Chinese Premier Zhu Rongji (朱鎔基) arrived in Hong Kong on Nov. 18 to host the opening ceremony of the 16th World Congress of Accountants. Following the meeting, he made some comments about Hong Kong that stirred up a storm. Since he has already announced his retirement, this trip may well have been his last as premier and thus his comments had the ring of parting words. Although they were made in earnest, he left people with the sense that he spoke recklessly.
When Zhu met with managers of enterprises funded by Chinese capital, he berated them for failing to understand politics and ignoring the big picture. On the one hand, he was referring to a September research report on Hong Kong's budget deficit by Bank of China International (BOCI), a subsidiary of the Bank of China. That report, which explored whether the Hong Kong dollar's pegged exchange rate should be abolished after a number of years, caused some turbulence in the foreign exchange market. After Zhu spoke, BOCI's research chief, Ho Cheuk Yuet (何綽越), was forced to resign.
Zhu was also referring to the issue of China Telecom's unreasonable hike of long-distance connection fees designed to increase the attractiveness of the company's IPO. The blame in that case was laid squarely at the feet of the soon-to-step-down Minister of Information Industry Wu Jichuan (
But the speech Zhu gave to over a 100 representatives of the political and business worlds at a dinner arranged by the Hong Kong government stirred up the most controversy. Zhu said, "With a budget deficit on the order of HK$70 billion, you can hang on for at least three years. After three years, even if your financial reserves have all been spent, what are you afraid of? Go to China and issue 50-year Hong Kong bonds. I'll be the first to buy! And I believe many Chinese will also buy them because they have confidence in Hong Kong. Hong Kong is one of China's resplendent pearls."
But he couldn't help adding, "We will continue to do our utmost, using all available resources, to promote prosperity and stability in Hong Kong .... I just don't believe Hong Kong can't be put back on track. If Hong Kong isn't put on track, not only will you be responsible; we will be responsible too. If having returned to the motherland, Hong Kong is run into the ground under our guidance, are we not guilty of crimes against the Chinese people? It won't come to that."
What did Zhu mean by so-called "all available resources"? In a meeting with the representatives of enterprises financed by Chinese capital, he told Hong Kong's Chief Executive Tung Chee-hwa (董建華) that Beijing would assist the territory, regardless of the cost. That is to say, China's foreign exchange reserves of US$265.5 billion (in fact, including interest revenue, the total exceeds US$300 billion) will be used to promote Hong Kong's prosperity and stability.
It would appear that this time Zhu went to Hong Kong for some high-stakes gambling. He talked so big it was terrifying. Is it that on the eve of his retirement he can throw restraint to the wind? Would the Chinese people and all the various interest groups in the Chinese Communist Party agree to use those foreign exchange reserves this way?
That speech was also a serious blow to Taiwan's unificationist faction because one of their keynote claims is that only if the "three links" or unification can be accomplished will Taiwan's economy be saved. Now Zhu has already promised to give all the foreign exchange to Hong Kong. His goal is to dangle the territory's "one country, two systems" in front of Taiwan. But if all the money has been taken by Hong Kong, how will China attract Taiwan? One can only worry that after unification, Taiwan will be even worse off than Hong Kong.
The fact that Zhu mentioned the problem of Hong Kong's budget deficit shows how serious the situation is. His suggestion to issue 50-year bonds, however, has been criticized by experts because the longest-term treasury bond in the world currently available is the US government-issued 30-year bond. Are Hong Kong's credit and collateral superior to those of the US? Who knows what Hong Kong will be like in 50 years?
Deng Xiaoping (
Zhu said one thing that alarmed Tung and the Hong Kong government. He said, "I don't think we have seen the worst of Hong Kong's troubles. My fellow countrymen -- the worst is yet to come!"
Zhu spoke primarily to support Tung and secondly as a warning. He knows that Tung is good-for-nothing, but having been hand-picked by President Jiang Zemin (
Paul Lin is a commentator based in New York.
Translated by Ethan Harkness
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