Category Archives: Hong Kong

Lam Lacks Much Room For Manoeuvre

Carrie Lam, seen at the Asia Society, New York on June 9, 2016 when she was still Chief Secretary for Administration of Hong Kong. Photo credit: Elsa Ruiz/Asia Society. Licenced under Creative Commons.

CARRIE LAM, HONG KONG’S newly elected chief executive (seen above), has a nigh impossible task in satisfying the desires and wishes of both her masters in Beijing and her constituents in Hong Kong, or more precisely, those who would be her constituents had they a vote.

It is equally nigh impossible to imagine that Lam will not prioritise those of the first over those of the latter. She has said that ministers in her administration would “be in charge of their own work” rather than taking their cue from Beijing’s local representatives. However, even if they are not following the script word for word, they will certainly follow the gist.

First, though, she will need to repair the damage done by her predecessor, the hapless and unpopular CY Leung. His five years in office were marked by civil discontent over political reform and an increasing chaffing on Beijing’s part at Leung’s inability to quell divisiveness that was evident not only on the streets of Hong Kong.

As Leung’s chief secretary, Lam will arrive carrying some of her predecessor’s baggage. However, before that, she was a well-regarded career civil servant. That may stand her in good stead, particularly with the Beijing-friendly business establishment whose support she will quickly want to consolidate, probably through more deregulation and tax reform. They (and Beijing, which backed her) will expect her administration to be more competent than that of Leung. She also comes without the scandals that dogged his term in office.

Winning over the opposition in the Legislative Council let alone outside it will be a different matter. It doubts that Lam will compromise on the key political reform issues that stalled under Leung. Possible education reform and more construction of affordable public housing — much needed though it is — will not be enough to offset that.

Lam also suffers from the constraint on every Hong Kong chief executive, the absence of a popular mandate. Hong Kong’s population of more than 7 million is reduced to an electoral committee of 1,194 voters that is more, if not entirely, representative of its pro-Beijing business establishment than the overall population.

A greater constraint lies 2,000 kilometres to the north. Beijing will not tolerate any consideration of the political and constitutional reforms the opposition wants. Independence is no more on the cards for Hong Kong than it is for Taiwan.

Many Hong Kong residents, though, while realistic about the realpolitik of their situation, are protective of the autonomy granted to them for 50 years under the ‘one country, two systems’ agreement by which the United Kingdom returned its colony to China in 1997. They do not appreciate the efforts of Beijing is making to accelerate the full integration of Hong Kong into China before 2047.

The fear is that many of the protections and freedoms granted under the Basic Law, such as access to the courts, private property rights and freedoms of speech, association and assembly will start to erode at the same pace.

As they have shown, some at least are ready to take to the streets to defend those rights. Even worse than an independent Hong Kong, by Beijing’s lights, would be a Chinese Hong Kong that harboured a centre of opposition to the Party. Lam’s term of office will take Hong Kong to the half-way mark to 2047. The trick she will have to pull off is knowing how much reform to allow to sustain popular trust in her administration without pointing even a toe in either the splitist or dissident direction.

Hong Kong’s descent into being just another corner of China of middling importance continues.

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Is Hong Kong’s Peak Behind It?

Hong Kong skyline, September 2014

NEXT YEAR SEES  the start of the 20th of the 50 years during which the 1997 handover agreement specified that Hong Kong’s way of life would remain unchanged. But with three decades still to go, ennui has settled over the city.

This disquiet goes beyond the chilling of civil rights by authorities that seem far distant from the mass of the population. It is a more existential concern.

Hong Kongers are not living in a place that, as many had once pragmatically expected, would inevitably become just one more big Chinese city but which the motherland would still want for its vibrancy and as a gateway to a wider world. They are, instead, living in a place that matters less and less to a China that has more and more direct access to the world (and bigger things to worry about than 1,100 square kilometers of rocky land on its southern coast).

Hong Kongers greatest fear has become that they are just being left to atrophy.

The chart below gives a sense of the economic driver behind that. As China’s economy racked up year after year of double-digit growth, it was inevitable that Hong Kong would seem smaller and smaller in comparison. But the diminution still points to a reality. Hong Kong remains a trade and investment bridge between China and the rest of the world, but it is no longer the only or most important one.

Hong Kong's GDP as % of China's, 1960-2014

 

Hong Kong’s entrepot role is longstanding, though where once merchandise trade was at the forefront, today it is capital. The city’s rule of law, functioning markets and financial institutions, and supporting social and business infrastructure made it a regional financial centre that was once essential to China.

But over the years, Shanghai has been growing as a rival. In the latest Global Financial Centres Index, Shanghai moved up five places to 16th while Hong Kong fell one to fourth, trading places with Singapore. In in the fullness of time, Shanghai, which in GDP terms is already about one-third larger than Hong Kong, will eclipse it as China’s financial centre. That will undermine Hong Kong’s utility as a regional financial hub.

The same will likely be true for Hong Kong’s recently adopted role as shopping mall for mainlanders if China is successful in rebalancing its economy over the long term towards domestic consumption.

Hong Kong will by then have had to reinvent itself–and Hong Kongers are nothing if not inventive. However, even though Hong Kongers have developed an identity of their own, independence as a Singapore-like city-state is a non-starter politically, as all but the tiniest slither of the population understands. A Taiwanese-like model of arm’s-length separation despite being joined at the hip is perhaps the best that can be hoped for–and even then the arm’s-length separation will be gone in barely 30 years. Little wonder there is a feeling of listlessness at that prospect.

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Beijing Drains The Energy Out Of Hong Kong’s Protests

BEIJING HAS GOT its Occupy Central protesters to where it wants them. The energy is draining out of the broad body of protest against Beijing’s insistence that it will select the slate of candidates from which Hongkongers can elect their new chief executive in 2017. The remaining rump, however radicalized it becomes, can be marginalized.

Beijing knows how to crack down on such dissenters. Widespread popular discontent with government is an altogether trickier and more threatening proposition for the Party.

Fears that Beijing might send in the tanks to break up the protest camps in a deadly echo of 1989 in another place have proved unfounded. But the iron grip of the authorities, exercised through a mix of police force and private court injunctions, has been steadily and unsparingly tightened.

The streets of Admiralty, Causeway Bay and Mong Kok have largely been cleared to allow daily commerce to flourish unhindered once more now popular sympathy for the demonstrators has ebbed. Beijing has also skillfully separated the student and civil activist wings of the protests.

The surviving student leaders threatening a hunger strike can be bought off with face-saving ceremonial concessions without authorities needing to cede anything of substance, not that any political concessions were ever likely. In the equally unlikely event that face-saving is rejected and the hunger strike produces a martyr, it shifts the focus of the protest, and the blame from Beijing’s handling of the situation to Hong Kong’s, and offers Beijing the opportunity of some housecleaning of Hong Kong officials should it so choose or need.

Enabling legislation still has to go through the Legislative Council so there will be more possible points of conflict before 2017 that could require some sacrificial official lambs, and especially. If international business confidence in Hong Kong is at risk.

However, the longest shadow of the Hong Kong protests falls over Taiwan. Last weekend’s local elections on the island underlined the extent of popular concern that Taiwan was rushing too quickly towards potential reunification.

Events in Hong Kong will have done little to encourage many in Taiwan that there is any need to hurry or that the political umbrella Beijing wants to put over the growing cross-Strait economic ties is even desirable.

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Hong Kong’s Umbrella Protest: Tanks For The Memory

PRESIDENT XI JINPING will not want a photograph of even a single Hongkonger facing down a line of PLA tanks to be the iconic image to emerge from the current Umbrella protest in the city. However, sending in the tanks, whether metaphorically or not, remains an option for the Party leadership in Beijing which has to suppress this protest against its monopoly on political power in short order.

While Hong Kong in 2014 is in a different time and place to Beijing in 1989, Beijing’s combination of cajoling condemning and cudgeling hasn’t yet done it. Xi may be prepared to wait out matters in the hope that the internal divisions among the demonstrators will eventually break their protest apart. Yet, as our man in Tiananmen Square in 1989 pointed out to us, there is a terrible symmetry taking shape: a tidy protest (demonstrators street sweeping in 1989; plastic bottle recycling in 2014) turning violent and unruly before being brought to a forceful end by the authorities.

The Party has to weigh the internal and external costs of shutting the protest down forcefully. One external consideration is the international sanctions it would bring. Beijing has been carefully following the response of the U.S. and Europe to Russia’s military intervention in Ukraine. It may conclude from that that those are the least of its worries. More concerning would be the effect of international confidence in Hong Kong as a place where China business can be done with Western legal safeguards. That would be shot, at least for a while, but there are internal municipal constituencies within China that would be happy for Hong Kong to be taken down a peg or two.

All of that pales against the internal calculation. Hong Kong is both a part of China and apart from it. One country; two systems. If its 50-year post-colonial assimilation agreement was seen from the south side of the Sham Chun River as prologue to the future — a chance for Beijing to experiment along the well-trodden development path of industrializing nations, letting the Party learn how to handle a growing middle class developing expectations of a greater voice in how they are governed and more say over their economic interests — then from the other side of the river that has just become to look like an existential threat. The further north you go, the acuter that threat seems.

The tinder that sparked the current demonstrations is Beijing’s requirement that no candidate may run in a Hong Kong election who has not in effect been nominated by the Party. Protesting Hongkongers want anyone to be allowed to stand. That is a long way from demanding reform to the elections themselves, which are a limited expression of popular democratic will at best. But it is a direct challenge to the Party’s notions of tight political control. And Hong Kong provides a beacon for the millions of urban middle class Chinese on the mainland where there is widespread dissatisfaction about the way they are governed, especially by local and municipal officials.

That, in turn, is a long way from saying that there is a groundswell of support for U.S. or European style democracy in China. There is not on any great scale, anymore than there was in Japan and South Korea at a similar stage of their economic development, even if democracy becomes shorthand for political reform, and a shorthand that is often misread in the West. But the bargain of rising economic prosperity in turn for docile political compliance no longer looks as attractive to many Chinese as it once did when they were poor.

The experience of industrialization has always been harsh for those living through it. For most, it is a hard daily slog in large, crowded cities with all the accompanying quality of life issues from adulterated food to killingly dirty air. Officials living high on the hog from corruption and cronyism sits ill with that. For Party bureaucrats the change is no less unsettling as they lose control of their economic levers of command and control.

Attempts by authorities to censor news of what is happening in Hong Kong are being only partially successful at best. How Xi settles his current Hong Kong issue will reverberate in the mainland for years to come, and especially if it is with tanks.

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Gauging Hong Kong

THE TURNOUT FOR Hong Kong’s annual July 1st rally in support of the territory’s continuing autonomy was the largest in a decade.

This year’s protest had added appeal as a way for Hong Kongers to show their distaste for Beijing’s recent white paper on the former British colony. This was read as foreshadowing tighter political control from Beijing and a less independent judiciary in a more-rapid-than-expected convergence of the two systems in the “one country, two systems” arrangements that now prevail.

Such proposals do not suggest that Beijing has a sure feel for Hong Kong’s political pulse. Hong Kong’s ultimate destiny is to be just another big city in southern China. Getting there will be bumpy unless Beijing demonstrates a more deft political touch.

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$8.6B HK-China Rail Link Approved

The controversial $8.6 billion rail link from Hong Kong to Guangzhou where it will join China’s high-speed rail network has had its funding approved by Hong Kong’s legislature, though the protests against it continue. Objectors say it will displace many residents in the New Territories and cause environmental problems for unproven economic benefits. The link is due to be completed by 2015. Once it is built,  Shanghai will be an eight-hour journey from Hong Kong and Beijing 10 hours. The railway is one of 10 mega-infrastructure stimulus projects that Hong Kong’s government is planning, including a bridge to Macau.

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