UNIVERSAL SUFFRAGE MAY BE COMING, BUT HOW?

By Robert Keatley, Editor, April 2008

Hong Kong’s political class spent much of the year’s early months digesting the Chinese decision to allow introduction of universal suffrage over the next decade or so. But this brought no clear decisions about how or when to start doing so, even though initial steps are supposed to be under way before 2008 comes to an end.

Meantime, economic news caused some local anxiety as global problems had their impact. The stock market yo-yoed in line with Wall Street, just as the Hong Kong dollar fell with the U.S. dollar on world currency markets (the two are pegged). This brought Hong Kong its sharpest price rises for a decade and some worries about the future. Following an economic growth rate of 6.3% in 2007, the outlook for this year is 5% or perhaps less. But the mood is hardly gloomy: Hong Kong also had its lowest unemployment rate in 10 years, exports rose 8.2% last year, retail sales soared 23% in January and yet another real estate boom is under way—complete with record prices for luxury flats.

This brisk economic activity brought the government more revenue than it seemingly knew how to spend wisely. Faced with a record budget surplus of HK$115.6 billion (US$14.8 billion), four times earlier predictions, it announced among other things a one-time 75% cut in salaries and real estate taxes, created a new HK$18 billion (US$2.3 billion) university research fund and abolished duties on beer and wine. The official justification for the latter move was to promote Hong Kong as an international wine trading center, rivaling London; it reportedly had nothing to do with the fact that the financial secretary is a wine connoisseur.

But there was only limited progress on a problem that increasingly bedevils more and more of Hong Kong society—that of air pollution. It’s an issue that has no short-term solution, and years of fitful negotiations with the government of neighboring Guangdong Province have produced some agreements in principle about joint action but few tangible results to date. In fact, during the first year since signing a cross-border agreement to make major pollution cuts by 2010, emissions in the industrialized Pearl River Delta rose 18%, according to an official study. Because the prevailing winds blow south, this helped give Hong Kong some of its most polluted days on record. And there were concerns that a new US$5 billion oil refinery near Guangzhou could make things worse when it comes on line.

Near the quarter’s end there also were temporary fears about a flu outbreak. After three children died and 184 other influenza cases were reported in early March, authorities closed all pre-schools and elementary schools for two weeks, including the regular Easter holiday. Medical officials called the move preventative and said the school closures should break the transmission cycle. Three strains of influenza were circulating in Hong Kong, but doctors said none was the especially virulent version known as bird flu. Apparently the move worked, for schools reopened March 31.

The political debate was prompted by a December 29 decision of the Standing Committee of the National People’s Congress (the Chinese parliament) that for the first time set a timetable for introducing long-promised universal suffrage. But it made no promises. The decision said elections for chief executive in 2017 “may” be based on a free vote by all those registered, rather than by an 800-member Beijing-backed committee as at present, while all Legislative Council (Legco) seats in 2020 “may” also be chosen by universal suffrage. At present, half represent interest groups known as functional constituencies and tend to take policy guidance from officials. The decision also said some modest interim moves to widen the electoral base must be in place for elections in 2012. How to do all this was left to Hong Kong, but subject to final approval by the NPC.

The inconclusive political debate within Hong Kong focused on three areas. The first concerned the schedule. Most pro-democracy politicians, and most Hong Kong people if public opinion polls are correct, would rather have free voting in place by 2012 when both chief executive and Legco elections are scheduled—even though China flatly ruled it out. A January march in favor of the earlier date attracted 22,000 demonstrators, organizers claimed, though police put the figure at 6,800. Despite their discontent, however, most pan-democrats seemed resigned to the Beijing-decreed timetable because changing it is beyond their control.

For example, Anson Chan Fang On-sang, former government chief secretary and a Legco member, joined the rally but said the real task is to “sit down as soon as possible and discuss how to implement real universal suffrage” for the 2017 and 2020 elections. And Bruce Liu Sing-lee, acting chairman of the Association for Democracy and People’s Livelihood, called on fellow democrats to start working out new rules for the future because the NPC decision “is a reality. More rallies and hunger strikes will not change it.”

A second topic of debate concerns what to do about the planned 2012 voting. Hong Kong has several choices. It could expand the 800-member election committee, perhaps to 1,600, and introduce more diversity. It could expand Legco to 70 seats or so, though half would still have to be chosen by functional constituencies. And, perhaps more importantly, it could revise voting rights in those constituencies in ways that could significantly broaden the electoral base—such as by giving voting rights to many more individuals in each occupation group. The December 29 decision allows considerable leeway but mandates that some reforms must be in place by 2012 if full universal suffrage is to follow. Some analysts expect the final version to be similar to modest reforms proposed in 2005 by Chief Executive Donald Tsang Yum-kuen but rejected in Legco by the pan-democrats because they included no firm schedule for universal suffrage.

The third topic of discussion dealt with what to do in 2017 and 2020; again, the December 29 decision leaves many key details for Hong Kong to decide. A central issue concerns functional constituencies—should they be abolished outright, or reshaped into an upper legislative house or other new form? Many business and pro-Beijing leaders hope to keep some version of the current system, hoping it would give them the political power needed to block populist social legislation that might lead to higher taxes or new regulations. The pan-democrats, meanwhile, want to fill all seats by straightforward contests in geographical constituencies with no guaranteed places for the wealthy or politically well-connected. They also want to ensure that any future election committee that vets candidates for the chief executive post doesn’t automatically reject everyone who lacks advance approval from Beijing.

With universal suffrage so many years away, most of these decisions face no pressing timetable. But Chief Executive Tsang has insisted that some preliminary reforms for the 2012 voting be on the table by yearend, so the outlook is for increasing political controversy in the coming months. Already, several pro-democracy politicians have said they oppose increasing the size of Legco because that would create new functional constituencies; they want to abolish those seats, not add to them. The ongoing debate could test just how free a hand China will give Hong Kong as the process moves forward.

Meantime, the budget largesse had its critics. Most focused on the absence of new programs to meet rising social demands, notably healthcare for an aging population. Finance Secretary John Tsang Chun-wah said he didn’t want to initiate costly new spending plans that might not be funded comfortably under the government’s legal requirement to seek balanced budgets. He said he’d rather return any temporary surpluses to the people through tax cuts and rebates. But his own projections showed budget surpluses rising for the next several years, suggesting more welfare could be entirely affordable. Critics said there were just too many giveaways to the already affluent at a time when the number of Hong Kong citizens living below the poverty line was rising shapely. This issue is likely to help shape the political debate as Hong Kong revises its electoral system.

Just where the economy was headed remained uncertain. Any decrease of American (or other) imports from China will affect the city directly, given its role as an entrepot and source of business services. Nearly all analysts predicted a slowdown for 2008, but not a disastrous one. And the financial sector still hoped that a derailed “through train” would get back on track; that refers to China’s tentative plan to allow its citizens to invest directly in Hong Kong-listed shares under certain restrictions. Such investments could give the Hong Kong market an enormous boost while putting some of China’s enormous private savings to work without permitting massive capital flight. So far, though, political and technical problems inside China have delayed the program.

In any case, two studies showed that many Hong Kong citizens continue to do well. The annual Forbes Magazine headcount of billionaires found 22 in Hong Kong, five more than last year. (Once again, Li Ka-shing led the list for all of East Asia.) And a survey by Citibank Global Consumer Group said Hong Kong has 410,000 people—about 8% of the adult population—with liquid assets worth HK$1 million or more, up from 270,000 a year earlier.

The biggest gain on the environmental front involved Hong Kong’s two electric power companies, the leading sources of the city’s home-grown pollution. They signed a complex rate-setting system with the government that lets them charge more if pollution falls below agreed levels but brings rate cuts if pollution exceeds these goals. Analysts called this bonus-and-penalty plan a good model for others to follow. Environmentalists also welcomed a proposal to impose stricter limits on new building in the mid-levels area, partly to preserve air flows that can dissipate pollution. But most conceded any major gains will require tougher measures in nearby Guangdong, and so far these have not been forthcoming.

In any case, Hong Kong is likely to endure more construction dust for many years if planned new projects go ahead. A flurry of governmental agreements and contracting pushed along several major projects, all of them multi-billion dollar ventures. These include: a 30-kilometer highway bridge connecting Hong Kong, Zhuhai and Macao; a new MTR (subway) line from Central to Shatin and extension of another line; a new MTR line around southern Hong Kong island; a railway between Hong Kong and Shenzhen airports; a new cruise ship terminal and other development on the former Kai Tak airport; a new government headquarters at Tamar, near Central; and a Wan Chai bypass freeway. Only the latter plan was stymied at least temporarily; a court ruled that its construction would violate laws to protect Hong Kong harbor. A final ruling will come later.

All this apparently caused the New Territories village of Tin Shui Wai—whose name suggests stagnant water—to seek its own share of affluence. Local leaders proposed building a nine-story geomancy tower in the shape of a calligraphy brush in hopes it would improve the town’s feng shui. They also proposed holding a public contest to pick a new town name more suggestive of prosperity.