As Hong Kong celebrates its 15 year anniversary since changeover, Max Mack reflects on the Island’s resilience to constant challenges and where to for the future.
So it’s been 15 years since “The Handover” of Hong Kong to Chinese sovereign rule. It got me thinking what has changed, and what has stayed the same, and what will the next 15 years hold.
How did it all come about anyway? There’s a bit of an interesting story behind this handover so let’s start there.
Hong Kong was acquired by the British under three separate treaties. The Treaty of Nanking in 1842 settled the end of the First Opium War and ceded Hong Kong Island to Britain in perpetuity. The Convention of Peking Treaty in 1860, signed at the end of the Second Opium War, leased Kowloon south of Boundary Street to the British in perpetuity.
This treaty also ceded a million square kilometres of Outer Manchuria to Russia – never asked for and never returned.
The Extension of Hong Kong Treaty of 1898 gave the British a rent-free lease of the area between Boundary Street and the Shenzhen River for 99 years.
Which essentially means that in 1997, all that was legally required to be returned was the New Territories of Hong Kong; Britain could have kept Kowloon and Hong Kong Island!
Of course the logistical impossibility of establishing a defendable national boundary along Boundary Street made that alternative relatively impractical. See picture.
Pictured: Where it all began: Kowloon’s Boundary Street. (Courtesy the author)
Now, in negotiating for the return of the New Territories, Deng Xiaoping told Margaret Thatcher that rather than a lease extension, the PRC held the view that the two early treaties were “unfair and unequal treaties” because Britain had yielded nothing as part of the bargain.
Deng appears to have forgotten the relevant circumstances. There were a couple of back-to-back wars, won by Britain and lost by China, and the treaties were essentially a non-cash form of reparations negotiated at the surrender. He took the view that this was an unfair deal. How perceptions can wane over 99 years.
It is also interesting to note that the “unfairness and unequalness” of the treaties doesn’t seem to have caught up with Russia’s Outer Manchuria yet.
The Basic Law negotiated as part of the Handover sought to preserve many aspects of daily Hong Kong life for 50 years. The currency remains, so do road names, the Hong Kong passport and even the 852 international “country” code.
So what has changed since the Handover?
Obviously things like replacing the Queen’s image on stamps with flowers, HKSAR Establishment Day for the Queen’s Birthday holiday, and replacing union jacks with Bauhinia emblazoned flags were quickly instituted. For the botanically challenged, the Bauhinia is a sterile pinkish-purplish orchid that prefers a sunny, sheltered position. Being impotent, the flower requires an omnipotent master to successfully grow the flower from a cutting.
So good choice then for Hong Kong’s symbol.
Royal has been dropped from all but two of the 10 organisations granted royal charter over the last 150 years. The Royal Hong Kong Police Force now fights crime in an unroyal like manner. The SPCA tends to wayward animals just as effectively as the RSPCA did, and similarly, there has been no drop in standards at the club formerly known as the Royal Hong Kong Golf Club. Nor a drop in dues.
The Royal Asiatic Society chose to keep their charter to distinguish themselves from the American-based Asia Society. But the Royal Hong Kong Yacht Club was only 90 members short of passing a special resolution to drop the R.
From a sporting perspective, Hong Kong will never add to her tally of 17 Commonwealth Games medals. Badminton’s loss.
Many point to the change of governance as the cornerstone shift. So rather than have a Governor appointed by a foreign government thousands of miles away, we have a Chief Executive appointed by a government thousands of miles away. Well, at least that’s the cynics view.
When I reflect on all those changes I am struck by how little has changed. Many people were fearful of the Handover and largely those fears have proven to be unfounded.
We still enjoy enormous freedom of press. Still enjoy freedom of movement. Still conduct international business in English and trade HKD, USD and any other currency we like. Still use English plugs and drive on the left.
Has there been no meaningful progress?
Actually there has been good progress, but it takes a decades long perspective to notice it. Let’s examine the report card.
Hong Kong’s glacial spiral towards democracy continues. It isn’t happening as quickly as the average Hong Konger would like, but it is happening.
My suspicion is that Hong Kong is serving as a democratic petri dish, a political road map in search of a hybrid form of democracy that balances the interests and social media impacts of the new world against the iron grip on social stability governments crave.
This is a fundamental governance issue for China. Hong Kong plays a key role in forging or avoiding a path to a new paradigm where everyone is connected and enjoys the benefits of democracy without two key drawbacks: polarising bi-partisanship that leads to policy gridlock; and short-termism where longer term structural improvements are sacrificed for electoral expediency.
Each election brings more cries for universal suffrage. Technically, Hong Kong already has universal suffrage. Everyone has a vote but some people also vote as representatives of 30 “functional constituencies”, like medical, real estate, and financial services. Only half the 60 seats are filled by traditional geographical constituencies.
You’ve got to admire and economy that has avoided recession and actually grown over the past five years, especially when you consider that it doesn’t actually grow or produce anything.
If only we could applaud the Financial Secretary, and find out his secrets to avoiding what the US and most of Europe could not. Unfortunately, the peg removes any chance of meaningful monetary policy, and mainlanders’ shopping prowess ensures a supplementing flow of cash into the all important tourism sector.
The downside of a low tax rate is that it fails to effectively redistribute wealth, and nowhere is this more evident than Hong Kong.
The often overlooked poverty and inequity in Hong Kong is slowly coming into focus as ignorance gives way to awareness.
Last year the government announced its response to the financial crisis. Every citizen was given HK$6,000 in cash. Australia enjoyed Kevin Rudd’s A$900 “Plasma bonus”, but this is an example of a bad ideas travelling, not good fiscal governance. This writer is not anti-cash giveaways, it is against short-sighted vote grabbing prioritisations that see the poorest receive no additional benefit from the largesse of a strong economy.
On the other hand, the introduction of a minimum wage law is an important step in rebalancing the employee-employer relationship.
Hong Kong’s trump suit and strongest subject.
The past several years of the financial crisis have seen governments around the world step in where previously they would never have dreamed of it. Think nationalised banks, etc.
Hong Kong has resisted this and is still rated the world’s freest economy. The banking system is still regarded as one of the best in the world, even though most banks are headquartered elsewhere.
Regional competition is fierce, particularly in Hong Kong’s key sectors like finance and shipping and logistics, from centres like Shanghai and Singapore. But ease of doing business, and minimal government interference in commercial matters has helped defend a justly deserved reputation.
The Rest of the Good Stuff
What an amazing 15 years it’s been. Handover, Asian financial crisis, Tech Wreck, Sars, and bird flu. Plenty of times Hong Kong has been written off, but always bounces back seemingly stronger than ever. It is not pre-ordained or fortuitous; it is a work ethic and resilience.
Whilst the labour market remains tight, head hunters are still quietly making a living. The public transport is world class. We enjoy one of the top three educational systems in Asia (if you can get your children enrolled, that is). This is still one of the best cities in the world to live and do business.
The Bad Stuff
The pollution keeps the rents exorbitantly expensive, rather than stratospherically unaffordable. That’s it.
And the Next 15 Years?
So where will we be in another 15 years?
Pro democracy activists will continue to increase the proportion of geographical representation. But I suspect there’ll still be functional constituencies lingering for a while to come yet. If you think that’s strange, what odds can I get on Kevin Rudd commencing a third non-consecutive term as prime minister?
As for the economy, if the last 15 years are anything to go by we should expect to see: Asian GFC 2, Food Crisis I, Sars II, The Facebook Crash of 2017, and Food Crisis II.
Of course the volatility and crises will give ample opportunity for Hong Kong to continue to demonstrate her resilience and perseverance.
But we will continue to use a hand from mainland shoppers, the consolidation of RMB settlement in Hong Kong, and the recovery of the US after their lost decade. ■
*Originally from Sydney, Max Mack is a long-time expat and banker currently living in Hong Kong. Contact the author at: MaxmackHK@gmail.com