By Mark Clifford It's lunchtime at the Mandarin Grill, Hong Kong's most venerable restaurant, where the city's political and financial elites meet to chew over deals. My luncheon partner -- let's call him Peter -- is part of this charmed inner circle. He dines more often with Hong Kong Chief Executive Tung Chee-hwa than he does with me.
But his connections extend further than this city of 7 million people. Peter has skillfully cultivated top-level contacts in the U.S., where he lived for many years and where his children attended college, as well as in China. Western investment bankers like him because he's so international.
Though Peter doesn't hold any official posts, this tycoon's friendships put him at the center of power. And his thinking is broadly representative of the small group that runs Hong Kong. Because I've known him for years, he'll say to me what others won't. Since I'm an American, our lunches are often an exercise in cross-cultural misunderstanding -- even though I've lived in Hong Kong for a decade and have permanent resident status.
ELECTION CANCELED. This week, talk with Peter quickly turns to the coming election for Hong Kong chief executive -- sort of like a mayor or county executive. There was supposed to be a two-week nomination period, then a one-month campaign. Yet Chief Executive Tung declared victory in the contest on just the fourth day of the two-week nomination period.
He did that by lining up 89% of the small group of electors that will pick the next chief. When the nomination period ended Feb. 28, Tung was declared the uncontested victor. It turned out that the election, which was scheduled for the end of March, didn't need to be held.
Bear with me while I explain a few technicalities of the Hong Kong election process. Fewer than 200,000 voters have the right to vote in this electoral college. A prospective candidate then needs nominations from at least 100 of the electors. A key point: Nominations must be made publicly. In the run-up to the beginning of the nomination period on Feb. 15, Communist Party leader Jiang Zemin and Premier Zhu Rongji both publicly backed Tung. So, few electors wanted to stand up and publicly buck the mainland's wishes by nominating another candidate -- especially since many of those people have interests that can be damaged by Beijing's displeasure.
NOT MUCH SAY. For Peter, it doesn't matter that most Hong Kong residents have no say in their top political representative. What matters is that Tung has Beijing's support. "The most important thing," he says, "is that whoever leads Hong Kong needs to have the trust of Beijing." That's hard to argue with. But this troubles me: What say do the people of Hong Kong have?
Since 1997, this former British colony has once again become part of China. I've got to give Tung credit for keeping the disruption of this historically unprecedented transition to a minimum. Think of it -- a freewheeling British colony, the emblem of raw capitalism, delivered into the hands of a Communist state.
Five years later, Hong Kong still has its own currency, firmly anchored to the U.S. dollar. We residents continue to have a low tax rate. None of the funds from the bulging Hong Kong government coffers are sent back to Beijing. The small contingent of People's Liberation Army troops is largely confined to barracks -- and are certainly much better behaved than were their British counterparts. And Queen's Road still runs through the central business district -- no one has moved to rename it Mao Zedong Boulevard.
MIXED RECORD. Tung has even allowed the falun gong, a cultish group that combines tai chi-like exercises with meditation, to practice in Hong Kong, even though it's the focus of a brutal crackdown on the mainland.
Scratch the surface a little harder, however, and the record is more mixed on things that really matter to Hong Kong's long-term prosperity. Things like rule of law and a free press. The situation remains tolerable. A disturbing amount of self-censorship aside, Hong Kong still has an independent press. And despite a few deeply glaring instances that show neither Tung nor his Secretary for Justice, Elsie Leung, really understand what "rule of law" means, they haven't tampered too much with the legal system.
"What if Martin Lee were chief executive?" asks Peter. "Would Beijing allow that?" He's talking about the chairman of the local Democratic Party, which regularly polls more votes than any other party. Lee, a prominent attorney, grew mistrustful of the mainland after the 1989 killings of pro-democracy protestors in Tiananmen Square, and he's on Beijing's blacklist.
YESTERDAY'S SLOGANS. Peter has a point. Beijing wouldn't like Lee's ascension to power at all. Indeed, although the government considers Lee to be Chinese, authorities won't even allow him to visit the mainland. Some people could argue that we're better off having one of Hong Kong's own people do Beijing's bidding than to have Beijing force its wishes on us in a more heavy-handed fashion.
But what about Beijing's promises in the Basic Law, the Hong Kong Territory's mini-constitution, that people here could enjoy a "high degree of autonomy." Only foreign affairs and national security were supposed to be in Beijing's province. As long as Hong Kong isn't used as a base for subversion, we're supposed to be able to run the territory ourselves.
Beijing's propaganda organs had a nice slogan for it: "Hong Kong people rule Hong Kong." Funny you don't hear that much these day. "The most important quality for a chief executive is that Beijing trusts him," reiterates Peter.
WIDESPREAD DISCONTENT. Beijing may trust Tung -- but the people don't. A poll by Hong Kong's Baptist University shows that only 16% of citizens support Tung for a second term, while 56% oppose him. Perhaps even more stunning is that my conversations with many members of the elite -- not the inner circle, but prominent names in the community -- reveal widespread discontent with the status quo and with Tung. Peter and I agree to disagree on this one.
I'd like to see more rapid movement toward representative government. We have the right to elect the chief executive through direct election in 10 more years. The Basic Law also gives Hong Kong citizens the right to directly elect all 60 members of the legislature after 2007, but it's vague on when or how this will happen. All the more reason why we should start putting more democratic institutions in place now. So far, Tung has been reluctant to even start a political debate.
I don't like this small-circle electoral system where a few members of the elite run things. Peter retorts that the U.S. has an electoral college -- and, as we saw in the last Presidential election, it doesn't always elect the winner of the popular vote. "If you didn't have the Electoral College, you might elect that guy Al Sharpton. You need some kind of check." He may have some influence in New York, but Al Sharpton isn't big in Hong Kong.
ENDURING LEGACY. Then it occurred to me: Most of the developed world had these sorts of arguments about the time Queen Victoria died. But Hong Kong's political system still reflects its legacy as a 19th century British colony. The last governor, Chris Patten, belatedly made some moves toward more representative government, but they were fought by mandarins in both London and Beijing.
So what is Tung going to focus on in his second term? Peter tells me the chief exec is dedicated to making sure Hong Kong continues to retain its distinct place, to ensure that it matters at a time when China's rise looks unstoppable and foreign investors are bypassing Hong Kong to go to directly to the mainland.
I ask Peter, what sets Hong Kong apart? How can it stay relevant at a time when China is a cheaper market and has higher growth potential? It's not our renowned infrastructure, which sure helps: Visitors and locals alike love our high-speed train to one of the world's most modern airports.
GREAT DIVIDE. What really sets Hong Kong apart is the soft stuff. A relatively small, clean, competent government. A local press that can criticize. The plurality and the confidence to allow dissenting voices. Abiding by legal decisions rather than running to Beijing to get them overturned, as Tung has done repeatedly.
I can see Peter's eyes impatiently flickering. For all the time that both of us have spent in each other's countries, for all that we share, a gulf still still separates us. For now, at least, Peter and his crowd are running Hong Kong. I can only hope that I'm wrong, and that they know what they're doing. As a Hong Kong permanent resident, BusinessWeek Asia Regional Editor Clifford will be eligible to vote in the next Legislative Council election