FRANK CHING
Hong Kong must make itself relevant to China

2009/12/17

WHEN Hong Kong was returned to China on July 1, 1997 after a century-and-a-half as a British colony, there was much anxiety as to whether the city would continue to prosper and to enjoy British-style rights and freedoms under China's formula of "one country, two systems" for 50 years. Now, 121/2 later -- or a quarter of the 50 years allotted to Hong Kong as a Special Administrative Region of China -- much has changed.

To be sure, the rights and freedoms remain and demonstrations against the Tiananmen Square massacre of 1989 continue to be held every June 4. This year, 150,000 people attended a candlelit vigil in Victoria Park where speakers called for Chinese officials to be held accountable -- the only part of China where such events take place.

And Hong Kong is as eager as ever to achieve full democracy, which Britain never allowed. China has now promised that Hong Kong's chief executive can be elected by universal suffrage in 2017 and the entire legislative council in 2020, but many are sceptical as to how fair the elections will be. Currently, half the legislature is chosen by universal suffrage, with the other members elected through a more limited franchise.

But it is on the economic side that things have changed most dramatically. Before 1997, Hong Kong people in general looked down on mainlanders as country bumpkins, but today mainland tourists are welcomed and the Chinese currency, or renminbi, is widely accepted.

Indeed, while in 1997 many in Hong Kong wanted to keep the mainland at arm's length, today many of the same people are working hard to integrate Hong Kong into the mainland economy, fearful that the city of seven million people might be marginalised as other Chinese cities boom.

When China announced earlier this year that Shanghai was to become an international financial centre by 2020, the fear in Hong Kong was palpable. While the local government made reassuring sounds about China being a big country that could accommodate two financial centres, many in Hong Kong were not convinced. The writing, they felt, was on the wall, and Hong Kong's days as an international financial centre were numbered.

Actually, anxious Hong Kong some years ago sought Beijing's reassurance about the city's future. Traditionally, the capitalist city was not included in China's five-year plans, but the current plan, for 2006-2010, does contain one short paragraph saying that the central government supports Hong Kong's status as an international financial, trade and logistics centre.

It is not widely known but that paragraph was written in Hong Kong and included in the five-year plan as a favour to the former British colony.

Now Hong Kong is asking for a seat at the table when the next five-year plan is drawn up, for the period 2011-2015. It wants to be heard on all decisions that may affect the city.

China has not done anything overtly to downgrade Hong Kong. In fact, Beijing clearly wants to help Hong Kong succeed.

Thus, when tourists from other countries stopped coming during the Asian financial crisis, Beijing allowed large numbers of mainland tourists to go to Hong Kong to bolster the economy. Now, mainland tourists exceed those from all other countries combined.

But as China develops, inevitably, its need for Hong Kong diminishes. Goods that used to be sent to Hong Kong for re-export to other parts of the world now can be sent abroad directly.

Hong Kong's container throughput used to be first in the world. Now it is behind Singapore and Shanghai, and two other Chinese cities, Shenzhen and Guangzhou, are expected to overtake Hong Kong soon.

The thaw in cross-strait relations also means that travel and trade between Taiwan and the mainland, which used to pass through Hong Kong, no longer does.

And, as China develops and improves relations with other parts of the world, Hong Kong's role as a gateway to China is no longer needed. Every Chinese city now is its own gateway.

Hong Kong still has certain advantages, such as a large body of professionals, like lawyers and accountants.

Other features include the rule of law, an independent judiciary and a largely corruption-free environment. These are important but still, foreign companies are flocking to the mainland despite its lack of such features.

And so Hong Kong has learned that if it is to keep growing, it must make itself relevant to China's growth. That accounts for the eagerness to be part of the next five-year plan.

frank.ching@gmail.com

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