The Handover of Hong Kong

Hong Kong's weather was bad, but at least it was fair to the two principal actors in the show of 1997.  It was raining for much of handover public holidays, from June 29 to July 2, as was usual for this time of the year.  The British had a dignified exit from its crown colony on June 30, with a show of 6 million-dollar worth of fireworks despite the heavy rain, paid by the association of British merchants in Hong Kong.  The Chinese were luckier the next day as the sporadic rain stopped before the fireworks went up, but the clouds were so low that the 200 million-dollar fireworks, paid through contributions by the big local businesses in Hong Kong, did not live up to the billing of the largest fireworks display in the history of Hong Kong.

The British and the Chinese made an often awkward pair in the handover ceremony.  The British guards of honor and the Chinese honor guards goose-stepped more or less in syc and blew their horns more or less in harmony, but the two could not have been more different on interpretation of Hong Kong's past: Prince Charles's speech reflected on the British pride in making Hong Kong the most dynamic trading city and financial center and referred to Hong Kong Chinese as cordial friends of the British, while President Jiang Zemin dwelled on the contributions of mainland Chinese to the economic success of Hong Kong and pointed out the suffering of the Hong Kong Chinese at the hands of the British imperialism.  The last British governor Chris Patten did not even pretend to listen to the translation of President Jiang's speech, which was delivered as if in front of an audience of communist representatives in a party congress.  When the ceremony was over, and the Prince and the President were supposed to rise up and exit, the announcement was made in Mandarin only, leaving the poor Prince confused and embarrassed.

Then there was the almost comical sworn-in ceremony for the Chief Executive C.H. Tung of the Hong Kong Special Administrative Region of the People's Republic of China (HKSAR), the top civil servants, the legislature, and the supreme court and the court of appeal.  To mainland Chinese who were watching it on TV, the sworn-in ceremony was a fresh experience because there is no such ceremony on mainland China, but because the ceremony was conducted in Mandarin, they probably understood it better than the Cantonese-speaking Hong Kong Chinese.  With the exception of the non-Chinese judges, the oath was also taken in Mandarin.  Considering that the oath actually proclaims accountability to the people of HKSAR as well as to the Chinese central government, the complete absence of Cantonese must surely have raised some eyebrows.

For the all hype generated by the Chinese government and the international media, the reaction of Hong Kong Chinese was largely subdued, although many of them obviously relished Hong Kong being the center of world's attention.  Active participation by the local business elite was evident, but to many common Hong Kong Chinese, the handover was a mainly Sino-British affair.  The majority of Hong Kong Chinese did not show any regret about the departure of the British, and they were too nervous to give a warm welcome the Chinese newcomers.  The reason that they were nervous about handover is simple: they had been living a pretty good life, and now suddenly there is uncertainty about that.  Elite Hong Kong Chinese have more polarized views about the British colonial masters, but it's not clear whether common people harbor any nostalgia or resentment toward the departing British.  In any event, Hong Kong Chinese are very pragmatic and know that whatever they think, the British have to go and the mainland Chinese have to come.  Even the activists of the Democratic Party, who often took anti-Beijing positions before the handover, acknowledged this sentiment in their first demonstration for democracy after the handover.

For me, the Hong Kong handover was a great opportunity to learn about Hong Kong, a city where I have stayed for almost a year, but about which I knew little.  As someone who was born and raised in China, went to the U.S. for Ph.D. degree in economics, and came back to Hong Kong to teach in a university, my perspectives are shaped by propaganda of the mainland government, brainwashing at the University of Chicago, and to a lesser degree, the complex feelings of Hong Kong people.

For the Chinese communist government, the handover of Hong Kong was an almost perfect political opportunity to improve its image to the world, and more importantly, to the Chinese people.  Despite of all the economic achievements under the leadership of the late Deng Xiaoping (or perhaps because of the achievements), the Chinese government still finds its hold to the "mandate of heaven" less than secure.  Indeed, the immense growth was possible only because of the smothering economic repression the Communist Party forced on the people prior to the reforms that began in 1979.  But the Chinese have learned a long time ago to rely on spiritual deeds in want of material superiority.  The one fundamental contribution to the Chinese civilization that the Chinese communists have always claimed is that it drove out the western and Japanese colonialists and upheld territorial integrity of China.  Just why the Chinese care so much about territorial integrity is intriguing, but this claim has always been the center of patriotism in communist propaganda.  The monument in the middle of Tiananmen Square symbolizes the communist's claim of a direct lineage from the heroes of the Opium War, and mainland Chinese children still grow up with the strong conviction that the Chinese history from the first Opium War to the communist takeover in 1949 was nothing but humiliation at the hands of the Europeans, Americans and Japanese.

So think about how lucky the Chinese government is in having the opportunity of taking over Hong Kong.  If the Portuguese colony Macau were the first to revert to China, we would have seen much less fanfare and international media attention, for Portugal today is no more than a small and poor European country---it already unilaterally gave up the sovereignty over Macau in 1970's---and Macau has nothing but casinos and massage parlors.  Instead, it was from the dying British Empire that the Chinese government recovered Hong Kong.  No other European country, indeed no country, would have been more appropriate from the Chinese government point of view, for the British was the one that inflicted the first and arguably the greatest humiliation on the Chinese through the Opium War of 1840-1842.  And look at what the Chinese government is taking back: a city with 6.5 million people on average richer (by 30%) than Britain itself, world's largest clothing export center and busiest harbor, a vibrant and rapidly growing financial center that's smaller only than New York and London.

And think about how lucky the Chinese government was in having concluded the negotiations about Hong Kong's future 5 years before the 1989 Tiananmen Incident.  Had the history been otherwise, the Chinese government would have to make so many more concessions to the British side to recover Hong Kong that its claim to recovering territorial integrity would have been seriously challenged in the eyes of mainlanders.  It would have even been possible for the British to maintain its administrative rights over Hong Kong under the umbrella of Chinese sovereignty (Hong Kong and part of Kowloon peninsular were ceded to Britain in perpetuity; only New Territory was on lease for 99 years that ended on July 1, 1997), as they have originally proposed in 1984 negotiations.  To the outside world, the Chinese government almost ruined the golden opportunity of Hong Kong handover with the 1989 Tiananmen Incident.  Instead of a warm welcome to Hong Kong's reversion to an increasingly open China, and with it a bigger market and more economic opportunities in East Asia, the predominant reaction among Hong Kong's trading partners is apprehension of Chinese repression of liberties enjoyed by Hong Kong Chinese and adverse effects on economic freedom.  The only government that benefited from this drastic turn of events is the British.  By pushing forward electoral reforms at the time when Hong Kong people were frightened by possible reparations after 1997, the United Kingdom managed to exit from its last influential overseas possession with just enough dignity.  Think about what would have happened if the British could not counter with the June 4 Massacre when the Chinese government reminded them of the evil opium trade that was the origin of acquisition of Hong Kong from the last Chinese (Manchurian) dynasty.  The subtle balance between the 1989 Incident and the Opium War was not lost even among Hong Kong Chinese.  When the Chief Executive C.H. Tung asked Hong Kong people to put the 1989 Incident behind them, some Hong Kong people responded by asking why the Chinese government wants the world to remember a war that occurred 150 years ago.

Fortunately for the Chinese government, the majority of mainland Chinese who celebrated the end of British rule in Hong Kong apparently did not see the connection between the 1989 Incident and the Opium War.  And, for the time being, they did not realize the extraordinary concessions that the Chinese government made in the 1984 Sino-British Joint Declaration.  Hong Kong is to keep its way of life for at least 50 years under the ingenious idea of "one country, two systems"  of Deng Xiaoping.  Deng was shrewd enough to see that the concessions were necessary to ensure that what the communist government takes over in 1997 is not worthless piece of land, that the takeover will not choke off economic growth in China, and that it will set up as a successful example to complete the recovery of China's territory with the reunification with Taiwan.  The list of concessions includes complete economic freedom from the central government (with 16.5\% flat tax and no tariff except on cars and cigarettes), an independent court of final arbitration, and a partially elected legislature with universal suffrage promised within one year of handover.  But will it take long for the mainland Chinese, especially those living in the prosperous cities, to see the special treatment of Hong Kong as concessions and to understand the logic behind the concessions made by Deng?

The Chinese government faces a formidable challenge after the handover. The political capital that it gained by recovering Hong Kong, in terms of a strengthened legitimacy in the eyes of mainland Chinese, will prove to have much shorter horizon than the implications of concessions it made in recovering Hong Kong from Britain.  Symbolically, the greatest concession that the Chinese government made, due largely to the distrustful world opinion after the 1989 Incident, was the registry of the 1984 Sino-British Joint Declaration with the United Nations.  Although within a few hours of handover Premier Li Peng already started to talk about issues involving Hong Kong as "internal affairs" to China, and in President Jiang's speech during the handover ceremony he seemed to retract the official promise of elections with universal suffrage by mentioning instead "a democratic system suitable to the needs of Hong Kong," the international world (and Taiwan) will be closely monitoring any significant breach of the Joint Declaration.  The concessions made by the Chinese government guarantee Hong Kong its way of life, but they also guarantee that, short of an economic miracle that lifts the living standard of mainland China by 50 times quickly, Hong Kong will remain much richer than the rest of China for a long time to come if China does not quicken the pace of economic and political reforms.  The Chinese government will have to explain to an increasingly restless domestic audience why Hong Kong deserves the special treatment when it is so much ahead, or why the rest of China can't adopt the system that makes Hong Kong Chinese so successful.

But the challenge to the Chinese government also presents a great opportunity and hope for the Chinese people on mainland and in Hong Kong.  When people from Hong Kong and around the world were asked about the future of Hong Kong and Deng Xiaoping's promise of 50 years to Hong Kong people, few seemed to realize that China is changing so quickly that in perhaps a decade, and certainly in the next 50 years, the political system in China will have changed its face.  When the time for change comes, the concessions made by Deng Xiaoping, with Hong Kong's capitalist ways under the watchful eyes of the world and enshrined in the Basic Law, will be a natural benchmark and a significant boost to the drive toward a more decentralized economic system and a more orderly society ruled by law instead of by man.  Moreover, Hong Kong's experience with democracy under the last British governor Chris Patten, limited as it was, will prove to be invaluable to the mainland Chinese who have had no experience at all.  Hong Kong Chinese can now look forward to a time period when they will change China.