Opinion

The Great Debate

from Ian Bremmer:

Chinese leader’s reforms are bad news for Hong Kong

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In 1997, Britain returned Hong Kong to China after some 150 years of colonial rule. In exchange, China agreed to a set of principles: Hong Kong would maintain its capitalist system for half a century, by which point its chief executive and members of the legislature would be elected by universal suffrage. As the thinking went, “one country, two systems” would suffice in the interim; Hong Kong and the Mainland would surely converge on democracy in the half-century to come.

Not so fast. Recently, Beijing has been systematically moving in the other direction. The decision on August 31 to rule out democratic elections for Hong Kong in 2017 was just the latest example. Chinese leader Xi Jinping’s transformational reform agenda is driving this shift—and it does not bode well for Hong Kong.

Xi’s reform agenda has two parts: the first is economic liberalization. The Chinese leadership recognizes that it cannot rely on state-driven investment and cheap labor to provide growth indefinitely. Xi wants to make China’s economy more sophisticated and competitive. He is overhauling inefficient state-owned enterprises and focusing on changes in the financial sector in particular. It’s a top priority of the new leadership, and a requirement for a sustainable and dynamic Chinese economy going forward.

But a prosperous economy is simply a means to an end-goal. Xi is opening up the economy because, above all else, he wants to ensure the long-term survival and stability of the Communist Party leadership. He thinks economic reforms are a good bet despite the risks they will usher in. Over time, reform will require an enormous transfer of wealth from large domestic companies to demanding citizens and it will threaten the vested interests of many powerful elites who have prospered off the status quo. It will inject necessary competition into the economy, which could put jobs, companies, and sectors at risk.

So as Xi opens the economy and the Pandora’s Box that comes along with it, he is simultaneously clamping down on political dissent and consolidating power. Some Chinese citizens may think (or hope) that economic reform will usher in moves toward democracy. Make no mistake: Xi is engaged in political reform...it just doesn’t resemble our Western notion of what that entails. Xi has absolutely no interest in domestic political competition; in a time of economic change, political unity needs to be at its absolute strongest. This is the basis for his anti-corruption campaign, which has already led to some 40 powerful officials with the rank of vice minister or above being detained or investigated. Xi wants to scare China’s political and commercial elite into falling in line with his economic reforms, all while building popular support for his initiatives by attacking perceived corruption.

from Breakingviews:

China’s Hong Kong experiment faces biggest trial

By Peter Thal Larsen

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

China’s experiment with Hong Kong is facing its biggest trial. The former British colony has mostly thrived in the 17 years since it was handed back to the People’s Republic. But a planned “Occupy Central” democracy protest is about to test Hong Kong’s openness – and China’s patience.

Hong Kong has defied the gloomy predictions of its demise that greeted the 1997 handover. Despite competition from Singapore and Shanghai, it has become a stronger financial and commercial centre. The authorities in Beijing have mostly respected Hong Kong’s special status, which former paramount leader Deng Xiaoping summarised as “one country, two systems”. Many citizens who decamped to Canada or Australia before 1997 have returned.

Mickey’s Magic needed for Disneyland Shanghai

WeiGucrop.jpg– Wei Gu is a Reuters columnist. The opinions expressed are her own —

China has finally given a green light for Disneyland to build a theme park in Shanghai. Negotiations that started when Bill Clinton was in the White House have concluded just before President Barack Obama is due to visit. The approval looks like a coup for Walt Disney Co, but it will take all of Mickey’s magic to prevent the park from becoming another government-financed loss maker.

Disney’s last theme park in the region was anything but a hit. Hong Kong Disneyland was created in 2005 in an effort to boost employment in the epidemic-stricken region, but attendance numbers have fallen short of target. This hits the Hong Kong government harder than Disney, because the former not only took an initial 57 percent equity stake in the venture, but also spent $1.75 billion building related infrastructure like a metro line and ferry piers.

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