Where is Hong Kong's economic potential hidden?
Updated: 2014-01-22 07:24
By Zhou Bajun(HK Edition)
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Chief Executive (CE) Leung Chun-ying's second Policy Address is titled "Unleash Hong Kong's Potential". The public have accepted that the city's potential lies in its advantages, or "soft power", such as the rule of law, freedom of speech and the free flow of goods, capital, information and talent, as well as "hard power", such as superb infrastructure. However, if Hong Kong already had these advantages for a long time, then why is its economic transformation into a knowledge-based economy stalling?
In some of my opinion pieces in Chinese language newspapers, I likened Hong Kong's advantages to a phenomenal athlete who holds world records in some sports and has the potential to do better. It is, therefore, disappointing to see this outstanding athlete outperformed by his competitors and unable to set new records. The reason, I believe, is that Hong Kong has failed to seize some great opportunities which are right in front of it.
In the late 1980s, Hong Kong grew from being an under-developed economy into a newly industrialized one - only slightly below the developed level. The city should have strived to make more breakthroughs in its economic growth so that it could have developed further. Though the potential is there, it was not always unleashed in a city of only 1,000 square kilometers and with 7 million people.
However, many of Hong Kong's business people were astute enough to see a great opportunity when it came along. They crossed the Shenzhen River to invest on the mainland as the country underwent economic reforms and began to open up.
However, the worst post-war economic recession that ravaged the region in the form of the 1997-98 Asian financial crisis imposed further restraints on Hong Kong's growth - an aging population and limited space. The reality was that the overwhelming majority of Hongkongers embraced the mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) signed on June 29, 2003. At the time, even the local opposition camp and anti-central government media had no choice but to support it.
However, from the very beginning there were two different attitudes toward CEPA. The "Love the Nation and Love Hong Kong" camp has been well aware that the arrangement between the central authorities and the SAR government is an important milestone in the integration of the two economies. Although the integration can be traced back to business exchanges by enterprises in the late 1980s, CEPA established an institutional framework for the process to progress - along with the mainland's reforms.
But the opposition camp only treated CEPA as a tool to temporarily stimulate the city's economy. When Hong Kong was mired in a severe economic recession, the central government offered it timely help in the shape of millions of mainland tourists under the Individual Visit Scheme (IVS). These visitors spent hundreds of millions a year here and fueled Hong Kong's service-driven economy. At the time, the opposition wasn't openly against this. But when economic integration seemed to draw local people's attention away from the "core differences" between Hong Kong and the mainland, the opposition felt threatened. So they began to oppose the IVS and demand that it should end.
This, of course, is self-defeating because economic integration has proved very beneficial to Hong Kong's economy and the well-being of local residents.
Guangdong province, Hong Kong's closest neighbor, consistently urges the economic integration in the Pearl River Delta with the CEPA as its spearhead. On Sept 17, 2013, the province's authorities submitted a plan to the central government. This was to establish a regional free trade zone (FTZ) with Hong Kong and Macao. On Jan 14, the authorities disclosed the FTZ plan and vowed to allow liberalization of trade in services between Guangdong and the two SARs this year through CEPA.
The CE's new Policy Address highlights the significant task of developing the economic relationship between Hong Kong and the mainland. However, it seems to have fallen short in both breadth and depth. So far Leung has intentionally avoided the term "economic integration". His Policy Address barely touches on the issue, save for a few short sentences under in the section of "Enhancing Cooperation with the Pearl River Delta". But it does not mention any concrete measures.
The CE's new Policy Address said: "We have capitalized on the advantages of 'One Country' and 'Two Systems'." This sounds right. However, if the city continues to be held back by the "visible boundary" between Hong Kong and the mainland as well as by an ideological barrier between Hongkongers and their mainland compatriots, it cannot make the most of China's resurgence. Therefore, it could miss some great opportunities to unleash its full potential in the 21st century.
The so-called middle path between "One Country" and "Two Systems" is merely wishful thinking. We should recognize the inherited limitation of "Two Systems" - the visible and invisible boundaries have already shown their negative effects on Hong Kong's economy. Hong Kong's potential ultimately lies in its continued economic integration with the mainland.
The author is a veteran current affairs commentator.
(HK Edition 01/22/2014 page1)