1

One Chief, Two Systems

One Chief, Two Systems

Who will rule Hong Kong?

Back in the 1960s—during China’s Cultural Revolution—the British, who ruled Hong Kong, were determined to keep China at bay from what decidedly was still their colony. Among other things, they kept a few Gurkha troops on border duty, with antiquated machine guns pointing at the mainland in case Red Guards tried to cross en masse. And the Royal Air Force air marshal based there had plans for his tiny air force to bomb the main road from nearby Guangzhou if the Chinese army joined in.

All of which struck at least one resident British diplomat of that day as slightly mad.

China regained sovereignty over the territory years ago, and London’s bureaucrats are long gone. But, in certain ways, keeping China at bay remains part of what Hong Kong is all about. Not in the most fundamental sense: the red flag of Communist China has replaced the Union Jack permanently, and there is no hint of a separatist or other opposition movement, as in Taiwan. The city knows its stability and prosperity depend upon ever-closer economic relations with the rest of China. Yet Hong Kong is governed by rules distinctly different from those on the mainland—more liberal in most ways—and keeping them intact remains crucial for many local residents.

All of which strikes them as eminently sane.

That urge to be different is especially obvious this month as Hong Kong holds what is called locally a “small-scale” election to pick a new chief executive, or head of government. On March 25, 1,200 worthies—holders of prestigious positions or representatives of social and professional groups—will pick a successor to the outgoing and unpopular Donald Tsang, who cannot seek reelection. And most citizens want that vote to reject the man Beijing favors as the next in line. Thanks to a sometimes farcical electoral season, they may get their wish.

When Hong Kong reverted to Chinese sovereignty in 1997, it became a Special Administrative Region governed by what is called the “one-country, two-systems” policy. It leaves Beijing responsible for defense and foreign affairs, though Hong Kong retains separate membership in functional bodies such as the World Trade Organization and has bilateral agreements with many nations, including about fifteen with the United States. But under Chinese legislation called the Basic Law, a de facto constitution, local government is supposed to involve “Hong Kong people ruling Hong Kong” with “a high degree of autonomy,” leading “ultimately” to elections by universal suffrage for all major offices. It also lets Hong Kong retain a legal system based on British common law, multiparty elections for half the legislative seats, a convertible currency, an independent anticorruption agency and quite real freedoms for public assembly, speech and press—all forbidden inside China itself.

However, these are transition years with no firm date set for the arrival of universal suffrage. Thus a 1,200-person Election Committee, its members appointed or elected by interest groups, will pick the new chief executive (though a full-scale election may do the job next time, in 2017). It’s an odd mix of local notables from such diverse fields as the law (thirty members), Western medicine (thirty), Chinese medicine (also thirty), hotels (seventeen) and religions (sixty). What they share, for the most part, is a willingness to go along with Hong Kong’s administration and the central government to which it reports.

That’s why Henry Tang, from a wealthy textile family with close ties to Beijing and until recently the government’s number-two official, was the early favorite. He was seen as a safe pair of hands that would never upset Beijing or his tycoon friends with original ideas or innovative social programs. His theme would be steady as she goes. At first, he ran a low-key campaign designed for maximum safety, refusing to debate his opponents or outline policy details. Yet he met near disaster over a surprise issue: Did he build an illegal wine cellar in his wife’s basement and then lie about it?

A bit of background is in order. On the surface, Hong Kong’s prosperity has raised consumption to the heights of wretched excess. Despite perpetual traffic jams, for example, the local Lamborghini agent sells all the $800,000 cars the Italian factory will allot him. The economy grew 5 percent last year and 7 percent the year before; unemployment is only 3.3 percent. Taxes are low, yet the government ran a $6.5 billion budget surplus last year and effectively has some $155 billion in fiscal reserves—twice that if funds needed to back the Hong Kong dollar are counted. The city’s role as a global financial center continues to expand.

 

Yet there is a growing rich-poor gap, with nearly a fifth of the population living beneath Hong Kong’s quite low official poverty line. The education system produces too few graduates qualified for the best jobs on offer, and many young people are restless, convinced they face downward mobility. Air pollution at unsafe levels, plus shortfalls in public health, pensions and welfare, haven’t been attacked systematically. Though highly competitive in many ways, the Hong Kong economy is also riddled with cartels, price fixing and bid rigging, in such areas as housing, construction and supermarkets, that benefit the richest. A ten-year effort to pass a competition bill remains stalled.

Many citizens saw Henry Tang as representing the status quo, part of a wealthy elite that retards political and economic reform, influences government policy to benefit itself—and has little interest in or understanding of ordinary people’s problems. For many, this was not a vintage year for wine cellars.

 

The uproar began when local papers reported that Tang had built, without legal permits, a 2,200-square-foot wine cellar, gym and office beneath his wife’s swimming pool. He denied it at first, then called it a storage area for groceries and finally said Mrs. Tang did it without his knowledge (it was built at her home when they temporarily lived apart in adjacent town houses). Given that Henry Tang is a noted wine connoisseur who got its import duties abolished and that the noisy project took several months, the public was not persuaded. Many people saw the episode as proof that he stood for all the elitist privileges they no longer wanted; some early backers withdrew their support, and two other serious candidates nearly entered the race.

The main beneficiary is his chief rival, Leung Chun-ying, or CY Leung. From modest origins—his working mother had bound feet—CY Leung attended a minor local university (Tang is a Yale graduate) and prospered as a chartered surveyor and in real estate. He too has close ties to the mainland and is a local delegate to the Chinese People’s Consultative Political Conference, a prestigious mainland body without real power. Considered more analytical and decisive than Tang, he has campaigned hard on an avowedly populist program that addresses social issues, especially housing, more explicitly. However, he too remains evasive about future political reform; he isn’t likely to offend Beijing officials who don’t want an electoral system they can’t control. Though the city’s leading businessmen are said to distrust him, public opinion polls show him favored over Tang by a four-to-one margin.

But CY Leung has his own ethics problem. Eleven years ago, he helped choose the designer of a government-financed arts center. Apparently unknown to him, two directors of his company gave land-value data, free of charge, to one bidder, a Malaysian architectural firm. That firm’s bid was thrown out, and neither Leung nor his company apparently had any financial interest in the outcome. But he didn’t then declare this link to his employer as a potential conflict of interest because, he says, he didn’t know about it. Last month, the government issued a press release about this previously undisclosed 2001 case, perhaps—some allege—to help Henry Tang by sabotaging the Leung campaign. At the end of last month, the legislature voted to open an inquiry into the matter; Leung says he will cooperate fully, but, at minimum, it may bring unwanted publicity as the election draws near.

The Beijing leadership has, for the most part, kept itself above the fray, at least publicly. However, there are reports that Hong Kong’s first chief executive under Chinese sovereignty, Tung Chee-hwa, has been campaigning quietly on behalf of CY Leung. Given that Tung is now an important spokesman for the central government who frequently visits Washington, this would indicate Beijing has shifted its support. In any case, an irritated Vice President Xi Jinping, due to become China’s president later this year, has told Hong Kong delegates to a key political session in Beijing that the time has come to knock it off. According to one of the delegates, Xi said Hong Kong people “should serve as role models [and rise] above their personal interests, to stand tall and look at the bigger picture.”

Only those 1,200 on the Election Committee can vote, and they may still choose Tang if Beijing decides to stick with its first choice. If not, the outcome could lie with those who support a third contender, Albert Ho. He’s a lawyer who represents several small prodemocracy parties and is certain to finish last. If neither Tang nor Leung can garner a 601-vote majority on the March 25 first ballot, there will be a second vote the same day. The pandemocrats claim to have 205 committee members; if they switched to CY Leung, Beijing’s first choice could be sent to the sidelines.