experience.
One of these characters wields great power
The office’s representatives get pride of place at civic functions. And it backs candidates sympathetic to the Communist Party in elections to district councils and Legco. Last year the office’s chief, Zhang Xiaoming, allowed his calligraphy extolling moral strength to be auctioned to raise funds for the main pro-Beijing party, the DAB (he is pictured above at the event, wearing a blue tie). A businessman with mainland interests bid HK$18.8m ($2.4m) for the art. “And it was really bad calligraphy,” says a former official. Many in the democratic camp see the creeping arm of the Liaison Office, Hong Kong’s “second team”, as a breach of China’s promises to Hong Kong—and a possible conduit for mainland-style corruption.
For those Hong Kongers with the territory’s interests at heart, the past 20 years offer some lessons. One is that for all the Communist Party’s might, and a want of democratic representation, popular opinion—strongly expressed—counts for something. Mr Tung’s attempt to pass an anti-subversion law demanded by the central government led to huge protests in 2003, the bill’s shelving, and Mr Tung’s eventual resignation. Protests in 2012 stopped a move to foist on schools a programme of Communist-inspired patriotic education. And even though Mr Leung patiently wore down the Umbrella protests by refusing to make concessions, his actions fostered a younger generation of political activists, many of them teenagers. That generation identifies far less with the mainland than do those who witnessed the handover.
Localism may help to preserve some of what makes Hong Kong distinct, but its rise is creating fractures in the pro-democracy camp. Under pressure from localist radicals, moderates are finding it more difficult to compromise with the government. Hence their rejection of a political-reform package in 2014 that would have allowed universal suffrage in choosing the chief executive, but with only vetted candidates running. Localism has also encouraged hardliners in Beijing to treat the territory as a potential political threat. Mrs Lam will take over an administration that feels overwhelmed by such conflicting pressures. Once a gung-ho place, Hong Kong these days struggles even to put in place sensible rubbish-recycling policies or push forward oft-stalled plans for a world-class cultural district. The quotidian falls victim to broader ideological struggles.
For all the current protest-fatigue, those struggles are bound to continue. Under British rule, Hong Kong was often referred to as a borrowed place on borrowed time (a description inspired by the title of a classic book about the territory by Richard Hughes). Time still haunts it. Nathan Law, an advocate of self-determination who at 23 is Legco’s youngest member, points out that 20 years since the handover is also just 30 years until July 1st 2047, when all formal promises about Hong Kong’s autonomy are void. In May last year, protesters displayed a countdown in seconds to that date on Hong Kong’s tallest skyscraper; see picture. To Mr Law’s generation, he says, 2047 is not far away; he will still be in his prime. It is why, he argues, there is all to play for now.
Counting down to the next big date
The Communist Party and its Hong Kong backers are clear about how to play the game: restrain democracy and try to exclude from elections any candidate they deem to be sympathetic to independence. Chinese officials have been making it clear to Mrs Lam that they want the shelved anti-subversion bill to be revived; as they see it, such a law would be a useful weapon against separatists.
So Hong Kong needs a new form of politics that involves playing a long game cannily. Mrs Lam does not seem the kind of person to argue doggedly in defence of Hong Kong’s rule of law, its way of life or its right to have free elections. But both she and her critics must find the confidence to seek new ways of co-operating with China economically. That will stick in the craw of people keen to safeguard Hong Kong’s distinctiveness. Yet dogged opposition to everything China does will make the party all the more inclined to tighten control. Let the game begin.
