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HONG KONG: three years after the hand-over.

C.K. Yeung and Jian Yang review the situation in the former British colony on the third anniversary of its reincorporation in China.

Three years have passed since Hong Kong was returned to Chinese sovereignty on 1 July 1997. To demonstrate its commitment to its innovative `one country, two systems' principle, Beijing has made great efforts to adopt a `hands-off' approach to the Hong Kong Special Administrative Region (HKSAR). Such efforts have won it much praise. The British government stated in its sixth six-monthly report on Hong Kong, released in February 2000, that `Our overall assessment of the implementation of "One Country, Two Systems" remains positive' and that `Overall, the experience of Hong Kong since 1997 augurs well for the future governance of the SAR.'(1) The seventh report of the US House Speaker's Task Force on the Hong Kong Transition, released in the same month, also concluded that `The picture of Hong Kong ... is largely positive.'(2)

The well-known `one country, two systems' principle is defined in the Basic Law, which was enacted in April 1990 and now serves as Hong Kong's Constitution. While Article I of the Basic Law proclaims that `The Hong Kong Special Administrative Region is an inalienable part of the People's Republic of China', Article 5 states that `The socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.'(3)

Indeed, Beijing has largely kept its promises of `one country, two systems'. This is especially the case in economic affairs. Beijing has actually made substantial sacrifices to help solve some troubles Hong Kong faced, particularly during the Asian financial crisis which occurred after the handover. It is widely believed that Beijing's determination to resist the enormous pressure and not to devalue its currency during the crisis was partly to help Hong Kong. The HKSAR's agreement with the Disney Corporation in late 1999 to build a major theme park in Hong Kong also benefited from the support of Beijing, which reportedly discouraged Shanghai from competing with the HKSAR.

Hong Kong's economy is recovering from the crisis, with a recovered stock market, a growing number of tourists, stabilised property prices and, more importantly, positive economic growth. After a decline of 5.1 per cent in 1998, the economy grew 2.9 per cent in 1999. The growth for the first quarter of the year 2000 was a stunning 13-year high of 14.3 per cent, causing the government to raise its full year growth forecast to 6 per cent from 5 per cent. It is believed that economic growth will be further enhanced by China's accession to the World Trade Organisation. Some 64 per cent of Hong Kong's trade, including re-exports, is with mainland China. The agreement with the Disney Corporation has injected further optimism into Hong Kong's economic prospects.

Freest economies

Hong Kong remains the world's freest economy, according to an authoritative survey of December 1999, which found New Zealand the third freest.(4) In mid-February 2000, the Washington-based Cato Institute and Canada's Fraser Institute also named Hong Kong, together with Singapore, the freest economies in the world.(5) This is despite the HKSAR government's massive intervention in the currency and stock markets in August 1998. The intervention is now generally believed a success. The market rose to new historical highs in the early months of 2000. To allay fears that Hong Kong's traditions of free markets and transparency might be compromised, the government has placed its equities, which have increased greatly in value, in the hands of an independently appointed board and has begun to liquidate some of its holdings by selling them to the public.

Hong Kong has successfully retained its reputation of having one of the finest systems of export controls in the world. The widely reported Cox Report alleged that China used Hong Kong as an illicit trans-shipment point for high-tech US goods. The Report also charged that Chinese People's Liberation Army (PLA) vehicles passed uninspected through Hong Kong. However, a visit to Hong Kong by staff members of the US House International Relations Committee found no evidence to support the first allegation.(6) The second allegation is believed to be a vast exaggeration. What should be noted is that in 1999 the Hong Kong Customs confiscated a PLA armoured personnel carrier which was on its way back to mainland China after a show in Thailand because the PLA did not have the proper licences. In late March 2000, another five armoured vehicles without import licences were confiscated on their way to the mainland.

Understandably, political issues have posed greater challenges to the `one country, two systems' principle. Beijing was sensitive to any political reform before the hand-over. Chinese leaders believed that after 150 years of colonial rule, there was no reason to introduce a change of political system at the last stage of the hand-over. The proposal of the last Hong Kong Governor, Chris Patten, on political reform in the early 1990s was intended to entrench Hong Kong's democracy by increasing citizen participation through electoral means. The proposal, with the endorsement of London but without prior consultation with Beijing, strengthened Beijing's perception that Great Britain and its allies were trying to build a Trojan Horse within China to bring about `peaceful evolution'. Beijing stated clearly that Hong Kong should not be allowed to degenerate into a `political city'. Patten was denounced as a `strutting prostitute', `clown' and `criminal of all time'.

Enduring legacy

Sino-British disputes over political reform in Hong Kong became history with the hand-over of Hong Kong to China. But the legacy stays. The last Hong Kong Legislative Council before the hand-over, which was basically popularly elected in 1995 under Patten's political reform, was dissolved at midnight on 30 June 1997, as Beijing filled the vacuum with a one-year-term Provisional Legislative Council. Thirty-three out of the total 60 members of this council, however, were members of the previous legislature.

The first Legislative Council elections after the hand-over were held in late May 1998. Of the 60 seats, 20 were elected by geographically defined constituencies through direct elections, 30 by so-called functional constituencies comprising various business and professional groups, and ten by a specially constituted 800-member Election Committee composed of political and economic elites. The new system, particularly with regard to the elections of the functional constituencies and the Election Committee, was criticised as `small circle election'. Fair as the criticism was, the system returned Martin Lee, the pro-democracy Democratic Party leader, along with 12 of his fellow party members, to the council. The system was also in line with the Basic Law, in that it allowed 20 seats to be directly elected in the first council elections after the hand-over. Defying torrential rain and the confusing system, a record 1.5 million people -- 53 per cent of those registered -- cast their votes. That was 500,000 more than in 1995.

The Basic Law provides a framework for an incremental increase in the number of directly elected seats in the Legislative Council `in accordance with the principle of gradual and orderly progress'. Under the Basic Law, the number of directly elected seats will be increased to 24 in the year 2000 and 30 in 2004. It does not guarantee that the HKSAR will have a fully directly elected legislature through universal suffrage, though it does state that that is the ultimate goal. On 3 January 2000, the three major political parties in Hong Kong joined to call for full democracy by 2008. The HKSAR government and the tycoons, however, are likely to slow down the emergence of full-fledged democracy in Hong Kong, fearing that a speeded democratisation process will threaten Hong Kong's prosperity. The government's controversial decision in December 1999 to abolish the municipal councils whose members were mainly elected and to increase the number of appointed members in district boards was criticised by the Democrats as `walking backwards'. But the actual speed of democratisation in Hong Kong will largely depend on the strength of popular demands.

Judicial independence

Article 85 of the Basic Law states that the courts of the HKSAR shall exercise judicial power independently, free from any interference. The Court of Final Appeal (CFA) is Hong Kong's highest appellate court and final authority in any legal proceedings. Although the CFA is vested with final adjudication of the HKSAR, the general power of interpreting the Basic Law rests with the Standing Committee of the National People's Congress (NPC), the Chinese parliament.

The rule of law is regarded as so important in Hong Kong that it is almost a substitute for political ideology. The continuation of laws and the legal systems and the prevention of any interference in them are among the most important factors for Hong Kong's success. The Chinese and HKSAR senior officials have time and again expressed their commitment to maintaining Hong Kong's legal autonomy and integrity. In his 1998 policy address to the Legislative Council, Tung Chee-hwa, the Chief Executive, stated that the HKSAR would `press home the message that our legal system is still autonomous and functioning smoothly'.(7)

The HKSAR government's commitment to Hong Kong's judicial independence has been challenged by a number of legal controversies. One was the government's failure to demand that Beijing return Hong Kong criminals for trial in the HKSAR. Such cases include that of Cheung Tzekeung, nicknamed `Big Spender', who committed a number of robberies, kidnappings and murders in Hong Kong and was arrested in mainland China. The HKSAR government refused to seek the repatriation of Cheung, even though most of his crimes were committed in Hong Kong. It was widely believed that the government wanted the mainland's court to handle the case since there was no capital punishment in Hong Kong. Rumours even suggest that Li Ka-shing, Hong Kong's most powerful businessman, whose son was once kidnapped by Cheung, asked the Chinese officials to make sure that Cheung was sentenced to death. The HKSAR's silence was widely criticised as surrendering Hong Kong's judicial independence.

Serious challenge

A far more serious challenge to the HKSAR's judicial independence is a case regarding the right of abode. Article 24(3) of the Basic Law states that persons of Chinese nationality born outside Hong Kong with at least one of their parents either born in Hong Kong or having resided in Hong Kong for a continuous period of no less than seven years are qualified to be a HKSAR citizen. The clause was originally designed to allow those who had emigrated to other countries the chance to return to Hong Kong as permanent residents.

On 8 July 1997, a nine-year-old girl applied to the court for permission to continue her stay in Hong Kong. But the following day the Provisional Legislative Council rushed through laws requiring children to obtain certificates of entitlement from outside Hong Kong before immigrating and the laws were made retroactive to 1 July 1997. After the judgments of the Court of First Instance and the Court of Appeal, the case was put forward to the CFA. On 29 January 1999, the CFA ruled unanimously that the Basic Law granted any child of a Hong Kong resident the right to live in the territory. The court also concluded that it was unnecessary to seek an interpretation from the Standing Committee of the National People's Congress. Beijing was angry about the ruling because it placed the CFA above the Standing Committee.

Fearing the potentially huge number of immigrants who might come to Hong Kong -- the HKSAR government put the figure at 1.67 million -- and thus impose enormous pressure on Hong Kong's social welfare systems, Tung Chee-hwa requested the Standing Committee of the National People's Congress to reinterpret the Basic Law. On 26 June 1999, the 140-member body overturned the CFA's January judgment by a unanimous decision. The decision held that the CFA's interpretation of the relevant articles failed to reflect the true legislative intent. Then, on 3 December 1999, the CFA unanimously accepted the NPC Standing Committee's reinterpretation and reversed its January ruling.

The Standing Committee's reinterpretation raised serious questions about Hong Kong's judicial independence and the rule of law. Some argue that if the Chief Executive can appeal to the central authorities when he disagrees with or dislikes the CFA's judgment, there will be no such thing as `final'. Despite the HKSAR government's assurances that future referrals to Beijing will be rare, the fact remains that a precedent has been set.

Article 27 of the Basic Law states that `Hong Kong residents shall have freedom of speech, of the press and of publication; freedom of association, of assembly, of procession and of demonstration'. Generally speaking, the people of Hong Kong still enjoy the tradition of free speech and free press. A good example is the fact that Falun Gong practitioners have been permitted to hold demonstrations in Hong Kong, even though the organisation has been declared illegal on the mainland. Media criticisms of the HKSAR government are tolerated.

Under the `one-country' paradigm, however, the freedom of expression has its limits. In April-May 1999, the HKSAR government denied visas to several prominent Chinese dissidents who had planned to participate in Tiananmen Square crackdown commemorations on 4 June. In mid-December 1999, the CFA ruled that defacing the Chinese flag is a crime.

Issues concerning China's sovereignty are the biggest taboo. In August 1999, Radio Television of Hong Kong allowed Taiwan's de facto envoy to talk about Taiwan President Lee Tenghui's `state to state' theory in a radio programme. Beijing expressed its displeasure. Not long after, Cheung Manyee, the Director of Broadcasting, was transferred to Tokyo. Similarly, Hong Kong Cable Television's interview with Taiwan's newly elected Vice President, Annette Lu, in early April 2000 incurred warnings from Chinese officials in Hong Kong. In that interview, Lu said that Taiwan and China were `close neighbours and distant relatives'. The warnings enraged Hong Kong's media and Tung Chee-hwa had to come out and make public assurances.

It is fair to say that the functioning of the `one country, two systems' principle has been `so far so good'. As a sign of confidence in Hong Kong, some 200,000 Hong Kong people who had emigrated before the handover have returned. There is every reason to believe Beijing will continue its efforts to keep its promises of `one country, two systems', not only in economic affairs but also in political, judicial and other fields. However, conflicts can hardly be avoided in the future, as in the past. This is largely because of the conflicting nature of the expectations of the Hong Kong people and Beijing with regard to the `one country, two systems' principle. For the Hong Kong people, `two systems' or the question of how `high' an autonomy Hong Kong can enjoy is the major concern. For Beijing, however, the `autonomy' must have a limit and sovereignty is not to be compromised. Thus `one country' is more important than `two systems'.

Three years after the hand-over, the experiment of the `one country, two systems' principle has been largely successful. Hong Kong maintains its vitality as the freest economy in the world. Its political liberalisation is moving ahead, slowly yet basically in accordance with the Basic Law, Hong Kong's Constitution. The independence of the judiciary has been seriously challenged and doubts have been raised. Freedom of expression is preserved, but with certain limits. Beijing will continue its efforts to keep its promises of `one country, two systems'. Nevertheless, conflicts are expected to arise in the future, as in the past.


(1.) `Six-monthly Report on Hong Kong, July-December 1999', presented to Parliament by the Secretary of State for Foreign and Commonwealth Affairs, Feb 2000.

(2.) Congressional Record, 8 Feb 2000, p. E93.

(3.) The Basic Law of The Hong Kong Special Administrative Region of The People's Republic of China ( ~caldwell/basic.htm).

(4.) LatelineNews, `Survey: Hong Kong Is Freest Economy', 1 Dec 1999 (

(5.) LatelineNews, `Hong Kong Rated the World's Freest Economy', 18 Feb 2000.

(6.) Congressional Record, 8 Feb 2000, p. E92.

(7.) Tung Chee-hwa, `From Adversity to Opportunity: 1998 Policy Address', Hong Kong Information Services, Oct 1998.

C.K. Yeung is an editor with Hong Kong Cable Television and Dr Jian Yang is a member of Auckland University's Department of Political Studies. The opinions expressed in this article do not represent the views of any organisation.
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Title Annotation:analysis of the success of the "one country, two systems" principle
Author:Yeung, C.K.; Yang, Jian
Publication:New Zealand International Review
Geographic Code:9HONG
Date:Jul 1, 2000
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