The Future of Hong Kong
by Chris Pang
For almost a century, the colony of Hong Kong has been one of the world's largest centres of economic activity. A major Asian port, it is a centre of international trade, finance, manufacturing and
tourism. On the southern coast of China, Hong Kong's deep, wide harbour is ideal for easy access
to ships and other large freighters. The colony is a British dependency and has been such as far back as 1839 when China lost the land as a treaty condition of the Opium War. In 1898, China leased the land to
Britain for 99 years. As 1997 approaches and that lease comes to an end, many questions surface as we view the new conditions in Hong Kong.
The exact day that Britain hands over Hong Kong to the People's Republic of China (P.R.C.) is July 11, 1997. Since China is a communist country, many in Hong Kong and abroad worry about political and economic stability. Despite China's promise to maintain the status quo, its credibility is questioned by concerned individuals. If China decides to alter the manner in which Hong Kong is currently governed, residents, business firms and foreign countries will be strongly affected. Of the six million people living in Hong Kong, no one really knows exactly how these potential changes will play out.
Many fear the uncertainty that is looming. One issue that afflicts residents is their inability to leave Hong Kong if China imposes new visa restrictions. Business firms from many countries operate in Hong Kong. If communism becomes the form of government, many firms may lose control over their Hong Kong-based
enterprises.
Hong Kong exports most products to the U.S.A., Germany, the United Kingdom and Japan. They import the majority of their food, machinery, steel, iron and raw materials from the U.S.A., China, Japan and Taiwan. With Hong Kong's fast-rising economy and tremendous prosperity, its international trade could be jeopardized if China imposes stringent policies affecting Hong Kong's foreign trade. Such change will not only throw Hong Kong for a loss but also affect numerous other countries that are involved in the area. Over 100 banks and four stock exchanges are situated in Hong Kong.
For Canada, there is potentially a huge impact. Over 125,000 Canadians currently live and work in Hong Kong; however, a whopping 60% of people emigrating from Hong Kong end up here in Canada.
On the other hand, there are plenty of reasons to look forward to the future of Hong Kong. Within the past few decades, China has shown an incredible movement towards capitalism and a free market economy. China has been a communist country since 1949, and their leader then, Mao Zedong, was opposed to any foreign trade. However, following the death of Chairman Mao in 1971, the de facto leader, Deng Xiaoping, realized that a free market economy would be in China's best interests. As this movement progressed, China reached a point of no return as the country slowly edged communism aside. With this new capitalistic ideology, Hong Kong citizens as well as the rest of the world, have confidence that China will not make drastic changes in Hong Kong. Abrupt political and economic change to the colony would result in destruction also of China's own economy.
Once China assumes control of Hong Kong, it will be responsible for all economic activities. The amount of money that Hong Kong brings in annually as a free port greatly benefits China, and any change would jeopardize China's economic growth. As an example of strident political change in a country, the recent situation in Russia clearly establishes the corresponding negative effects of sudden change in government. If Hong Kong were to experience a similar change, most likely, a tremendous collapse would occur and China would obviously be reluctant to risk such a huge reaction.
An agreement negotiated in 1984 between China and Britain states that Hong Kong is to become a special administrative region of China. This agreement states that China would have no control over foreign policy and defense of Hong Kong and further that it was permissible to maintain the capitalistic economy. However, behind this somewhat friendly agreement, there lies a resentful issue. For over 150 years, Britain had not altered Hong Kong's existing colonial government. And just a few years ago, the U.K. suddenly changed the government from one of colonial nature to that of a democratic nature. This obviously angered China for a democratic society would trigger arguments between the Hong Kong and the Chinese government. The main issue at hand in this situation is a free election for the citizens of Hong Kong.
The most popular of the many parties running for a possible free-election in 1997 is the Democratic Peoples' Party which won 19 of 60 seats in the legislature, making them the largest political party in the Hong Kong. Britain claimed that this change would be for the better, although the Chinese see it as a cunning way to protect British assets, which rest in Hong Kong. China's control will allow them to either allow the free-election or choose their own type of governors. No matter what course the Chinese government chooses, its decision is one that the world must accept after 1997.
Hong Kong's future may be seen through several perspectives, and there is hope for Hong Kong in 1997. Demand for real estate is surging; retail sales rebounding; corporate profits climbing; and falling Chinese interest rates are signaling an end to China's three -year long austerity program. With this program, which raised inflation rates coming to an end, the Hong Kong stock market is now on a roll, with investors having a great deal of confidence in post1997 Hong Kong, under Chinese control.
On September 26, 1996, Canada signed an agreement, which stated that Hong Kong travelers could enter Canada visa -free, giving many Hong Kong citizens a greater assurance of their future. China, which has also benefited from a heightened economy, has cut interest rates twice during the past six months and a third rate cut is expected next year. Some analysts have reported that this may be the start of a major bull market run!
I feel that China's step toward a free-market economy has helped them to realize the benefits that Hong Kong will offer. Still, there remain a few important issues that need to be addressed before any conclusions are made. Many people condemn China for their military attack on the university students at Tiananmen Square in 1989. Although that was over 7 years ago, a lack of confidence in China has developed amongst the people of Hong Kong. The main issue of concern is that China could take away the free-election and democratic rights of the Hong Kong people overnight. However, in my opinion, there has been a deliberate media campaign by the British to protect their vested assets.
We must not forget that when Britain controlled Hong Kong, it did not grant any form of democracy for the colony until a couple of years ago when Britain wanted to ensure their economic status. Thus, it is fair that Britain hand over Hong Kong to China without further disruption. I can understand China's contempt towards Britain for the cynical act of playing a political game. China, however, has the power to control this 'game' by choosing their own representatives, which seems wholly appropriate.