Sun, Jul 04, 2004 - Page 8 News List

Hong Kong's ordeal under China

By the Liberty Times editorial

This past Thursday was the seventh anniversary of Hong Kong's handover to China. Except for the usual celebrations held by the government, no sense of joy could be detected in the private sector. In fact, many residents held a demonstration to demand popular election of Hong Kong's chief executive and the Legislative Council (Legco). On the handover's anniversary there was only discontent among the people, and no happiness, pride or hope.

The historical development of Hong Kong is very ironic. Leftist scholars use it as an example in criticizing the ruthless exploitation of other countries by imperialism, blaming such exploitation for causing poverty and stagnation. In 1842, Hong Kong was ceded to Great Britain as a result of the Opium War. From both the nationalist and leftist perspectives, this was a shameful page of colonial history.

However, this shameful page leads to an unexpected page of history. The cession of Hong Kong helped it to avoid more than a century of wars in and dictatorial rule by China. Influenced by the British emphasis on efficient government management, respect for law and capitalism, Hong Kong flourished into a prosperous free port and the financial center of East Asia. Even more ironic is the fact that under the colonial rule of the British, Hong Kong was able to efficiently utilize its human resources. While the people of Hong Kong were under colonial rule, they had confidence and a sense of pride.

However, after the handover to China, despite China's promises of "one country, two systems" and that there would be no change of the status quo for 50 years, Hong Kong's political condition took a turn for the worse. During the first year of the handover, the Asian financial crisis traumatized Hong Kong. A series of other disasters beset the former colony, ranging from typhoons to the SARS epidemic, from the Internet economy's slump to avian flu.

The inability of the Special Administrative Region's (SAR) government to deal with these problems and its inability to win the people's support have caused the economy to decline. The unemployment rate in Hong Kong went from 2.2 percent in 1997 to last year's 7.9 percent. In 1997, the average Hong Kong resident's income was HK$270,000, but this fell to HK$179,000 last year.

Some structural factors played key roles in the decline of Hong Kong's economy, many of them the inevitable results of its absorption by China. After Hong Kong integrated with China, the SAR's industries became more able to use the mainland's cheaper labor, which caused an exodus of local industries, leaving virtually no manufacturing industry in the SAR. Many blue-collar workers lost their jobs. As for Hong Kong's service industries, they require only a limited amount of manpower. Furthermore, in recent years China has poured in massive amounts of capital and effort toward developing Shanghai in an attempt to have it replace Hong Kong as the financial center of the region. Therefore, even the service sector of Hong Kong is facing some very tough challenges. The economies of Hong Kong and China have not supplemented each other. Instead, they became wrapped up in a zero-sum competition. People who hold unrealistic dreams about the "Greater China economy" should realize how wrong they have been upon closely examining how Hong Kong's economy declined after its takeover by China.

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