ECONOMIC RECOVERY, AT A PRICE

President Jiang Zemin and his aides have given unmistakable indications that Beijing is taking a harder line on Hong Kong. The Chinese Communist Party (CCP) leadership, however, has also dangled what could be an economic lifeline for the recession-riddled Special Administrative Region (SAR). Jiang and other senior cadres such as Vice Premier Qian Qichen were in Hong Kong for only twenty-four hours to mark the fifth anniversary of the July 1, 1997 change of sovereignty. Yet the tough and surprisingly unsubtle statements they made on Beijing-Hong Kong relations have left little doubt that the delicate line between the mainland and the SAR is being blurred.

In his July 1 address, the 75-year-old president and party chief claimed that experience in the past five years had shown that late patriarch Deng Xiaoping’s “scientific concept of ‘one country, two systems’ and ‘a high degree of autonomy'” were “entirely workable.” Yet, recent developments, including Jiang’s own statements, seem to show that the multisplendored possibilities of “two systems” could be sacrificed on the alter of the monolithic requirements of “one country.”

AN INVITATION OR A SUMMONS?
The president raised eyebrows when he invited Hong Kong compatriots to become “worthy masters of not only Hong Kong but also our great motherland.” Jiang went on to admonish the “masters” to “conscientiously safeguard the motherland’s security and unity–and to safeguard the overall interests of the motherland and the Chinese race.”

Under this patriotic banner, it is conceivable that the SAR administration and Hong Kong residents may be called upon to suppress “anti-Beijing” or “subversive” forces such as the Falun Gong, deemed an evil cult and a threat to national security. In the week leading to Jiang’s visit, about 100 Falun Gong practitioners from the United States, Japan and Taiwan had been denied entry to the SAR. And, in the interest of promoting national unity, Hong Kong media may be asked to play down news about–if not to denigrate and attack–activities by the pro-independence Democratic Progressive Party of Taiwan.

Moreover, veteran Hong Kong observers think Jiang’s statement may be high-level propaganda to lay the groundwork for legislation to flesh out the much-feared Article 23 of the Basic Law of Hong Kong. This notorious article says the SAR administration should enact laws to forbid “subversive and seditious activities” against the central government and to stop political organizations from forming links with counterparts in foreign countries.

In a series of interviews that he gave to selected Hong Kong media in late June, Vice Premier Qian urged that an antisubversion law be enacted early to combat “anti-Beijing” groups such as the Falun Gong. “We should ban activities by the Falun Gong,” Qian said, adding that extra attention should be paid to Hong Kong-based Falun Gong members colluding with counterparts overseas.

Another disturbing signal that Jiang, Qian and other senior officials sent relates to the issue of democratization in the SAR. While the Basic Law points out unequivocally that the SAR should–albeit gradually–evolve towards a democracy, the top cadres have put their emphasis solely on “rallying behind [Chief Executive] Tung Chee-Hwa and his executive-led administration.” Thus Jiang called on different sectors of the community to render more support for Tung “under the banner of loving the country and loving Hong Kong.”

And in his interviews with the Hong Kong media, Qian warned that Hong Kong “cannot copy the political system of another country.” Translation: no Western-style democracy for the SAR. While the Basic Law states clearly that the legislature should eventually be elected by universal suffrage, Qian recommended the “model based on functional constituency elections.” Functional constituencies are a reference to chambers of commerce and professional organizations that have over the years tended to nominate pro-government and pro-Beijing legislators.

LIKE-MINDEDNESS?
And, intriguingly, while until late last year Beijing leaders had praised Hong Kong’s 180,000-strong civil servants as the pillar of the SAR’s success, Jiang and company have recently cast doubt on their political loyalty. In his July 1 address, Jiang called on senior civil servants, most of whom having been trained by the British, to “conscientiously submit to and uphold the chief executive’s leadership.” Qian even referred to Tung’s first term as a “one-man show,” implying that the bulk of the policy secretaries he was obliged to retain from former Governor Chris Patten’s cabinet were not quite trustworthy.

The vice premier called the newly introduced accountability or “ministerial” system–under which Tung is empowered to name businessmen and professionals, and not necessarily civil servants, as top officials–a big improvement because it would enable Tung to work with “like-minded officials.” Again, the implication was that some of the senior civil servants who served Tung in his first term could hardly be described as the chief executive’s “like-minded” soulmates. Sources close to the SAR administration said Qian’s remarks caused a lot of anxiety and ill will among veteran civil servants.

The harsh words of Jiang and Qian have elicited a hailstorm of criticism from the SAR’s democrats, who see themselves marginalized even further in Tung’s second term. Chairman of the Democratic Party Martin Lee has decried efforts by Beijing to “impinge on the Basic Law and the SAR’s high degree of autonomy.” City University of Hong Kong social sciences lecturer Choi Tze-keung pointed out now that Hong Kong was no longer the focus of international attention, the top leadership was “exercising much less self-restraint” while discussing local affairs in public.

The CCP leadership, however, has sweetened the bitter medicine of more direct interference in SAR affairs with offers to bail out its beleaguered economy. In his address, Jiang said Beijing would “continue to support and help Hong Kong’s efforts to revive and develop the economy.”

MOVING WATER NORTH TO SOUTH
Chinese and Hong Kong sources familiar with Beijing’s SAR policies say that the central government is contemplating a plethora of dispensations for Hong Kong. For example, in a move dubbed “moving water from north to south” (water means money in Chinese slang), Beijing is expected to encourage firms ranging from traditional state-owned enterprises (SOEs) to IT start-ups to invest in Hong Kong or transfer part of their operations to the metropolis. “SOEs and other firms may be encouraged to set up offices or even headquarters in Hong Kong to take advantage of its financial expertise and sales networks,” a Chinese source said. “Until now, only provinces and directly administered cities–and companies with the same administrative rank–can set up offices in Hong Kong. In future, most cities may be able to do so.”

In internal papers, Chinese economists have estimated that some 10,000 companies in southern China alone may want to set up outlets in the SAR. In the past year, Hong Kong businessmen have also asked Beijing to allow China’s 60 million gumin (frequent stocks buyers) to buy stocks and shares issued in the SAR.

While funds may be moving from north to south, schemes are being formulated to relieve Hong Kong’s unemployment woes by persuading more of Hong Kong’s 250,000 jobless laborers to seek their fortunes north of the border. Some mainland think tanks have proposed that municipal administrations in Shenzhen and other cities in the booming Pearl River Delta provide retraining for Hong Kong workers with a view to employing them later on a permanent basis.

Other measures being contemplated to help Hong Kong out are centered on the concept of a mainland-Hong Kong “closer economic partnership arrangement,” which was agreed upon between the central and SAR governments last January. The Tung administration and the SAR business community have been lobbying Beijing to lower or abolish tariffs on mainland-bound Hong Kong products. Central authorities’ favor is also being sought regarding infrastructure planning in southern Guangdong with a view to turning Hong Kong into a logistics hub for southern China.

These dispensations will come on the heels of other “super-special policies” already granted the SAR. For instance, to help Hong Kong’s hotel and retail businesses, all Chinese cities have scrapped their limits on the number of Hong Kong-bound tourists. And so as not to take business away from Hong Kong, Beijing has asked Shanghai not to bid for a Disneyland franchise–and Shenzhen to postpone the opening of its second stock market.

THE PRICE
Hong Kong’s economic integration with the mainland, however, may take place at the expense of the erosion of its unique characteristics. Increasing dependence on Beijing’s special favors may undercut both the SAR’s competitiveness and its legendary can-do spirit and resilience. Anson Chan, Hong Kong’s chief secretary until early 2001, had incurred the CCP leadership’s ire by repeatedly speaking out for Hong Kong’s interests and refusing to go along with Tung’s sycophantic ways with Beijing’s mandarins. Yet Chan hit the nail on the head when she warned in an article in the Financial Times about the pitfalls of letting “one country” tower over “two systems.”

“Mainland China does not owe us a living any more than the rest of the world does,” she pointed out while referring to Hong Kong’s growing dependence on the Chinese economy. “It is unrealistic to expect Beijing to come to our rescue. While it is necessary to smooth the flows of people, goods and capital between Hong Kong and the mainland, we must be careful not to blur the dividing line between the “two systems.”

Chan’s words will, of course, hardly sway Tung, who has in his first five years in office failed miserably to hack out new paths for the SAR. With popularity ratings at their all-time low, the chief executive knows that the only thing he has to sell is his sterling connections with Beijing–and the helping hand that he and the business community hope will be extended by the CCP administration. For face-saving reasons–and also for the sake of the SAR’s “prosperity and stability”–of course, Beijing may be willing to throw Hong Kong some bones. But Hong Kong’s uniqueness–its international flavor, independent spirit, and go-go, capitalist traditions–will be lost if it becomes not only another Chinese city but also one that is dependent on Beijing’s largesse. And as the mirage of “one country, two systems” recedes further and further, Hong Kong’s prospects for democratization may also become more illusory than ever.

Willy Wo-Lap Lam, one of Asia’s best known journalists and authors, is a senior China analyst at CNN’s Asia-Pacific Office in Hong Kong.