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The System Works – More or Less

By Frank Ching

President Jiang Zemin, at the glittering handover ceremony in the Hong Kong Convention and Exhibition Centre on the night of June 30, 1997, reiterated the promises that China had made to Britain, to the international community and to the people of Hong Kong ever since the signing of the Sino-British Joint Declaration in 1984.

"After the return of Hong Kong," President Jiang pledged, "the Chinese Government will unswervingly implement the basic policies of 'one country, two systems,' 'Hong Kong people administering Hong Kong' and 'a high degree of autonomy' and keep the previous socio-economic system and way of life of Hong Kong unchanged and its laws basically unchanged."

Has China kept its word? This is a difficult evaluation to make because many subjective elements are at stake. How high, for example, is "a high degree of autonomy"? Where does "one country" end and "two systems" begin? And who decides which Hong Kong people will administer Hong Kong?

The answer to the last question is easy: the Chinese Government decided early on that shipping magnate Tung Chee-hwa would become the first Chief Executive of the Hong Kong Special Administrative Region. True, there was a 400-member Selection Committee that was given the task of choosing the first chief executive from among Tung, former Chief Justice T.L. Yang and business tycoon Peter Woo. Although voting was by secret ballot, the outcome was never in doubt.

To be fair, immediately after the handover Beijing bent over backwards not to interfere in Hong Kong affairs. It cut back on the number of officials who could visit Hong Kong. No one could go who did not have official business and those who had official business had to leave once their business was done. In fact, to prevent interference by mainlanders, Beijing even cut back on the number of tourists who were allowed to visit. Ironically, this period coincided with the Asian financial crisis, when Asian tourists stopped arriving, and Hong Kong had to plead with the mainland to send more tourists.

As to where "one country" ends and "two systems" begin, that is still a work in progress. Tung said in June 1997, even before assuming office: "What is good for Hong Kong is actually good for China, because we do contribute to China's modernization. And what is good for China is very good for Hong Kong. The long-term interests of China and Hong Kong are the same, but in the short term there will be differences."

However, not everyone was convinced of this. Certainly, within Hong Kong, there were those who felt that for "one country, two systems" to work, China must be kept at a distance. For example Anson Chan, who was appointed Chief Secretary by Chris Patten, the last British governor, and was kept in place by Tung, apparently wanted to keep the mainland at arm's length to safeguard Hong Kong's autonomy.

While that sentiment was entirely understandable, it was a losing cause. Ever since China opened up in the late 1970s and early 1980s, Hong Kong's labor-intensive manufacturing sector had gradually migrated across the border to take advantage of low land and labor costs while manufacturers that remained in Hong Kong focused on hi-tech, high-value products. The integration of the Hong Kong and mainland economies was inevitable. To survive, Hong Kong had to make itself indispensable to the mainland with its shipping, banking, insurance, legal, accounting, financial and other services.

In fact, the Hong Kong economy and that of neighboring Guangdong province developed a symbiotic relationship with increased flows of people, freight, capital and information between them. In 1998, the government set up the Hong Kong-Guangdong Cooperation Joint Conference as a high-level channel governing communications between the two sides.

After Anson Chan's resignation in 2001, when she clearly had lost China's favor, Hong Kong's economic relationship with the mainland developed rapidly. The Hong Kong-Guangdong Cooperation Coordination Unit was set up in August 2001 to coordinate and spearhead initiatives aimed at fostering closer links between the two places and to facilitate joint development of the Pearl River Delta region. Today, Hong Kong-linked companies employ 11 million people in Guangdong province, many more than in Hong Kong itself.

In 2002, Beijing offered a Closer Economic Partnership Arrangement (CEPA) to Hong Kong to help revive the economy of the SAR, which had been faring poorly ever since the Asian financial crisis.

Because of CEPA, many Hong Kong products now enjoy tariff-free status. In addition, Hong Kong professionals are allowed to offer their services on the mainland.

Even more important, Beijing launched the Individual Visit Scheme for mainland residents to visit Hong Kong. In 2004, a record 14 million mainland visitors arrived in Hong Kong, of whom 4.2 million arrived under the individual traveler scheme, bringing in additional tourism receipts of around HK$6.5 billion. Previously, mainlanders could only visit Hong Kong as part of tour groups. To a large extent, the current economic recovery is attributable to the big influx of mainland tourists.

The decision has also been made to construct a 29-kiloneter bridge that will link Hong Kong with the former Portuguese enclave of Macau (now also, like Hong Kong, an SAR) and Zhuhai on the mainland at an estimated cost of HK$51.84 billion. This will greatly improve transport between Hong Kong and the west side of the Pearl River Delta.

In his first policy address in October 2005, Chief Executive Donald Tsang sounded almost like his predecessor when he asserted: "A good relationship between the Central Authorities and the SAR is the cornerstone for the successful implementation of 'one country, two systems.' It is also a prerequisite for our sustained economic growth and constitutional development."

This is a far cry from the idea that Hong Kong has to keep the mainland at arm's length. There is growing awareness in Hong Kong that the territory's future cannot be separated from that of China. As far as the economy is concerned, Hong Kong is very definitely part of "one country."

Members of the Legislative Council concerned about the need to maintain "two systems" have called on Chief Executive Tsang to brief Legco after each trip to Beijing, but he has refused. Mr. Tsang is also reported to have made unannounced trips to the mainland, and it is not known what it is that he discusses with mainland officials on these trips.

This is a sensitive issue because it is often unclear whether decisions announced in Hong Kong are actually made there. In 1998, for example, the government decided not to prosecute newspaper owner Sally Aw-a member of the Chinese People's Political Consultative Conference, China's top advisory body-even though the Independent Commission Against Corruption had named her a co-conspirator in a scheme to defraud advertisers by inflating the circulation figures of the Hongkong Standard. Two serving senior executives and a former senior executive were charged and found guilty. There was speculation that she was not charged because of her China connections.

In 1999, the government came under fire for "inviting interference" by asking China's State Council, or cabinet, to seek an interpretation of a provision in the Basic Law by the National People's Congress Standing Committee. The government said a decision by Hong Kong's Court of Final Appeal would open the floodgates to 1.6 million mainland immigrants. The Chinese authorities obliged and the Hong Kong judgment was overturned.

Under the mainland's system, the National People's Congress Standing Committee, not the courts, is the authoritative body for interpreting law.

The following year, the election of pro-independence candidate Chen Shui-bian as Taiwan's president came as a blow to Beijing. This was reflected in its handling of Hong Kong. One senior mainland official in Hong Kong warned journalists not to report Taiwan independence news while another advised businessmen not to do business with pro-independence Taiwanese. Although such remarks seemed to some to be tantamount to infringing on press freedom and the freedom to do business-rights protected by the Basic Law-the Hong Kong government did nothing.

In 2001, when Tung was in his fourth year, the press began to speculate on whether he would serve a second term. When reporters asked President Jiang, he strongly affirmed his support for Mr. Tung's re-election. Subsequently, so did Premier Zhu Rongji, Vice Premier Qian Qichen and other senior officials. It was clear that the Chinese government wanted him to continue in office. Not surprisingly, no one came forward to contest the position and Tung was elected unopposed. To some, this looked very much like interference by the central government in Hong Kong's affairs. Of course, since Beijing has the authority to appoint the chief executive, it can argue that it has a legitimate interest.

Article 23 of the Basic Law provides that the Hong Kong Special Administrative 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 political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies."

Ever since the Basic Law was promulgated in 1990, there had been apprehension in Hong Kong that implementation of Article 23 would result in the curbing of rights and freedoms. The Tung administration took no action in its first term to implement the article but, in September 2002, the government published a consultation document containing its proposals for implementing Article 23.

Soon, the government came under criticism from lawyers, academics and the media for not having taken a minimalist approach but had gone well beyond what Article 23 required. Many academics asked the government for a white bill-published for public consultation, unlike a blue bill, which is introduced into the legislature-but Secretary for Security Regina Ip, who was responsible for shepherding the legislation through the Legislative Council, adamantly refused. Partly because of her abrasive nature, a situation arose whereby many members of the public as well as legislators felt that the government was simply going to steamroller its bill through, given that it had enough votes in the legislature.

In fact, the government announced that the measure would have to be adopted on July 9, 2003, the last sitting of the legislature before its summer recess. Opponents of the bill organized a march on July 1, the sixth anniversary of the establishment of the Special Administrative Region and thus a public holiday.

While the organizers were hoping for a turnout of 100,000, well over half a million people actually came out to march, the biggest such outpouring of public sentiment since the Tiananmen Square massacre in June 1989. Many of the marchers were professionals and other members of the middle class.

In the aftermath, Tung made three major concessions by agreeing to delete or amend three provisions which the government had previously said were absolutely vital. But on July 6, James Tien, chairman of the Liberal Party, resigned from the Executive Council and told Chief Executive Tung that his party would no longer support the national security legislation. Now without the votes to push the bill through, the government had no choice but to shelve it.

Taken aback by the sheer size of the demonstration, the central government sent numerous people to Hong Kong to study the political situation. It realized that Tung was not in control and feared a democratic majority in the legislature after the September 2004 elections. Hong Kong's democrats made use of the momentum created by the huge protest to press its demand for universal suffrage at the earliest possible date: 2007 for the chief executive and 2008 for the legislature.

The central government was silent for months but, by February 2004, it was clear that Beijing was not going to go along with the democrats. Chinese officials openly questioned the patriotism of Hong Kong's democrats and Martin Lee, founding chairman of Hong Kong's Democratic Party, was denounced as a traitor.

In April, the Standing Committee again interpreted a provision of the Basic Law. While the language in the Basic Law indicated that Hong Kong could initiate the process to adopt universal suffrage as the means for electing the chief executive and decide on its own when to elect the legislature by universal suffrage, the interpretation, effectively an amendment, asserted that approval by the National People's Congress is needed before Hong Kong could even begin the process. The Standing Committee then issued a Decision ruling out the possibility of universal suffrage in 2007 and 2008.

China's wariness over allowing full democracy for Hong Kong stems largely from its fear of losing control over the territory. Unlike Taiwan, there is no separatist movement in Hong Kong, which depends on the mainland for food and water. But a genuine democracy could result in the election of someone not acceptable to Beijing. While the Basic Law says the ultimate aim is the selection of the Chief Executive by universal suffrage, it also stipulates that nomination of candidates shall be "by a broadly representative nominating committee," a process which may allow Beijing to screen out unacceptable candidates. Moreover, Beijing is apprehensive that universal suffrage in Hong Kong will lead to demands from within the mainland for democracy.

Yet another interpretation of the Basic Law was made in April 2005 after Tung's resignation as Chief Executive the previous month. The Standing Committee decided-contrary to Hong Kong legal opinion-that the new chief executive would not have a five-year term but would simply serve out the remaining two years of Tung's second term.

Beijing's willingness to accept Donald Tsang as chief executive came as a surprise to some people, especially Hong Kong's leftists, because Tsang–like Anson Chan–is a product of the British colonial system. In fact, he was knighted by Prince Charles on the eve of the handover, although he does not use his title in Hong Kong. Beijing's reasoning seems to be that as long as he is an effective chief executive, it makes little difference what his background was.

On his part, Tsang announced after he became Chief Executive that not only would he personally make frequent visits to the mainland, he would promote contacts and exchanges between senior Hong Kong officials and the central government. "All principal officials and permanent secretaries will visit Beijing and other places in the mainland more frequently to enhance communication and mutual understanding and to engage in discussions on substantive issues," he said. Hong Kong officials, he said, should become familiar with mainland affairs and major national policies.

On a political level, Mr. Tsang has announced that the Government will forge closer ties with Hong Kong deputies to the National People's Congress as well as Hong Kong members of the Chinese People's Political Consultative Conference, the mainland's highest-level advisory body, and give them a bigger role.

The Hong Kong government, it seems, is as pragmatic as the Chinese government and will work with the central authorities as far as it is able. Beijing continues to decide which Hong Kong people will administer Hong Kong. The various interpretations of the Basic Law have limited the "high degree of autonomy" promised to Hong Kong. However, Beijing can still claim, with some validity, that "one country, two systems" is working-in a fashion. Hong Kong Journal

About the Author
Frank Ching worked for The New York Times in the late 1960s and early 1970s, editing stories about China. He joined The Asian Wall Street Journal when it was launched in 1976. In 1979, when the United States and China normalized relations, he opened The Wall Street Journal's bureau in Beijing. He thus became one of the first four American newspaper reporters to be based in China since 1949.In 1992, he joined the Far Eastern Economic Review, where he wrote a weekly column "Eye on Asia," in which he commented on political developments around the region. At present, he is Senior Columnist for the South China Morning Post in Hong Kong. Since 1994, he has also hosted a weekly current affairs television program, "Newsline."

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