Already a Bloomberg.com user?
Sign in with the same account.
HONG KONG: `WE ARE MOVING INTO A MAJOR CONFRONTATION'
Just a few weeks ago, Britain and China seemed well on the way to a relatively painless handover of Hong Kong in 1997. The two sides had finally signed off on funding for the territory's new $20 billion airport and seemed likely to work out other contentious issues. But with the surprisingly big victory of Martin C.M. Lee's crusading Democratic Party in the Sept. 18 elections for Hong Kong's Legislative Council (LegCo), all bets are off. "We are moving into a major confrontation," says John Walden, a former senior Hong Kong official.
Most of the tension is likely to rise between the people of Hong Kong and China rather than between Beijing and British Governor Chris Patten. The election revealed that China's efforts to win the support of Hong Kong's residents by buying into local companies and cultivating key figures have failed.
REJECTION. The vote was a clear slap in the face for Beijing. The three leading pro-China candidates lost, while Lee, whom Beijing dismisses as a "counterrevolutionary," romped to a landslide victory. This shows China that multiparty "politics are here to stay," says Paul M.F. Cheng, a pro-business legislator.
Although Beijing still says it will dissolve LegCo when the takeover happens, Chinese representatives in Hong Kong publicly backed candidates, and pro-China parties mounted a big advertising campaign urging voters to support people who could get along with Beijing. But voters resoundingly rejected this message, favoring pro-democracy candidates in 17 of the 20 seats open to direct election. Lee and his allies came close to an overall majority in the 60-seat legislature, most of which is elected by voters representing specific occupational constituencies. "China made these polls a referendum on its involvement in Hong Kong," says Lee. "Now, China knows the answer."
Over the next year and a half, the uncompromising Lee is likely to use his strength in LegCo to reopen sensitive issues, such as the Court of Final Appeal, that were previously settled. Clearly, British flexibility will be reduced, and business worries that the Democrats will also obstruct contracts and push to cut the flow of immigrant labor.
Lee's strategy appears to be to carve out as much of a separate identity as he can for Hong Kong before the handover and then hope pressure from countries such as the U.S. and the international business community will provide some protection. This could work, but the danger is that the activist U.S. Congress could turn Hong Kong into another U.S.-China flash point like Taiwan.
Much depends on whether the international and Hong Kong business communities can prevail on China to live up to its promise to give Hong Kong a "high degree of autonomy" in running its affairs. Hong Kong's Trade Development Council, the powerful government-funded business body, is already working hard to persuade mainland officials that Hong Kong will be more valuable to China as a semiautonomous entity than as just another Chinese city.
But on the whole, Lee's win has made already jittery business executives even more nervous. They worry that Lee, a British-educated barrister, will so annoy Beijing that Hong Kong's role as a business center will be wrecked. "If Hong Kong is perceived as a threat to China, then they won't listen to anybody," warns a leading Hong Kong businessman, who terms Lee's victory "bad news."
That isn't entirely fair. If Lee succeeds in his efforts to assure Hong Kong an accountable government and a fair legal system, the territory's position as Asia's most dynamic commercial center will be enhanced. The question is whether he can protect Hong Kong without provoking the Chinese into destroying it.EDITED BY STANLEY REED By Mark L. Clifford, with Pete Engardio, in Hong Kong