Is this the real Hong Kong handover?

June 28, 2012

By Richard Beales

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hong Kong is on a long journey from foreign outpost to just another province of China. The Special Administrative Region is commemorating one milestone, 15 years since that storm-lashed night when Britain handed it back to China. It is also embarking on a new phase with the appointment of the first chief executive who wasn’t a member of the old colonial club. Leung Chun-ying, also known as CY Leung, is a local policeman’s son who is seen as close to Beijing. It could almost be called the real Hong Kong handover.

The end of the road comes in 2047 with the expiry of Hong Kong’s SAR status – the “one country, two systems” arrangement agreed with the UK. Then, the city-province is supposed to emulate China’s recent exploit in space by docking gently with the motherland. Over the next generation or so, Leung and his successors have a chance to show that the 7.1 million people in Hong Kong, while economically already firmly hitched to China, can still be a model for the 1.3 billion residents in the Middle Kingdom.

A priority should be to buttress Hong Kong’s mostly transparent and honest government – a contrast and an example to opaque China, where the families of the elite use their connections to amass fortunes. Leung isn’t, however, starting off particularly well on the integrity front. He is under fire over revelations that his home has, or had, illegal additions. But the fact that this transgression is all over the newspapers already puts Hong Kong far ahead of any organ of the Chinese government.

Next might be curbing the power of the old establishment. The relative outsider Leung is well placed to do that. The goal shouldn’t be to make the rich poorer, but to respond more broadly to Hong Kong’s politically savvy residents, who of late have been worrying about the shortage of affordable homes and the chasm between rich and poor in the territory. That could mean, for example, upsetting property tycoons by releasing more land for housing.

Maintaining economic vitality is also important. As China gets richer, Hong Kong will inevitably become less prominent. Its contribution to the combined GDP of China plus Hong Kong has already shrunk from perhaps 15 percent in 1997 to about 3 percent now. But the government can still cultivate the former territory’s competitive advantages: the laissez-faire heritage of the British, coupled with consistent regulation, and the expertise in finance gained as a trading hub and as China’s most important window on the world. Action from Beijing, like new measures to develop the Hong Kong offshore market in the Chinese currency, may help but Hong Kongers will need to nurture their entrepreneurial streak, too.

Then there is the question of freedom – not just economic, but personal. Hong Kong remains more attractive than the mainland to many expatriates and PRC nationals if they get the chance to move (or to have their babies in Hong Kong, a practice that has some locals up in arms). There is no mandatory family planning, the press is much less constrained and the education system is not weighed down by propaganda. That’s an advantage the territory should trade on for as long as possible.

Finally, Leung, his team and his successors could focus on the environment. The British and early SAR governments didn’t completely ruin Hong Kong, but they hardly made great efforts to protect its astonishing natural beauty. If future administrations can make this big commercial city a better place to live, protecting its environment and heritage, reducing pollution to the extent they can and improving living standards, it could be a model not just for China but for the world – and give it staying power even as its economic and financial significance wane.

Hong Kong is symbolic of China’s emergence onto the world stage and its ability to tolerate Western and democratic ideas. And while the SAR model might not directly attract the Taiwanese to hand their destiny to the PRC, its failure would surely make the prospect of that yearned-for reunification recede. So for now, most watchers in Beijing are probably happy for Hong Kong to succeed. That gives Leung some leverage. His task is to make the most of it and set a course to keep Hong Kong exceptional – until 2047 and beyond.

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