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I have a few observations about HK after the turnover. Some are
exposed by the Asian economic crisis:
The political aspect of the turnover went more smoothly than any one
expected. China has honoured all of its promises and left HK totally alone. It went out of
its way to do so. However, it does leave behind a strange political system where the Chief
Executive is elected by a small group of people and appointed by China, and an elected
legislative council(through various means) who have no hope of becoming the ruling party.
We therefore have an elected permenant opposition. It is a difficult system, to say the
least. The civil service is in a particularly difficult situation as they are the
non-elected government facing an elected opposition.
There is not total alignment between the British/Western trained
civil service with the (necessarily) pro-China Chief Executive and his hand picked
executive councillors. Both mindsets and styles are very different. This has led to
problems on a range of issues.
It is encouraging to see the contiuation of freedom of speech. There
are a number of newspapers and magazines (Jimmy Lai's Apple, Next etc), and some radio
programs who do nothing but criticising the government. Anti China demonstrations
are still allowed (none banned in the last year). The free press is alive and kicking.
The current crisis has exposed that HK is facing a cross road. What is
the role of HK going forward? In the past, HK is a western (British) base for doing
businesses in China and the Far East. Now it is a Chinese base. My personal view is that
HK should become the window for South China with the outside world. In the long run, its
role for Middle and Northern China is likely to be replaced by Shanghai. In the next
decade, there are possibly four business centres in Asia Pacific, Tokyo for Japan,
Shanghai for Northern China, HK for Southern China, and Singapore for South East Asia. A
network could be developed amongst these four centres.
There is a bubble in the HK economy that needs digestion which is
caused by
high land prices and high property prices (a legacy from the British colonial government).
It has driven out totally manufacturing and technology (although one can argue that labour
cost differences are also responsible). It has now putting high pressure on retail
and tourism. It will need adjustment and there will be a lot of pain. The problem is that
properties have become the main assets of most HK people. Even the brightest and the most
intellegent are in a denial mood. If not handled properly, either the problem will not be
solved, or the medicine is too strong that it will lead to social unrest.
The HK/USD peg is another short term issue. Psychologically, it is
dependent
on the Yen and the RMB (I am not sure there is a real economic dependence). There
are more down side than upside on this issue at this point of time. Once the peg is
removed, no one can predict the floor. Damn if you do it, damn if you don't.
Education, or its failure in the last decade, is an issue. You know
this better than I do.
There are many challenges for HK. We can only count on the hard
working, highly innovative, and highly adaptive people of HK to overcome them.
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