A golden goose that won’t be cooked

Richard Vokey May 3 1982

A golden goose that won’t be cooked

Richard Vokey May 3 1982

A golden goose that won’t be cooked


Richard Vokey

Hong Kong is the greatest city in Asia, Mr. Bartlett. Whoever masters it will eventually master Asia. — From James Clavell’s Noble House.

Often improbable, always dramatic, Hong Kong appears out of a southern Chinese hinterland of barren, mist-teased mountains. Over a harbor strewn with junks, freighters and an occasional warship, over the noisiest, most overbuilt, heavily peopled square miles on earth, the aircraft’s descent continues toward the next surprise—one of commercial aviation’s hairiest right turns. There’s not much room in Hong Kong: concrete, glass and 5.5 million of capitalism’s foremost practitioners are jammed onto a small island and a tiny chunk of mainland, hemmed in by the billion citizens of Communist Asia. Inevitably, just past the creaking, last-minute level-out, touchdown is safely achieved. For all the constraints, things get done in Hong Kong, and usually with style.

Will this improbable outpost built by capitalist freebooters and refugees from central planning become, as fictional tycoon Quillan Gornt predicts in Clavell’s best-selling novel, the centre of Asian trade and shipping, finance and big business? It’s possible; the colony is halfway there already. But in the short term, a more crucial question is

whether or not Hong Kong can survive. For the most important, by far, of Britain’s remaining 11 colonies and dependencies—Hong Kong’s economic dynamism regularly puts the mother country to shame—survival would hardly seem a major issue. It is, among other things, the world’s 19th-largest trading economy and the third most important financial centre, after New York and London.

Hong Kong tunnels beneath its harbor and through its mountains and adds to a stunning Manhattanesque skyline at a rate that would intimidate planners and entrepreneurs in countries much richer and more secure. Last year, a squat, less than luxurious tourist hotel was sold for $500 million, more than even New York’s Pan Am building sold for, in history’s largest single building transaction. To make way for an even bigger and better structure amid the real estate boom, one speculator knocked down a brand-new high-rise before it was ever occupied.

Strategically situated, Hong Kong bristles with banks and the Asian headquarters of key multinationals. Tourists abound, about 2.3 million last year. In an Institutional Investor survey of the world’s great hotels, Hong Kong was the only country in the top 10 to be awarded two selections. The teeming, cacophonous streets burst with shops— shops with the globe’s most expensive goods. A budget surplus and rapid eco-

nomic growth are foregone conclusions year after year. When the respected European monthly Euromoney recently conducted an in-depth analysis of the post-1973 period, Hong Kong was judged to have turned in the world’s third-best economic performance, after Taiwan and Singapore.

Overachieving Hong Kong, however, remains “a borrowed place living on borrowed time,” as one worn cliché puts it. British titles to the territory were obtained from China under “unequal treaties” and, in Peking’s view, are therefore invalid. The Chinese have also had Hong Kong struck from the United Nations list of “colonies”: a colony could do the unthinkable—become independent; “occupied territory,” however, awaits only “liberation.” And, as another cliché notes, Peking could take Hong Kong by telephone.

Such dramatics are unlikely; more important is the simple fact that expiration of Britain’s 99-year lease on the so-called New Territories (NT), 90 per cent of Hong Kong’s overall area, is only 15 years away. Without the NT, Hong Kong, at least as it’s known today, would cease to exist. Uncertainty could have a cancerous effect on the economy. Starting this year, for instance, international bankers must consider that the final repayments of much-needed longterm loans to the colony will fall into the post-1997 political twilight zone. “It is going to be difficult to persuade any

international lenders to lend against property as the date approaches,” warns Colin Stevens, chief executive of Barclay’s Bank in Hong Kong. “Unless China recognizes this fact, confidence will start to be sapped.”

The appointment last December of Sir Edward Youde, a former British ambassador to Peking, as the new Hong Kong governor, was a sure indication of London’s urgent desire to work out a formula for the colony’s future. Youde also faces tough domestic challenges. Once a bastion of law and order, Hong Kong has recently felt the tremors of incipient social disorder. In the first se-

rious rioting since Communist-led uprisings in 1967, marauding gangs of teenagers rampaged through posh Central District this past Christmas, smashing luxury shop windows, overturning cars and battling riot police. The local media, often overly sensitive to “security concerns,” played down one of the incident’s most significant aspects. For the first time in almost 15 years, Chinese residents had singled out members of the colony’s white British ruling class for physical attacks. There is subtler but serious restiveness in the middle class, whose members want a say in their political destiny.

A glittering diamond of hope set in the vast greyness of Chinese poverty, Hong Kong is a victim of its allure. In 1978, former governor Sir Crawford Murray MacLehose pronounced the colony ready to tackle the last of its major social problems. Hong Kong was about to seek membership in the “developed country” club. Then came the refugees, 500,000 of them, dodging Chinese and British troops on overland routes, paying off fishing junks and professional smugglers, risking and often losing all on marathon swims through shark-infested waters. In the communes of China’s Kwangtung province, young farmers tuned into “decadently extravagant” Hong Kong radio broadcasts while their visiting city cousins sported Seiko watches and toted Sony tape recorders; the unearthly glare in the nighttime sky of a million Hong Kong lights seemed to beckon from beyond the mountain frontier. A so-called “touch base” policy that allowed refugees to stay once they reached urban areas was finally labelled a “tragic charade” by MacLehose last year. Beefed up by elite British troops, Hong Kong border forces began to send new illegal immigrants back home.

The immigrant onslaught didn’t shatter the dreams of Hong Kong’s hardworking Chinese, but for many it postponed them indefinitely. Housing became a nightmare—cramped, excruciatingly expensive and often unavailable. More than 750,000 Hong Kong residents still dwell in jury-rigged—though TV-equipped—squatter settlements. Police believe that an epidemic of squatter fires last year can be partly blamed on arsonists seeking transfer to special camps and from there to governmentsubsidized housing. Unemployment has grown—though only to about four per cent. Worse, family incomes have dropped, with fewer workers able to clock overtime and the influx depressing wages.

Moreover, many illegal immigrants are young toughs, common criminals or even past members of the Red Guards who terrorized China during the Cultural Revolution. Known as “mainland boys,” they have introduced a stark chill of fear through acts of gratuitous violence to a colony once renowned for its safe streets and are the principal contributors to the soaring violent crime rate. In one recent barbershop holdup, two teenagers brutally stabbed a 40-year-old customer because he produced his wallet “too slowly.” These irritants are driving a deep wedge between a rustic, undereducated, dirtpoor illegal immigrant underclass and the sophisticated, ambitious residents of refugee stock who regard Hong Kong as their “country.” The long-term dangers of such tension are obvious, as is the risk of social upheaval should the

newcomers’ high expectations be entirely frustrated.

For all its opportunities,

Hong Kong life can be cruelly difficult. There is no minimum wage, no health or unemployment insurance, no real pension plans, not even a broad-based union system. Each year tens of thousands enter the colony’s schools in a bitter race for the 1,500 spots annually available at the university level. Competition for good secondary education is so fierce that students sometimes commit suicide—last year two despondent teenaged girls jumped to their deaths from a high-rise building.

There are 2.6 million “citizens of the U.K. and colonies” in Hong Kong whose rights of entry, or even to education in Britain, have been cut off entirely. More and more, they want a real say, not only in the colony’s future, but in its day-to-day affairs. This is something Britain cannot allow; Peking forbids it. Frustrated, anxious about their children’s prospects, they can hardly avoid believing that the British may one day abandon them. The U.K., according to Ian MacCallum, a leading jurist and 25-year Hong Kong resident, is even leading the European Community’s protectionist campaign against the colony’s manufacturers. Calling for a boycott of British goods, he describes current United Kingdom-Hong Kong ties as a completely one-sided relationship that, under other circumstances, would lead to “independence.”

Yet Hong Kong remains a hotbed of achievement. Its financial secretary, John Bremridge, likely to be a key player in this decade’s negotiations with Peking, notes that of course the creation of wealth is what the colony is

all about. Rather than fear the worst in 1997, Hong Kong is undertaking what may be history’s most ambitious urban development project—a plan to construct seven new cities in the New Territories, which are expected to have more residents by the 1990s than Canada’s largest city.

Recent events affecting Hong Kong’s long-term viability have favored optimists rather than hand wringers. A consortium of British banks has agreed to a U.K. government-underwritten $11.2-billion loan—to build two 660megawatt, coal-fired generators—even though the repayment term runs into the next century. Talks between the British and the People’s Republic have been almost cloyingly cosy. Declared Bremridge after an eight-day visit to China in March: “All these discussions have confirmed my belief that Hong Kong has a very important role to play in the development of the Chinese economy,” and that there is “strong mutual interest in the continued prosperity of Hong Kong. Adds Robert Baldwin, Can-

ada’s trade commissioner in Hong Kong: “It is a golden goose that the Chinese would be very reluctant to shake off.”

Hong Kong consumed 30 per cent of China’s exports last year, and the Communist state’s investments in the colony range from office towers to the thirdlargest banking system. Talks continue over a proposed joint venture to build a huge nuclear power plant not far from the border. Bremridge believes that the colony will become a crucial financial, supply and communications support base for China’s potentially massive oil production industry. But it is diminutive Deng Xiaoping, China’s senior policymaker, who has done the most to boost Hong Kong’s hopes. “Even if there is some change in Hong Kong’s status in 16 years’ time,” he told then British foreign secretary Lord Carrington in 1981, “the interests of investors will not be harmed.”

More light may be thrown on Hong Kong’s prospects in September when British Prime Minister Margaret Thatcher travels to Peking. There are several possibilities. Some see Hong Kong—and Taiwan—becoming a separate economic and administrative territory of China, providing the finance and know-how to spur the country’s modernization. Other reports speak of a 30-year friendship treaty between Britain and Peking that would allow a gradual transfer of power without destroying Hong Kong’s economic climate and thus its value to capitalists and Communists. Whatever happens, whether Hong Kong becomes Asia’s greatest city or free enterprise’s largest ruin, the odds are it will be done with excitement, if not style.