Beyond the ha ndover

CHRIS WOOD,C.W July 7 1997

Beyond the ha ndover

CHRIS WOOD,C.W July 7 1997

Beyond the ha ndover


Hong Kong's return will have a wider impact

They are the ghosts at the banquet. Crumbling green bunkers built at the peak of the Cold War, they dot bare hilltops along the southern side of Hong Kong's 32 km border with China. For decades, they have deterred people fleeing China’s political and economic turbulence from crossing illegally into the comparative freedom and prosperity of Hong Kong. But increasingly, the bunkers are out of date. Positions that once commanded a sweeping view of the rural Shenzhen plain to the north are now under the eye of even higher observation points: the revolving restaurants and penthouse offices atop soaring skyscrapers in the dazzling new city that has sprung up in Shenzhen since 1980. And a steady drop in the number of people trying to cross the frontier reflects the reality that by week’s end, Hong Kong in many ways will be just another city in China.

Differences will remain, to be sure. As dignitaries, including China’s President Jiang Zemin, were due to proclaim at this week’s fireworks-punctuated handover ceremonies, Hong Kong is promised wide-ranging autonomy under the principle of “one country, two systems.” But the subtext is writ large on Shenzhen’s tree-lined boulevards. Amid strings of festive Chinese lanterns hung from lampposts, brightly colored banners exhort China’s citizens to “Celebrate the reunification of Hong Kong

with the motherland.” In Shenzhen, as in Beijing and most other Chinese cities, massive celebrations were planned to drive home the message that Hong Kong’s return signals the end of Chinese humiliation by foreigners. The implication for China and its neighbors is unmistakable. The dragon is once again ascendant The wider view is harder to achieve in Hong Kong itself. Selfabsorbed at the best of times, the territory spent its last few days under British rule in last-minute primping, partying and pettiness. A round of farewell concerts marking the British departure was archly dubbed “The last nights of the Poms” by one newspaper.

And bickering continued down to the final hours. The British argued with the Chinese over who should take over the territory’s archives—Beijing or the incoming Special Administrative Region government. Members of the outgoing elected legislative council passed a last-minute raft of liberal laws—which members of the incoming Beijing-appointed provisional legislative council promised to repeal as soon as they took office on July 1. More ominously, China announced that as part of an initial deployment of 4,000 troops in the territory, 21 tank-like armored vehicles would roll in within six hours of the handover. With memories still vivid of the tanks involved in Beijing’s bloody 1989 crackdown on pro-democracy demonstrators in Tiananmen Square, outgoing British Gov. Chris Patten


denounced the move as sending “a very bad signal to Hong Kong and to the rest of the world.”

Yet for better or worse, the impact of the handover will be felt far beyond Hong Kong’s own 1,095 square kilometres—in Taiwan, in the wider Asian region, and, especially, in China. The neighboring province of Guangdong, where Shenzhen is located, already understands the power of Hong Kong’s money. Since 1980, Hong Kong companies have built more than 60,000 factories and assembly plants there, employing more than six million Chinese. “Hong Kong,” notes Canada’s commissioner to the territory, Garrett Lambert, “has basically already made Guangdong province its hinterland.” As links with the rest of the country grow in the wake of the handover, that flow is bound to spread farther.

Still, flowers and banners aside, there was little eager anticipation of the fruits of reunification evident in Shenzhen last week. “It won’t make any difference to me,” said a woman behind the ^ counter of a working-class noodle shop within sight of the heavily £ guarded internal frontier that separates Shenzhen’s Special Eco| nomic Zone from the rest of the mainland. “It won’t make it any 1 easier to get to Hong Kong.”

1 In fact, it is hard to imagine how much more impact Hong Kong 1 could have on this part of China. Photographs of Shenzhen takI en in 1978 show a sleepy fishing village of 2,000 people sur3 rounded by rice fields. In the wake of economic reforms institut£ ed the following year, however, billions of dollars in investment, mainly from Hong Kong, have transformed Shenzhen into a pulsating modern metropolis of 1.7 million. At 78 stories, the gleaming, twin-spired Shun Hing Square tower downtown is Asia’s second-tallest building. Architectural purists may shudder, but such boomtown scenes are being repeated in cities across China, often with Hong Kong’s help.

The territory’s return will also have a major effect in the larger arena of East Asian rivalries. Aside from the strategic advantages of Hong Kong’s fabled port, there is the renewed self-confidence that the historic transfer seems to be imparting to Beijing’s leaders. Communist strategists have taken advantage of the moment to launch a propaganda campaign whose central message is that China, having shaken off decades of humiliation by outsiders, is once again Asia’s pre-eminent power. President Jiang was expected to officially declare the new China-rising doctrine in a speech in Beijing on the evening of July 1. According to leaked reports, Jiang envisioned “a greater China economy and civilization,” built on a foundation of patriotism that would “lead the Chinese race to new glories.”

Beijing clearly anticipates glorious new—or at least reconstituted—borders. No sooner was Hong Kong to be welcomed back to the motherland than authorities planned to erect a giant clock in Tiananmen Square to count down the seconds until the next bit of Chinese soil returns to Beijing’s rule. That will happen at midnight on December 20,1999, when the Portuguese-administered territory of Macau, across the Pearl River estuary from Hong Kong, is handed over along with its 460,000 people.

Yet Macau is a footnote compared to the territory that Beijing longs most to regain: Taiwan. Since the nationalist Chinese army of Chiang Kai-shek retreated there in 1949 after losing to Mao Tse-tung’s Communists, the island has styled itself the Republic of China and claimed to be the only legitimate government of the mainland. But the claim is increasingly threadbare. Only 30 countries give Taiwan diplomatic recognition, most on the order of Burkina Faso or Tuvalu. And the island’s 21 million inhabitants are divided on whether to reunite with China or to declare independence. In rival rallies to mark the Hong Kong handover, nationalists planned to celebrate it, while pro-independence groups declared, “Say no to China, say yes to Taiwan.”

Hong Kong’s return has unquestionably turned up the heat on Taiwan. Beijing, in fact, has offered the island an even higher degree of autonomy than Hong Kong will get, promising not only political and economic freedom but an independent military. The Taipei government, however, rejects the system “imposed on Hong Kong,” says Taiwan President Lee Teng-hui, “because the state of division across the Taiwan Strait differs categorically from Hong Kong’s situation.” Taipei insists on being treated on an equal footing with Beijing, explains Susie Chiang, who heads Taiwan’s unofficial embassy in Hong Kong, the Kwang Hwa Information Centre. “The government in Taipei,” she says, “doesn’t want to be downgraded to a provincial government”

Still, that was precisely how protocol officials planned to treat 60 Taiwanese invited to attend the handover ceremony. And other pressures are certain to follow. From July 1, it is a criminal offence in Hong Kong to advocate independence for Taiwan (or Tibet, which also harbors strong separatist sentiments). And Beijing will order closed the handful of consulates in Hong Kong from countries that recognize Taiwan. Objected President Lee: “This testifies to China’s merciless and increasing pressure on our existence.” Increasing, certainly. A Chinese official quoted in Hong Kong last week said that China’s Jiang had instructed mainland think-tanks to find new ways to force Taiwan into reunification. “After this year,” the official said, ‘Taiwan will take centre stage.” In defiant reply, Taiwan’s military last week scrambled new American F-16 and French-built Mirage 2000-5 jet fighters, as well as tanks and naval units, in a two-day display of defensive power.

But in the long run, the legacy of Hong Kong’s return may be greatest in China itself. For the moment, the “two systems” are evident to anyone crossing the frontier from Hong Kong to Shenzhen. On a wall behind the immigration counters on the Chinese side, an illuminated notice declares it illegal to import any printed matter or other media “dangerous to the political, economic, cultural or moral

interests of China.” Visitors to a hotel room must register with monitors placed on each floor. Everywhere, public notices proclaim the politically correct slogans of the day (with, in Shenzhen, a curious whiff of Business 101, as in the huge blue and white billboard in one industrial area that declares: ‘Time is money and efficiency is life”).

But change is coming—more often at the flip of a chequebook than at the barrel of a gun. Since the beginning of this year alone, new share placements by so-called red chips, large mainland-owned companies listed on the Hong Kong stock exchange, have raised a staggering $3.4 billion for capital investments in mainland China. In many instances, investor enthusiasm for the Chinese issues has defied economic logic, with share prices soaring to 80 times company earnings or more. As a result, says financier Francis Leung, whose Peregrine Investment Holdings Ltd. has brought some of the largest red-chip issues to market, “the Hong Kong stock market is a very cheap way for China to raise money.”

It is also becoming a finishing school of sorts for mainland managers. Exposed for the first time to the scrutiny of outside shareholders, many red chips have had to re-examine wasteful business practices back home. “The requirements of the international investors have helped state-owned companies to reform,” says Leung.

The pattern goes beyond high finance to dozens of other areas of business law, public administration, crime control and technology. Noting that 600 Chinese delegations visited Hong Kong during 1996 to study how the territory works, Canada’s Lambert observes: “Even the Chinese government hopes that Hong Kong’s impact on China in these areas will be greater than the other way around.”

Beijing doubtless feels differently about political reforms. But there, too, Hong Kong’s influence on the mainland may be impossible to reverse. The choice last December of shipping tycoon Tung Chee-hwa as Hong Kong’s new chief executive was made by a committee composed of only 400 carefully selected people. Yet Beijing’s willingness to give Hong Kongers some voice, and to allow an open field of candidates who campaigned publicly, has galvanized mainland intellectuals and party officials. Said a Beijing academic: “Why can’t people in Shanghai and Tianjin elect their mayors like Hong Kong people elected their chief executive?”

For now, the “two systems” remain in place. And Hong Kong remains a magnet for mainlanders seeking freedom and greater prosperity. But as differences between ways of life on each side of the frontier diminish, so does the attraction of Hong Kong’s often roughedged capitalism. Camouflaged Hong Kong police in high-speed boats still patrol the choppy waters of Deep Bay, while their counterparts on shore guard the land border with thermal imagers and night-vision glasses in the search for illegal immigrants. But this year, the numbers have been steadily declining. In fact, a growing portion of those intercepted on land—fully 15 per cent in recent months—are headed back towards the mainland after failing to find work in Hong Kong. “No one would bother trying to cross now,” says Shenzhen taxi driver Yim Geng-san, showing two visitors the sights of the town, including a distant view of the decaying hilltop observation posts. “It’s just the same over there as here.”

Not quite yet, perhaps. But soon, maybe.