Winston-Salem/Forsyth County Schools



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The Post-1997 Hong Kong Press: How Free and for How Long? (excerpt)

CHING, FRANK. "The Post-1997 Hong Kong Press: How Free and for How Long?" Asian Affairs: An American Review 26.1 (1999): 3. Student Resource Center - Gold. Web. 3 Sept. 2010.

The annual report of the Hong Kong Journalists Association, published in June 1997, just before the British colony reverted to Chinese sovereignty, had this to say:

All the signs suggest that following the handover, freedom of expression is likely to experience quite severe external and internal pressures.... All the indications from China's leaders, and to a good extent from the incoming Special Administrative Region Chief Executive Tung Chee-hwa, point to freedom of expression, and of the press, being restricted in some manner after the handover.

The report was entitled "The Die Is Cast: Freedom of Expression in Hong Kong on the Eve of the Handover to China."

Fortunately, that somber assessment has not been borne out by events in the last twenty-one months. No newspapers have been shut down by the Hong Kong Special Administrative Region government (or by soldiers of the People's Liberation Army), and no journalists have been thrown into prison. (That is not to say that no newspapers have shut down or that no politicians have been jailed. Within weeks of the handover an afternoon paper, the New Evening Post, folded. Ironically, however, it was a pro-Communist paper [an evening edition of Ta Kung Pao]; it was the only afternoon paper left in Hong Kong, and it folded because it had been losing money for years. The legislator Chim Pui-chung was jailed after being found guilty of fraud.)

But the widely predicted political disasters, including dramatic curtailment of rights and freedoms, have failed to materialize. Initially, the prophets of gloom explained that China was deferring its crackdown until after President Jiang Zemin's state visit to the United States, or until after President Clinton's return visit to China in June 1998.

This line of reasoning assumes that China's hands-off policy toward Hong Kong is a result of pressure from the Americans, the British, or another external source. In fact, the policy of "one country, two systems," with "Hong Kong people ruling Hong Kong," was not imposed from outside. It was China's own idea, one that it announced before negotiations on the future of Hong Kong started in 1982.

Reasons for Hope and Fear

In the Sino-British Joint Declaration on the Question of Hong Kong, initialed in September 1984 and signed in December of the same year, China agreed that Hong Kong residents' rights and freedoms would be protected by law after the changeover. The declaration said:

The Hong Kong Special Administrative Region Government shall maintain the rights and freedoms as provided for by the laws previously in force in Hong Kong, including freedom of the person, of speech, of the press, of assembly, of association, to form and join trade unions, of correspondence, of travel, of movement, of strike, of demonstrations, of choice of occupation, of academic research, of belief, inviolability of the home, the freedom to marry and the right to raise a family freely.

This long list of rights and freedoms was included to assure the people of Hong Kong that they would be treated differently from people in the rest of China. For example, although couples in China had to abide by the one-child policy, those in Hong Kong could decide for themselves how many children to have, and when.

The preservation of rights and freedoms set out in the Joint Declaration was to a large extent reiterated in the Basic Law, Hong Kong's miniconstitution, which was adopted by China's National People's Congress in April 1990. In Article 27 of Chapter 3, entitled "Fundamental Rights and Duties of the Residents," the Basic Law says, "Hong Kong residents shall have freedom of speech, of the press and of publication; freedom of association, of assembly, of procession and of demonstration; and the right and freedom to form and join trade unions, and to strike." Other rights enumerated in the Joint Declaration are reflected in other articles of the same chapter. In fact, the freedom of expression protected in the Basic Law is more comprehensive than in the Joint Declaration. The Joint Declaration refers to "freedom of the press," whereas the Basic Law provides for freedom "of the press and of publication."

If words on paper could convince, then Hong Kong residents and their wellwishers abroad would have been confident of the continuation of a free press in Hong Kong after I July 1997. However, it was well known that Chapter 2 of the Chinese Constitution, "The Fundamental Rights and Duties of Citizens," contained many of the same promises of rights and freedoms; and these clearly were not enjoyed by the residents of mainland China. Article 35 of Chapter 2 declares that "citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration." Yet clearly the press is under Communist Party control and is not free. Moreover, citizens of the People's Republic are not allowed to form independent trade unions; the only legal unions are those controlled by the government and party. Demonstrations, although legal in theory, are not allowed in practice, usually on grounds that traffic would be disrupted or that chaos would result.

So it is not surprising that many skeptics saw China's promises as worthless, particularly after the Tiananmen Square crackdown of 4 June 1989. Indeed, the Basic Law was a product of that atmosphere, as it was finalized less than a year after the Tiananmen Square incident. China, fearful that Hong Kong would become a base for subversion against the central government in Beijing, sought to tighten its control of Hong Kong by strengthening Article 23 of the Basic Law, which says:

The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government, or theft of state secrets, to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies.

As of April 1999, no laws dealing with treason, secession, sedition, or subversion had been adopted by the legislature. In fact, Secretary for Justice Elsie Leung indicated that draft legislation would not be presented to the legislature until after the 2000 elections.

Since the handover the Chinese government has dissolved several bodies that had been seen as its potential instruments for interfering in Hong Kong affairs. The Preparatory Committee was formally dissolved. China's Hong Kong affairs advisors were told that their term had come to an end and that their services were no longer required. And the Xinhua News Agency, which had been China's mouthpiece in Hong Kong, abolished the position of spokesman.

Looking back, it is understandable that the Hong Kong Journalists Association and many other people in Hong Kong expected a crackdown after the handover. Not only did Beijing apparently deny to mainland Chinese the rights enshrined in their constitution, but as the handover approached, it repeatedly issued statements that suggested a determination to dilute press freedoms in Hong Kong.

China's Reasons for a Hands-Off Policy

It should be borne in mind that China's policy toward Hong Kong is dictated by self-interest: Beijing recognizes the value of Hong Kong to its goal of economic development. China could have taken over at any time after 1949, when the People's Republic was proclaimed, but it chose not to do so. As for the nonobservance of the Chinese constitution, one must remember that the situation in Hong Kong is quite different from that in China proper. In Hong Kong, for example, all newspapers are privately owned and operated; in China all newspapers are ultimately controlled by the Communist Party.

China's leaders clearly did not intend Hong Kong to be run like the rest of the country. If they had, they would not have spent two years negotiating the Joint Declaration with Britain, five years negotiating and drafting the Basic Law, and many more years negotiating other agreements with Britain, primarily through the Sino-British Joint Liaison Group, the transitional body created by the Joint Declaration. If China had wanted simply to absorb Hong Kong, it could have done so without enunciating the concepts of "one country, two systems," with "Hong Kong people running Hong Kong" with a "high degree of autonomy." It did not need to announce that the Hong Kong lifestyle would remain unchanged for fifty years, that Beijing would not send officials to run Hong Kong, that foreigners could serve on the Hong Kong legislature and continue to serve in the Hong Kong government and police force, that the border between Hong Kong and China would remain intact, that Hong Kong would retain its own currency, which would remain convertible, or that Hong Kong would remain a member of such international organizations as the World Trade Organization, the Asia Pacific Economic Cooperation forum, and the Asian Development Bank.

A look at the Hong Kong policy of the People's Republic of China since its establishment in 1949 is instructive. In 1949, when troops of the People's Liberation Army swept southward, they could easily have overrun Hong Kong. But they stopped at the border on instructions from party leaders, precisely because the new Chinese government did not want to upset the status quo. Similarly, during the tumult of the Cultural Revolution, when Red Guards in Beijing burned down the British legation and demanded the ouster of the colonial government in Hong Kong, the central authorities in Beijing stopped them from marching across the border into Hong Kong. Clearly, China's policy was to maintain the status quo, with the British colonial government in charge. So important was this to China that it submitted to taunts from Moscow about its tolerating colonialism on Chinese territory.

China had good reasons for its policy. From 1949 until 1971, when Beijing entered the United Nations, China was isolated from the West--a situation that was exacerbated by China's allying itself with the Soviet Union and then, after the Sino-Soviet split, adopting a policy of self-reliance. Hong Kong was China's main channel to the rest of the world. Even during the Korean War, when British Hong Kong joined the United Nations embargo against China, Hong Kong was valuable to China because smugglers in Hong Kong ameliorated the effects of the embargo.

What little trade China had with the noncommunist world was conducted through Hong Kong. After the death of Mao Zedong and the rise to power of Deng Xiaoping, China adopted a new policy of economic development that made Hong Kong's role even more important. About a third of China's foreign exchange earnings passed through Hong Kong, and when China opened up for foreign investment, the vast majority of investment came from Hong Kong. More recently, in seeking to raise capital abroad, China has again turned to Hong Kong.

Clearly Hong Kong has been of great economic benefit to China, and it is in China's interest to keep it pretty much as it is. It is also clear that China has always considered Hong Kong part of its territory and would have recovered it sooner or later.

The Chinese government's position was that the three treaties under which Britain obtained various parts of Hong Kong in the nineteenth century were "unequal treaties," imposed on a weakening Qing dynasty through gunboat diplomacy, and hence were not valid. Therefore, from China's standpoint, the expiration of one of those treaties on 1 July 1997 had no legal significance. But from the British standpoint, the three treaties gave them the legal right to administer Hong Kong, and the expiration of one of them in 1979 would mean the loss of 92 percent of the colony. Hence in 1979 the British broached the issue in the hope that China would agree to sign a new treaty formally extending British rule beyond 1997.

China was prepared to turn a blind eye to the British administration as a legacy of history, but it was not prepared to sign a new treaty extending colonial rule into the twenty-first century. The Chinese leaders felt that they had no choice but to take Hong Kong back. Nevertheless, aware of its great economic value, they decided to allow it to remain as it was after the departure of the British; hence the announcement that Hong Kong would be run not by Beijing but by the people of Hong Kong themselves, and that Hong Kong would remain capitalistic. It was clear that any damage to Hong Kong would slow China's economic growth. Moreover, if China rode roughshod over Hong Kong, Taiwan undoubtedly would lose all interest in being reunited with China as a special administrative region like Hong Kong.

Another factor is direct economic ties to the West, particularly the United States. The West is important to China's plans for rapid economic development. By the middle of the twenty-first century, China hopes to achieve a standard of living appropriate to a moderately developed country on its way to a developed economy. To this end it needs peace and stability in the Asia-Pacific region. It also needs continued investment, technology transfer, and trade from the wealthy countries of the West. And the West, China knows, sees Hong Kong as a litmus test of China's intentions and willingness to honor its commitments. China therefore has strong reasons for abiding by its promise to preserve Hong Kong's rights and freedoms, and this includes the right to a free press.

Still, there are valid reasons for concern. Communist governments are not known for willingness to share power, or for allowing regional autonomy to the extent envisaged by the Joint Declaration and the Basic Law. It has been said that China's promise not to interfere in Hong Kong's internal affairs is like the promise of a left-handed person to use only use his right hand. The promise may be sincere, but in the absence of restraints the person will forget sooner or later and start using his left hand.

Conclusion

I believe that Hong Kong newspapers are likely to continue functioning pretty much as they have in the past. It is extremely unlikely that Beijing wants every Hong Kong newspaper to read like a Communist Party mouthpiece. The Chinese government wants Hong Kong to maintain its status as a sophisticated, cosmopolitan city, and that requires publications with a range of editorial viewpoints. The government also wants Hong Kong to continue to be seen by the rest of the world as having a free press. The continued presence of publications such as the International Herald Tribune, Time, Newsweek, and the Far Eastern Economic Review would certainly enhance that image.

The exertion of political or economic pressure from time to time (as is found in other countries as well) will not necessarily sound the death knell for press freedom. Economic pressure can be resisted as long as there continue to be many economic players and Chinese-owned companies do not dominate the scene.

We should also keep in mind developments within China itself. The Fifteenth Party Congress, held in late 1997, showed the country headed further on the road to economic reform and greater political openness. If China is becoming more open, the prospects for a free press in Hong Kong seem reasonably bright.

FRANK CHING is a senior editor of the Far Eastern Economic Review in Hong Kong.

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Gale Document Number:A54831597

Full Text:COPYRIGHT 1999 Heldref Publications

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City of bad omens.

(deterioration of conditions in Hong Kong following its handover to China)

(excerpt)

As every schoolboy would once have known, traditionally the Chinese have believed that a dynasty reigns because it has been vouchsafed divine approval - the Mandate of Heaven. According to this belief, extensive natural or man-made catastrophes demonstrate that the Mandate has been revoked, and that the reigning dynasty will soon fall. Natural catastrophes began in Hong Kong the instant the regime appointed by Beijing to succeed British rule took office in July 1997.

It rained continually for months. Landslides swept away buildings and imperiled lives. The people slipped into dejection under the seemingly endless rain pelting down day after day. The business slump had already begun and was soon to dip - and then plunge - further. But initially it was the weather, not the economy, that depressed the people of the new Special Administrative Region (SAR) of the People's Republic of China.

That was not a good start. Neither was it the end.

A few weeks later, Hong Kong was afflicted by a virulent influenza carried by a virus that could leap from its normal habitat in chickens or ducks to human beings. Naturally fearful, the government ordered millions of fowl destroyed. The mass slaughter, which all but impoverished poultry breeders and traders, was not carried out adeptly. Stray dogs and cats gnawed and clawed at black refuse sacks containing dead chickens, as well as some that were not quite dead. Highly efficient under British control, the Hong Kong Civil Service made a mess of that essential execution under Tung Chee-hwa's aegis.

Still another natural disaster struck early in 1998. Hong Kong's inshore fishing had already been curtailed by noisome pollution and by competition from Japanese, Taiwanese, and Korean boats. Nonetheless, Hong Kong's trawlers and motorized junks were still finding good catches not too far away. Then came the "red tide", a flood of scarlet algae that poisoned innumerable fish and imperiled the industry. Within two months fifty to sixty people were struck by the virulent enterovirus called Taiwan flu.

A man-made catastrophe, however, was to all but eclipse nature's malign deeds. A new airport some twenty miles away was built at great speed to replace the dangerous and inadequate old airport at the center of the city. Costing more than $20 billion, it is, after Japan's Kansai Airport, the most expensive in the world. Originally scheduled to begin operations in mid-July, it was prematurely commissioned so that President Jiang Zemin could be the first traveler to set down - and thus mark the first anniversary of Hong Kong's acquisition by China. Opened to normal traffic on July 6, it was so spectacularly incompetent that air cargo to and from Hong Kong had to be suspended for more than a week, at a cost of around half a billion U.S. dollars. Even more gravely, given the nearly simultaneous opening of competing new airports nearby in Macao and Guangzhou, the dismal spectacle severely undermined Hong Kong's reputation for brisk efficiency.

What, then, Hong Kong's people asked, of the Mandate of Heaven? What indeed. To see ahead, let us start by looking back.

In the fifth decade of the nineteenth century, Britain took the island called Hong Kong from China at gunpoint. In the last decade of the twentieth century, China took back from Britain, by force majeure if not directly at gunpoint, not only Hong Kong Island but the small Kowloon Peninsula, which had been seized later, and the broad New Territories, which had been leased for ninety-nine years in 1898. In none of these exchanges was the indigenous population asked its view. Nor were its interests seriously considered. In each case, too, the transfer of sovereignty ran counter to the wishes of the majority of the inhabitants.

The few thousand part-time fishermen part-time pirates using the island in 1840 preferred the nominal rule of the Manchu Dynasty in far distant Beijing to the meddling British. In 1898 the tens of thousands in the farming villages of the New Territories were not eager to exchange ineffectual Chinese rule for British intrusiveness. In 1997 the well over six million Chinese living in the Crown Colony of Hong Kong were happy with the highly effective and low taxing British administration that had made Hong Kong prosperous even by the standards of economically buoyant Asia. They also cherished civil order based upon general consent rather than coercion, as well as a degree of intellectual freedom and expression rare in authoritarian Asia. Opinion polls, and the belated introduction of a measure of democracy by the Colony's last British governor, affirmed as much. In 1995 the people of Hong Kong elected legislators sworn to resist communist tyranny. Three years later they humiliated Beijing's candidates in the first legislative election under China's sovereignty, indeed the first free election on mainland Chinese soil since the communists established the People's Republic in 1949.

Most communist leaders would have preferred a Hong Kong that continued to serve their economic interests by providing financial services and large sums of foreign money. But, above all, they wanted a Hong Kong that would not imperil their hold on power through its constant example of a more relaxed, more free, and much happier political entity next door to the mainland they ruled so harshly. Still another imperative impelled Beijing to demand the return of all Hong Kong when the lease on the New Territories expired on June 30, 1997. The sting of the humiliation and depredation inflicted on China by foreign powers from the early nineteenth century onward could only be salved by reclaiming every inch of territory that had once been Chinese. Aside from Hong Kong, minuscule Portuguese Macau was the only other foreign enclave remaining. Since it was effectively under Chinese rule already, formal reversion was less pressing. Taiwan presented a different kind of challenge - already under Chinese rule but not Beijing's suzerainty.

Hong Kong, the very first and the most conspicuous of the territories Britain had stolen from China, had to be reclaimed to expunge the shame of the past. And it had to be reclaimed no later than July 1, 1997, lest it appear that Beijing was truckling to London.

A very senior and very influential British diplomat assured me years ago that Hong Kong would not suffer as a result of the disorder he correctly foresaw in China, but would remain prosperous and happy after it came under Chinese rule. He was wrong. The mood in Hong Kong is now sour and pessimistic.

Besides, this school of thought would add, the depressed state of Hong Kong today is due not to Beijing's rule, but to the fiscal crisis that has shaken all of East Asia from South Korea to Indonesia. Hong Kong's blues are economic, nothing more. That contention, however, is only half of a half-truth.

The Hong Kong economy was depressed even before the Asian downslide. The proprietor of a shop selling linen and embroidered garments replied glumly when I asked how his business was doing, "I haven't made the smallest profit since July 1st '97. Just losses all the way - and getting worse. I can't even cover the rent." A campaign to reduce greatly inflated business rents by 40 percent has been overtaken by events. But he added, "Forty percent reduction wouldn't be enough. I'd still go broke."

The old Pedder Building houses factory outlets and other cut-rate shops. All now display signs offering even greater bargains, which literally translated from the Chinese is "Great Price Cutting." By changing one of the three words, one shop has made its come-on read "Great Bloodletting! Eighty percent oft."

For the beginning of Hong Kong's economic stagnation the fall in tourism is largely to blame. The number of visitors has fallen by more than 50 percent since July 1, 1997, a slump caused by both the change in Hong Kong's political status - as witness the many empty hotel rooms the week of the handover-and by the Asian recession, which is keeping many Asian tourists at home.

But general dejection also reflects a peculiar Hong Kong psychology. Most people still repose greater confidence in Great Britain - now a small, far away, third-rate power entangled with the European Union than they do in their presumed motherland, a colossal resurgent power on their doorstep. A majority of Hong Kong's people are either themselves refugees from People's China or descendants of refugees. During the decades I lived in the Crown Colony I found it hard to discuss China with them. They automatically disbelieved Beijing's every statement and discounted its every achievement. Their fixed conviction: "The communists only know how to lie!"

Despite recession, Hong Kong glitters with riches and throbs with commerce compared even with go-ahead Shanghai. But Hong Kong is now suffering a recession that is sliding fast toward a depression. The woes are by no means limited to the merchants and hoteliers who depend on tourist dollars. Everyone is singing the blues, and with good reason. By early August it had become clear that early predictions of economic trouble were too optimistic. Data showed that the economy had shrunk 2.8 percent in the first quarter of 1998, and was estimated to contract a full 3 percent in the second quarter. Release of that data, along with news that Hong Kong's major banks were in much worse shape than anticipated, sent stocks tumbling - which in turn completed the circle of economic gloom.

There are less transient explanations for Hong Kong's troubles as well. Little is manufactured there today. Almost all industry has migrated to China itself, lured by much lower wages and by greater latitude regarding working conditions. The chief money-maker in the SAR is money itself. Investment, insurance, banking, finance, and speculation bring in the big bucks. But employment in finance has fallen some 20 percent recently, and those who hang on to their jobs have been taking swinge-ing salary cuts.

All the people were interested in making a good living; the mass of the people was also vitally interested in practical politics. The emerging middle class, the managers, the professionals, the shopkeepers, the artisans, and even the workers had a stake in basic fairness, stability, and lawfulness. It was precisely their vital concern with politics that in 1989 first alarmed Beijing, which in its doctrinaire ignorance had thought the people of Hong Kong little different from the people of China.

Ironically, the event that put Beijing on its guard demonstrated strong sympathy between the people of Hong Kong and the mainlanders whose interest in democratic politics Beijing sought to crush. In 1989 Hong Kong was profoundly moved by the June 4 massacre in Beijing of students and workers campaigning for democracy, and by the persecution of all dissidents, however mild, throughout China. A million men and women gathered in a candle-lit vigil in Hong Kong. Such vigils on a somewhat smaller scale have occurred every year since, including 1998. Hong Kong was until July 1, 1997 a haven for refugee dissidents and provided funds for their movement. Naturally, Beijing is determined to crush that independent spirit.

The people of the Crown Colony of Hong Kong again proved themselves vitally interested in politics in 1995, when the second legislative election in its history took place. Twenty of the sixty seats were to be filled by direct public election, twenty by the governor's direct appointment, and twenty by "functional constituencies", which meant groups demarcated by occupation. That election was a further step toward democracy, not a great leap. Governor Patten, who would have liked a far more democratic election, was constrained by the diplomats' prior agreement with Beijing that only a third of the legislators would be directly elected.

Still, some 35 percent of those eligible came to the polls - and voted overwhelmingly for the Democratic Party of barrister Martin Lee. He stood for increased democracy and for vigorous resistance to the encroachment on freedom that he foresaw when Beijing took power in July 1997. The Democrats could do nothing about the handover, of course. That was an irreversible fait accompli. But the elections did show Beijing that most of the people did not want Chinese rule.

It was a smashing victory for the advocates of democracy and independence, a stinging repudiation of Tung and his puppet-masters in Beijing. In immediate practical terms it was something less. A majority of the sixty legislators will vote as Beijing directs, for the twenty appointed directly and the functional constituencies, largely the realm of big business, returned some fifteen pro-Beijing candidates. Martin Lee is now all but literally the leader of the opposition in communist China, since nowhere else in the sprawling nation is any opposition party tolerated. Of course, the SAR will continue to run as Beijing directs. But a spark of democracy will glow in Hong Kong until either Beijing stamps it out or until the Chinese capital itself changes even more radically than it is changing at the moment.

In the year 2002 a committee of eight hundred is to select the next chief executive, either Tung Chee-hwa or another equally subservient to Beijing. In 2007 the successive chief executive is supposed to be popularly elected, although Tung has already said he feels that may be too soon. He has also decried Hong Kong's excessive Westernization and restricted teaching in English, a measure originally planned by the outgoing colonial administration to facilitate the Sinicization of Hong Kong. Yet switching to Cantonese as the language of instruction is downright silly. Not only will graduates of the newly restricted schools not have mastered the international language, English, but they won't even be adept in Mandarin, China's common national language.

The press, radio, and television are already constrained, mostly the result of the fears of reporters and editors under pressure from proprietors. Such self-censorship is probably more effective that outright censorship, since it knows no bounds. Direct censorship has not been imposed, but the Chinese-language media are harassed. The frankly oppositionist Apple Daily has been charged with violations of employment laws and other non-journalistic offenses. The English-language press, the barometer by which most outside observers assess Hong Kong's political weather, is still reasonably free of interference. But only a few regularly read the English press and they are predominantly foreigners who are mostly transients and thus don't really matter. But Radio Television Hong Kong, an editorially autonomous public entity rather like the BBC which broadcasts in English and Cantonese, has been fiercely attacked for failing to present government policy "positively." Hong Kong's new regime really cannot see the difference between a quasi-independent broadcasting service financed by the government and a wholly government-controlled service - no more than can Beijing.

While we wait to find out, the Communist Party closes its hand ever tighter on the Special Administrative Region of Hong Kong. Relentlessly, albeit gradually, the people are being deprived of the opportunity, the objective education, and, above all, the dignity and freedom they once enjoyed. Such an erosion of human rights is reason enough to deplore the present trend and to fear for Hong Kong's future.

Robert Elegant, who speaks and reads Mandarin, has written extensively on China in novels and nonfiction for almost five decades. He lived in Hong Kong for twenty years.

Elegant, Robert. "City of bad omens." The National Interest 53 (1998): 85+. Student Resource Center - Gold. Web. 3 Sept. 2010.

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Gale Document Number:A21223153

Full Text:COPYRIGHT 1998 The National Affairs, Inc.

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Hong Kong, one year later. (includes related articles on Hong Kong's Provisional Legislature and interview with American expatriate in Hong Kong Steve Knipp)(Cover Story)

A new flag flies. The army remains out of sight. Yet, is this still the Hong Kong we knew and loved?

The typhoon rains that soaked Hong Kong during last year's handover to the People's Republic of China (PRC) were considered harbingers of good luck by China and Hong Kong alike. But when the rains continued for several weeks, some wondered how much luck Hong Kong could sustain. Since then, the Hong Kong Special Administrative Region (SAR) has been buffeted by the financial crisis that shook much of Asia and has delayed opening its new airport. As Hong Kong celebrated the lunar new year, which started on January 28, some small shops announced plans to close, real estate projects were put on hold, and massive layoffs were under way at real estate development firms. Despite these problems, everything else in Hong Kong seemingly remains untouched. "The world... hasn't realized that nothing has changed," says Owen Chi, assistant executive director of the Hong Kong Trade Development Council. "There are no soldiers on the streets," he says, and the laws and the business climate remain intact. The greatest difference is that, for the first time in its history, Hong Kong is governed by the people of Hong Kong. In May, Hong Kong elected its first Legislative Assembly under the PRC (see box on page 13). And the government is led by a well-educated, well-heeled, savvy group of business leaders who are determined to govern Hong Kong even more effectively than did the British.

But the Hong Kong government also must take into consideration the wishes of the PRC, which could impose restrictive regulations in the region. Today, it is understood that no governmental actions take place in Hong Kong without the tacit approval of leaders in Beijing, and Hong Kong's current leaders are reluctant to rock a boat that, so far, is stable. Although business leaders uniformly emphasize that "nothing has changed" and that China itself is dramatically improving its own policies and views, there is a quietly voiced concern that Hong Kong is a "frog in the pot." The saying goes that China is turning up the heat so gradually that the frog will be cooked before it realizes it is in danger.

Freedom of Information

Any changes related to the handover actually began a few years ago, as people and businesses began to censor themselves to fall more closely in line with Beijing's view of the world. As a result, the ability of local and international businesses in Hong Kong to get accurate, unbiased news from the Hong Kong media has been compromised.

In the communications industry, for example, the Malaysian owner of the leading English-language newspaper, the South China Morning Post, appointed Feng Xiliang, the founder of China's state-sponsored English-language newspaper, as a consultant. Ming Pao, a leading Chinese-language newspaper, fired two columnists who were strong critics of the PRC authorities in April 1996 and advised other columnists to share their column space with contributors and thereby write less.

Perhaps more worrisome, information may not be disseminated without government authorization if it relates to security, intelligence, defense, international relations, confidential information from international organizations or other states, crimes and special investigations carried out under statutory warrants. Even air crashes and fires could be considered issues of state security and therefore may not become public, according to The Die Is Cast, the 1997 annual report of the Hong Kong Journalists Association.

Additionally, amended privacy laws restrict press operations by limiting the information available about public figures, according to Carol Pui-yee Lai, chairman of the Hong Kong Journalists Association. This could mean that certain illegal business dealings may be more easily concealed under the guise of "privacy," making corruption more difficult to unearth.

The Climate

The current business climate in Hong Kong is affected more by the Asian currency crisis than by the region's return to the PRC because of its business ties to Asian nations.

Globally, analysts consider the Asian financial crisis to be a short-term problem for Hong Kong and an opportunity to gauge China's determination to allow Hong Kong to handle its own affairs. In Beijing, Chen Yuan, vice president of the People's Bank of China, said last October, "We expect Hong Kong to remain very stable." If necessary, however, "we can provide liquid assets to protect and defend the Hong Kong dollar," he said.

The Hong Kong dollar, which is pegged to the U.S. dollar, isn't likely to need such help because the SAR has no debt and has vast reserves of cash. Even so, the Asian crisis has taken its toll on Hong Kong's financial market and economy. Since the July 1 handover, the stocks in the Hang Seng Index peaked at about 16,500 in August before hitting a low of 8,000 in January and rebounding to about 10,500 in April. During the downturn, Hong Kong residents cut their losses by selling some stocks. Peregrine Investments Holding, Asia's biggest underwriter of stocks, collapsed, thus tightening credit controls at other financial institutions. Soon after, some small stockbrokers were in liquidation. The Securities and Futures Commission is monitoring some 20 other brokerage and finance firms, many of which have cash-flow problems.

Window to Asia

Despite Asia's financial turmoil, Hong Kong is a strong, logical base from which to launch business in the PRC and East Asia. "Dealing with China is very difficult because of the culture, market and mind-set. Businesses need partners who understand both [Chinese and Western cultures] and avoid the pitfalls," says Chi of the Hong Kong Trade Development Council, adding that Hong Kong firms provide that multicultural understanding.

China views Hong Kong as its window to the world and a prime financial, services and international center. For Western businesses, "Hong Kong is far closer to Western-style management than most other Asian nations," Terence Guddyre, senior vice president and country manager at the Bank of America NT&SA, commented at a breakfast meeting for U.S. journalists hosted by the American Chamber of Commerce in Hong Kong.

Hong Kong has become a strong, influential services center for China and the West during the past decade as 80 percent of its manufacturing facilities moved to the PRC. "Manufacturing facilities [are moving to China], but the mind rests with Hong Kong. We're at the higher, value-added end of the chain," says Salina Yan, principal assistant secretary of the government Trade and Industry Bureau. She adds that Hong Kong has made a smooth transition from a labor- to a knowledge-based economy.

It's Not the PRC

As the airport plans show, the business of Hong Kong is business. "Hong Kong is one of only a few places to have this policy in its constitution. It states, 'Hong Kong shall have free trade,'" says Yan of the Trade and Industry Bureau. "Hong Kong will continue to be a special customs territory, meaning that we make, formulate and implement our own trade policies." Even after the handover, the region remains a member of the World Trade Organization, independent of the PRC's nonmember status.

The change in status from a British colony to a special administrative region of the PRC currently appears more cosmetic than substantive. But China takes a long view of these things. In 50 years, the PRC may resemble Hong Kong today, Chinese officials suggest.

On the streets, the most noticeable change is the sight of the PRC flag flying alongside the new Hong Kong flag. Just as before the handover, Hong Kong remains awash in lights at night. There is a purposeful air about the people. The inhabitants, including international business executives, are optimistic. "The values and decisions are Hong Kong values and decisions," says Douglas Henck, chairman of the American Chamber of Commerce in Hong Kong.

The 'Rule of Law' Stands

Worries about restricted freedom of expression and public assembly began to unsettle the population of Hong Kong even before the handover. Since then, international businesses in Hong Kong have watched closely to determine the practical extent of Hong Kong's celebrated self-rule.

During the past year, the laws of Hong Kong haven't changed significantly, and they remain grounded in British common law. To date, the interpretation of those laws has been consistent with Hong Kong's colonial record.

But the much-ballyhooed changes in the Public Order Ordinance that require permits for large assemblies have cast a shadow on citizens at large. In an effort to brush off such worries, Hong Kong's government has repeatedly emphasized that such changes are primarily "a procedural matter." Welsley Wong, the youngish senior government counsel for the Department of Justice, says, "Legislators think procedures have to be tightened. It's a transportation and public-safety issue."

But Martin Lee, noted dissident, senior counsel and executive officer of the Democratic Party of Hong Kong, thinks that changes in the laws such as this will have profound ramifications in the region. "Hong Kong is slowly being molded into a society in which the public has no effective voice in government and the 'rule of law' is eroded by the court's inability to interpret our constitution."

Lee terms this trend the "Singaporization of Hong Kong" He points out that Tung Chee Hwa, the SAR chief executive, has repeatedly expressed an admiration for Singapore's Senior Minister Lee Kuan Yew and his "so-called 'Asian values' in which democracy and freedom are subjugated to government control" In Singapore, Lee notes, "court challenges to the government invariably fail," as they have already failed in Hong Kong.

If Lee's assessment is accurate, businesses in Hong Kong can expect the same type of bureaucratic environment they face in the mainland. This would mean a reversal of the favorable business environment that Hong Kong has always enjoyed. In a meeting with American journalists in October, Lee explained that Hong Kong's economic success story was largely made possible by the noninterference, laissez-faire policy of the British.

Dutton, Gail. "Hong Kong, one year later." Management Review 87.6 (1998): 10+. Student Resource Center - Gold. Web. 3 Sept. 2010.

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Gale Document Number:A20950438

Full Text:COPYRIGHT 1998 American Management Association

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