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Walk on Two Legs

(Letter to Hong Kong - 2004.3.21)

I have long been intrigued by the close inter-relationship between economics and politics and have in fact written casually about it from time to time. I believe that whilst economics provide the strict disciplines to resources formation and allocation, politics is the collective process undertaken by the community to ensure that these exercises are done rationally, equitably and with a high degree of transparency. In short, they are like the two legs of progress for humanity and we can only take one step with each leg in turn at a time in order to maintain steady and sure progress.

This is the theme that I took when I met with leaders of China last September. During that trip, I have consistently advocated that the political and economic development of Hong Kong should go hand in hand in tandems. I would also say that with the economy recovering nicely now, the next desirable step that China can take for Hong Kong is a policy of engagement with the democratic camps in Hong Kong and hopefully, vice versa. Before we take this important step slowly forward, it is difficult for me to see how Hong Kong can suddenly race speedily towards full democracy.

The year of the Monkey is a particularly mischievous year for politics where rational economic decisions can be easily marred by three very important and hotly contested elections, all with unpredictable results. The outturn of the elections in Taiwan, the United States of America and later on in Hong Kong itself could all have considerable impact on the course of development of our still fragile economy. As a small economy vulnerable to outside influences, it is important that we must all set aside our small differences in domestic politics and guard vigilantly our long term overall economic interests with one mind and one voice. I shall discuss some of these implications below from both the international and local fronts.

The presidential election in Taiwan is in earnest progress at the time of writing this message. Tension is high both within Taiwan itself and across the Strait. As part of their campaigns, the presidential candidates have played up the referendum issue on the territory’s position on unification with the China mainland. Although the authorities in China have been upset, they are still holding a pragmatic view to wait and see how the course of events would unfold. However, there is no telling what they might do if the Taiwanese leaders make a misjudged move under pressure. Then emotions might flare and an excuse for economic sanctions could easily present itself as a form of penalty to be metered out. Unless the ‘touch and go’ situation begins to calm down after the election, one rushed act of politics might just end up with no winners at all.

The presidential election of the United States of America in the rather more distant future is another case in point. It is probably impossible and futile for us to try to tell American politicians to keep their ideas of the world a bit more to themselves. This is especially true in election year. It might not be difficult to see also that foreign policy may be regarded by some as a weak link of the present Administration and mileage might be gained in raising hosts of foreign policy issues as part of the fiercely contested election campaign. China politics has been an old favorite and Hong Kong, one of its sore spots. Despite the obvious unwillingness of the People of Hong Kong to be drawn into this type of politicking overseas, we might still live to suffer the consequences. That is what I would call ‘excessive politics’ at play.

The recent saga of Martin Lee’s visit to the House of Senates and the untimely visit from the ‘US-China Economic and Security Review Commission’ have been met with such unexpected emotions showed just how sensitive China and Hong Kong are to any perceived outside interventions. Unfortunate for us too, the growing mistrusts amidst the counter productive war of words between the pro-China groups and the democrats in Hong Kong might mean a wrong step which is out of phase with progress of political development at a critical time.

I do, however, wish to think that there can be some positive lessons to learn from all of these events:

Firstly, the People of Hong Kong must be able to stand proudly at all times to defend a record of self reliance and self determinations. If we wish to earn a high degree of autonomy for self rule, we must first learn to stand on our own two feet and not to constantly seek help from others. No begging from China and most certainly not asking for unwelcome help from other foreign powers to resolve our own domestic squabbles.

Secondly, it is a chance for us to ‘wise up’ in the way we deal with foreign affairs. Despite of the fact that Hong Kong cannot have formal diplomatic relations with the outside world, we still desperately need the diplomatic experience to deal with sensitive predicaments that might arise from time to time. In the long run, we need to develop career foreign affairs experts if we are to hold out as the most important international centre for China where the realms of international politics and trade issues are becoming increasing inter twinned. It would also help to keep our inexperienced bureaucrats and politicians at a safe distant from the tight rope of partisan diplomacy.

Thirdly, it provides a chance to show solidarity in Hong Kong if we can for once keep our minds off our own elections for a little moment. With the political storms brewing outside our doorsteps and our weak economy just beginning to recover, it is really not a good time to be excessive fault finders in looking for excuses to launch attacks on each other. The People of Hong Kong are smart and it is often not difficult to see if an act of politics is for the tangible benefit of Hong Kong or just ones own standing. To indulge in excessive politicking might simply burn out their enthusiasm and eventually the will to support and to participate in this important process.

Turning closer to home, the hot topics of the day are the Government’s Budget; the never ending debates on political reform and of course, with the upcoming Legislative Council election lurking in the background. Again these issues do not really mix well and I hope that they don’t. Especially for the Budget which is already carefully designed to be un-provocative. 

Some of us have criticized the Financial Secretary for not doing enough and that he is just waiting for good fortune to befall on Hong Kong. It is true that the Budget still fall far short of all three targets set by the former Financial Secretary, that is, the $20 billion target of additional revenues; $20 billion cost cutting measures and another $30 billion additional revenue to be generated from economic recovery. But I think that the Financial Secretary is simply waiting for the economic recovery to play out its course before making his next move. Depending on the strength of this unexpectedly rapid recovery, he will then decide how to adjust these targets set and place the stamp of his own hallmark on future budgets.

I consider it wholly reasonable for him to decide on such a strategy since he has only taken on office for a few months and it may be unwise for him to hastily dismantle the financial blue prints already put in place before he is sure of the direction, speed, depth, magnitude and sustainability of the present economic recovery. I hope that in the face of the upcoming political uncertainties, we should give this Budget a break and exercise similar patience as the Financial Secretary before plotting the next budgetary move ahead.

On the point of our future political development, I would like to share a fitting quote I heard from the Secretary of Justice. She said that in describing a bottle half full of water, an optimist would say that it is half full. However, a pessimist would call it half empty but it is the accountants, or a person like me, to say that the bottle is really twice the size it needs to be!

What fits Hong Kong best in the present situation is probably not what suits only our business interests or the inspired democrats. But to walk a step from where we now stand instead of just wishing to hop to a place where we hope to be.

 If we take a look at where we are standing now, Hong Kong is already blessed with the highest degree of freedom, an affluent society by most standards and a well defined goal of universal suffrage before 2047 guaranteed by the Basic Law.  We should also be able to see that our economy is integrating well with China mainland at full speed and our positive influences on them have been far more than just economics but also our internationalized culture and a forward more liberal way of thinking.  In the world that rewards patience, self reliance and steady progress, is it worth risking serious discords with China mainland and to just brush aside genuine political and business concerns of a great number of us in order to pursue a hurried reform?

The issue of political development is vital to our long term economic health as well and any excessive politicking might only raise the temperature for discussion and propel our debates to an irrational path. In that case, we are more likely to stumble instead of taking another stride forward with the next leg in turn.


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