Written by Tracy Lam, GEI Associate
This time last year the Far East was rather chaotic: civilians in Hong Kong initiated a pro-democracy campaign, widely known as the Umbrella Movement, which lasted for almost three months after its official launch on September 28. In fact, it has been 18 years since Britain handed over Hong Kong’s sovereignty to China in 1997, but a complete transition is still awaited. Under Chinese rule, the city has encountered inevitable changes in multiple aspects of its politics and economy.
Essentially, after the handover, a major mission of Hong Kong’s economy was to assist China in her open-up. Back in the 90s, the Chinese communists continued laying an emphasis on their economic reform, in which they strove for industrial modernization. According to World Bank, the nominal GDP of China proliferated from 359.9 billion USD in 1990, to 1.083 trillion USD in 1999 (Fig. 1) – an increase of more than 200%.
Upon successful mass production, China needed an outlet for her ample products – Hong Kong could be a convenient stepping stone. Hong Kong was ideal because of her liberal economy, connections with the Western world, and well-established Common Law system inherited from the British. All of these appeared useful to the Chinese leaders, and understandably, converted Hong Kong into a bridge between the rather secluded Chinese market and the rest of the globe.
On the other hand, the reunification also implied more frequent interactions, or even synchronization, between the two economies. In November 2014, the Chinese government and the Hong Kong government jointly introduced the “Shanghai-Hong Kong Stock Connect,” a policy that joined the stock exchanges in Shanghai and Hong Kong. In other words, foreign investors were able to purchase China-listed shares through the Hong Kong market. Such a scheme was beneficial to both the Mainland and Hong Kong: Chinese shares reached foreign capital more directly and easily than ever, while Hong Kong’s status as an international trading center could hopefully be secured, even though Ashley I. Alder, the CEO of Hong Kong’s Securities and Futures Commission, would expect to wait for two years before the effectiveness of the Shanghai-Hong Kong link in market could be widely seen.
While the Chinese government was seemingly creating a win-win situation, excessive Beijing interference was actually a crucial underlying factor contributing to the outbreak of the Umbrella Movement. As stated in the Sino-British Joint Declaration of 1984, Chinese leader Deng Xiaoping outlined the white paper of “one country, two systems”. Together with a high degree of autonomy, Hong Kong could retain her capitalist economy and parliamentary system, while China would remain socialist. Nevertheless, in 2014, China strictly denied universal suffrage in Hong Kong, stirring anti-Chinese sentiments in town. As student activist leader, Joshua Wong, stated in his opinion piece in the New York Times:
“Since the return of Hong Kong to China in 1997… the people of this city have muddled through with a political system that leaves power in the hands of the wealthy and the well-connected…Universal suffrage became a shattered dream.”
In fact, it was not only a breach of contract, but also a diplomatic humiliation to China herself – “[the white paper] is effectively saying ‘one country, two systems’ is merely a joke… and abolishes the Joint Declaration“, Bao Tong, former Policy Secretary of Chinese Premier Zhao Ziyang, told South China Morning Post of Hong Kong.
Besides, another problem between China and the city of Hong Kong was that excessive Chinese immigrants – more than 450 hundreds in 2013, according to the Hong Kong Census and Statistics Department – and tourists (Fig. 2) were overwhelming to Hong Kong, especially when the 152 years of British rule had imposed too many fundamental differences between Hong Kongers and mainland Chinese in their cultures and core values.
Since the return to Chinese administration for almost two decades, Hong Kong is said to be losing her leading status in the international trading market to her neighbour Singapore. Hing Kong is often outranked by Singapore internationally: Swiss World Economic Forum ranked Singapore second and Hong Kong seventh on its Global Competitiveness Index for the year of 2014-2015; while the Economist‘s Economist Intelligence Unit (EIU) ranked Singapore first and Hong Kong third on its Business Environment Rankings for 2014-2018.
Of course, the effectiveness of Beijing’s ruling is yet to be evaluated, but the well-formed banking structure, reliable legal system, and high degree of economic freedom can be more than adequate in preserving the irreplaceability of Hong Kong, if these three unique strengths of the city are righteously upheld.
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