Chinese rule will leave Hong Kong's
financial markets free but its society
tyrannized.
On June 30 at 12 a.m., 150 years of British rule will end when
the crown colony of Hong Kong becomes a special
administrative region (or SAR) of the People's Republic of
China. An affluent, freewheeling, cosmopolitan city will pass into
the hands of an isolated, paranoid, totalitarian state.
The editor of The Red Herring recently traveled to Hong Kong
to find out for himself, what will happen after July 1? More
specifically, will Hong Kong retain its economic, civil, and
political liberties?
The answers are yes, no, and not much. Here's why.
Discussions of Hong Kong's future tend to center on whether
China has sufficient economic incentive to preserve Hong
Kong's liberties, as if those liberties were all of a piece. China's
interest, however, is in preserving that part of Hong Kong that is
devoted to earning money while dismantling the other parts.
Hong Kong is rich. With only 6 million people, Hong Kong still
has the third-largest economy in Asia. At US$23,000, its per
capita annual income is higher than the United Kingdom's. The
colony owes its wealth to the freedom of its markets (regulation
is minimal, the corporate interest rate is 16.5 percent, and the
personal income tax 10 percent). China has every incentive to
preserve this freedom: the return of Hong Kong will increase
China's gross domestic product by more than 20 percent and
swell its foreign reserves by $66 billion. Hong Kong, whose
currency is pegged to the U.S. dollar, serves as an offshore
center to fund Chinese companies and individuals. Much of the
Chinese political and military establishment are investors in Hong
Kong property and financial markets.
But China does not want to preserve Hong Kong's civil and
political liberties, which it both fears (as a potential source of
instability) and hates (as a colonial influence that must be
eliminated in order to make Hong Kong Chinese again).
The treaty signed between Britain and China in 1984 recognizing
Hong Kong's reversion to China provided for "one country, two
systems." The Basic Law, as Hong Kong's postcolonial
constitution is called, promises that "the current social and
economic systems in Hong Kong will remain unchanged. Rights
and freedoms, including those of the person, of speech, of the
press, of correspondence, of strike, of choice of occupation, of
academic research will be ensured by law."
But in the months leading up to the takeover, Beijing has shown
an undisguised contempt for the Basic Law. The Chinese
government has ordered that Hong Kong's democratically
elected legislature be disbanded on July 1 and replaced with its
own Provisional Legislature, which has already passed measures
that require demonstrators to obtain police permission and
political parties to register with the government. The
Beijing-appointed Selection Committee has "elected" shipping
tycoon Tung Chee-hwa as the SAR's first chief executive; since
his appointment, Mr. Tung has consistently opposed civil and
political provisions of the Basic Law. China's foreign minister,
Qian Qichen, has demanded that Hong Kong's schoolbooks be
rewritten to reflect mainland sensibilities.
The only question, then, is whether Beijing's prescription for
Hong Kong is sustainable. Does economic freedom require
political liberty? Necessarily not, since for 150 years, Hong
Kong had none and prospered. Does economic freedom require
civil liberties? In classical economics, a free and open society is
seen as essential to the efficient operation of free markets, but
free information about markets is only a small part of what
constitutes an open society.
We should not look to the people of Hong Kong to resist the
transplanting of Deng's disagreeable blend of totalitarianism and
capitalism. Without the right to assemble or protest, and with
15,000 troops of the People's Republican Army waiting in the
New Territories, the opinion of the great majority of Hong
Kongers is irrelevant. The only people in Hong Kong whose
opinion matters are the business elite, and they seem happy with
the coming arrangement. In the Western press, the optimism of
the Hong Kong business community has been interpreted as
diplomatic flattery. But in a week spent interviewing the bankers
and property developers of Hong Kong, this editor found their
enthusiasm genuine. So long as Hong Kong's free markets are
not tampered with, the wealthiest Hong Kongers are
sympathetic to Beijing's plans. What they really admire is
Singapore, whose government suppresses political and civil
liberties but affords every freedom to business. Barring a
miracle, they will get what they want. |
