Last month, the Hong Kong government announced that Carrie Lam, a career politician who had been the number two official in Hong Kong for the last five years, would become the next chief executive of the city.
She will officially take her new position on July 1, 2017, which will be the 20th anniversary of the British Crown ending its 156 years rule of Hong Kong and returning the city to the mainland Chinese government. The first female chief of Hong Kong, Lam faces a tough road ahead. It has nothing to do with her experiences and ability, but everything to do with how she was selected.
To be fair, Hong Kong was never a democracy and never had a free election even under the British rule from (1842 to June 30, 1997). The British monarchy, upon the advice of the United Kingdom’s foreign secretary, always appointed governors of Hong Kong, who then led the executive branch of the Hong Kong government under the British sovereignty. These appointed governors never made any serious attempt to establish a representative government in Hong Kong.
Yet they did instill rule of law, protection of free speech and a free press, and a laissez-faire economic system with light regulation and low taxes. This approach helped turn Hong Kong from a sleepy rock island with few people and natural resources in the 1840s into a global finance and business center. Hong Kong has always ranked as one of the top three places in the world that promotes economic opportunity, personal freedom, and prosperity, according to the Economic Freedom Index.
China Is Increasingly Eroding Promised Universal Suffrage
Before turning over Hong Kong to mainland China, both the U.K. and mainland China governments signed a declaration in 1984 that stated Hong Kong would be governed under the “one country, two systems” principle and continue its capitalist economic system and protection of individual freedom for 50 years from 1997. Based on this declaration, the “Basic Law,” a de facto constitutional document, was later created and adopted to govern Hong Kong as a special administrative region of China. Article 45 of the Basic Law asserts that the chief executive of Hong Kong should eventually be elected by universal suffrage.
However, since China officially took control of Hong Kong on July 1, 1997, the chief executive of Hong Kong has always been selected by an “election” committee, whose membership has grown from 800 to 1,200 and is mostly made up of business people who rely on the mainland market and pro-Beijing political elites for their fortune. The committee has rubber-stamped any candidate Beijing told them to.
Hong Kongers’ hopes for a real election rose in 2007 when it was reported that China’s National People’s Congress Standing Committee (NPCSC) passed a resolution granting the people of Hong Kong the possibility of electing their chief by universal suffrage in 2017. But in August 2014, the NPCSC issued an election framework that went against the international interpretation of “universal suffrage” by insisting that any would-be candidates for the No. 1 office in Hong Kong must be vetted by a nominating committee.
The composition of the nominating committee remains the same as the existing 1,200-member election committee. The resolution also capped the total number of candidates for the top job at two or three and stated the winner must get at least half the votes of the election committee. This resolution practically closed the door on electing Hong Kong’s chief through universal suffrage and ensured Beijing would continue to have the final and only say in choosing the future Hong Kong leader.
Beijing Pressures Hong Kong Residents to Get In Line
That resolution prompted more than 800,000 Hong Kong residents to sign an online pro-democracy petition, followed by a large-scale protest later referred to as the “umbrella revolution” after images of protesters using umbrellas to protect themselves from police’s tear gas and pepper spray. But with Beijing’s backing, the Hong Kong chief then, C.Y. Leung, didn’t budge to any pro-democracy protesters’ demands and the protest eventually dissolved after the general public yielded to the fear that fighting for political freedom was damaging their way of life, especially business opportunities with the mainland.
So when it came time to select Hong Kong’s fifth chief since 1997, it was business as usual and Beijing had total control. In February of this year, Zhang Dejiang, chairman of the China’s National People’s Congress and a member of the Politburo Standing Committee, informed Hong Kong’s business leaders and pro-Beijing elites that Carrie Lam was Beijing’s preferred candidate. So in this city of more than 7 million people, Lam “won” by getting 770 votes from the election committee and her victory was a surprise to no one.
Had Hong Kong had a free election, pre-selection polls showed Lam would have lost by a big margin. The two decades of history since 1997 shows that without a popular mandate, Beijing-anointed chief executives of Hong Kong enjoyed low credibility and couldn’t govern effectively. Lam acknowledged she probably would have similar difficulty because she was “selected,” not “elected.”
As the newest chief of Hong Kong, the biggest challenge she will face is whether she can reverse Hong Kong’s slow but sure decline. When mainland China took over Hong Kong in 1997, Hong Kong’s gross domestic product (GDP) per capita was $27,330 (that of Americans then was $31,572), while mainland China’s was only $774. Hong Kong was truly China’s golden goose.
But the golden goose has been losing it shine little by little since then. The Chinese government has devoted enormous resources to pump up a select few Chinese cities to challenge Hong Kong’s international finance and trade center status. For example, China’s largest city, Shanghai, is quickly catching up with Hong Kong. With the backing of the central government, Shanghai has been able to use various incentives including tax breaks and the establishment of a free trade zone to attract international investments.
Beijing Deflates Hong Kong to Legitimize Itself
In 2010, Shanghai’s GDP surpassed Hong Kong’s. A year later, Beijing’s GDP also outgrew Hong Kong’s. Several other Chinese cities such as Tianjin and Shenzhen are on track to pass Hong Kong’s economic output in the near future too. Hong Kong’s GDP as a share of China’s national GDP has dropped from 16 percent in 1997 to less than 3 percent in 2013.
In addition to losing the GDP race, Hong Kong is gradually losing its prestige as an international finance center. In 2014, Shanghai tied Hong Kong for the fifth place in a ranking of international financial centers, according to an index developed by the state-run Xinhua News and Dow Jones. What’s really worrisome to many Hong Kongers is the trend. The same index shows Shanghai moved up one place compared to its ranking in 2013, while Hong Kong fell back two ranks.
The most telling sign came on August 23, 2016, when China’s richest man, Wang Jianlin, announced that his company, Dalian Wanda Commercial Properties Co, which was listed on Hong Kong stock exchange, would re-list on the Shanghai stock exchange. Some predicted Hong Kong would drop from the No. 1 economic powerhouse in China to No. 9 within a decade.
Hong Kong is still years ahead of any other Chinese cities in terms of economic and personal freedom. Its independent judicial system is unmatched by any Chinese city and it’s the envy of the world. But so far Hong Kong has failed to help mainland China become a politically more open society. At the same time, China is making Hong Kong more like just another Chinese city by gradually asserting its authority over Hong Kong’s education, legal system, and business operations.
Thirty years from now, in 2047, the “one country, two systems” principle that established Hong Kong’s special administrative region status will expire. Many predict Hong Kong will not only fall into a second-tier city in China, but could even be absorbed by its northern neighbor, Shenzhen, one of fastest growing cities in China with 12 million people and a stock exchange currently ranked number nine in the world in terms of market capitalization (by the same measure, Hong Kong ranked No. 6 and Shanghai No. 7). Will Carrie Lam be able to do anything to reverse the trend?