A Cheer for Hong Kong, Really

While its woes are well documented, the city since Britain's handover has fared far better than many feared

By Bruce Einhorn

As anyone who reads BusinessWeek's coverage of Asia knows, we often point out that Hong Kong faces lots of problems -- and that the government isn't addressing them properly (see BW, 3/11/02, "Why Tung Should Trim the Fat"). Whether the issue is its wrong-headed economic policies or slow-paced political reforms, Hong Kong needs to get its act together if it wants to remain at the top of the heap among Asian cities.

But a recent news story in a local paper made me think perhaps it's time to call a brief time-out when it comes to criticizing Hong Kong. Let's put some of Hong Kong's woes in perspective.

In late February, a top Hong Kong official revealed that the government was planning an initiative to promote foreign investment in the city's moribund economy. Regina Ip, the security secretary in Chief Executive Tung Chee-hwa's government, said foreigners who invest in Hong Kong property, stocks, or investment funds would qualify for Hong Kong residency. While the minimum investment hasn't yet been established, she indicated it was likely to be $833,000.


  Since this is Hong Kong, where Tung has no shortage of critics, the plan was immediately lambasted. Labor activist Lee Cheuk-yan, who runs the leading prodemocracy union and is also a member of the legislative council, told the South China Morning Post the plan made no sense, since it didn't require that investments create new jobs. An immigration consultant complained that the figure was too high, and the newspaper pointed out that Singapore, Hong Kong's longtime rival, allows investors to buy residency permits for only $800,000. Even in the U.S., the figure is just $500,000. And the SCMP mentioned that the government would not enjoy the maximum benefit from the plan, since it wouldn't apply to those most likely to want Hong Kong residency -- people from mainland China.

Let's step back for a moment. The Hong Kong government is trying to entice people to invest in order to win residency, but it wasn't long ago that the situation was almost completely reversed. Back in the early to mid-1990s, Hong Kong denizens were looking to use investment to get precious U.S. green cards or comparable documents that would allow them to live in places like Canada or Australia. After the 1989 Tiananmen Square massacre, many were desperate to get some sort of protection from Beijing.

The disruptions were huge. Businesses faced major difficulties, as employees streamed out of Hong Kong. Emigrants feared the communists would come in and run roughshod over all the civil liberties the British had protected. The worst-case scenario had Hong Kong becoming a fearsome police state, with people like Martin Lee, the leader of the Democratic Party and a perennial critic of China's communist rulers, muzzled, imprisoned, or exiled. After all, that's what Beijing does to dissidents inside China.


  It hasn't happened. Martin Lee is still doing his thing -- lashing Tung, Beijing's hand-picked leader for Hong Kong. Meanwhile, unionist Lee Cheuk-yan continues to denounce the government from his seat inside the legislature. Outside the legislature, protestors gather on a regular basis. In fact, the demonstrations are so common they're barely even news anymore. And members of the Falun Gong movement -- which is banned in China and the object of a fierce crackdown -- stand at the Star Ferry terminal and other major pedestrian areas to protest Beijing's suppression of their mainland cousins.

Washington agrees that Hong Kong has remained relatively free. On Mar. 4, the State Dept. released its annual report on human-rights practices in 195 countries and territories. Here are excerpts from the section on Hong Kong: "The Government generally respected the human rights of residents, and the law and the judiciary generally provide effective means of dealing with individual instances of abuse.... Despite the ban on the Falun Gong in mainland China, the Falun Gong remained legally registered and generally free to continue its activities in Hong Kong."

That's not to say Hong Kong has made the transition from British Crown Colony to Chinese Special Administrative Region unharmed. Tung's government has certainly moved in the wrong direction in many areas. It has undermined the legal system by getting Beijing to overrule a decision by the Court of Final Appeal, Hong Kong's ostensible supreme court, that didn't go the government's way. Tung also has reduced the number of democratically elected local officials.


  The legislative council is severely weakened, with members often complaining that Tung's government simply ignores them. The most pro-reform member of his government, Chief Secretary Anson Chan, stepped down a year ago after Beijing made it clear she wasn't welcome. Thanks to a so-called election process that would make Saddam Hussein proud, Tung just won a second term in office (see BW Online, 3/4/02, "A Insider's Take on Hong Kong's Tomorrow"). And the economy is in trouble, with the unemployment rate at a record high of 6.7% and likely to continue rising in the months ahead.

Still, when you consider what many people feared would happen once the British set sail and the communists came marching into town, Hong Kong isn't such a bad place. That's worth remembering, even after the time-out ends.

Einhorn covers technology from Hong Kong for BusinessWeek. Follow his weekly Online Asia column, only on BusinessWeek Online

Edited by Patricia O'Connell

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