(This essay was published in Hong Kong Economic Journal on 17 September 2014.)


The political reform framework decided by the Standing Committee of the National People’s Congress has evoked strong reactions in Hong Kong. It has been denounced by the pan-democratic parties and organizations as undemocratic and being incompatible with “genuine popular elections”.


The framework addresses a number of contentious issues and provides a narrative of Hong Kong’s political development. For me, it is consistent with many critical elements of the Basic Law – an agreement between the Chinese sovereign and the people of Hong Kong promulgated into law by the National People’s Congress in 1990.


For this reason, I find the accusation that Beijing has failed to live up to its obligation to allow the people of Hong Kong a democratic system of government to be unconvincing. For sure, all interested parties and groups have pushed the envelope, but this is not the same as saying that one side abrogated a promise. The implications of the announced framework deserve to be carefully analyzed and understood.


Core Values and Concerns


I am able to discern three different narratives of Hong Kong’s political development, which have been advanced by different groups and interests. At this juncture of history it is too early to know which will become Hong Kong’s dominant political narrative. In this and future essays, I will consider some of the building blocks necessary for a narrative within the Basic Law framework of “one country, two systems”.


Two of the narratives emerged from concerns that arose following the Sino-British Joint Declaration of 1984. The first concern was that Hong Kong’s fundamental commitment to limited government, a free enterprise economy, civil liberties, and the rule of law would inevitably be overwhelmed by populism, through the development of democratic politics.


The second concern was that these same fundamental commitments would be eroded because the Chinese sovereign, as a non-democratic and non-capitalist state, would not respect them.


Opinions also differed on which of the four fundamental commitments was most vulnerable, and which were the most important to defend. The Basic Law embodied both concerns to varying degrees, but the differences were not entirely hammered out into a coherent statement. The Basic Law, however, was the best statement the people of Hong Kong could hope for and the Chinese sovereign solemnly agreed to it.


The Basic Law reflects the first concern in part in provisions to establish a Court of Final Appeal and an executive-led government, to disallow legislators from proposing bills with fiscal consequences, to balance the fiscal budget, to maintain low taxes, and to preserve free trade. These provisions aim to retain those elements considered germane to the four fundamental commitments under British rule.


Democracy and the Establishment Narrative


Many advocates believe that political democracy is also necessary for preserving the rule of law, a free enterprise economy, and civic freedoms. But note that Hong Kong is one of the rare examples where these four fundamental commitments had been preserved by colonial rule in the absence of a free polity, in other words, without democracy.


Singapore also has many of these same features (perhaps to varying degrees). Its political system is not a free polity even though it has always held popular elections. Thus Hong Kong and Singapore both provide anomalous examples of how a free enterprise economy and civic freedoms can exist even without full political freedom, as long as there is a robust set of institutions upholding the rule of law.


Some have suggested that Hong Kong and Singapore have succeeded without democracy because they are small open economies. Others believe that Hong Kong was able to do so because the colonial master Britain was itself a free polity, so there is democratic accountability in the end. But this latter argument cannot be applied to Singapore whose government is sovereign.


Most people in Hong Kong relish the rule of law, a free enterprise economy, and civic freedoms, and they were eager to preserve them after sovereignty over Hong Kong was restored from Britain to China. The business and professional elites, who took part in crafting the Basic Law some 30 years ago, sought to preserve this triumvirate that had made Hong Kong a postwar success.


Hong Kong therefore had all kinds of liberties under the rule of law, except for political liberties. Indeed, some even believe this was not accidental. Experience in the West shows that political freedom does not always protect economic and civic liberties, but instead erodes them along with the rule of law.


This is the first political narrative, which sees a trajectory in which the rise of populism, through democracy, contributes to a growing redistributive and regulatory state and, eventually, curtailments on economic and civic liberties. If this happens then the commitment to limited government and a free enterprise economy would erode.


Democracy and the Bottom-up Narrative


The second concern, and the resulting second narrative, is shared by those who are strongly in favor of a “bottom-up approach” to building democracy in Hong Kong. Such a view necessarily anchors political decision-making in the choice of the people and no one else, even though the people of Hong Kong under “one country, two systems” are not a sovereign people.


From the perspective of some pan-democrats, the citizens’ nomination of candidates for Chief Executive, even though it is not a common practice in most mature democracies, accords with the general principles of a democratic political process. But in principle a “bottom-up approach” can only be consistent if it is applied to a sovereign polity.


“One country, two systems” is a unique political arrangement. That the Chief Executive may from time to time have to serve two masters cannot be ruled out: one is the Chinese sovereign, and the other is the people of Hong Kong. A poorly-designed political system will increase the chance of such incidents. The democratic political principles that have shaped the political development of mature capitalist democracies in the West and Japan cannot be directly applied to Hong Kong.


I attended a private lunch in 2005, where Singapore’s founding leader, Lee Kuan-Yew, was the guest of honor. He was asked to comment on Hong Kong’s political development. He declined and said Hong Kong’s Chief Executive had a very difficult job because he had two masters to please. He reiterated it was a very difficult job without saying it was an impossible one.


Deep Divisions and the Middle Narrative


There is also a third concern, and narrative, that is less concerned with whether Hong Kong will implement “genuine popular elections” in 2017 but, rather, fears that the deep political divisions in Hong Kong society will become even more difficult to bridge as society continues to polarize. The Standing Committee’s announced framework therefore comes as a disappointment to them.


These folks are concerned that political stalemate will lead to long-term negative consequences for future prosperity and stability. They wish to see Hong Kong have a popularly-elected Chief Executive in 2017. Their fear is that the Standing Committee’s framework does not allow sufficient room for the political divisions to bridge their differences. The chance of successfully completing the Basic Law’s “Five-Step Process” for constitutional development therefore becomes more remote.


For them, achieving progress on political reforms in 2017 is an important step towards reducing the uncertainties of Hong Kong’s future political development. It could improve effective governance, restore the capacity to adopt sound policies to address the deep economic and social contradictions that have emerged in the past 30 years, and sustain long-term prosperity and stability. Alternatively, failure to make progress would precipitate a continuing process of gradual decline – politically, economically, and socially.


Many of those who hold a moderate middle ground embrace this third narrative. But increasingly they find themselves sandwiched between the intransigent narratives of the pan-democrats and the establishment. These folks do not subscribe to the “bottom-up approach”, but wish to see a democratic arrangement develop without unwarranted confrontations with Beijing. They believe that “one country, two systems” can only be made to work if both sides of the political divide are patient and tolerant.


Although the Standing Committee’s framework is restrictive, I think the prospects of finding a moderate middle ground have not yet vanished, despite the very limited room to maneuver. Failing to do so would be an irrational outcome and benefit no one, least of all the public at large. One should not abandon hope even if the political process appears less than rational at times. Realistically speaking, the room to maneuver was never going to be very large because the Basic Law laid down boundaries within which a great diversity of opinions and conflicting interests had to be accommodated.


These differences in opinions and interests have widened in the past 30 years as a result of growing economic and social contradictions. Some people have become impatient and intolerant and are tempted to introduce political innovations as a solution. But are these within the law, in particular the Basic Law?


Citizen nomination of candidates for Chief Executive is a political innovation outside the Basic Law. Changing the four sectors of the Nominating Committee is also an innovation outside the Basic Law. But other political innovations such as changing the thirty-eight sub-sectors of the Nominating Committee and how they are to be constituted are legitimate because these are established through legislation in Hong Kong according to Basic Law.


Growing economic and social contradictions have to be addressed by sound economic and social policies. Political innovations that help facilitate the adoption of such policies should be accommodated. There should be room within the Basic Law and the resolutions of the Standing Committee to allow for such changes over time to contribute to a better future for Hong Kong.

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