Hong Kong's dreams

DAVID BAIRD July 13 1998

Hong Kong's dreams

DAVID BAIRD July 13 1998

Hong Kong's dreams


Somehow, Bill Clinton and Hong Kong seemed really ready for each other. The U.S. President had just completed eight gruelling days travelling around mainland China, and he arrived in the former British colony looking weary. Hong Kong, meanwhile, had just marked its first anniversary as a special administrative region of China without much hoopla—not because of political problems, but due to tough economic times. So when Clinton suddenly decided to take an unscheduled walk on the wild side in Hong Kong’s upmarket bar district of Lan Kwai Fong, everybody seemed ready for an excuse to party. As he strolled down the steep steps of Pedder Street, pressing the flesh with cheering crowds, cries of “We love you, Bill!” greeted him. When he paused at a flower stall, salesgirl Anita Wu presented him with a white “sampan rose” for his buttonhole. ‘What a moment!” she said afterward.

Office worker Daisy Chan, 28, was instantly smitten. “I’d vote for him anytime,” she said. “He’s so handsome.”

For Clinton, the moment was a literal breath of fresh air. “He was fed up staying in his hotel room and wanted to get out and meet the people,” an aide told Maclean’s.

But it also served to underscore how free-wheeling a place Hong Kong remains a year after Britain handed it back to China—the kind of place, in fact, that Clinton clearly would like the mainland to become. During his tour of China, the first by a U.S. president since the bloody 1989 crackdown on demonstrators in Beijing’s Tiananmen Square, Clinton scored some remarkable successes in speaking directly to the Chinese people about democracy and human rights. At a news conference broadcast live, he told President Jiang Zemin that the use of force at Tiananmen was “wrong.” In a televised session with students at Beijing University, he said China needed more individual freedom before it could achieve its goal of a prosperous and stable society. He attended a service in Beijing at China’s largest Protestant Church and spoke to callers on an open-line radio show in Shanghai. In a nationally broadcast interview, he called such “open, sweeping communication” the most gratifying part of his trip. Chinese authorities, however, did not let down their guard: at least seven dissidents were arrested in connection with his visit and only released after Clinton flew to Hong Kong, landing at a gleaming new airport that formally begins operations this week.

Once in Hong Kong, Clinton found it necessary only to make a perfunctory reference to recent legislative election results as “a mandate for more democracy.” Far from the dire predictions of Beijing

One year later, the big worry is money, not politics

interfering with Hong Kong’s promised “high degree of autonomy,” the enclave’s big worry has turned out to be the unexpected downturn in the economy brought on by Asia’s financial crisis.

Addressing an anniversary celebration attended by Jiang, Hong Kong chief executive Tung Chee-hwa called for “unprecedented courage” to overcome the difficulties ahead. Among his listeners were ranks of People’s Liberation Army officers, their first highprofile appearance since their ominous midnight entrance into Hong Kong on June 30, 1997. Despite his brave words and Jiang’s pledge to help maintain local prosperity, Tung can hardly be a happy man. He is increasingly criticized for lack of leadership, and in a recent poll 43 per cent of respondents preferred the rule of the last British governor, Chris Patten, while only 14 per cent favored that of Beijing’s hand-picked chief executive.

Outwardly, little has changed in Hong Kong since Patten sailed away with Prince Charles on the royal yacht Britannia. The Noonday Gun, celebrated by Noel Coward in his 1931 song Mad Dogs and Englishmen, still blasts off daily, and Queen Victoria’s statue continues to preside over the park named after her. On June 4, as in past years, a candle-lit vigil was held in the park to honor the victims of Tiananmen. The sidewalks of Central, the business district where the main street is still named Queen’s Road, are thronged with dark-suited bankers,

mini-skirted office workers and people who function as walking advertisements for Armani and Versace. Money, more than ever, is the main preoccupation.

Even China’s fiercest critics admit that civil liberties have not been much affected. The media remains unfettered and politicians ungagged. Dire predictions of an avalanche of desperate humanity sweeping across the border have proved unfounded. In fact, tougher controls on both sides have reduced the number of illegal immigrants slipping into Hong Kong.

Under the slogan “One country, two systems,” one of the world’s most ruthless Communist regimes has swallowed the supreme example of laissez-faire capitalism with an amazing lack of friction. In the view of Terence F. Thomas, managing director of Fortis Investments, “Hong Kong has simply changed from being a British colony to a Chinese colony. There is not significantly more or less freedom than under

the British. Everything Beijing has said it was going to do it has done.”

But the economy is another story. The repercussions of Asia’s crisis—including devalued currencies, cancelled projects and a tourism slump—hit Hong Kong hard. Determined to maintain the Hong Kong dollar’s 15-year-old peg to the U.S. dollar, officials have defended it with high interest rates, which have sucked cash out of shares. The stock market has plunged from a high of 16,000 points last August to under 9,000 last week. Punters like 32-year-old barman Victor Chan are devastated. “A fortune teller told me my name was unlucky so I changed it to Victor, after the son of Li Ka-shing, and invested my life savings,” he says. “Now, I’m broke.” Billionaire tycoon Li Ka-shing has little to smile about either. The property bubble has burst. Prices have plummeted by up to 50 per cent in less than a year. Hotels, restaurants, stores, finance companies and realtors are cutting staff, with Cathay Pacific Airways alone shedding more than 1,800. June figures reveal unemployment at 4.2 per cent, the highest in 15 years.

The slump in Hong Kong comes at a time when the economy in much of Canada is booming—the reverse of the early 1990s when Hong Kong immigration to

Canada was at its height. Yet Hong Kong’s Canadian passport-holders—150,000 at the last estimate, of whom 90 per cent are of Chinese origin—show little inclination to leave. “People want to stay, despite the economic situation,” says Olivia Lee, 32, president of the 3,000-member Chinese Canadian Association. “Most people still have their jobs and they still believe it will be better here than in Canada because of the taxation over there.” (In contrast to Canada’s panoply of income, sales and capital gains taxes, Hong Kong levies only an income tax. Maximum rate: 15 per cent.)

Business, in fact, is brisker than ever for Lee, a lawyer specializing in corporate affairs who studied and worked in Canada between 1982 and 1992. Many of her wealthier clients have returned to Hong Kong with their families, she says, because of Canada’s new requirement to declare foreign assets. “The general feeling is that the downturn may only last one or two years and that down the road things will improve,” says Lee.

That outlook is widely shared by local Canadians. Originally from North Vancouver, David Armitage, 41, runs a software business and is hanging in. “The present situation is a dose of reality,” he says, noting that many businesses were formerly making profits from real estate side ventures instead of their core businesses. “But Hong Kong adapts well,” Armitage says. “I’m very bullish. The situation is completely different to that in every other part of Asia, but it is being tarred with the same brush.” Neil Johnston, principal of Hong Kong’s Canadian International School, notes that while Hong Kong’s property market has fallen, so has the one in Vancouver, where many Hong Kong people settle. “I’ve not seen any negative effect from the downturn,” he says. “We have 625 pupils, more than half with Canadian citizenship. We’ll have 700 by September, and in December we’re moving into new premises.”

For all the long-term bullishness, however, many Hong Kong people have demanded government action for the present. Tardily in many eyes, Tung recently introduced an $8-billion rescue package. Its inclusion of a freeze on government land sales to stabilize prices—a critical element in the economy— sparked criticism that he had bowed to pressure from his old cronies, the big property developers, at the expense of cash-strapped home-buyers. His promise of 85,000 new homes a year looks increasingly out of reach. The rescue package may ease the pain, says economist Guonan Ma, of Salomon Smith Barney, but will not change the trend. “Hong Kong benefited from the boom, now it’s suffering and there’s no escape,” he says. “There’s no free lunch.”

Nobody doubts the integrity of Tung, a 61-year-old workaholic shipping tycoon, but his lack of political skills shows. Last week, he gained a formal opposition when the newly elected legislative council was sworn in. Despite a highly complex electoral process, a record 1.5 million of Hong Kong’s 6.3 million people voted in May elections to replace a rubber-stamp provisional council. Only 20 seats out of 60 were directly elected, ensuring a majority for pro-Beijing factions, but pro-democracy candidates did well. They cannot initiate legislation of any importance in the executive-led government, but they can block laws and funding. “The people voted overwhelmingly against the lapdogs in favor of the watchdogs,” says

Martin Lee, leader of the Democratic Party, which gained 13 seats. “The voters have given us an absolute mandate to press for more democracy.” Even Tsang Yok-sing, leader of the solidly pro-Beijing Democratic Alliance for the Betterment of Hong Kong Party, says he supports moves towards democracy. He is also surprisingly critical of Tung. “His avuncular image makes him popular in peaceful times,” says Tsang. “But now people are complaining, YVe’re in the middle of a storm and the captain is invisible.’ ”

The chief executive has also sent some ambiguous messages about the rule of law. Outspoken prodemocracy politician Emily Lau is suing Xinhua, China’s secretive news agency and longtime unofficial embassy, because it took 10 months to reply to her request for any data it held on her. Though clearly in conflict with the law, Xinhua was not prosecuted, said Tung, because it was only a “technical breach.” Then, three Hong Kong Standard executives were accused of conspiring with the English-language newspaper’s owner, Sally Aw Sian, to falsify circulation figures.

The executives are being prosecuted, but not Aw, a friend of Tung and a member of a Chinese consultative committee.

Such cases provoke vitriolic comment on radio call-in programs, which have grown in popularity. But the press is more careful. ‘The papers are doing such a good job of self-censorship that Beijing doesn’t even have to lift the phone,” says Liu Kin-ming, vice-chairman of the Hong Kong Journalists’ Association. “They are going overboard to be acceptable to China.” Even more disturbing, just before the provisional legislature disbanded it rushed through a law to exempt local offices of China’s state organizations from 500 Hong Kong statutes. “The government fails repeatedly to enact laws in conformity with international human rights standards,” says Law Yuk-kai, director of Hong Kong’s Human Rights Monitor. ‘We have the rule by law, not of law.”

A burning issue is the implementation of Article 23 of the Basic Law, Hong Kong’s mini-constitution. The section bars acts of sedition, subversion, secession and the theft of state secrets, crimes that on the mainland often result in long prison sentences for activities that would be legal in most democracies. Tung has said he favors such measures, although Hong Kong officials insist that the implementation would be very different from China. Even so, Frank Lu Siqing fears his information centre on human rights in China would be closed. One of a handful of Chinese dissidents still in Hong Kong, Lu actively monitors mainland conditions. “Every day, I receive faxes and calls about people being arrested,” he says.

Clinton may have made some inroads in raising such issues in China during his groundbreaking trip. But as the President found when he reached his $4,600-a-night suite at the Grand Hyatt hotel, Hong Kong is still not the same as China.