Hong Kong's Future as Seen by a Native Son

At a recent luncheon in San Francisco The Honorable Edward Chen, member of Hong Kong Executive Council, spoke on the subject of "The Future of Hong Kong." His indisputable claim to authenticity was in distinct contrast from the typical and endless stream of superficial western views on the same subject.

Professor Chen, president of Lingnan College, has degrees from Hong Kong University and Oxford and visiting appointments at Yale, Oxford, Stockholm and U.C Davis. While he is an advisor to the current London-appointed governor, he will step down after the transition on July 1 and return to an academic life. If he had an ax to grind, it was not readily apparent at the luncheon organized by the Hong Kong Economic & Trade Office.

Chen, a specialist in economics and Asian studies, began his speech by noting that he had been going around the world explaining Hong Kong to the West. He had just come from Europe and he expressed amazement at the depth of ignorance of the Europeans on the Hong Kong situation. He also recalled how The Economist had predicted in 1984, after Beijing and London had come to terms, that there would be no more new buildings in Hong Kong. In fact, he pointed out Hong Kong's longest sustained economic boom began after 1984.

He gave three reasons why the transition from British control to Chinese control has been so extremely smooth.

First, the Basic Law that will govern Hong Kong after the return is based on the joint declaration negotiated over a two year period between London and Beijing and is an international document registered with the United Nations. Under the terms of settlement, only issues relating to foreign affairs and defense will be subject to Beijing approval. According to Dr. Chen, the Beijing government has never reneged on any international treaty in which they are signatories.

Second, Hong Kong people are given 13 years of advanced notice to prepare for the transition. Those that wanted to leave have ample time to do so. In the meantime the local economy has adjusted to the prospects of a new master. The British common laws have been localized and translated into Chinese so that after the transition, the majority of Hong Kong people will, for the first time in Hong Kong's history, be governed by laws written in their own language.

Third, the attitude of the Hong Kong people towards China and China towards Hong Kong has changed during this interim period and Hong Kong has grown accustomed to the prospect of becoming part of China. Those that are not comfortable with the idea have already left. Recent survey showed that 80% of the Hong Kong population look forward to the return to the motherland. (Dr. Chen did not mention that the population of Hong Kong has been increasing during this period.)

For the next three to five years, Chen expects Beijing to keep their promises for at least four reasons: (1) As a matter of "face," essential to all Asians, Beijing would want Hong Kong to fare even better economically under their control than previously under London.

(2) A stable Hong Kong is basic to maintaining stable and positive relationship with the ASEAN countries. Contrary to the perception in the West, China views its relationship with neighboring ASEAN nations as more important than even with the U.S. or Russia.

(3) Beijing also needs a stable Hong Kong to reassure Taiwan that the principle of one country, two systems works. Even more important, China wants the U.S. to stay out of Taiwan and would not wish to provide the U.S. with any excuse to interfere.

(4) While Hong Kong will gradually lose its edge as entrépot and source of foreign exchange earnings (to Shanghai and other Chinese ports), Hong Kong people with their decades of experience will be essential in helping China build the economic institutions needed to privatize state-owned industries, to provide public housing, to establish rules for an orderly public securities market and other policies needed to further strengthen China's economy.

While Chen cannot predict what will happen to Hong Kong after the 3-5 year, near term future,--he doesn't think anybody can--he does see serious problems that Hong Kong will face and need to overcome. An average of 150 people, mostly from China, enter Hong Kong every day. The incoming government will need an education system and manpower policy to absorb this influx. (On a population equivalent basis, that's comparable to making room for 20 million immigrants every year in the U.S. vs. less than one million actual legal immigrants now.)

Hong Kong's real property market is controlled by a monopoly of seven firms and is the cause for the astronomic cost of housing. The new government will have to get rid of these anti-competitive practices.

With the massive inflow of new people, urban poverty is becoming more evident in Hong Kong. The relatively abrupt transition from a manufacturing economy to a service economy (in about 10 years) is adding as many as 1 million under employed work force to the problem. This is going to be a non-politically induced but nevertheless real social problem that the new government will face for years to come.

None of these problems have attracted the attention of western media. Hong Kong is but a stop enroute to their next assignment. The views of someone that really ought to know just might be the needed deodorizer to neutralize a highly charged atmosphere created from absymal lack of informed opinion.