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There were those — this writer included — who thought there was a chance that when Britain ceded the old Crown Colony to China, it might be a case of the tail waging the dog. After all, Hong Kong was an island of law, stability, and progress on the edge of the great China swamp.
But that dream is evaporating. Hong Kong appears to be falling into the quicksand of corruption, arbitrary government, and even losing its once powerful economic modus operandi.
There are lots of telltale signs.
It was never any secret Tung Chee Hwa was chosen governor because, having bailed him out of bankruptcy, Beijing was installing their man. At issue was whether Tung would somehow be able to fend off the Beijing kleptocrats to preserve Hong Kong’s prosperity, not only for its own, but also as probably the best thing [at least economically] that happened to China in the Communists’ half century. It was a tricky role. And as some of us who had had contact with him earlier on suspected he might not be up to.
Without romanticizing British Hong Kong, it is clear that the erosion set in early. Old friends told me about narcotics trafficking between neighboring Kwantung People’s Liberation Army and Triad Societies even as Beijing was taking over. Last minute British efforts to install some primitive representative government moved backwards. The once pretty clean civil service is being purged — the resignation of Anson Chan, even though she was not a vociferous democrat nor a great mandarin, was a signal. Only the Chinese working class population knows but I suspect the horrendously difficult job of keeping local police from turning into petty extortionists, always a threat in those backalleys which the tourists never see, is failing, fast.
Two new developments, though, are what must be considered milestones on the road down. Tung is widely believed under great pressure from Beijing to ban the Falung Gong. The odd combination of religious fervor, apparently filling the ideological vacuum left by Marxist-Leninism nihilism, and traditional Chinese Tao health prescriptions, frightens Beijing’s New Class. It awakens memories of other mystical revolutionary groups that swept China in the nineteenth century.
But banning Falung Gong will not only mean Tung is taking one more order from Beijing against Hong Kong traditions of freedom of conscience. It will be another step in abandoning Hong Kong law for the chaos of the Mainland’s haphazard code.
In another arena, but tied, is a shift in Hong Kong economic policy under Tung and his not very respected new financial secretary, Anthony Leung — announced at the recent gathering of international capitalists, primed with Marco Polo dreams of huge Chinese markets and refusing to read any storm signals. Leung refused to make the blanket endorsement his predecessor, Donald Tsang, made only two years earlier, a restatement of the old Hong Kong economic panacea: free markets.
Of course, despite Milton Friedman’s endorsement of Hong Kong as the crystal pure exponent of unfettered capitalism, Hong Kong always had some government intervention. But choosing winners and losers has never been Hong Kong’s style. And as Tsang said then, and has always been apparent, Hong Kong without the benefit of bureaucratic planning made several complete and successful transitions over the past half century simply because of its people’s entrepreneurial abilities, and unpredictable conditions on the Mainland and in the world economy. That may have ended when the government plunged as a major player into a falling stock market, a role it still has not abandoned even with its profits from the earlier purchases.
This new trend comes as the government has had to reduce its estimates of economic growth this year — from 4 percent to 3 percent. It may get worse. Chinese exports that Hong Kong passes on to the United States are reeling from the downturn in the U.S. economy. And Hong Kong’s domestic economy had not recovered from the late 90s financial crisis in the Asian region to which Hong Kong ministers as entrecote, financial center and tourist center.
How far, one wonders, will an interventionist Hong Kong government be able to maintain independence of growing Mainland economic “guidance” — especially now with a falling yen and Japanese import restrictions cutting into China’s exports on another front? There will be renewed pressure for a Chinese devaluation. Are Hong Kong’s huge reserves sacrosanct in this environment? Nor can one rule out the influence of Beijing’s Shanghai Clique in trying to hobble HK’s competitive advantages. [Having built one huge white elephant complex thinking it was the automatic way to regain its prewar position as financial capital of East Asia, Shanghai is now talking about building another set of buildings.]
Thus the bridal veil is slipping away — imperceptibly, perhaps, to those in the lavish hotel lobbies, and, apparently, to those in the boardrooms in New York.
Sol W. Sanders, (solsanders@abac.com), is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International.
He writes weekly for World Tribune.com.