Hong Kong must go back to basics to overcome its structural challenges

Vincent Lo says Hong Kong must change, or be changed by external forces, in the face of a web of social, political and economic challenges. It's time to recall our fine tradition of pragmatism

PUBLISHED : Tuesday, 14 January, 2014, 11:35am
UPDATED : Wednesday, 15 January, 2014, 3:58am

Hong Kong is facing a very critical juncture in our political, democratic development. The city is increasingly being marginalised as a result of the rapid changes around us, generating deep-seated social, economic and political problems.

Former premier Wen Jiabao first coined the term "deep contradictions" to describe Hong Kong's situation. As Professor Richard Wong of the University of Hong Kong elegantly puts it, the source of these deep contradictions arises from Hong Kong's "dual integration" process, which refers to "the product of having to adjust from being integrated with the global market economy to being integrated with both the mainland and the global market economy".

Resourceful big companies do well in adapting to these changes. But Hong Kong's small and medium-sized enterprises typically lack the resources or expertise to tap the mainland market. Those in manufacturing are now facing the acute problem of rising costs and the difficult choice of whether to close shop, move further inland or find a cheaper production base in other countries. Those in the service sector who have been supporting the manufacturing activities in the Pearl River Delta face the same difficult choice.

There is resentment in certain quarters that Hong Kong is not trying hard enough to help itself

Amid all these challenges, Hong Kong has failed to diversify its economy. Our pillar sectors today, all service-driven, have remained the same for more than 20 years, with their competitive advantages gradually eroding. While we stall, mainland cities are fast catching up.

We have lost our feel-good factor not just because of the intense competition. At home, the widening rich-poor divide has taken away much of the gloss of our economic achievements. It tugs at my heart to see many young people struggle, without much hope. Some have turned radical in their political views. Many more have become despondent, disengaged.

There is therefore little surprise that some young people vent their anger by blaming their bleak prospects on the influx of mainland immigrants and visitors.

The rise in numbers is a product of Hong Kong's social integration with the mainland. Many locals worry that the city's systems simply cannot be sustained if the trend continues. These are genuine worries, but the opinions in some quarters show worrying signs of xenophobia and isolationism.

While the business sector sees mainland visitors as customers, some residents regard them as intruders. But many people's livelihood depends on the retail and tourism industries. We cannot just turn mainland visitors away. But we also need to find solutions to cope with the ever increasing numbers. We cannot allow the problem to get out of hand and the resentment to continue to grow.

What can the government do in view of all these challenges? The somewhat cynical view is that officials could at least head north to Beijing to ask for help whenever there is a crisis. But mainland public opinion has changed somewhat. There is resentment in certain quarters that Hong Kong is not trying hard enough to help itself. There is also resentment that Hong Kong people have failed to develop a national identity. All these negative sentiments could tie the hands of the central government when they contemplate providing further help.

Has Hong Kong and our government tried hard enough to pull ourselves out of the doldrums? Yes and no. There have been some attempts to find new directions. The government can try to do more, but it is subject to many restraints.

First, how do you solve the conundrum of the civil service? In the past, we all believed Hong Kong succeeded in its governance because of its fine civil service. But, not long after 1997, the prevailing theory was that we were failing because of the civil servants. It is basically the same civil service, so why the sudden change of perception?

One must admit that we might have been a bit too optimistic back in the 1980s when the Basic Law was being drafted. We believed naively at that time that there would not be much politics after 1997, because the civil servants would take care of it all and run the government as before. It was not entirely fair to the civil service that we had such an unrealistic assumption and high expectations. The politicised atmosphere in Hong Kong today proved us wrong, quite wrong really, and it shows the ignorance of many of us in our poor understanding of politics and democracy back then.

We wrote an executive-led political system into the Basic Law, buttressing it with the civil service. But it rings hollow in the face of the elected legislature. Now we've come to realise that a chief executive who does not have any secured vote in the legislature will find the system difficult, if not unworkable, at times.

The executive-legislative relationship is the crux of our structural problem concerning governance. Even if we elect our future chief executive by universal franchise, he or she may still not have support in the legislature. The Basic Law does not allow the chief executive to be a member of any political party.

The current debate about the 2017 election method is important, but even if we can find a new election method supported by most, it will not be a panacea, unless we can find the key to unlock the executive-legislative stalemate.

Our institutional set-ups, some enshrined in the Basic Law, some long embedded in our systems, look increasingly unsustainable. We will have to change, otherwise we will be changed by external forces. We are already being reshaped by the "dual integration" process. The choice is whether we want to take our fate in our own hands.

There are some important considerations while we wrestle with the difficult issues. First, we need to go back to our fine tradition of pragmatism, to set realistic targets for ourselves, and strike a balance among different aspirations and goals. Politics is all about compromise, give and take, in the positive sense. No one wins all, and no winner should take all.

We desperately need a broader agenda. That should include, for instance, ways to improve our economic competitiveness, deliver adequate housing, improve the environment, sharpen our education system, and encourage entrepreneurship and new industries.

To formulate such an agenda, we need a workable political system. Will democracy be the solution? It must be part of the solution, but not a cure for all.

How far should we go in our democratic development? And how quick? These are important issues to ponder in a pragmatic manner, with the aim of achieving a workable compromise.

I hope this process of frank soul-searching, open-minded discussion and vigorous search for solutions will continue. It is only through such a process that we may eventually find the way out for Hong Kong.

Vincent H. S. Lo is chairman of Shui On Group. This is an edited version of a speech he gave at the Oxford-HKUST Leadership and Public Policy Series Launch Forum recently