Hong Kong—After the Fireworks

July 9 1997 3:30 AM

Hong Kong—After the Fireworks

Democracy goes into reverse, but liquidity drives a boom.

42000_42715_byoxfordanalytica

The champagne has been drunk and the fireworks exploded. Now Hong Kong's real test as a special administrative region of China begins.

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Politically, the façade of the old colonial government structure--a strong executive, a weak legislature, and an efficient but politically neutral civil service--will continue. Economically, the stock market and property booms will continue in the short term if money still flows in from the mainland and elsewhere. The road ahead, though, is bumpy. Hong Kong needs to control rising costs and create jobs quickly for a large number of unskilled immigrants.

More clues about post-1997 Hong Kong will become evident at the 15th Congress of the Communist Party of China this autumn. If the Chinese leadership under President Jiang Zemin emerges more confident of its power, this will give Hong Kong more leeway to run its own affairs. If not, the territory's autonomy will suffer. More than ever, Hong Kong's fate will be intertwined with that of China, because the buffer provided by the United Kingdom for 150 years has been removed.

Some rollback of democracy is inevitable, as Beijing will not tolerate an independent legislature run by outspoken lawyers and longtime human-rights activists like those in the last Legislative Council ("Legco") elected in 1995. That is the main reason Beijing disbanded the 1995 council and formed the so-called provisional Legco, which is dominated by appointed pro-China politicians.

Beijing has already ensured that it will have the final say in important matters by appointing those with proven loyalty to top administrative positions. Next, it wants to make sure that it can influence the outcome of the Legislative Council election, promised by May 1998. It could do so by arranging voters into small, industry-based electoral groups. This would amount to a de facto shrinking of the franchise. However, it would be justified internationally as being akin to the electoral system that existed in Hong Kong prior to the democratic reforms introduced by the territory's last British governor, Chris Patten, in the face of Chinese objections.

Beijing will further sideline independent-minded politicians such as Democratic Party leader Martin Lee and opposition activist Szeto Wah. The danger is that the voice of lower-income groups will not be heard in a government machinery dominated by big business and mainland elites, but Beijing will calculate that the historically shallow roots of popular political movements in Hong Kong will limit the magnitude of this risk.

Overall, Hong Kong will still enjoy more political autonomy than the average Chinese city. There will be open, public debate of issues, as well as civil disobedience by political activists. Chief Executive Tung Chee-hwa will also be able to negotiate with Beijing for a degree of administrative leeway unthinkable for his counterparts on the mainland.

The judiciary, run by respected judges, should be able to remain independent, except when it is handling highly sensitive, politicized cases in which Beijing's central authority is at stake. For the press, there will be self-censorship, but heavy-handed interference from Beijing seems unlikely.

One important check against any abuse of power by Beijing toward Hong Kong is international attention. Western countries have urged China to conduct fair, competitive elections next year. There will also be annual reviews of Hong Kong's political and human-rights situation in the U.K. Parliament, the U.S. Congress, the United Nations, and other international forums.

For business, Hong Kong is still a good place to make money, an increasing amount of which will come from China. The territory's gross domestic product is expected to grow by 5 percent or 6 percent in 1997 and 1998, up from 4.7 percent in 1996. Unemployment has dropped to 2.6 percent between February and April 1997 from 3.3 percent in the same period a year ago.

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