Hong Kong Status Report ~10 Years Later

Below is an adapted version of a paper I wrote a few months ago, citations stripped out. It’s a check-in on how Hong Kong is doing politically and economically since the Handover in ’97. The short answer seems to be: just fine. Economic growth is bustling, political freedoms are more or less respected by Beijing. More detail below. BTW – Hong Kong is one of my favorite cities in the world.

On July 1, 1997 Britain ceded control of its colony Hong Kong to the People’s Republic of China, ending 155 years of British rule. When the transfer agreement was made after the Treaty of Nanking, ‘97 seemed like a lifetime away, and Hong Kong did not have much economic significance. As the date drew nearer, however, Hong Kong had established itself as a financial hub in Asia, with a vibrant cosmopolitan culture, democratic processes, and an independent, more modern identity than mainland China. The “Handover,” as it is called, from Britain to China, therefore proved all the more intriguing because an important economic partner of the West was leaving its safe grasp and becoming a unit of a far less developed communist government.


British Rule of Hong Kong

When the British took control of Hong Kong it was poor and uninhabited. While it had some useful natural features ⎯ such a deep lake area surrounded by hills, which eventually became the famed Hong Kong port ⎯ at the time none of this was developed, and there was much debate within British government about whether they should even invest in their new colony or not.  Left to their own devices, the inhabitants of Hong Kong fostered an atmosphere not unlike the “wild west” sense in the early days of America.

When Britain began attending to its Asian colony, it did so without much concern for local tradition or custom. There was little effort on the part of British officials to learn Chinese. British governors made laws with no input from locals. One scholar of Hong Kong characterized early British rule as “oppressive” but something that could “offer opportunities.”  Those opportunities, of course, came in the resources a modern, Western powerhouse could make available to a small island in underdeveloped Asia.

Indeed, were it not for British resources (and some might say its culture) Hong Kong would have not become, by the end of British rule, the world’s seventh largest holder of foreign reserves, third largest exporter of clothing, and second highest per capita GDP in Asia.  Hong Kong, with its British backing, established a beacon of stability in Asia, and was bridge to Western markets. Expats flocked and contributed to a genuinely cosmopolitan culture that made it appealing for businesspeople to conduct trans-national deals.

As Hong Kong grew in economic stature, its political system matured to resemble not only Britain in its freedoms but also Switzerland in its pro-business attitude toward policy. Taxes and tariffs were kept low. The country was ranked one of the easiest places in which to start a business.  From a democracy perspective, local representation was still limited (a small group of Hong Kong businessmen voted in a legislature of sorts) and universal suffrage non-existent. British governors ruled. But locals didn’t seem to care much, so long as their pocketbooks were full and freedoms of speech protected. The Chinese in Hong Kong grew accustomed to colonial rule, and as such were a bit apathetic about engaging in political debate. Compared to their neighbors on the mainland or in Southeast Asia, day-to-day life in Hong Kong looked pretty good.


The Handover

The negotiations of Handover itself grappled with the fundamental challenge of autonomy. How autonomous will Hong Kong be within China? How will a liberal, more or less democratic place with press freedoms, an independent judiciary, and a stable private property / capitalist system be morphed into a government that is communist, censors its citizens, maintains a crooked judiciary, and allows only flashes of uninhibited capitalism? Will Beijing call all the shots? If not, which decisions are left to Hong Kong officials? These questions give a glimpse at issues negotiators from both sides (China and England) had to wrestle with. How, in other words, does the idea of “one country, two systems” actually get implemented?

In the end, China agreed to declare Hong Kong a “Special Administrative Region” which would enjoy a “high degree of autonomy” for at least the first 50 years of China control.  This meant the courts, free press, capitalist system, etc. would all be maintained independently in the short term. A “Chief Executive,” elected by an 800 person election committee in Hong Kong, would govern the state. The Chief Executive would govern in conjunction with the Hong Kong Legislative Council, a congress of sorts, which would be partially elected by the people and partially appointed by Beijing. The rule of law would change from British law to “Basic Law,” a Beijing-written constitution concerning Hong Kong. The most controversial aspect of Basic Law was Article 23 which said the Hong Kong government must enact legislation that “prohibit any act of treason, secession, sedition, subversion against the Central People’s Government.”

At face value, these arrangements seem excellent: at least in the short term, Hong Kong would maintain its rich independent culture, currency, and democratic institutions. To simplify, the arrangement guaranteed that the flag flying high would change, and British troops would leave the island, but there would be no substantive overhauls.

The fear among democratic activists in Hong Kong and among Western observers was that China wouldn’t follow through on these commitments. After all, “high degree of autonomy” can be interpreted in many ways.

With 11 years of Chinese rule of Hong Kong now behind us, we can safely say that the reality is somewhere in the middle – China has not reneged on its commitments to maintain Hong Kong autonomy, but there is also some evidence that Beijing is dragging its feet on certain democratic measures to run out the clock until the 50th year of control, when they have no need to maintain Hong Kong as a special region.


Political Situation

Political life under Chinese rule has changed in ways more invisible than visible. Universal suffrage still eludes the people and Beijing-appointed Chief Executives have proven less interested in advancing Hong Kong causes than pushing through Beijing policy. Yet British governors, even though they were probably more sympathetic to local causes than Beijing, still, in the end, represented the interests in Britain above all. So what are the “invisible” political changes?

Observers say that what’s changed in the political landscape in Hong Kong is an increased level of self-censorship on the part of the people and media.  People are less willing to speak out on issues that might contradict an official Beijing stance. Though in theory they are endowed with the right to do so, at least until 2047 at the 50 year anniversary of the Handover, people are nevertheless reticent. Beijing commits thousands of human rights violations each year on the mainland. Dissenters are hushed ⎯ even killed. Information is controlled. Who knows what Beijing might do to a loud democracy activist, for example, or a newspaper editor who consistently editorializes against the mainland? There have been cases of radio hosts mysteriously resigning after expressing negativity with the PRC.  Rather than risk it, people stay quiet.

It is impossible to measure self-censorship precisely. We do not know how many citizens or Hong Kong politicians have changed their attitudes out of fear of retaliation from Beijing.

One positive political development since the Handover is more local engagement in politics. Maybe because the leaders of Hong Kong are Chinese and not British, or because the “central office” is closer (Beijing and not London) ⎯ whatever the case, more Hong Kong citizens engage in politics.

Economic Situation

While politics in Hong Kong has a mixed picture now and an uncertain future (will democracy prevail? will Beijing infringe on political freedoms guaranteed in the Handover agreement?), the economic picture of post-Handover Hong Kong is clearer.

From an economic growth perspective, Hong Kong GDP is growing at a rate comparable to the period leading up to the Handover.  Moreover, the prospects for continued strong growth are likely due to China’s emergence as the largest developing economy. Despite a scare early on ⎯ the Asian Financial Crisis pulled Hong Kong into a recession literally the day of the Handover ⎯ the island recovered within a few years. Unemployment lessened. Economic ties with mainland China deepened thanks to a 2004 free trade agreement and a loosening of immigration restrictions between the two regions. Meanwhile, mainland China continues to post stellar growth numbers. Due to proximity and special agreements, Hong Kong companies get first dibs on mainland opportunities, and the mainland imports from Hong Kong tariff-free. 

Timing-wise the Handover may turn out to be perfect for economic growth. For many years, Hong Kong mooched off its powerful colonizer. Back then, Britain was a more formidable economic force. Hong Kong built up its infrastructure and culture under the umbrella of a rich, safe, free Western patron. Meanwhile, China was slowly but surely developing. Now, as the lines seem to cross on the graph, Hong Kong becomes part of a more stable China which is rising rapidly, and leaves behind a Britain whose time has come and gone.

In its current position as an economic hub, Hong Kong boasts close ties with China (it is, after all, part of the Beijing apparatus) as well as a history of Western-style freedoms. This means multinationals eyeing the Chinese market ⎯ and there are more of these opportunists than ever before ⎯ who are unwilling to enter the chaos that is Shanghai, opt to set-up shop in Hong Kong as a safe baby step.

So: economic life in Hong Kong post-Handover is strong and getting stronger.



“Over the past 10 years, there have been some very bumpy moments – politically and economically. But some of the more dire predications I remember so vividly from 1997 have not come true. One country, two systems has worked,” British Foreign Secretary Margaret Beckett said last year.  This seems to be the consensus among experts on the region. Fear mongers abound in 1997, predicting economic ruin, political overreach from Beijing, and so forth. Few of these fears have been realized. Has Hong Kong changed beyond a simple flag change? Yes. It is more Chinese than ever before. Hundreds of thousands of British and American ex-pats have left the city. The governing political bodies now draw more influence from their communist bosses in Beijing than their democratic and capitalist bosses in London. So culturally, yes, Hong Kong is different. Politically, yes, Hong Kong is different ⎯ probably for the worse, but Beijing still largely respects the Handover agreement. Economically little has changed besides deeper ties with the mainland. In sum, any changes that have occurred since 1997 have been on the margins. Hong Kong remains a dynamic economic powerhouse, with a mostly free press and a somewhat-representative government. Contrasted to the tense situation in Korea, or the Tibetan uprisings in mainland China, or the general instability and coup d’états that plague Southeast Asia, or the economic stagnation that seems to be afflicting Japan, Hong Kong is a bright spot in the Pacific Rim. For now. The next big juncture in this small island’s life will be in 2047, when China no longer has obligations to the international community over autonomy. Until then, Hong Kong gives us reason to smile.

5 comments on “Hong Kong Status Report ~10 Years Later
  • I remember when the transfer of Hong Kong was impending in 1997 there seemed to be a dearth of discussion in the mainstream media of the U.S. (there were alternative media then) of one aspect of its historical context– how the Treaty of Nanking had been concluded to the detriment of the Chinese people– and how long a memory their five thousand year old culture has.

    I think to this day the older Chinese are acutely conscious of the devastation visited on their country in the imposition by force of the British Empire’s opium trade in 1842, which wreaked such social havoc in China.

    British arrogance and racism were as boundless then as their empire on which “the sun never set”– how appropriate that the most vigorous seeds of change were planted in the fertile field of the Chinese people’s discontent by British colonialism.

    There was some irony in Chinese nationalism manifesting itself in the person of the revolutionary Sun Yat-Sen, who had actually become a citizen of the U.S.

    No matter his true role in the revolution of 1911, his fervor for change was inspirational fuel for the engine that pulled down the Qing dynasty.

    Though his chief aim was to drag China from the insularism of the past and to extinguish the stifling rigidity of the Confucian examination system in government, how long a wait it’s been for his Three Principles of the People– connection, power, livelihood– to bear tangible fruit.

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