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Hong Kong: 15 years since the return to Chinese rule
ON 1 July, as Hong Kong marks the 15th anniversary
since its return to Chinese rule, a massive anti-government
demonstration will take place. Last year more than 200,000 took part in
what, since 2003, has become an annual event. This shows how strained
are relations between the central government in Beijing and the Hong
Kong ‘special administrative region’ it regained from Britain in 1997.
The demonstration will be a baptism of fire for
new Chief Executive (head of government) Leung Chun-ying,
on his first day in office. Leung, known as ‘CY’, is a capitalist
politician with an authoritarian streak. He is also a suspected member
of China’s ruling ‘communist’ party (CCP). Like many other elite
figures, Leung denies this.
The CCP rules over but does not officially exist in
Hong Kong, preferring to operate in the shadows. It is deeply unpopular,
especially among young people. As a legal party, without the political
monopoly it commands in mainland China, the CCP would be damaged by
greater public scrutiny, unfavourable opinion polls and electoral
setbacks. This would call its legitimacy into question, not just in Hong
Kong.
Liberal author and commentator
Christine Loh describes Hong Kong’s system, rather politely, as
"undemocratic capitalism". While the territory
enjoys a degree of autonomy, its people cannot elect a government, which
is appointed by the CCP dictatorship in consultation with Hong Kong’s
billionaire tycoons. The CCP has preserved the undemocratic governmental
system inherited from the British, making very few changes.
Wave after wave of demonstrations and mass demands
for one-person-one-vote have met with delaying tactics, pseudo
‘reforms’, and other manoeuvres from the central government and its
local representatives. The capitalist tycoons and conglomerates that
control the economy make no secret of their opposition to faster
democratic change, arguing this will lead to ‘welfarism’ and undermine
competitiveness (ie profits).
The frozen pace of democratic change is one of the
main causes of anti-government feeling. Other factors – a housing
crisis, extreme wealth gap and government-business ‘cronyism’ – have
brought discontent to boiling point. Despite its undemocratic
system, Hong Kong is regularly judged the ‘freest economy’ in the world
by right-wing think-tanks, such as the Heritage Foundation (linked to
the Wall Street Journal). Britain came 14th and Germany 26th in its most
recent list.
But Hong Kong has the most extreme wealth gap of any
developed economy, according to the UN. Based on several surveys it also
has the world’s ‘most unaffordable housing’. Home prices have risen 82%
since late 2008, largely fuelled by the cheap US dollar, ultra-low
American interest rates (to which Hong Kong is tied through a currency
peg), and an influx from mainland China of capital seeking speculative
gains and a way around Beijing’s capital controls. Mainlanders account
for over one-third of property deals since 2008.
Hong Kong boasts more millionaires than any other
comparably sized city, but spends only a fraction of what other
developed economies spend on welfare, education and pensions. An
estimated 300,000 elderly people, mostly women, gather trash on the
streets every day to earn a little cash from recycling.
The wealth gap has widened since China regained Hong
Kong, the share of the population living in poverty rising from 14.8% in
1995 to 18% today. While GDP has grown by 30% in the last ten years,
median monthly income has been virtually stagnant, inching from
HK$10,000 in 2001 to HK$11,000 today, partly due to the minimum wage law
of last year.
In Hong Kong, the term ‘property hegemony’ is widely
used to describe how a few tycoon dynasties control most of the economy,
with business empires spanning property, construction, hotels,
transportation, telecoms, retail and banking. Just four families (led
respectively by Li Ka-shing, the Kwok brothers, Lee Shau-kee and Cheng
Yu-tung) control roughly half the economy and have grown even fatter
from close relations with the CCP since the handover.
Li Ka-shing is Asia’s richest man and owns companies
in more than 50 countries, including electricity and water companies in
Britain, Australia and Canada. It is often said that for every
dollar spent in Hong Kong, five cents goes into the pocket of
Li Ka-shing.
Hong Kong’s net foreign assets (ownership of companies, securities,
stocks, etc) are the highest in the world at 288% of GDP, ahead of
second-placed Switzerland on 157%. Hong Kong’s tycoons have pushed
overseas – into land deals in mainland China, in particular.
The CCP built up close ties with Hong Kong’s tycoons
from the early 1980s, when negotiations began with Britain over the
territory’s future. The CCP adopted the doctrine ‘use business to steer
politics’, something it has repeated in Taiwan more recently, making
allies of Taiwan’s big capitalists. Of China’s 20 largest export
companies, ten are Taiwan-owned.
In Hong Kong’s case, the tycoons and financiers are
now big players in the mainland economy. Hong Kong’s bank loans to the
mainland China property sector are worth 200% of its US$280 billion GDP.
Especially since the handover, the Hong Kong economy has been built on
‘money laundering’ to facilitate outward capital flows from mainland
China to get around the government’s controls. Most of this money is
then round-tripped back into China as ‘foreign investment’, enjoying tax
breaks, cheap or free land, and other perks. Between 1978 and 2010, Hong
Kong stood for half of China’s total foreign direct investment.
To prepare for the handover, Beijing in 1985 set up
the Basic Law Drafting Committee (BLDC) to write a ‘constitution’ for
Hong Kong. It included 23 Hong Kong members out of 59 in total and, of
the 23, twelve were tycoons. Pao Yue Kong, a shipping tycoon, and David
K P Li, chairman of Bank of East Asia, became vice chairs of the BLDC,
which "showed Beijing’s desire to form an alliance with the
capitalists", according to Christine Loh. The resulting constitution,
‘Basic Law’, enshrines capitalism as the "only system" that can be
practised in Hong Kong until 2047 (50 years after the handover), and
even outlaws budget deficits as a hedge against ‘welfarism’.
Although the BLDC is no more, the tycoons are
heavily represented among Hong Kong’s appointees to China’s
quasi-governmental organs like the National People’s Congress and
Chinese People’s Political Consultative
Conference (CPPCC). This process of integrating the big capitalists with
the CCP regime began with Hong Kong and has since been emulated
elsewhere, including on the mainland itself.
Throughout this period, Beijing has worked closely
with Hong Kong’s capitalist establishment to block universal suffrage
and demands for stronger welfare rights. In his memoirs, the former boss
of Xinhua’s Hong Kong office, Xu Jiatun, confessed: "Some of the
capitalists and people in the upper strata of society thought they could
rely on China to resist Hong Kong’s democratic trend". Xu expressed
fears that one-person-one-vote, "would make Beijing lose control of Hong
Kong". (Underground Front, Christine Loh, Hong Kong University Press,
2010)
Using its alliance with the tycoons, the CCP has
been able to muzzle Hong Kong’s ‘free press’. Most media tycoons have
business interests on the mainland and positions in mainland
governmental bodies. The bosses of Sing Tao Group (Charles Ho), Oriental
Press Group (Ma Ching Kwan) and Wheelock (Peter Woo), which controls
cable TV, are all CPPCC members. As is Victor Li, son of Li Ka-shing,
whose business empire owns Metro Broadcast Corporation.
In 2003, when half a million people mobilised to
defeat the repressive security bill, Article 23, tycoons like Li Ka-shing,
Stanley Ho and Gordon Wu came out publicly in support of the bill.
Article 23 would limit freedom of assembly, free speech and other
democratic rights, as well as banning ‘links with foreign organisations’
such as the CWI.
This year, with CY taking power, Article 23 is back
on the agenda. His government, with Beijing in the wings, will attempt
to push a new bill through, possibly getting some right-wing ‘pan
democrats’ to support this in return for token concessions or even seats
in a ‘coalition’ government. These pro-capitalist politicians have shown
many times that their support for democracy is little more than words.
But at society’s base there is massive opposition to
new repressive legislation and frustration over endless broken promises
about universal suffrage. The widening gap between Hong Kong’s rulers
and the ruled is preparing the way for a social explosion, with big
repercussions in mainland China and the region.
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