China: Beijing's Dilemma in Hong Kong

6 MINS READAug 3, 2012 | 10:30 GMT
Demonstrators in Hong Kong on July 29

Tens of thousands of residents marched in Hong Kong on July 29 in opposition to a new national education plan seen as introducing a pro-communism account of mainland history and the Chinese political system. The march happened just a month after the inauguration of Hong Kong's new government, the election of which inspired intense public speculation about the candidates' qualifications.

The protests represent a significant setback for Hong Kong Chief Executive Leung Chun-ying's Beijing-backed administration, and public opinion of Hong Kong's government has reached record lows in recent months. In this environment, Beijing's main goal is to ensure a smooth transition of power for Leung — not only to restore the image of the Leung administration, but also to cement mainland China's influence in the city-state. However, a seamless transition seems increasingly unlikely, and rumors are circulating that Beijing will consider replacing Leung if public discontent does not fade.

Replacing Leung is not desirable for either the Hong Kong government or Beijing. The process of removing a Beijing-backed official would embarrass the Chinese central government and potentially exacerbate political turbulence in the special administrative region. And underlying the current political unrest is the growing challenge for Beijing of consolidating its hold on, and popularity in, Hong Kong.

Located at China's doorstep along the Pearl River Delta, Hong Kong has long acted as a bridge between mainland China and the West. Historically, when China has been inward-focused, Hong Kong has served as one of the few channels through which the mainland could communicate and trade with the outside world. When China opened up, Hong Kong served as a crucial facilitator. The mainland still relies on Hong Kong for trade and foreign investment due to the city-state's position as a regional trade and logistical hub.

Whether ruled by the Qing dynasty, the British or the current Chinese government, Hong Kong has played a unique role in shaping mainland history thanks to the city-state's strategic location and myriad economic and political systems. As a popular safe haven for Chinese reformists during the late- and post-Qing eras, Hong Kong served as a forum for revolutionary ideas that fueled mass movements on the mainland during the first half of the 20th century. During World War II, Hong Kong served as a key supply and transshipment center supporting Chinese operations against Japan until the city-state was occupied by the Japanese in 1941. Maoist China relied on Hong Kong for political and trade communications.

120802 Map - China - Hong Kong

Hong Kong also helped facilitate the mainland's economic opening over the past 30 years. The city of Shenzhen, located immediately to Hong Kong's north, was developed as China's first special economic zone with the introduction of some market reforms, and the Pearl River Delta has become a global manufacturing hub. Furthermore, Hong Kong has long boasted a free port and a Western-style regulatory system, making it an ideal gateway for foreign investment in the mainland.

Beijing's Strategy in Hong Kong

Beijing has benefited enormously from the economic and political differences between itself and Hong Kong by using the city-state's openness to attract expertise and resources. Thus, the Chinese government understands the importance of maintaining Hong Kong's distinctions, even if doing so would be contrary to Beijing's communist ideology and political system. By the 1970s, Beijing took a rather pragmatic approach to reunification with Hong Kong by ignoring political and economic differences. Indeed, the basis for reunification in 1997 was the "one country, two systems" concept developed by former Chinese leader Deng Xiaoping. The concept essentially allowed Hong Kong (and Macau) to retain its capitalist system, a large degree of its political autonomy, its judicial and legal independence and its ability to hold elections.

Beijing's plan for Hong Kong could benefit the Chinese government in other ways. China hopes that the "one country, two systems" concept could demonstrate Beijing's tolerance for alternatives to communism, laying the groundwork for improved ties with Taiwan and, potentially, a cross-strait reunification. Moreover, because the mainland's rapid development eventually will require significant political and economic reforms, Beijing has viewed Hong Kong's Western-style system as an experiment to potentially replicate.

Consequently, the Chinese government has tried to maintain a delicate relationship with Hong Kong. Beijing hopes its relatively conciliatory approach will help woo Hong Kong and cement its authority in the city-state, but this strategy could backfire.

Increasing Unease

Despite increased economic ties between Hong Kong and the mainland, relations have become more strained. Beijing has continued to benefit from trade and technological cooperation and Hong Kong-facilitated investment, but the mainland's rapid economic expansion has shifted the economic dynamic in the region. Beijing has sought to harness Hong Kong with economic measures such as the Closer Economic Partnership Arrangement, which aim to facilitate bilateral trade and investment, promote bilateral visits, and allow for the listing of a higher number of mainland enterprises and securities in Hong Kong's stock exchange.

Beijing likely hoped that economic interdependence would draw public attention to the benefits the mainland can offer Hong Kong, potentially alleviating the two entities' political differences. Moreover, by increasing economic ties, Beijing hoped it could gain influence over Hong Kong's business community. Instead, much of Hong Kong has grown more resentful of Beijing's authority. Recurring government scandals in the city-state, coupled with the perception that the government cannot distance itself from Beijing, have contributed to public anger toward mainland China and fueled accusations that the central government has been interfering excessively in Hong Kong affairs.

This sentiment was seen in disputes over whether pregnant women from the mainland who give birth to babies in the city-state should get Hong Kong passports, as well as public debate sparked by an insult made by a Peking University professor about Hong Kong people. According to a prominent survey, just 16.6 percent of Hong Kong residents identify themselves as Chinese citizens instead of Hong Kong citizens — a 12-year low.

Factors Inflaming Tensions

To many in Hong Kong, the core values of the city-state are its vibrant civil society, free speech and rule of law — all inherited from the days of British rule. This belief has created a great degree of political consciousness, especially in the years since Beijing's takeover. Hong Kong's populace is thus quite sensitive to any attempt by Beijing to undermine the city-state's democratic system or electoral process. Moreover, Hong Kong remains a haven for mainland political activists and dissidents, and pro-democracy elites often stage large protests in the city-state demanding Western-style democratic reforms in China and reduced interference by Beijing.

Furthermore, the effects of years of economic connections and cultural exchanges between mainland China and Hong Kong could end up limited to the city-state's business elites and their political proxies instead of reaching the grassroots level. Hong Kong has a wide wealth gap, and many of its people have been negatively affected economically. As a result, mainland Chinese people in the city-state seeking jobs, social benefits for their children, or real estate investment opportunities have been accused by Hong Kong residents of consuming limited space and resources.

With the mainland economy outpacing Hong Kong's in recent years and key cities such as Shenzhen, Shanghai and Guangzhou emerging as similar bridges to the outside world, many in Hong Kong are anxious about becoming marginalized. This fear, combined with an unwillingness to rely completely on the mainland economically, is fueling concerns among Hong Kong citizens about how the city-state can reorient itself in response to the region's shifting dynamics.

For Beijing, its current state of relations with Hong Kong is undesirable. Controlling Hong Kong gives Beijing a chance to experiment with managing a different system within its territory and find ways to use that system to its advantage. However, recent developments have called into question Beijing's ability to keep Hong Kong under control, thus lessening the benefits the mainland gains from the city-state and challenging the "one country, two systems" concept Beijing hoped to demonstrate to Taiwan.

For Hong Kong, distinctions from mainland China are what make it unique and give it a competitive advantage. Although Hong Kong has benefited from mainland development, relations with Beijing have begun to negatively affect the city-state, creating tensions and a sense of frustration. Without an effective change in their relationship, this will lead to losses for both Hong Kong and Beijing.

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