Why is Hong Kong so important to China—power, profits or prestige?

S
ince the handover of Hong Kong from British rule back to China in 1997, the central government in Beijing has granted the city the special status in terms of the “special administrative region” (HKSAR). According to the principle of “One country, two systems” that was initiated in the 1980s by the late Chinese leader Deng Xiao-ping, Hong Kong was allowed to “enjoy a high degree of autonomy, except in foreign and defense affairs” for the next 50 years.

This means HKSAR has its own legal system, multiple political parties and its mini-constitution to enshrine the basic civil rights in terms of the democratic procedures of the West. Considering the stark contrasts between the mainland China and Hong Kong in the 1980s, this is truly an innovative idea and daring practice. Otherwise, the unconditional handover of Hong Kong back to China would not be so smooth and the governing of the former colony by Beijing would not be so successful. Here the question arises why Hong Kong is so important to China which has been seen as a rising power with an ambition likely to end the hegemony of the United States?

Frankly speaking, now Hong Kong has become one of highly competitive global trading and financial hubs primarily during the past two decades. As a former British colony, it had laid down the sound legal and financial systems, yet all its current economic, technological and social weights have been resulted in China’s reform & openness initiated in the 1980s. As former U. S. Consulate General Burton Levin said in 1994, “Under British ruling for 155 years, Hong Kong had enjoyed full freedom of speech and religions but never democracy.” Especially to the people of China, Hong Kong is more than a colony but a bitter memory of “the century shame of the ancient country”.

Yet, in 1949 when the People’s Republic of China was founded, the government in Beijing did not retake Hong Kong back immediately. Even during the cold war, Britain was the first major power of the West recognizing the P.R.C. as the legitimate government of China in 1950 and posted a chargé d'affaires ad interim in Beijing from 1954 until 1972 when China accords full recognition to HMG, permitting the exchange of ambassadors. Considering the severe sanctions imposed by the United States against China of that time, Chinese Premier Zhou En-lai not only facilitated the Sino-British trade committee as semi-official trade body (later merged with the Group of 48), but also made HK as the key “window” to the outside world. Under the circumstances, Hong Kong did serve as a channel to help China obtaining various technologies, economic items and foreign currencies, which were so invaluable to China for it was eager to develop but was isolated by the US-led Coordinating Committee for Export to Communist Countries. The hidden role of Hong Kong as a “window” was not finished until 1972 when the Sino-United States’ rapprochement was made in light of the realpolitique of the world affairs.

When China started the reform and openness in the late 1970s, Hong Kong had also changed impressively in terms of garments industries, public housing program and general living standard. For sure, this rapid industrialization was driven by textile exports, low-cost manufacturing items and re-exports of good to China. In addition, efforts were made during the 1970s—1980s with the view to improving the public services, environment, social welfare and infrastructure, which in turn laid the foundation for Hong Kong to establish itself as the first of the “four Asian tiger economies”. Due to this, Hong Kong naturally came to be the vital gateway for mainland China to draw relatively competitive manufacturing know-how, financial management, and foreign direct investment into the economic areas in southern China which were opened up to foreign businesses. This is not one-way benefit since Hong Kong needed to transfer its low-skilled and massive-labor industries to China. Under the win-win formula, Hong Kong has developed itself as a global financial center along with London and New York city, a regional hub for logistics and freight, one of the fastest-growing economies in Asia and the exemplar of laissez-faire market policy globally.

However, in retrospective, people in Hong Kong and the British public as well have always reviewed the past two decades with obvious ambiguous sentiments. Back then in 1997, cosmopolitan and glittering HK city served as China’s gateway to its future dream and many believed it would stay that way for years to come. Fast forward 20 years, it is no longer the only jewel in China’s crown, with cities such as Shanghai, Shenzhen and Guangzhou becoming financial and technological innovative powerhouses. As HK politician Martin Lee observed, “I couldn’t have thought that China’s economy would develop so quickly … and Hong Kong’s bargaining power would diminish so fast.”

Would Hong Kong remain China’s golden goose in the next decades? The answer seems to be given by Chinese President Xi Jinping on June 30 during his three-day visit to Hong Kong for the historic anniversary of the handover of HK from British rule back to China in 1997. In a brief speech at the airport, Xi reaffirmed that Beijing’s central government “has always been a patron of Hong Kong, and will as always support HK’s economic development and improvement of people’s welfare.” Looking forward into the next 30 years, he promised that Beijing was to work with all sectors of Hong Kong’s society in maintaining its extraordinary achievements of the past decades and would ensure “one country, two systems” moving forward in light of social stability in Hong Kong.

No doubts, Hong Kong will act as the key player in China’s century project of “the Belt and Road Initiative”. The reasons behind are as follows, since its return to China, Hong Kong has kept its distinct features and strengths, including its vibrant metropolis where the East meets the West remains as strong as ever. For example, Hong Kong’s leverages are its knowledge of finance management, global trade and technologies innovativeness, the Guangdong-Hong Kong-Macao Greater Bay Area, Renminbi internationalization and other major development strategies, which are all important to “the Belt and Road Initiative”. As China has entered the final stage to realize its national goal as a global power, development is both the top priority and an abiding pursuit. As a result, it is crucial not only for Hong Kong's survival but also provides an invaluable opportunity and an inexhaustible source of strengths and broad space for it to address prominent economic and livelihood issues that people are concerned with. To that end, the new Chief Executive Carrie Lam Cheng Yuet-ngor vowed that HKSAR takes all necessary measures to enforce the principle of “one country, two systems”.

Pragmatically speaking, as the Chinese Government Work Report in 2016 explicitly stated, Hong Kong and Macao are expected to play their roles in China’s economic development and especially in “the Belt and Road Initiative”. Thus, the framework agreement on closer cooperation between the Chinese mainland, Hong Kong and Macao aims to draw up a development plan for a city cluster in the Pearl River Delta that gives full play to the distinctive strengths of each side. Or simply put it, with relatively higher market sophistication, the advantage of “one country, two systems”, and competitiveness in building up clusters of production and industries, the economic aggregate of the Greater Bay Area in the Pearl River Delta is poised to exceed the bay area of Tokyo to become the world's largest economic cluster area by 2025.

In closing, despite a growing sense of local identity and even a clear anti- Chinese sentiment among the post-1997 generation, most people in HK admit that in the next 20-30 years, thing are going to change. They have the bridges between Hong Kong, Macau and the cities in China, and they have high-speed rail as well. These infrastructures will change Hong Kong and eventually the borders will become seamless. As a result, “Hong Kong will integrate more in China, whether we like it or not.” These words were confided by a HK business magnate Allen Zeman. What he said is not exaggerated, yet he still missed the point, that is, the central government in Beijing allows no one to interfere with the Hong Kong’s business and to deviate from the official line of the principle of “one country, two systems”.

Wang Li is Professor of International Relations and Diplomacy at the School of International and Public Affairs, Jilin University China.

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