[Analytics] Hong Kong: the end of an era

Whatever turn events will take in Hong Kong, there is one reality that cannot be discounted: Hong Kong is in China. It is to this geopolitical reality that the territory owes both its prosperity and elements of its current predicament, and it is this reality that will, when push comes to shove, override any other considerations in determining the territory’s future. Alexander Casella specially for the Asia Times.

Hong Kong’s prosperity over the decades has in essence been due to a number of factors, the most important of which was its insulation from the turmoil that prevailed in the mainland. This included both the Chinese Civil War and the subsequent spasms that convulsed the Communist Party once in power, such as the various rectification campaigns, the Great Leap Forward, and the Cultural Revolution. This insulation provided Hong Kong with stability, continuity and above all predictability.

What ensured that this regimen would endure after the Communists came to power on the mainland was the fact that, unlike Taiwan, Hong Kong never claimed to be another version of China. Not having this ambition, Hong Kong never represented an alternative to Communist Party rule. In this context colonial status was a plus in the sense that a valid claim could be made that Hong Kong did not represent another model for China but rather a portion of Chinese territory temporarily administered by foreigners.

The nature of this administration had much to do with its accomplishments. Unlike Chris Patten, who deluded himself into believing that he was the governor of a British colony, his predecessors, while abiding by form, were in essence the general managers of an emporium. What emerged was a social framework based on a reasonably efficient government administration, on corruption being kept within limits and, rather than on the mirage of “democracy,” on the scrupulous and all-encompassing respect for the rule of law.

This convergence of factors would not have sufficed to make Hong Kong what it was had it not been for its very quintessence. Hong Kong is a Chinese city born of Chinese work, Chinese entrepreneurship and Chinese creativity. Britain provided the framework, but the substance was Chinese. The question today is whether substance and framework have, over time, not merged into one delicate balance in which the erosion of one has unavoidable consequences on the other.

Historical context

There were two seminal dates in the history of Hong Kong. The first was October 1, 1949, which saw the proclamation of the People’s Republic of China. By its ideological inclination the new regime could have been expected to demand the return of Hong Kong to Chinese sovereignty. However, there was also a treaty due to expire in 1997 regarding the lease to Britain of the New Territories, and the government in Beijing professed to respect treaties, even those categorized as “unequal.”

In addition, Hong Kong provided China the only access to the West at a time when the country was literarily under siege by a US-led coalition of nations. Thus both for practical and legal reasons Beijing put up with the presence of a British authority in Hong Kong, and even more so as the colony did not represent a political threat to the regime.

The second seminal date for Hong Kong was July 1, 1997, when the colony of Hong Kong and the adjacent New Territories were retroceded to China to become a special administrative region (SAR) of China under a “one country, two systems” formula, which would preserve the former colony’s autonomy.

In purely practical terms there was not much that China stood to gain from the retrocession, and there was even less that Britain stood to lose. Likewise, had the population of Hong Kong been consulted, it is highly likely that a majority would have preferred the certainty that would have come with a continuation of British rule than the uncertainty that came with retrocession. Thus for the average inhabitant of Hong Kong, the handover was in no way perceived as “liberation” and certainly did not electrify his or her patriotic fiber.

But for the leadership in Beijing a continuation of British rule in Hong Kong, which was seen as a leftover from the times the Western powers had invaded China, was not even to be considered.

The concept of “one country, two systems” had originally been conceived for Taiwan, where its relevance, at least on paper, appeared plausible for a number of very concrete reasons. Not only had Taiwan a functioning and well-rooted government and political parties but the patriotic fiber that fueled it was very much alive. It also had a sizable defense force, a strong economy and, last but not least, being an island was physically insulated from mainland China. None of these characteristics applied to Hong Kong.

Moreover, had the substance of the handover been thoroughly thought out it would have brought to light the fact that the two “systems” had generated two societies with different values, different aspirations and even a different vision of what it is to be Chinese.

Post-handover developments

During the some 20 years that followed the handover, Hong Kong and mainland China took what amounted to two different paths. At the time of the handover Hong Kong was affluent while the mainland was just at the beginning of a stunning economic takeoff. Shenzhen, compared with Hong Kong, was still a shabby suburb and Shanghai had yet to recover its former glory as the leading city on the East Asian mainland.

Over the subsequent years, hand in hand with a massive level of economic development, there emerged on the mainland a new class of wealthy and super-wealthy that could be compared to their Hong Kong counterparts. For Hong Kong the message was clear. The economic model prevailing in the SAR was no longer the only one that would bring wealth to China, and a parallel model was now emerging that would inevitably reduce the value of the SAR to the central government.

Conversely, for the average inhabitant of the SAR, the model provided by the mainland was not necessarily to be admired. Granted it was making China a great power, but this hardly stirred his nationalistic fiber, and the price to pay – massive corruption and the absence of any rule of law – surpassed its benefits. Hordes of “uncouth” Mandarin-speaking mainlanders descending on the SAR and, flouting their newly acquired wealth, did not help matters but contributed to a generalized feeling of discomfort, not to say uncertainty, which fed a growing identity crisis, especially among the younger generations.

This pervasive disquiet was exacerbated by a major and ongoing housing crisis. With land leases for housing parceled out by the Hong Kong government to developers at an extremely slow pace, housing in the territory, which has no lack of land, had been artificially kept at a level that is among the highest in the world. Except for the super-rich, finding housing at an affordable cost became a major challenge for most of the population and in particularly for the young, adding to the overall feeling that the local authorities were only sensitive to the concerns of the central government or of the local oligarchs rather than to those of ordinary citizens.

Anger boils over

Hong Kong is currently the world’s No 3 financial market and, according to the World Bank, boasts a per capita income higher than that of the US, Sweden or Germany. Excluding the work ethics prevailing in the territory, the two main pillars of this achievement are stability and the prevalence of the rule of law. On February 19, 2019, this whole edifice was shaken at its foundations.

On that day Carrie Lam, Hong Kong’s chief executive, took the initiative to propose an amendment to the current extradition law, which would have resulted in facilitating extraditions to the mainland. The amendment, which originated in Hong Kong, was a reaction to a murder case in Taiwan and was probably motivated by the best of intentions. Its long-term implications were not to be discounted, however, as many in Hong Kong saw it as a foot in the door of the firewall that insulated the legal system in the territory from the regime prevailing on the mainland.

Why Lam would propose such an amendment says a lot about how the territory is governed. Lam is quintessentially old-school Hong Kong. A Cantonese-speaking Christian with a British education and the former holder of a British passport, she served with distinction for 27 years as an administrator in the territory’s civil service. As such she had the trust of the central government that engineered her nomination as chief executive; a nomination that was predicated on a profound misunderstanding, not to say insensitivity, of what Hong Kong was and stood for.

As a rule of thumb, administrators don’t make good politicians and politicians don’t make good administrators. Ultimately, Hong Kong did not need an administrator as its chief executive. It needed a politician who while having the trust of the central government was attuned to local sensitivities and would be perceived as standing up for Hong Kong when the situation demanded it. Visibly the Communist Party of China (CPC), with its penchant toward control, felt more comfortable with an administrator than with a political figure. It was a shortsighted decision.

The proposed amendment to the extradition law proved to be the straw that broke the camel’s back. Suddenly, all the frustrations, concerns and fears that had silently gnawed upon a sizable part of the population, and in particular the young, broke into the open. What started as demonstrations turned into riots leading to a major crisis, which if unaddressed might well spell the end of Hong Kong as we know it.

At the root of the problem lies the question of how the CPC views Hong Kong.

For China, Hong Kong is an anomaly inherited from history. In terms of size and population it is insignificant. Conversely it is a beneficial anomaly, and China is better off with Hong Kong as it is than without it, and even more so as it does not aspire to represent an alternative economical or political model to the one prevailing on the mainland. Thus for the CPC there should be no advantage in absorbing Hong Kong just as there should be no disadvantage in keeping it at it is, a contention that would require the party to come to terms with the fact that being in control does not necessarily mean satisfying the need to control everything.

That Hong Kong will never be the same after the current crisis is a given. And so is the fact that an adjusted status quo could be achieved that would preserve the essentials that are at the root of Hong Kong’s prosperity.

This would entail as a first step that Carrie Lam be permitted to retire gracefully. She has done her time and the fact that she waited until September 4 to withdraw her proposed amendment to the extradition law formally shows her disconnect from the social reality in Hong Kong.

As for her successor, who he or she is will be more important than how he or she is nominated. But he/she will have to be perceived as having enough credibility both to represent the concerns of the central government in the SAR and the interests of Hong Kong at the level of the central government. Ultimately he/she will have to be both a forceful and a reassuring figure, and one of the first tasks will be to initiate a massive government-funded rent-controlled housing scheme, which should alleviate the stress generated among the middle class by the housing crisis. This will not go down well with the oligarchs who control the housing market but should be a popular measure in the eyes of the Hong Kong residents. Furthermore the new chief executive will have to generate a dialogue with the grass roots, who should feel that their concerns are, if not met, at least listened to.

As for the demonstrators, not to say the rioters, irrespective of the validity of their concerns the way they are expressed is self-defeating and if left unchecked could well bring down Hong Kong and all it stands for. And their parading of British and US flags or their shutdown of the airport show an alarming disconnect from the geopolitical realities that relate to the very existence of the SAR.

For all practical purposes the systems prevailing in Hong Kong and on the mainland are incompatible, and the SAR’s system can only endure if it is insulated from the other. Given the massive asymmetry between the two, the continued existence of Hong Kong in its present form is tied to the benefits it represents for the mainland. That these benefits will be better preserved with less rather than more central government interference is a given but will require a better reciprocal empathy between the SAR and Beijing and a greater sensitivity in Hong Kong for the concerns of the local population.

Hong Kong is not indispensable to China, just useful. It should be in the interest both of the SAR and of the central government to keep it so. For the time being, that is.