BOOK REVIEWS

James C. Hsiung ed., Hong Kong the Super Paradox: Life After Return to China

This is a collection of 13 essays about various aspects of life in Hong Kong after its reversion to China in July 1997. As common to publications of this nature, the quality of the chapters varies and there is a lack of theoretical coherence. The editor, however, has to be commended for providing the readers with an excellent Introduction that highlights a theme common to some of the contributions. Without the benefit of this introduction, readers who selectively read the individual chapters might well miss this interesting theme. In a nutshell, it has to do with the various discrepancies between some expectations prior to and the major outcomes after 1997. These gaps are subsumed under the concept of “The super paradox” that refers to the contrast of developments between the domestic (more precisely the political but not the economic) and the external domains in the Hong Kong Special Administrative Region (HKSAR), each of which contains its smaller paradoxes. In the former case, the prophets of doom expected the central government in Peking interfered in Hong Kong's domestic affairs, encroaching upon its freedoms and elections. They also feared the rise of corruption, nepotism and cronyism as a consequence of increasing mainland Chinese influence in the territory. The outcome is however China's hands-off policy, integrity of the “one country, two systems” formula, and reduction in corruption and the crime rate. On the other hand and paradoxically, the same happy ending does not repeat in the external arena, rosy pre-handover expectations notwithstanding. Contrary to upbeat forecasts by most commentators, the economy of the SAR has experienced a severe downturn. Unexpectedly too, the international status and competence of Hong Kong to defend its interests abroad have been challenged and suffered a blow.

In deciphering the sources of “the paradox syndrome,” the editor emphasises the uncertain meaning of “the current system” to be preserved for 50 years after 1997 in the Sino-British Declaration of 1984, the unanticipated Asian financial crisis, and the confusing novelty of the “one country, two systems” model.

The first source for the paradoxes basically explains why the doomsday commentators came to acquire those pessimistic views about China's stance after 1997. The logic runs as follows. The uncertainty as to what constitutes “the current system” allowed the British to undertake unilateral reform measures such as the electoral system, the Bill of Rights Ordinance, the Societies Ordinance and the Public Order Ordinance. These measures were repugnant to the Chinese government. It strongly reacted with threats, bringing bad publicity about her readiness to meddle in Hong Kong. This is a well-reasoned argument but faulted, at least partially. First, the prediction part in the paradox may not have to do with the undefined “current system” in the Sino-British Declaration, because the prediction may not be, at least not entirely, informed by the subsequent controversy between the British and the Chinese government on important transition issues. It could well be the case that the prophets were pessimistic because they did not trust the Chinese government in the first place, either for ideological reasons or due to their knowledge about political practices in China since 1949. Secondly and more importantly, because it takes two components to make the paradox, expectation and outcome, no explanation can rely on factors affecting expectations alone. On the outcome side, one may argue that depending on what the analyst chooses to cover in measuring the outcome, there is no paradox after all, because the electoral system unilaterally engineered by Chris Patten and the amendments made to the latter two ordinances have been undone after the reversion in 1997. Alternatively, if one defines the outcome in terms of the level of freedoms enjoyed (more demonstrations than before and so on), despite what had changed with the legislature and the ordinances, there remains a paradox. In that case, it can better be explained by crediting both the SAR and the Peking government for their self-restraint as the dominant factor affecting the outcome, rather than a loophole in the said Declaration that affected the perception of the commentators. Focusing on the source for the outcome, one may even submit that well before 1997, China had determined to take a hands-off attitude towards the future SAR to make “one country, two systems” work, for whatever reason. The search for the source of the paradox then lies in these reasons, rather than perceptions of the pessimists. There were, before 1997, optimistic commentators who believed in these reasons, such as the economic value of Hong Kong for China's modernisation, the demonstration effect of the Hong Kong model for reunification with Taiwan and the prestige stake for China of a successful post-colonial Hong Kong. Frank Ching points out in Chapter 6 for example, that China's hands-off policy for Hong Kong is not a result of external pressure, because the “one country, two systems” formula was China's own idea, made public by China before the negotiation with the British began in September 1982 (p. 154). Finally, rather than looking for the source of the paradox in the results of Sino-British negotiation or in the intrinsic Hong Kong policy of China, Daniel Fung in Chapter 4 alludes to an endogenous explanation, i.e. the rise of constitutionalism in Hong Kong itself. Using the national flag-burning case, Fung argues that by acquiring a written constitution on reversion to Chinese sovereignty, Hong Kong has developed substantive judicial review as a fundamental legal culture, resulting in a Chinese judiciary (The Hong Kong Court of Final Appeal) acting for the first time in Chinese history as the vigorous arbiter of the constitutionality of executive as well as legislative acts” (p. 109). On the right of abode case, Fung also presents an interpretation in a way radically different from the mainstream in the legal profession. Many legal experts focus on the adverse effect of the interpretation of the Standing Committee of National People's Congress on the prestige and thus the independence of the Court of Final Appeal. Fung places his emphasis on the decision of the Court, as showing that the “Hong Kong judiciary not only did not metamorphose into a shrinking violet after reversion to Chinese sovereignty, but presented rather the spectacle of robust constitutional arbiter, even to the extent, indeed, of raising the spectre of bellicose regionalism” (pp. 115-116). The rise of constitutionalism argument reminds us that what the people of Hong Kong can contribute to a favourable outcome despite unfavourable expectations.

As a second source for the paradox identified by Hsiung, the impact of the Asian financial crisis on the economic downturn in Hong Kong is obvious. The crisis was unexpected, and shattered the rosy economic forecasts of before the handover. There is no need to explore whether the economic downturn was linked with the departure of Hong Kong's former British rulers. It is more interesting instead to see whether China was implicated in this second aspect of the paradox. This is exactly what Y.Y. Kueh offers in Chapter 9. Kueh not only gives us a sophisticated explanation for the economic optimism before the handover and the financial dynamics underlying the Achilles heel of the US dollar peg, but also a superb analysis of whether the Chinese connection is an asset or liability to Hong Kong. It is an asset when international hedge funds speculate on the devaluation of the renminbi as a domino of the South-East Asian currency crisis, the resolve of the Chinese government against devaluation indeed helped to boost the confidence in the HKSAR government's defence of its own currency. The paradox in Kueh's eyes is however different from Hsiung's to the effect that the fully convertible Hong Kong currency unfortunately became a target of international speculation, because mainland China's capital account is strictly closed to any outside manipulation (p. 248-249).

The third aspect of the paradox, i.e. the deterioration of Hong Kong's international status and its source, constitute the most important contribution of the present volume to the discussion about post-1997 development in Hong Kong. In this regard, the editor's chapter on “(t)he Paradox of Hong Kong as a Non-sovereign International Actor: An Update” stands out. In Chapter 7, four concrete cases are analysed to demonstrate the serious challenge posed by judicial decisions in foreign courts against Hong Kong's status and capacity to act internationally as a non-sovereign entity. The Matimak case is particularly revealing. Matimak is a Hong Kong corporation that sued in the US federal courts for breach of contract by an American firm. The courts ruled that a Hong Kong corporation is “stateless” for purposes of alienage jurisdiction. In is thus paradoxical that the autonomy granted to the HKSAR became a liability, as the fact that Hong Kong is not entirely controlled by its sovereign disqualified Matimak as a citizen or subject of a state entitled to legal protection in foreign soil. Cases of this kind thus cast doubt on Hong Kong's legal eligibility to act on its own internationally in defence of the interests of its citizens. The source for this unexpected outcome is said to lay in the confusing novelty of the “one country, two systems” model. In particular, the novelty is that Hong Kong is both an inalienable part of China but at the same time enjoys a high degree of autonomy. The exact nature of this symbiosis is unclear, thus causing confusion among foreign judicial organs. Chapter 7 also considers why Hong Kong's return to Chinese sovereignty has made it less desirable as a catalyst for Taiwan-mainland liaison, despite pre-1997 speculation to the contrary. Primarily, Hong Kong can no longer be regarded as neutral ground for Taiwan-mainland contact. Besides this, Hong Kong has “too high a visibility for Taiwan to feel comfortable using it as a venue for conducting sensitive talks with Peking” (p. 190). In sum, the book's discussion of the international dimension of post-colonial development in Hong Kong is refreshing. Nevertheless, the reviewer thinks it premature to jump to any definitive conclusion. After all, the cases examined in the present volume represent only a small part of the activities of the HKSAR as a non-sovereign actor in the regional and the international arena. A balance sheet is yet to be compiled with the possible result that the setback experienced in the negative decisions in US federal courts may be amply compensated by positive development in other areas, such as Hong Kong's participation in regional and international organisations.

Turning away from the major theme of the book, distinct contributions from other chapters deserve comment. In Chapter 1, S.K. Lau documents the rise and decline of the popularity of the new SAR regime. His central theme lies in the unrealistic governing strategy of Mr Tung Chee-hwa, the chief executive of the HKSAR. For want of a coherent strategy, Mr Tung's attempt to depoliticise a highly politicised society was doomed to fail. The chapter by Ho Loksang provides a balanced evaluation of Mr Tung's performance. He is seen to be responsive to the needs of the man in the street. For instance, policy initiatives in the housing sector, e.g. his public housing sales programme and the 85,000 housing production target, seem eminently appropriate, Ho proclaims. Yet, despite the best of intention, the policy turned out to be a flop. The reason is that the chief executive “attempted to run before he could walk” (p. 74). In other words, it is a problem of political leadership, a theme in line with that expressed in Lau's chapter. The chapter on the securities and futures markets is written by the able hand of Anthony Neoh. The reviewer is particularly attracted by Neoh's description of how Hong Kong weathered the adversity caused by the political transition and emerged stronger as an international financial centre. Specifically, when companies moved their corporate base away from Hong Kong before the reversion of Hong Kong to China, the Hong Kong Stock Exchange overhauled its listing rules to allow overseas domiciled companies to be listed, provided that they complied with the required standards of shareholder protection and disclosure. These standards are indeed international standards in all fields of financial regulation that Hong Kong had no choice but to apply. The response to a potential crisis thus resulted in the advantage of a revamped stock market with a market capitalisation of US$350 billion, the eighth largest in the world. Ting Wai's chapter on the HKSAR's relations with its Chinese sovereign is an equally important chapter. It is important for a perspective that it advances and that has thus far received scant attention in scholarly treatment of post-colonial development in Hong Kong. Ting submits that the ultimate source of all the problems and scepticism in Hong Kong “is rooted in the nature of the Chinese regime under the rule of the CCP” (p. 269; Chinese Communist Party). He thus proposes to examine how the Party-state in China might exert its influence upon the future development of Hong Kong by interfering in its civil society, yet not the political system. However, despite the promising analytical framework, the subsequent analysis turns out to be inadequate. Ting can though, be excused for a number of reasons. First, the attempted task was formidable. For example, the nature of the Chinese regime under the rule of the CCP is undergoing change. How can we relate the changing nature of the Chinese regime to Peking's meddling in the civil society of Hong Kong? Secondly, access to availability of data about Peking's activities in Hong Kong is very limited, since the CCP operates underground and most united front work of the regime in Hong Kong is conducted in a covert manner. The concluding chapter by the editor deserves careful reading. It is a critique and a post-colonial reflection of the British legacy in Hong Kong. Praise of the rule of law, the system of freedoms and the clean government are balanced by the troubling revolution of rising expectations instigated by belated efforts at democratisation. Egregious poverty of compassion of the colonial period is held responsible for difficulties confronted by the new SAR government that has been hard pressed by cross-pressures demanding remedying reforms. In short, the colonial legacy is not necessarily an asset. It can be an handicap.

All told, this volume is a valuable addition to the discussion of the important subject about the working of the “one country, two systems” formula in Hong Kong. It should benefit not only students in Hong Kong politics, but also more generally experts in political development, specialists in comparative constitutions and theorists in inter-governmental relations.