Hong Kong, China - One Year On/06-30-98

One of the major threats to Hong Kong in the year since its return to Chinese sovereignty came not from the red dragon, says Sheila Parker, but from a scare over sick chickens

Watching the handover of Hong Kong on 30 June last year, I remember one commentator on the BBC becoming extremely emotional as pictures of the 4,700 Chinese Red Army were shown coming over the border from China. He was concerned at the 'Communist threat to successful capitalism in Hong Kong'. I laughed. Here was a BBC reporter who was either so entirely caught up with the patriotic fervour of the moment that he could avoid the reality of the situation or was just completely ill-informed. The idea of China having any interest in damaging Hong Kong when China has been pursuing internal reforms to make itself more like Hong Kong for the past 20 years, was and remains, ridiculous.

Indeed, the idea that Hong Kong's return to China was to be a sudden change or break with the past was similarly risible. As early as 1993, 80 per cent of Hong Kong's manufacturing firms had transferred some or all of their production to mainland China. Hong Kong was already operating as a part of China long before midnight on 30 June 1997. The BBC reporter was merely voicing the British establishment's perspective of the handover. It was, in fact, a stark reminder to the world that Britain is not what it was and never will be again. For Britain the issue was not 'one country, two systems' but 'one country up, one country down'. Sections of the Hong Kong media recognised their counterparts' biased reporting even at the time. 'Many stories revealed as much about journalists' own interests and those of their domestic audiences as they did about Hong Kong's transition, a slow process that began years ago and will continue for years hence'. (Far Eastern Economic Review 10.7.97)

Over the year there has been very little, if anything, which has given the media cause to speak out against China. The vast majority of commentators are stretched to find anything but continuity in Hong Kong.

The fears of Chinese repression have not been vindicated. The troops have remained in their barracks. There have been no displays of China's might and mastery over the SAR, or intervention in its administration. Neither has the fear that China would scrap the vestige of democracy introduced just as Britain was leaving the colony been vindicated. May's elections to the Legislative Council (Legco) were conducted with the same electoral system as under Chris Patten, the last British Governor. Some media commentators implied that the Chinese-appointed chief executive Tung Chee-hwa is responsible for the current lack of democracy in Hong Kong. Far >from it. The lack of democracy is a British legacy. Twenty of the 60 seats in the Legco are directly elected, 30 are chosen by functional/professional constituencies and the remaining ten by an electoral college. This is exactly the same electoral system that Patten used in 1995. In addition, the turnout for the elections under Chinese rule was 53 per cent compared to 35 per cent in 1995. While there are many interpretations of this, it would seem to indicate that Hong Kong people have more faith in the current administration than they had under British rule.

One of the major problems for Hong Kong since the handover has been an economic downturn, notably in the tourist and retail trades, the latter largely as a result of the former. Some have argued this was a result of the transfer of power - tourism fell by 32 per cent immediately afterwards. And, given that the British establishment and the media constantly talked down Hong Kong's future, it was perhaps to be expected. But the impact of the surge in the Hong Kong dollar compared to other South East Asian currencies as a result of the Asian currency crisis was the main reason for the downturn in tourism. It resulted in far fewer Asian tourists travelling to Hong Kong. In 1995 almost 50 per cent of tourists came from Asia (excluding China). The outbreak of 'bird flu' in November not only resulted in the disposal of almost 1500 tonnes of poultry, but also chased yet more tourists away.

When I wrote about the handover this time last year in LM (see Who's afraid of the Red Dragon?), my main conclusion was that Hong Kong had largely become a part of China well before handover. It is, therefore, not surprising that nothing has changed. I also concluded that events that would impact on Hong Kong would be as a result of its and China's place in the international economy, not what the bureaucrats did or did not do within its borders. However, the major influence on Hong Kong in the past year has not been interference from China, but the impact of the Asian currency crisis. Although Hong Kong is now sinking into recession, last year's growth was 5.2 per cent, a figure countries in the West only dream about. Without China, Hong Kong would have been less able to withstand the Asian currency storm. And far from Hong Kong's relationship with China having caused the recession, China has provided stability for the Hong Kong economy.