THE WISDOM FUND: News & Views
June 29, 1997
The Toronto Sun

Hong Kong Democracy That Never Was

by Eric Margolis

LOS ANGELES - Don't cry for British Hong Kong. The British Empire died half a century ago. Hong Kong is merely a relic of an age of rapacious European imperialism.

British traders founded Hong Kong as the main base for pushing their opium trade into China. When China resisted the mass addiction of its people to drugs, Britain twice went to war with China, forcing it to accept opium. Hong Kong was the 19th century version of Cali, Colombia, the world's narcotic capital. The fortunes of many of Britain's great families, including those royal, were built on the drug trade.

Britain pillaged, humiliated and addicted China for more than 50 years. Russia, Japan, France and Germany joined in carving up the carcasses of bleeding China. Only America treated China with humanity and decency. Chinese will retain no nostalgia for this period, or for the 19th-century British, who were charming, witty, elegant, utterly ruthless pirates.

The media is barraging us with a distorted, nostalgic image of pukka British Hong Kong - a perfect little jewel of democracy and western values - that never really existed. The British didn't let Hong Kong citizens vote in direct elections until 1991. Behind a facade of democracy, a powerful British-Chinese oligarchy ran Hong Kong.

On Monday night local time, Hong Kong will finally be reunited with China, ending a century and a half of national shame. A purely Chinese oligarchy, the communist party, will assume power.

What will happen in Hong Kong? At first, little. Chinese move slowly. Beijing won't spook foreign investors - the majority overseas Chinese - or Taiwan, the next candidate for reunification, by strongarming Hong Kong. Change will be slow, discreet; in form, rather than substance. China already runs much of Hong Kong, and dominates its business.

In time, however, Hong Kong will become much more like the rest of China. Toxic corruption will infuse industry and institutions; personal connections, `guanxi,' will become more important than law. Bureaucrats will inevitably get their hands on free enterprise, and begin draining some of its blood.

Political expression will be curbed, This is a minor concern to most Chinese, who are intent on making money, not politics. Hong Kong's vast wealth had little to do with democracy. It came from the colony's strategic location as the export center for southern China; Chinese entrepreneurial spirit; and a stable society, with rules of law, enforced by the British, that permitted business to flourish.

Today, Hong Kong is an economic colossus because it has minimalist government that does not intervene in the economy. Maximum personal taxes are 15.5%. People can get rich from hard work in Hong Kong. Families, not government, provided social security.

In fact, Hong Kong is the ultimate expression of Margret Thatcher's free market economic policies: people with the least government have the most wealth. Lack of intrusive, taxing government, rather than popular democracy, has been a major factor in Hong Kong's success.

Some of this economic freedom and vitality must be lost when China takes power. To the north, Shanghai is rapidly emerging as Hong Kong's commercial and financial rival. In the 1930's, Shanghai's stock market was Asia's most important financial center - and will likely resume this role within a decade.

Beijing, wary of secessionist tendencies in south China, is building up Shanghai as a counter-weight to Hong Kong. Still, China needs Hong Kong's commercial culture which provides business moxy and know-how. It will take at least another generation to replicate Hong Kong's advanced commercial culture on the mainland.

Even reunited to China, Hong Kong will look outward and retain a good measure of autonomy. This is because of the centrifugal pull of the overseas Chinese. The overseas Chinese community, including Hong Kong's 6 million people, amounts to 55 million, spread around the globe. These Chinese expatriates dominate trade and finance in every East Asian nation except Japan and Korea.

Amazingly, if the total economic activity of overseas Chinese was lumped together in one country, it would be the world's third largest economic power, exceeded only by the US and Japan. The Chinese diaspora today provides 80% of the foreign investment in China.

China is undergoing a breathtaking economic transformation similar to Japan's emergence from feudalism a century ago under Emperor Meiji. The end-product of China's second revolution under the late, great reformer, Deng Xioping will most likely be a post-communist, hybrid system that combines authoritarian rule and free market capitalism. Most depressing to China's western critics, this new system will probably work rather well.

Much of the current anti-Chinese hysteria in the west - and handwringing over Hong Kong - is caused by dismay, or fury, that China is becoming a super-power. Carping about voting rights in Hong Kong, or threatening trade sanctions, won't deter China's inevitable rise to economic, political and, one day, military might.

Monday night is enormously historic. It truly marks China's debut as a world super-power - and, equally significant, - signals the beginning of the decline of the United States as the dominant power in East Asia and the China Sea.

The `Sleeping Giant' has awakened - and, as Napoleon predicted, the world is shaking.



Eric Margolis is a syndicated foreign affairs columnist and broadcaster based in Toronto, Canada.

[The dark secret at the heart of Hong Kong is the unmitigated collusion between the government and a property cartel - controlled by just a few tycoons; the Lis, the Kwoks, the Lees, the Chengs, the Pao and Woo duo, and the Kadoories (more about them on part 2 of this report). These tycoons and their close business associates also happen to dominate seats on the 1,200-member Election Committee that chooses Hong Kong's chief executive.--Eddie Leung and Pepe Escobar, "The myth of a free Hong Kong economy ," atimes.com, August 2, 2012]

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