(This essay was published in Hong Kong Economic Journal on 15 October 2014.)

 

The student protest and Occupy movement is, on the surface, motivated by democratic ideals, with its focus on fighting for (1) equality of opportunity in nominating candidates for Chief Executive in 2017, and (2) the abolishment of functional constituencies.

 

More fundamentally, the movement is a sign that the deepening economic and social contradictions in Hong Kong society brought about by China’s opening and economic globalization have reached a tipping point. These contradictions were present even before 1997. The failure to address them has increasingly been seen as a consequence of a flawed, undemocratic political arrangement. More and more people have been persuaded of this view, especially youths, as a result of the growing gap between the “haves” and “have-nots” and the perception of diminishing opportunities for the middle-class.

 

The current political conflict reflects the failure to find common ground on Hong Kong’s future development between two existing political narratives – the “establishment narrative” and the “bottom-up narrative.” The growing rift between them is difficult to bridge because of the Beijing factor.

 

Adherents of the bottom-up narrative have been at loggerheads with Beijing, first over the June-fourth crackdown and then over the attempted enactment of Article 23 in 2003, and this has served to draw Beijing and supporters of the “establishment narrative” closer together.

 

Beijing’s leaning in favor of the “establishment narrative” had its origins in the Basic Law, but became more pronounced as adherents of the “bottom-up narrative” became increasingly critical of China over time. Beijing’s attitude has tilted the historical balance that existed between the two political sides. This balance was developed in the aftermath of the riots in 1966 and 1967, which had many origins including the critical underlying issue of a rapidly rising industrial economy.

 

Failures of the “Bottom-up Narrative”

 

The 1960s was a period of mounting dissatisfaction over British colonial rule. The living and working conditions of the general population were appalling, and corruption in officialdom was prevalent. Social unrest reached a boiling point with the proposed Star Ferry price increase in 1965. Urban Councilor Elsie Elliot created a petition against the fare increase and collected the signatures of 20,000 citizens.

 

On 4 April 1966, So Sau-Chung went on public hunger strike with the words “Hail Elsie” written on his black jacket. He was arrested and sentenced to imprisonment. Within a few days the situation escalated into full-scale public demonstrations and rioting. Thousands of canisters of tear gas had to be fired and a curfew declared. Rioters were warned they risked being shot.

 

The rise of the professional and labor unions and many social service organizations in the aftermath of the riots reflected a change of government policy. The government sought to deal with the deep contradictions that had emerged in Hong Kong’s rapidly industrializing economy by healing rifts in society and giving industrial capitalism a kinder face. Many new non-government organizations were developed, with close ties to the government. These groups were given a bigger role in the public policy arena and were also provided with funding support. They then became a permanent feature of the socio-politico-administrative landscape in Hong Kong.

 

I have previously characterized this non-government social sector as the policy constituent of the Chief Secretary, in contrast to the business and economic sector which is the policy constituent of the Financial Secretary (see my article in the HKEJ 9 March 2011). In Hong Kong, under British rule, the business and economic sector always played a more dominant role in policy matters, but there was still a considerable supporting role for the social sector. The political narrative embedded in the Basic Law promulgated in 1990 by and large reflected the same narrative. The constitutional intention was to preserve the Hong Kong system as it was then.

 

But this political arrangement was developed in the 1970s when the city was a booming manufacturing economy. By the 1990s, the Hong Kong economy was facing an equally colossal change as it transformed rapidly into a service economy. A new political narrative was needed to articulate the challenges of the new era. It became imperative that both sides work together to resolve the many economic and social challenges that had appeared.

 

However, the traditional approaches of policy advocates and activists in the non-government social sectors, while behind the times, were not abandoned. By the 2000s it was no longer obvious that a rapidly ageing society could afford the expensive social welfare programs promoted by the adherents of the “bottom-up narrative” without impacting the “establishment narrative” in a substantial way.

 

Adherents of the “bottom-up narrative” had little understanding of the challenges of economic transformation and were not interested in articulating an economic policy agenda. Their primary focus was on social and political concerns. For them, democratic elections became a political means to advance their social policy agenda. Fears of populist encroachment drove supporters of the “establishment narrative” to capitalize on Beijing’s discomfort with the adherents of the “bottom-up narrative.” They would start to work together from time to time to resist the pace of democratic political reforms.

 

In contrast, to widen their political base, radical adherents of the “bottom-up narrative” became increasingly critical of Beijing. Beijing attempted to undercut their success in garnering political support from the masses by relying on sympathetic organizations to reach out to the grassroots. Suddenly, adherents of the “bottom-up narrative” found they had political competition in setting the social policy agenda, including competition for the same pool of resources. Their institutional ties and support within the established landscape were being challenged. All these changes unsettled the old modus operandi that had been in place since the 1970s.

 

Cracks in the “Establishment Narrative”

 

The “bottom-up narrative” was not the only one straining in the face of Hong Kong’s socio-economic transformation in the 1990s, which was as challenging as that in the 1960s. As the various parties have failed to produce a common narrative on how to address the challenges and continued to talk past each other, the public has become frustrated and increasingly persuaded that there are deep flaws in the “establishment narrative.” Criticisms of the tycoon economy and property hegemony have gained sympathy (see Poon 2006 and Stilwell 2014).

 

Under British rule, the “establishment narrative” worked well because Hong Kong was not a democracy, but ruled by a governor sent from London who was not beholden to the local business and professional elite. The governor worked very closely with these powerful local interests and befriended them, but he could also tower over them and hold them at bay since he did not have to cultivate their goodwill to keep his job.

 

Constitutionally, the governor served at the pleasure of Her Majesty. This empowered him to choose to uphold the rule of law, maintain a limited government, promote a free enterprise economy, and protect civil liberties. It also empowered him to encourage a kinder capitalism whenever there was the need to do so, for example, after the late 1960s.

 

Hong Kong’s political arrangement turned out to be a great friend of capitalism, but not necessarily of individual capitalists. Businessmen knew the environment provided all with a level playing field, and that each of them had to face fierce competition in the market place to survive and succeed. Underperforming British hongs were acquired by leading Chinese entrepreneurs – Wharf and Wheelock by Y K Pao, Hutchison and HK Electric by K S Li, and Towngas by S K Lee.

 

With the coming of 1997, the Chief Executive had to be elected from within Hong Kong. This changed the rules of political engagement in a very fundamental way. A crack appeared in the “establishment narrative” over whether the Chief Executive should be accountable to an electorate dominated by the business and professional elite or to the people of Hong Kong through universal suffrage.

 

As far back as Han times, the central government of China understood that the commissioners and officers sent down to the commanderies and counties could become too close to powerful local landed elites. To ensure justice would be administered and to minimize opportunities for official corruption, the central government regularly rotated commissioners and officers and limited their tenure. Administrative rotation is still practiced today. Throughout Chinese history, corruption has been viewed by the central government as the ultimate threat to the stability and prosperity of its rule.

 

But because of 1997, the Chinese government allowed the local elites in Hong Kong to play a large and important role in the political process. From the very start, Hong Kong’s elites have had the ear of the Chinese government and its officials, a decision that could be justified by China’s wish to assure broad acceptance for “one country, two systems” in Hong Kong and to win over world opinion. But this strategy has been tearing at the seams because it entrusts the governance of a capitalist system to the capitalists.

 

A central role of government in a capitalist society is to act as a neutral referee and maintain a level playing field for all. Upholding the capitalist rules of the game means preserving the rule of law. It is the best defense against the rent-seeking activities of powerful elites. Limited government also helps to reduce the potential benefits from rent-seeking activities and makes the capitalist system more robust, which strengthens the “establishment narrative”. When capitalists are put in charge of creating wealth they contribute to prosperity, but when they are put in charge of running government they contribute to instability.

 

Since 1997, the “establishment narrative” has become less convincing. The business and professional elite appear increasingly to be defending their own interests rather than those of society. A society divided between “haves” and “have-nots” becomes an embarrassment for a narrative that promises equal opportunity and fair treatment.

 

The situation has given rise to criticism that functional constituencies in the legislature and the Selection Committee for the Chief Executive are a small-circle game. At first this criticism was a political tactic employed by adherents of the “bottom-up narrative” to advance their political objectives. Over time, as political deadlock has continued, economic and social contradictions have deepened, and frustration has mounted, especially among the youths, this criticism has gained credence not only as a commentary on the political arrangements, but as a radical indictment of perceived injustices in society.

 

Adherents of the “bottom-up narrative”, for their part, have made the fatal mistake of antagonizing Beijing excessively and unnecessarily without accomplishing any political objectives. Their coalition also has become increasingly fragmented. Their main achievement has been to discredit the “establishment narrative” with their political rhetoric, which has helped their radical wing to recruit frustrated youths.

 

But it is not surprising that Beijing is forced to shoulder the larger share of the blame for the conflicts of the two political narratives. Beijing’s failure has been to tilt so heavily in favor of one side. It is politically wise to hold your friends close, but wiser still to hold your enemies closer. The post-1997 political arrangement has further polarized a society inflicted with deep economic and social contradictions.  Only a Chief Executive elected through universal suffrage and accountable to the broad public can hope to bridge the gap between the two political narratives.

 

References

 

Alice Poon, Land and the Ruling Class in Hong Kong, Enrich Professional Publishing, 2005

 

Joe Studwell, “HK should focus on its fight on the tycoon economy,” Financial Times, 6 October 2014

 

Y C R Wong, “Contradictions in Hong Kong’s Policy Environment,” Hong Kong Economic Journal, 9 March 2011

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