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A CASE OF
SELF-DELUSION
Part 1: From colonialism to
confusion
By Henry C K Liu
The current severe acute respiratory syndrome
(SARS) crisis highlights an obvious fact: that Hong Kong
is an inseparable part of China, regardless of the
artificial separation in the "one country, two systems"
(OCTS) arrangement.
On July 1, 1997, China
regained sovereignty over Hong Kong after one and a half
centuries of shameful colonial occupation. What should
have been the beginning of an era of renewed national
pride and prosperity for the residents of Hong Kong,
more than 90 percent of whom are Chinese, degenerated
instead into half a decade of confused identity crisis
and shocking economic contraction with no end in sight.
The departing British had 15 years to set Hong Kong up
as a time bomb for China, by disguising colonialism, the
most evil of political institutions, into a haven of
bogus democracy and sham freedom, and by presenting a
colonial command bubble economy as a faked model of
free-market fundamentalism.
Love is blind and
infatuation disguises faults as virtues. As Rudyard
Kipling fell in love with the pageantry of colonialism
and saw racial exploitation as the "White Man's Burden",
Milton Friedman, Nobel economist, fell in love with
colonial Hong Kong, seduced by the wine-and-dine
hospitality of its colonial masters and elite
compradores. Friedman mistook Hong Kong's colonial
economic system as a free market, despite Hong Kong's
highly orchestrated colonial command economy.
For 156 years, Britain deftly manipulated the
economy of Hong Kong, as a jewel in the British imperial
crown, to opportunistically respond to changing global
geopolitical forces for Britain's benefit. Even during
the best of times, the average local Chinese small and
medium businesses had to operate under the dictates of
British colonial policy and at the mercy of monopolistic
British trading firms and banks, not to mention that the
average worker never had it good at all. British
monopolies needed an unregulated supply network of
ruthless predatory competition to keep costs low, by
disguising the institutional slavery they lorded over as
a free market. It was a system of survival not of the
fittest, but of the fittest slaves, the ultimate of a
divide-and-rule stratagem.
Friedman even
apologized for Hong Kong's discretionary currency board
despite his trademark monetarist advocacy for
free-floating exchange rates set by foreign-exchange
market forces. The linked-exchange-rate mechanism for
the Hong Kong dollar was introduced by the British in
1983 as a political expediency in response to the 1982
Sino-British Joint Declaration on the return of Hong
Kong to China by 1997. It was not based in the slightest
on alleged monetary insights that have since been
conjured up to justify the political decision. Popularly
known as the peg, the linked-exchange-rate mechanism was
the central factor behind Hong Kong's bubble economy in
the early 1990s and has locked Hong Kong in a steadily
downward spiral since the Asian financial crises that
began in 1997.
From 1935-67, Hong Kong operated
a classic colonial currency board pegged to the pound
sterling, as part of the sterling hegemony of the
British Empire, in which private British banks, not the
government, issued the currency, a practice that
continues today. Instability in the value of the pound
in the late 1960s pushed Hong Kong to switch to a
gold-backed US dollar peg. In 1946, the Bretton Woods
regime came into existence, thereby forbidding the
importation of gold for private purposes in signatory
nations. Britain was a signatory but Portugal was not.
Thus a Macau-to-Hong Kong gold-smuggling operation
flourished until 1974, two years after the United States
took the dollar off gold, in effect abolishing the
Bretton Woods system of fixed exchange rates, when Hong
Kong abolished a law that requires a special license to
import gold. The tiny Portuguese colony of Macau became
one of the world's biggest importers and re-exporters of
gold during this period.
After the United States
in 1971 suspended the Bretton Woods system of fixed
exchange rates tied to a dollar pegged to gold at US$35
an ounce, the US dollar too came under periodic attack,
resulting in the dollar sinking in free float. Hong Kong
then decided also to let its currency float, which
worked reasonably well until the commencement of
Sino-British negotiations on the return of Hong Kong to
China, which unleashed wild speculation against the Hong
Kong dollar, a precarious colonial currency whose days
were numbered. By the end of October 1983, Hong Kong
pegged its currency to the US dollar at a rate of 7.8:1,
in effect devaluing the Hong Kong dollar by 50 percent
from its previous normal market fix of around 5:1.
To the chagrin of Hong Kong's colonial
administration, Friedman publicly suggested that after
1997, "the only choice is for the Hong Kong dollar to be
absorbed by the yuan and for Hong Kong's foreign
reserves and foreign assets to be taken over by China".
It was a rational suggestion, and if the Hong Kong
Special Administrative Region (SAR) government had
followed it, Hong Kong would be prospering at 9 percent
growth now, along with the rest of the Chinese economy,
instead of negative growth from deflation caused by a
freely convertible overvalued currency.
The
bogus democracy promoted by the last British governor,
Chris Patten, and the free-market myth created by
Friedman's fantasy have fueled Hong Kong's eager
self-delusion. The so-called rule of law, so frequently
touted these post-colonial days in Hong Kong, merely
meant that no local Chinese business ever won a case
against any British trading firm in 150 years of
colonial justice. Hong Kong's low-tax myth is merely a
cover-up for the exorbitant land tax disguised by the
government's century-old, unseemly role as chief land
speculator. Throughout its history, Hong Kong's economy
has always been driven by geopolitical conditions rather
than by free-market fundamentalism, much less by
democracy or the rule of law.
What most analysts
miss is that Hong Kong's future is dependent not on
China's adherence on its OCTS policy of non-interference
in Hong Kong's internal autonomy, or on the continuation
of a fantasized free-market system, or rule by colonial
law disguised as rule of law. Rather, it depends on
whether Hong Kong can again recognize changes in the
global geopolitical landscape since the end of the Cold
War to reorient a new useful role in it.
The
OCTS policy erroneously accepted Hong Kong's colonial
regime as democratic and free-market, instead of the
colonial governance and command economy that it actually
was. The Basic Law, Hong Kong's mini-constitution drawn
on the OCTS principle, contains defining clauses on the
political and economic systems of Hong Kong that are
mere fantasies of Anglo-US propaganda. The Basic Law in
essence condones a continuation of Western
neo-imperialism under Chinese sovereignty for another 50
years. As such, these constitutional clauses constrain
the government of the SAR from any attempt to face
reality and provide solutions to real problems it is
facing. The artificial constitutional segregation of
Hong Kong from China is now creating difficulties in
Hong Kong's effort to be integrated with the booming
economy of the Pearl River Delta. China has no need for
Hong Kong compradorism in this era of direct contact.
Neither do China's trading partners in the West.
Moreover, world trade has changed under a decade
of US-imposed globalization, and is changing again with
its impending collapse and restructure. Hong Kong, as an
international trading center on Chinese soil, must
change with the new geopolitical landscape to survive.
There are increasingly undeniable indications that
British propaganda to disguise colonial rule as
neo-liberalism has trapped Hong Kong under Chinese
sovereignty into a state of policy paralysis and
rendered it impotent in disengaging itself from a
downward spiral of dysfunctional obsolescence. Hong Kong
will prosper only if China replaces Britain in Hong Kong
and sets policies for a command economy to serve the
geopolitical interest of China, as the British had done
for one and a half centuries.
At the early part
of the 19th century, Hong Kong was little more than a
backwater cove in southern China, with no indication it
would one day be turned into a world trade center by
geopolitics. All through the 19th century, China had no
interest in overseas trade. Thus a natural deep harbor
on its coast on the South China Sea was of little
significance to the Chinese economy. In the early 1800s,
Hong Kong was home mostly to indigenous farmers and
fishermen, pirates and smugglers. At that time, China's
reluctant contact with an increasingly intrusive West
took place up the Pearl River, at Canton, more correctly
known as Guangzhou, some 145 kilometers north of Hong
Kong. It was in Canton that traders from Britain,
France, the United States and elsewhere in the West
lived and worked in a small segregated enclave strictly
regulated by Chinese officials. British ocean-going
ships found Hong Kong's deep harbor useful for unloading
and loading cargo to be barged up the Pearl River to
Canton. Trade developed only slowly and in China's
favor, because the Chinese economy had more to offer the
Western economies than it needed in return.
The
British soon found a remedy for this trade imbalance,
which was draining silver steadily from the Bank of
England. They illegally imported opium grown mostly in
British India to China, where opium sale and use had
been banned since 1729 under the reign of Emperor
Yung-zheng (1723-35), and its importation and
cultivation were made illegal under Emperor Jia-qing
(1796-1820). It was in Canton that the illegal opium
trade flourished, with great profit for the British. By
1840, the British were importing 40,000 chests of opium
to China annually, selling at a price of $2,075 (Stg160)
per chest that cost the British $25. US traders, such as
the Delano family, as in Franklin Delano Roosevelt, also
made great fortunes shipping Turkish opium to China and
returning with Chinese tea and porcelain to Boston in
Yankee Clippers. Much of the wealth in Boston came from
this narcotic trade and provided capital for the
westward expansion of the United States. This illicit
massive transfer of wealth from China, one of the
world's richest and largest economies at the time,
played a key role in financing the economic development
of Europe and North America in the 1800s.
Opium
addiction in China grew to epidemic proportions within a
short time, ravaging all levels of Chinese society. Qing
Dynasty authorities appointed a special commissioner in
Canton in 1840, with orders to stamp out the insidious
opium trade. A week after his appointment, special
commissioner Lin Zexu ordered his troops to surround the
international enclave in Canton, and demanded that the
British drug dealers turn over all of their opium
contraband. After a six-week standoff, the British drug
dealers surrendered more than 20,000 chests of the
narcotic, which Lin burned in public.
These
British opium traders, led by the East India Co and
Jardine Matheson & Co, a leading British firm still
operating in Hong Kong today, provoked a belligerent
response from the British military with the First Opium
War of 1840-42. The Opium War was depicted in
British-issued textbooks used in colonial Hong Kong
schools as a war to protect private property rights. On
January 26, 1841, a British naval party landed on the
northwestern shore of undefended Hong Kong, raised the
Union Jack, and occupied the island as a navy base to
make war farther north. China's outdated navy and army
were no match for British naval cannons. The First Opium
War ended with the Treaty of Nanking in August 1842, the
first of many "unequal treaties" Western imperialist
powers imposed on the decaying Qing dynasty over the
next half-century. That treaty forced China to
acknowledge, among other humiliating terms, British
extraterritorial privileges in five Chinese trading
ports. It also ceded the island of Hong Kong to the
British.
Less than two decades later, the Second
Opium War (1856-60) ended with another British victory
and the Convention of Peking, through which London
claimed perpetual control of Stonecutters Island and the
Kowloon Peninsula on the Chinese mainland across from
Hong Kong Island. By the century's end, other European
powers and Japan had demanded and received countless
concessions from a Qing Dynasty in its final stage of
collapse. With the security of Hong Kong as a pretext,
the British demanded a 99-year lease on what came to be
known as the New Territories - land farther into China,
beyond the Kowloon Peninsula. That lease began on July
1, 1898, and expired on July 1, 1997.
To
understand this history properly, one needs only imagine
that the United States had lost its "war on drugs" and
had to cede New York City and a good part of New Jersey
to Colombia, whose government had come under the
influence of drug lords. The new government of the
Republic of China, upon its establishment after the 1911
revolution that overthrew the decrepit Qing Dynasty,
immediately declared null and void all unequal treaties
imposed on China during this period of national shame.
The People's Republic, established on October 1, 1949,
holds the same position.
Settlement in the new
British colony of Hong Kong grew slowly at first; the
population rose from 32,983 in 1851 to 878,947 in 1931.
Recurring social unrest in reaction to British racial
oppression gave rise to Chinese xenophobia that acquired
nationalistic overtones in Hong Kong. Historically,
Chinese society had been a multi-ethnic melting pot
until the arrival of European imperialism. Such
nationalistic agitation lay hidden behind a veneer of
stability and prosperity propped up by the ruling
British with the help of a subservient local elite who
were rewarded with leftover monopolistic royal charters
considered not lucrative enough by the British trading
firms themselves. Hong Kong began to prosper
economically because it served the geopolitical
interests of its colonial master, without any hindrance
from ideological delusion about free market and
democracy.
The 1911 revolution led by Sun Yatsen
against the Qing Dynasty was hatched in Chinese
communities overseas. Hong Kong was one of its operating
bases due to the fact that British authorities were not
proficient enough in the Chinese language to detect and
suppress Chinese revolutionary activities under their
noses. However, any anti-imperialist expression of
disrespect to the British crown or hostility toward
British authority was swiftly and firmly suppressed with
imprisonment and/or deportation. Even after World War
II, it was a criminal offense to remain seated or not to
stand at attention when "God Save the King/Queen" was
performed prior to sporting events and at the end of
movies.
During the early decades of the 20th
century, Hong Kong served as a refuge for those fleeing
social disorder on the mainland during the Taiping
Uprising that broke out in 1851 and during the Northern
Expedition against warlords after the founding of the
Republic in 1912. The outbreak of three large labor
disputes, namely the first general strike in support of
the Manchurian Railway workers' strike (1920), the
Seamen Strike (1922) and Guangdong-Hong Kong General
Strike (1925-26) reflected widespread
revolutionary/nationalistic attitudes and the close
linkage between Hong Kong residents and their mainland
compatriots. These strikes were all brutally suppressed
by the British to keep the Hong Kong economy humming,
with the approval of the elite compradore class.
In 1927, the Kuomintang (Nationalists) escalated
their campaign against the Communists. Mao Zedong
established a rural guerrilla base in 1928. The Japanese
occupied Manchuria in 1932 and the Chinese Communist
government declared war on Japan, but the Sino-Japanese
war did not formally break out until 1937 after the
Xi'an incident, which brought about a united front
against Japanese aggression. As Japanese forces advanced
into China, hundreds of thousands of displaced Chinese
sought refuge in British Hong Kong, bringing the
colony's population at the outbreak of World War II to
about 1.6 million. At the height of the influx, 500,000
homeless people were sleeping in the streets as a result
of British indifference for the welfare of the colonial
subjects.
Life was harsh and undignified for all
of colonial Hong Kong's Chinese residents, not just the
new refugees. The densely populated slums where the
Chinese lived were regularly ravaged by disease, fires
and typhoons and by criminal elements condoned by the
British colonial administration as necessary for doing
the dirty work for British opium smuggling. Primitive
conditions mixed with unregulated foreign traffic made
the colony without public hygiene vulnerable to
recurring epidemics of new diseases.
Hong Kong
society was segregated between privileged, wealthy
British masters and the Chinese they employed and ruled
through local compradores. Hong Kong Chinese were not
allowed out after dark by a policy of race curfew. They
were barred from European residential districts and
parks except as servants. Most Westerners in Hong Kong
treated the Chinese as "a degraded race" - in the words
of a missionary. "You cannot be two minutes in a Hong
Kong street," wrote another observer of the time,
"without seeing Europeans striking coolies with their
canes or umbrellas." An example of these racial tensions
surfaced in 1857, when a Chinese baker was accused of
attempting to poison his Western clients by lacing their
bread with arsenic. The incident caused no fatalities,
and the baker was later acquitted for lack of evidence,
but not for lack of motive.
Hong Kong's fortunes
rose in the 1850s and '60s as refugees flooded the
colony, fleeing from the social chaos in China
associated with the economic dislocation from the
resultant drain of silver from widespread opium
addiction and periodic foreign invasion and ruinous war
reparations. The new arrivals helped the colony evolve
from a drug-trading outpost into a permanent settlement,
providing a productive base to serve British economic
imperialism.
Western apologists stress British
contribution to the development of a market economy in
Hong Kong through its laissez-faire policy. What Britain
actually did was to transfer wealth accumulated from
imperialistic exploitation of China to Britain through
an offshore island on the China coast ruled by British
colonialism. Thus the argument that British colonialism
built a prosperous world city on a barren rock by virtue
of a superior economic system was as ridiculous as
Kipling's "White Man's Burden" bringing civilization to
India.
Professor Hui Po-Keung of Lingnan
University, Professor Tak-Wing Ngo of Leiden University
and others have written on Hong Kong's colonial
compradore politics and monopolistic middle-man
capitalism and the propagandistic dissemination of
mythical free-market ideology in Hong Kong, despite
total British control of the colonial command economy.
These research findings refute the myth that Hong Kong's
economic success was a result of a laissez-faire policy,
or the outcome of free-enterprise response to free
markets. Evidence showed that British colonial policies
dictated Hong Kong's commercial and trade development to
support British interests, while discouraging any local
industrialization before World War II, and also blocking
opportunities for industrial upgrading in the 1960s that
would have enabled Hong Kong to compete independently in
world markets.
The British colonial government
in Hong Kong handled conflicts between China and Japan
during the 1930s strictly on evolving British global
geopolitical interests. British actions obstructed
China's fight to preserve territorial integrity against
Japanese occupation of Manchuria for fear of
antagonizing a rising Japan and on the principle that
foreign occupation of semi-colonial China was the
international norm. The then British-owned South China
Morning Post did not depict Japan in the early 1930s as
the aggressor in China, lest such a depiction reflect on
British occupation of Hong Kong itself as aggression.
After the Japanese seizure of Manchuria in 1939,
British policy had been to appease Japanese aggression
as a natural effect of geopolitical Darwinism. From the
July 7 Lugouqiao incident of 1937 that formally launched
the Sino-Japanese War to the fall of Hong Kong to
Japanese forces on Christmas Day in 1941, British policy
on China, known in the British Colonial Office as
"Passage of Hong Kong", was divided into two phases. The
first phase, before the fall of Guangzhou to Japan in
October 1938, allowed Hong Kong to supply China on a
profit basis. The League of Nations had advised its
members, of which Britain was one, not to interfere with
China's defensive war against Japan. The second phase,
after Japanese occupation of Guangzhou, closed Hong Kong
off from legally providing any supply for China.
Britain's neutrality in the Sino-Japanese war
enabled British Hong Kong to trade with both China and
Japan at the same time, supplying war materiel to both
warring parties. This compensated for the drop in trade
in Hong Kong resulting from the rapidly deteriorating
war economy in China. The security of the British
Empire, of which Hong Kong was a crown jewel, was
conditioned on non-antagonistic British-Japanese
relations. British interests in China would face
unwanted threats and British status in the Far East
would face further decline if German global expansion in
alliance with Japan's Greater East Asia Co-Prosperity
Sphere were to strengthen. Demonstrations and protests
from Hong Kong Chinese against British and other Hong
Kong companies trading with Japan were suppressed and
calls for a boycott of Japanese goods were disallowed by
the colonial government in the name of free trade and
law and order.
Britain's policy of neutrality,
together with Japan's blockade of the Chinese coast,
made Hong Kong's Victoria Harbor and the Kowloon-Canton
Railway critically important. Hong Kong became a vital
route for transporting goods, commodities and munitions
by sea from overseas and by train via Guangzhou to
Wuhan, where Chinese forces were staging a desperate
defensive battle. After Japanese destruction of the
Chinese section of the Kowloon-Canton Railway in October
1937, the British agreed to Chinese proposal of building
a Kowloon-Guangzhou highway as a replacement route in
early 1938, as a commercial consideration. It was also a
policy consistent with British geopolitical interest in
preventing total Japanese military success in China, so
as to avoid the possibility of Japanese pressure turning
against British interests once Japanese control of China
was total. The plan to import nine British-made
airplanes to China from Hong Kong in November 1937 was
allowed by the British Colonial Office despite strong
protests by Robert Craigie, the British ambassador to
Japan.
The geopolitically induced trade helped
relieve the Hong Kong economy from some of the global
effects of the Great Depression of the 1930s. Combining
patriotism with financial benefits, Hong Kong Chinese
took a leading role in supporting Chinese war efforts
against the Japanese through the utilization of the
Kowloon-Canton Railway and Victoria Harbor and later the
Kowloon-Guangzhou highway. The British announced that
keeping Hong Kong open to the mainland was crucial to
China's future, while the US secretary of state
applauded the "Passage of Hong Kong" as enhancing
China's ability to resist Japanese invasion. Both
Britain and the United States hoped that China could tie
down Japanese expansionism enough to spare Hong Kong and
US interests in the Pacific, particularly the
Philippines, from Japanese aggression.
Hong
Kong's closeness to the approaching war zone, Japan's
growing threat to Hong Kong, and Britain's apprehension
on a two-front war in Europe and Asia caused Britain to
discontinue a tilt toward China after Japanese
occupation of Guangzhou in October 1938. The Japanese,
having taken Guangzhou, were more determined to cut off
supplies to China from Hong Kong. When the Nazi-Soviet
non-aggression pact was signed in August 1939, Britain
tried to persuade Japan to withdraw from the Axis cause
by offering de facto recognition of Japanese occupation
of China. British appeasement of Japanese aggression in
China continued until the attack on Pearl Harbor,
Hawaii, on December 7, 1941.
The Chinese
government's proposal to establish an
aircraft-reassembly factory in the New Territories in
August 1937, as well as a Hong Kong company's proposal
to build two military steamers for Guangzhou in January
1938, were refused by the British under the second phase
of the Passage of Hong Kong. Immediately after the fall
of Guangzhou, British governor Alexander Northcote
stopped all transshipment of munitions and weapons from
Hong Kong to the mainland. In December 1939, the British
government prohibited the reassembly of four US-made
passenger planes in Hong Kong. The planes had been
purchased by the Chinese government. In June 1940, in a
desperate last-ditch effort to appease Japan, the
British formally closed the Passage of Hong Kong and
terminated British tolerance for the supply of
munitions, weapons, fuel, and gasoline to China. Hong
Kong banks were forbidden to handle aid funds destined
for China from overseas Chinese communities.
Nevertheless, massive smuggling of military materiel to
China and underground financial transactions continued
to benefit the Hong Kong economy.
When Japan
began bombing Shanghai in November 1937, it unleashed a
massive influx of refugees into Hong Kong, the greatest
in its history since the Taiping Uprising in the 1850s.
The population grew by 50 percent, while slum housing
expanded by 8 percent only. The 650,000 refugees created
problems of crisis proportion on already overburdened,
substandard housing conditions while the British
pampered themselves in their luxurious villas on the
Peak lamenting over cocktails on the uncouth manners of
the lesser breed.
During the Japanese occupation
of Guangzhou, armed resistance was mounted by the
Dongjiang (East River) guerrillas, originally formed by
patriot Zeng Sheng in Guangdong province in 1939,
comprising peasants, students and seamen. Among its
members was the revolutionary sculptor Zhang Songhe,
later a member of the 5th, 6th and 7th People's
Political Consultative Conference, who became the chief
editor of the Pictorial of the Guangdong and Guangxi
column of guerrilla forces. His masterpieces include the
sculpture of Anti-Japanese Guerrilla Warfare on
the Monument to the People's Heroes in Tiananmen Square,
sculptures in Shijiazhuang Martyrs' Mausoleum, the
design of the Monument to Martyrs in Shenzhen and
sculptures on the Dongjiang Monument to Martyrs.
When the British surrendered Hong Kong to Japan
in December 1941, the Dongjiang guerrilla force had more
than 6,000 fighters. In the wake of the British retreat,
the guerrillas picked up abandoned weapons and
established bases in the Japanese-occupied New
Territories and Kowloon. Applying guerrilla warfare,
they targeted traitors and collaborators, protected
patriotic traders in Kowloon and Guangzhou, attacked the
occupation police station at Tai Po, and set off bombs
at Japanese-controlled Kai Tak Airport. In addition, the
guerrillas rescued British prisoners of war, notably Sir
Douglas Clague, Professor Gordon King, and David
Bosanquet. One of the guerrilla force's significant
contribution to the Allied cause was their rescue of 20
American pilots who parachuted into Kowloon when their
planes ran out of fuel after the Dolittle raid on Tokyo.
Founded in January 1942, the Guangdong Renmin
Kangri (People's Anti-Japanese) Guerrillas were
established to reinforce other anti-Japanese forces in
the Dongjiang (East River) and Zhujiang (Pearl River)
deltas. The third and fifth branches under Cai Guoliang,
which were sent to Hong Kong and Kowloon, became known
as Gangjiu Dadui (Hong Kong-Kowloon Battalion). Led by
Wong Kwun-fong and Lau Hak-tsai, the guerrilla force
attacked traitors and enemy forces, while growing farm
produce and protecting civilian lives in Hong Kong. In
addition, the guerrilla force extended its influence in
April 1942 over Lantau Island, enhancing communication
with Macau and Guangzhou.
The spread of
guerrilla activities into cosmopolitan Hong Kong Island
assisted Chinese intelligence on Japanese strategies and
operations. Furthermore, the force played an important
role in saving British and other foreign figures of the
Allied cause, and 89 of them - 20 British, 54 Indians,
eight Americans, three Danes, two Norwegians, one
Russian and one Filipino - were saved from enemy hands.
However, because of Japanese control of Guangzhou and
British appeasement policy, and the subsequent British
surrender on Christmas Day 1941, Hong Kong was
officially closed to Mainland Free China contact until
the end of World War II.
On December 8, 1941,
one day after Pearl Harbor, just hours after Tokyo
ordered attacks on the Philippines and the Malay
Peninsula, Japanese troops swept across the border from
occupied China into Hong Kong's New Territories.
Japanese forces quickly destroyed the colony's weak
defenses, manned by fresh British troops recently
redeployed from Singapore and still unfamiliar with Hong
Kong geography. British commanding officers did not take
seriously the idea that an "Asiatic" army could ever
defeat the British Army that had been invincible for
more than a century in Asia. The only effective
resistance was from the small Hong Kong Volunteer Force
of local Chinese youths. By Christmas Day, the British
had surrendered, which brought nearly four years of
brutal Japanese occupation.
The pending defeat
of Japan in 1945 raised a new question of who should
rule Hong Kong after the war. At the beginning of World
War II, US president Franklin D Roosevelt had argued
that the British should return Hong Kong to the China
after the war. But at the Yalta summit in 1943,
Roosevelt gave in to British prime minister Winston
Churchill's insistence that Britain did not fight the
war merely to give away the empire.
The British
moved quickly to regain control of Hong Kong after
hostilities ceased. Tokyo had ordered the Japanese
forces in Hong Kong to surrender to the British. The
Nationalist Chinese government held back its troops at
the Hong Kong border. Franklin Gimson, Hong Kong's
colonial secretary, left his prison camp as soon as he
received word of the Japanese surrender, and declared
himself the colony's acting governor. Gimson set up a
provisional government, which welcomed a British naval
fleet into Hong Kong harbor several days later. British
Rear Admiral Sir Cecil Harcourt then formally accepted
the Japanese surrender of Hong Kong.
Hong Kong's
postwar recovery was swift. Eight months after the
Japanese surrender, the colony's civilian administration
was restored. Traditional colonial discriminatory taboos
were relaxed in the postwar years. Chinese were no
longer restricted from public beaches, parks or European
residential districts, or from owning property on
Victoria Peak.
World War II disrupted the
socio-economic structure of colonial Hong Kong. After
the Japanese surrender in August 1945, Chinese civilians
returned in force to Hong Kong at the rate of almost
100,000 a month, most expecting China, as a member of
the victorious Allies, to recover the Japanese-occupied
colony from British imperialism, but they were sadly
disappointed by events. The population, which by August
1945 had been reduced to about 600,000, rose by the end
of 1947 to an estimated 1.8 million. The Chinese economy
was deteriorating under the Nationalist policy of
elitist capitalism, which was entirely antithetical to
Chinese historical conditions. Soon afterward, as the
Nationalist government began to lose support from the
masses, and its army faced defeat in civil war at the
hands of the People's Liberation Army, Hong Kong
received a population influx unparalleled in its
history. Hundreds of thousands of Chinese - mainly from
Guangdong Province, Shanghai, and other commercial
centers - entered the colony during 1948-49 and, by the
spring of 1950, the population had swelled to an
estimated 2.2 million. Since then, it has continued to
rise from population inflow from China and now totals
6.5 million.
Modern Hong Kong rose from the
ashes of World War II, created partly out of an urgent
necessity to deal with one of the greatest refugee
crises of its time. Hong Kong's economy slowed when the
United States placed an economic embargo on China after
the founding of the People's Republic on October 1,
1949, but the Korean War broke out in 1951 and brought
new economic life to Hong Kong. It was during this
period that the shipping sector of Hong Kong got its
start, leasing anything that floated to the US Navy to
fill the sudden rise in demand by trans-Pacific military
transport.
But Hong Kong also played a critical
role in supplying China unofficially. While Chinese
soldiers were being killed in Korea by US-British
troops, with the son of Mao Zedong among those killed,
freedom of speech in Hong Kong consisted of open
advocacy for the violent overthrow of the Chinese
government. At the same time, any call for passive
resistance to Western imperialism and British
colonialism was censored and punishable with
imprisonment in the colony.
Even today, the
English-language press in Hong Kong remains
predominantly anti-China under the guise of press
freedom. When the SARS problem first broke out, the Hong
Kong English-language press was full of criticism of
alleged Chinese government cover-up as typical of
totalitarianism, despite the fact that the main
motivation had been to avoid market panic. But when
Toronto adopted in essence the same approach to the SARS
scare to protect its economy, the Western press was full
of editorials expressing understanding.
The
Korean War had a fundamental geopolitical impact on Hong
Kong and its economy. The US embargo and blockade
against China, plus the interference by the US 7th Fleet
in the reunification of Taiwan, made Hong Kong the
needed window to the outside world for an isolated
China. China took advantage of a British Hong Kong as a
base to run the US blockade, and for intelligence work
in Taiwan and in the United States and its allies.
Although underground communist cadres came to
Hong Kong in 1948 with an ultimate mission of liberating
the territory, the eruption of the Korean War stabilized
the geopolitical position of Hong Kong. Chinese
tolerance for the continuation of British colonial rule
was justified by China's geopolitical need for a window
to the West. British official ignorance of Chinese
political literature created a void that became the
target of competition and occupation by the two
ideological rivals: the Nationalists supported by US
propaganda and the Communists.
During the Cold
War era, global competition between the two superpowers
became the backdrop of the rivalry between the
Communists and the Kuomintang, making Hong Kong a key
residual battleground in the ideological war in the
Chinese language. British diplomatic recognition of the
People's Republic and de-recognition of the Nationalist
regime on Taiwan made outright ban of pro-Beijing
activities untenable in British Hong Kong. On the other
hand, Chinese non-recognition of British colonial rule
of Hong Kong prevented Chinese diplomatic presence in
the British colony. Until the return of Hong Kong to
China on July 1, 1997, China was represented by the New
China News Agency in Hong Kong, which served as a de
facto diplomatic mission.
With its traditional
entrepot role cut off by the US embargo against China in
1951, the colony was forced to develop local industries
for export. Hong Kong took advantage of a continuous
supply of cheap labor in the form of refugees, financed
by flight capital from China, and the colonial
government's traditional disinterest in regulating labor
standards as long as land prices kept rising to keep
government revenue flowing. But the main factor of
growth of labor-intensive manufacturing was the special
access to the US consumer market, kept open through a
geopolitical understanding between the United States and
the United Kingdom, in recognition of the strategic
location of Hong Kong. This was the early kernel of
globalization, with the US providing a market for goods
too cheap to warrant production by high-paid US labor,
and simultaneously giving US neo-liberalism an early
experimental station for real-life "peaceful evolution"
on the doorstep of communist China.
But unlike
Japan, South Korea and Taiwan, Hong Kong did not get on
a high-end manufacturing path for lack of any industrial
policy. British colonial education, trade and finance
policies kept Hong Kong in low-end manufacturing
sweatshops for the narrow benefit of British trading
monopolies and banks, which had never wanted to endow
the colony with industrialization. At the same time, the
Hong Kong government's long-standing land speculation
that enabled a tax policy that attracted foreign
investment further contributed to rapid growth of the
low-end export sector. The colony began exporting in
ever-increasing amounts cheap textiles, garments,
low-end electronics, cameras and watches, plastic
flowers, toys and many other low-priced goods made in
small sweatshops, stamped "made in Hong Kong" to clear
the US custom embargo on China.
But most of Hong
Kong's wealth came from land speculation, with the
colonial government as the chief speculator and
beneficiary. This policy condemned labor in Hong Kong
into perpetual under-education, low subsistence wages
and sweatshop working conditions.
The influx of
refugees from China continued unabated during the 1960s,
providing ample cheap labor and occasional
entrepreneurial human resources for the manufacturing
workforce. The British colonial government left the
refugees to fend for themselves, to live and struggle
for survival under appalling, subhuman conditions.
In 1953, a tragic, spectacular night fire
engulfed hillside shanty slums in the Shek Kip Mei
squatter area on Christmas Eve, destroying tens of
thousands of refugee squatter huts unreachable by
firefighting equipment, leaving 53,000 homeless. The
tragic event attracted the attention of the
international media, and even became the backdrop of a
best-selling novel about a bar girl: The World of
Suzy Wong, which later was made into a Hollywood
film. The British colonial government was finally
spurred into reluctant action by world opinion,
introducing a housing program for refugees with the
construction of vast public-resettlement buildings -
standard seven-story walk-up concrete structures with
minimum facilities in a refugee city. With virtual
dictatorial power, the colonial government managed to
solve the housing problem for refugees in short order,
although the result was little better than highrise
concentration camps.
By the mid-1960s,
escalating US involvement in the Vietnam War made Hong
Kong a major supply point for the US military. Hong
Kong's ports, shipping and logistics sectors grew
further to serve the new geopolitical needs. The colony
became a regular stop for US troops seeking "rest and
recreation". It was also the West's main pre-satellite
spy post into a China isolated by hostile US policy.
Much of Hong Kong's prosperity during this period came
from an economy that served the geopolitical aims of the
United States in the Cold War. It had as much to do with
free markets and democracy as cheese on the moon.
Hong Kong's "go-go" pace, while not the same as
free-market dynamism, created typical problems many
neutral cities such as Casablanca during World War II
faced: espionage intrigues, organized crime, rampant
prostitution and drug dealing, smuggling, polarization
between rich and poor, ideological cynicism, political
opportunism and official corruption. The colony's
low-end manufacturing sector was unregulated, and the
labor force had to work long hours in sweatshops under
inhumane and unsafe conditions for less-than-subsistence
pay with no health or retirement benefits or job
security. Small entrepreneurs were forced to seek
financing from predatory lenders. Child labor
exploitation was routinely practiced. Human rights and
civil liberties were never issues about which British
colonialism cared much.
The Great Proletarian
Cultural Revolution unfolded in China in 1966. While the
issues raised in the Cultural Revolution on whether
politics should be the determinant of the correct
development path remain debatable to this day, the
excesses associated with internecine political struggle
of the decade-long upheaval left the nation exhausted
and its economy in near-total collapse. The political
cataclysm spilled over into Hong Kong. In 1967, a labor
dispute at an artificial-flower sweatshop in Hong Kong
quickly escalated into widespread violent street
demonstrations. For several months, protesters clashed
with police, overturned cars and buses, stoned hotel
lobbies and shop windows, and in a general release of
century-old, pent-up rage and hostility toward colonial
capitalism, disrupting life and business in the colony.
Several bombs were set off in a wave of terrorism. At
one point, shots were fired across the border from China
into Hong Kong.
British officials responded with
a ruthless crackdown against the sudden release of
pent-up nationalism, suspending what little civil
liberty the colony had traditionally allowed, in the
name of anti-communism, imprisoning thousands without
trial and closing down left-wing Chinese-language
newspapers. Official reports acknowledged that some 50
people were killed during the riots by excessive police
force, with thousands more wounded.
To defuse a
recurrence of social unrest, social and government
reforms in Hong Kong followed, including the cleanup of
the openly corrupt, scandal-ridden police force. At the
same time, China made clear that it still considered
Hong Kong a part of Chinese territory it would
eventually reclaim.
It was at this point that
British imperialism decided to solicit US assistance by
the gradual adoption of bogus democracy and free markets
as a new colonialism with a human face. The colonial
government then began officially referring to Hong Kong
as a territory, not a colony. British banking interests
began nurturing a new breed of native compradores with
special preferential bank credit. Their role was to pose
as a national bourgeoisie to front for neocolonialism.
These new compradore tycoons, some speaking no
English and unwashed by British upper-class education
and mannerisms, dutifully bailed out British interests
from the political risk of rising nationalism. They
acquired British trading firms at inflated market prices
with loans from British-owned Hong Kong banks, backed by
profit they made in real-estate speculation, light
manufacturing, shipping and retail finance and banking
services for poor natives. The huge profit they squeezed
from the colony were invested in British and US
enterprises overseas that suffered huge losses, in a
form of cross-border political transfer of wealth
through the market mechanism. These new tycoons welcomed
the new liberal colonialism as they benefited from token
gestures of the end of racial discrimination.
The British finally allowed that rich Chinese
should no longer be treated as subhuman, at least in
public, setting them apart from the masses of the Yellow
Herd as Honorable Whites who might even qualify for a
knighthood from the queen. Compradores now could comfort
themselves by claiming they were serving democracy and
freedom rather than imperialism and colonialism. They
posed as heroes of capitalism instead of running dogs of
colonialism.
Colonialism, the administrative
system of imperialism, like its slavery kin, is
inherently evil. Yet the evil institution of slavery in
US history did not prevent the emergence of great
leaders from the South, such as George Washington and
Thomas Jefferson. Similarly, the evil institution of
colonialism in Hong Kong history did not prevent the
emergence of a sensible administrator in the person of
Murray MacLehose.
Fluent in Chinese and a
student of Chinese culture and history, Crawford Murray
MacLehose was first posted to Hong Kong in 1963 as a
political advisor to ensure that colonial policy in Hong
Kong supported evolving British policy on China. He held
several other political posts in the British Empire
before becoming Hong Kong's 25th British governor in
1971.
From 1971, when he assumed the post of
governor, to 1982 when he left the post and returned to
Britain, MacLehose, of a new breed of governors more in
tune with the progressive British Foreign Office than
the conservative Colonial Office, practiced an
"enlightened form" of colonial administration with an
eye on Cold War geopolitics. He moderated the
traditional colonial attitude of aloof, discriminatory
disinterest in Chinese community problems and needs. He
also balanced the traditional policy of open government
support for British monopolistic businesses with a new
progressive social awareness. Reflecting the ideological
wind from the British homeland under Labour control,
MacLehose took an active role in social welfare
(particularly public housing, medical care, colonial
education, and protection of workers), and improved the
living conditions of Hong Kong residents within the
context of liberal capitalism and benign colonialism.
The MacLehose administration accorded with Hong Kong's
economic takeoff, laid a socio-economic foundation for
the colony as a labor-intensive manufacturing center,
and instilled a sense of respectable if not totally
honorable identity for colonial Hong Kong residents.
MacLehose established the Independent Commission
against Corruption (ICAC) to ensure rule by colonial
law, even indicting mid-level British police officers
and colonial officials who had run a police force and a
regulatory regime known for widespread corruption. While
the ICAC stopped administrative corruption in the
colony, much of the regulatory regime of structural
British preference remained in place and at the same
time exempted US commercial interests from British
protectionism. After a mass demonstration by off-duty
policemen on Queensway in Central in 1976, the governor
ordered an amnesty for all crimes of corruption
committed before January 1, 1977, lest the entire police
force had to be imprisoned. The rule of law indeed.
MacLehose initiated moves toward social welfare
as effective and timely responses to mounting social and
political turmoil, such as the riot against the Star
Ferry fare increases in 1966 and the leftist
anti-British-imperialism strikes and demonstrations in
1967. He handled deftly the student movement launched by
Hong Kong University students in 1968-69, the movement
to legalize the Cantonese language in 1970, and
demonstrations in Queen Victoria Park in defense of
Chinese sovereignty over the Diaoyutai Archipelago in
1971.
MacLehose's liberal responses and
concessions protected British interests and stabilized
British rule in Hong Kong by reducing the most visibly
oppressive aspects of old-time colonialism. In contrast
to the socio-political upheaval then raging in China,
many in Hong Kong began to let the practical benefit of
a peaceful life mask the political issue of national
honor. The threat of communism was promoted as an
anesthetic for British imperialism and colonialism with
high effectiveness among the refugees, who were mostly
members of the petty-bourgeois class that fled from
communism in China.
The Vietnam War aborted
president Lyndon Johnson's "Great Society" for the
United States, but it brought economic benefits in the
form of subsidized trade for Japan, South Korea, the
Philippines, Singapore, Malaysia, Indonesia, Taiwan and
Hong Kong. While the war created a backlash in US
domestic politics against anti-communist mania, it
strengthened a chain of anti-communist frontline bases
in East and Southeast Asia, in which Hong Kong was a
crucial link. Thus Hong Kong basked in the glory of
geopolitical trade preference with the US. MacLehose
became governor at the end of Hong Kong's tumultuous
anti-colonial phase, but the economic fringe benefits
from the Vietnam War gave Hong Kong a much needed and
timely boost, which stabilized Hong Kong's economy at
the beginning of MacLehose's benign rule.
After
the economic takeoff in the 1970s, primary and secondary
education in the colony improved by government policy
and quotas for tertiary educational institutions
increased. In 1969, the Chinese University of Hong Kong,
a conglomeration of US missionary educational
institutions expelled from China, moved to Shatin on a
new campus as Hong Kong's second officially recognized
public university. Notwithstanding its institutional
roots as an anti-communist propaganda machine, the
Chinese University provided a counter base to Hong Kong
University, the bastion of British colonial elitist
education. In 1970, the government agreed to convert the
former Hung Hom Industrial College into Hong Kong
Polytechnic.
The literacy rate and level of
education of the population rose, albeit still way below
world-class standards and still infested with colonial
mentality of rote learning and discouragement of
independent, let alone revolutionary, thinking. To this
defect was added the anti-communist propaganda financed
from US sources. Doctoral and postgraduate education was
non-existent even for professional schools. There was no
basic research in the sciences and much of the education
was focused on commercial job training for clerical and
mechanical maintenance work. Much of the research in the
social sciences produced in this period was little more
than outright hostile intelligence gathering and
anti-China propaganda.
Graduates of Hong Kong
universities went predominantly into careers in the
docile, apolitical Civil Service. Offspring of the elite
went to universities overseas and returned to join
family businesses that had nothing to do with their
studies. Scions of wealthy families who were promising
nuclear physicists were put to work in the plastic-toy
business. The professions that prospered were law,
medicine, accounting and architecture. Even then,
overseas professionals were routinely called in for
significant assignments. This is true even today. While
Hong Kong has yet to adopt a rule-based competitive
policy, it has never felt the need to adopt any
affirmative-action program for local talent.
In
addition, in the 1970s, with the spread of television,
TVB (begun in 1967) exerted a strong influence with
improved public communication, particularly in the
imposition of Anglo-US anti-China propaganda on an
uninformed and unthinking public poisoned by a colonial
education. In the early 1970s, remnants of Qing Dynasty
Manchu feudal laws were officially abolished, putting an
official end to one colony, two legal systems. It may be
said that the MacLehose regime signaled the beginning of
Hong Kong's self-delusion in the name of modernization.
In reality, MacLehose repositioned Hong Kong by giving
it a central anti-China role in the Cold War.
During his time in charge, MacLehose oversaw a
historic period of social reform and public investment
that formed the foundation for unprecedented economic
growth, including the building of Hong Kong's
underground transit system. Lord MacLehose was knighted
in 1983, a year after his retirement. These social
programs formed the foundation of Hong Kong's subsequent
economic success in the command economy, not the
much-touted free-enterprise myth.
In retirement,
Lord MacLehose summed up his opposition as governor, to
any introduction of democratic elections in Hong Kong by
saying: "If the communists won, that would be the end of
Hong Kong. If the nationalists won, that would bring in
the communists," in an interview in Britain's Daily
Telegraph. Of course even MacLehose was not delusionary
enough to contemplate the possibility of the British
winning. British colonialism had no use for democracy
until Britain was forced to return Hong Kong to China.
MacLehose, on October 10, 1979, reported the
government's housing policy of creating between 40,000
and 45,000 units annually: "The housing program
continues to be of prime importance, and in the review
of public-sector expenditure it was rightly given very
high priority ... None of the housing, amenities,
schools and landscaped surroundings would be of any
value without employment. And the new towns are not
intended as dormitories. So the progress of industry in
the New Territories is vital." Thus public housing and
an industrial policy of low-end manufacturing for a
geopolitically guaranteed US market put Hong Kong on the
road to prosperity.
Eighteen years later, on
October 8, 1997, Tung Chee-hwa made his first address as
the first chief executive of the Hong Kong SAR under
Chinese sovereignty. Again, housing was a key theme. The
current system, he said, had "produced erratic price
patterns and left potential home buyers and developers
in the lurch". He set as a goal the production of 85,000
new public and private units annually within two years.
Tung's policy speech, which laid out a five-year
plan for the SAR, went far beyond MacLehose's vistas.
Hong Kong's new leader unveiled plans to cut the waiting
times for public rental housing from six and a half
years to four years by 2003 and no more than three years
by 2005. He spoke of building major infrastructure links
and developing technology parks to diversify the economy
into the next century. And he announced concrete
initiatives to alleviate the livelihood burdens of the
SAR's expanding elderly population. Tung identified
improving competitiveness and education as the key
challenges facing the new Hong Kong - and launched
comprehensive initiatives to achieve such goals. He
stressed the rapidly growing ties - notably economic,
cultural and technological - between Hong Kong and
China, though he was careful to omit mentioning
political ties. By doing so, he was turning the
attention of a new generation of Hong Kong residents to
the vast opportunities that awaited them in what was
officially their motherland once more. But the
arm's-length attitude on political integration with
China means that this vast opportunity remains elusive
to the Hong Kong economy.
Most critically,
Tung's vision did not include any awareness of the new
geopolitical landscape. The new Hong Kong SAR, by
constitution, puts fundamental obstacles in the way of
its needed integration into the new Chinese economy,
while its former colonial role to serve Anglo-US
interests in China is becoming inoperative. Hong Kong
has yet to shed its compradore mentality or its
compradore policy. It continues to look at China from
the outside in, representing the geopolitical and
economic interests of the West, by presenting its
residual colonial system as the more superior of the two
systems in OCTS, instead of an obsolete system that must
be restructured in time.
When faced with
economic collapse from Hong Kong's failure to
restructure its economy to respond to the new
geopolitical landscape, the new SAR government hangs on
to obsolete myths of its colonial predecessor. Hong
Kong's top leaders tirelessly mouth meaningless slogans
of focusing on "sound fundamentals", rule of law, free
markets, small government, sound monetary regime based
on its dysfunctional currency peg, in subservient
tribune to US neo-liberal globalization, which has
destroyed the colonial command economy. To make matters
worse, it has abandoned its public housing and other
social programs started three decades earlier by
MacLehose, in a panic attempt to save the over-leveraged
real-estate tycoons at the expense of the future of the
Hong Kong economy. While the new leaders continue to pin
their hope for Hong Kong on external trade, they excuse
lamely their dead-end policies by lamenting that Hong
Kong has no control over external factors.
Henry C K Liu is chairman of the New
York-based Liu Investment Group.
(©2003 Asia
Times Online Co, Ltd. All rights reserved. Please
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