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Leung Chun-ying has thrust Hong Kong's business elite into the front line of class warfare.
Opinion
The View
by Peter Guy
The View
by Peter Guy

Pulling the strings

Chief executive's gaffe raises the prospect of the elite perverting legal system to their advantage

In one of the worst political gaffes since US President Clinton protested, "I did not have sexual relations with that woman", Chief Executive CY Leung officially explained the truth behind Hong Kong's business-led governance. According to Leung, the problem of equal representative voting "would be talking to half of the people in Hong Kong who earn less than US$1,800 a month. Then, you would end up with that kind of politics and policies". One assumes he was referring to excessive welfare for the poor rather than the corporate welfare that benefits tycoons today.

Rather than defusing the Occupy protests, his statements reveal that Hong Kong cannot attain democracy anytime in the future because it violates the anti-democratic principles of the business elite. While many people strongly suspected that the tycoons virtually owned or controlled Hong Kong, no one in power actually had the temerity to state the obvious.

But, by doing so he virtually asserts that there is no reason why Hong Kong's oligarchs will give up their control without a struggle. Leung has thrust Hong Kong's business elite into the front line of class warfare. Most of all, Leung's revelations are particular dangerous to the perception of how its government, business and economy operates.

Perception is paramount to maintaining power and prestige. And power is where everyone believes it resides. It's really a trick, a shadow on the wall. By officially opening the curtain and revealing that the city's elite will not trust its citizens to govern, he sets the stage for heightened political and business risks. The students' struggle really isn't against the restrictions of the Basic Law, but tycoons who conspire with Beijing and Hong Kong governments to frustrate democratic development.

Leung's depiction of Hong Kong as a plutocracy run by a group of ultra-high-net-worth families allows us to make cynical comparisons of how their conduct may affect the city's business and financial future. Recent calls by Leung, Li Ka-shing and Tung Chee-hwa for students to restore stability are now seen in the context of Leung's remarks as being hopelessly deluded, duplicitous exhortations that fail to address any problems.

When one thinks of modern cities dominated by powerful and greedy families, some of the most decrepit urban environments come to mind. Consider Newark, New Jersey, run by mafia families for decades.

The goal isn't just about achieving a representative voting system or a semblance of democracy, but enduring political systems and governing institutions that are respected by people and businesses even at the worst of times. It is evident that both Hong Kong's government and its tycoons are starting to lose the crucial respect needed to lead the community. If students shift their protest calls from democracy to the tyranny of the tycoons, social instability and civil strife will be widened and magnified.

No city or state that is governed by a plutocracy has ever been able to sustain an independent judiciary, Western-style legal concepts, economic prosperity or its position as a major world financial centre. Conversely, it is no coincidence that the world's most prosperous countries and important financial centres are only in liberal democracies. Plutocracies eventually spiral downward into decrepitude and corruption. But, perhaps Hong Kong can delay that through historical fate and business necessity.

Hong Kong's position as a financial centre is largely driven by China's need to attract foreign capital and international financial services - and the ambition of foreign banks to enter China. Nowhere else in China is currently able to provide the appropriate operating and legal environment for global banks. The future development of China's domestic financial services and markets makes Hong Kong a necessary bridge. So financial institutions presently have little choice but to locate in Hong Kong if they wish to develop China business.

Luckily, Hong Kong inherited and China preserved a sound legal system from the British. However, legal institutions do not exist and thrive in isolation. Over the long term, it is tempting for an entrenched and official oligarchy to bias and pervert laws towards their own priorities. Our legal system, the foundation of Hong Kong's success, could face considerable problems in Hong Kong's Occupy era.

This article appeared in the South China Morning Post print edition as: Pulling the strings
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