What is it about Hong Kong that makes life here a series of cliffhangers? Social scientists describe it as a 'contester' society, where attention spans are counted in nanoseconds and patience is a negative survival trait. Perhaps it has something to do with its vulnerable geographic position, exposed to the maelstroms of the South China Sea. In Post Impressions, an elegant new book commissioned to celebrate the South China Morning Post's centenary year, among the most memorable of its 370 silver-tint photographs are those of the destructive power of nature - collapsed apartment buildings, huge freighters washed up on beaches, boulders crashing down from the sky. Hong Kong's greatness - and its fascination - is the resilience of its people and their boundless appetite for change.
Hong Kong shares these characteristics with the rest of China. One of the ironies of the 'one country, two systems' concept is that neither China nor Hong Kong has ever stood still long enough to crystallise around a distinct 'system'. In the 20 years since the Sino-British negotiations over the future of Hong Kong in 1983, both Hong Kong and China have changed immeasurably. The landscape of Hong Kong literally evolves beneath our feet. The skylines of Beijing, Shanghai, Guangzhou and other cities are breathtakingly new.
One major difference between Hong Kong and the rest of the country, however, is a sense of perspective. The contrast was on full display this week as China approved limited convertibility of its official currency, by allowing individuals and retail businesses to open yuan accounts in Hong Kong. This momentous step was comparable to previous milestones in the gradual opening of China's capital account, which have occurred roughly every 10 years since the beginning of economic reforms.
In the early 1980s, China introduced foreign exchange scrip to facilitate currency movements into the country. In the early 1990s, the scrip was abandoned as settlements and clearing capacity of Chinese banks strengthened. Now we have another step in the move towards yuan convertibility, and not a small one. Yet Hong Kong's reaction has been typically aggressive. Beijing granted Hong Kong banks limited rights to conduct yuan banking services on November 18. A day later, a delegation from the Hong Kong Association of Banks was in the capital asking People's Bank of China governor Zhou Xiaochuan to raise the investment ceiling on ownership of Chinese banks. Meanwhile, Hong Kong's bankers have been grumbling about the likely selection of state-owned Bank of China as the clearing bank for yuan payments.
What Hong Kong's bankers should bear in mind is that full convertibility of the yuan is a goalpost that China will reach the way it has accomplished each step along the way of its grand experiment with globalisation. China is the living antithesis of shock therapy. The risk-averse but successful pattern for the last 25 years has been to introduce the international economy bit by bit. Some experiments have worked, others have not. The most vivid nearby examples are Shenzhen, Zhuhai and Shekou, all of which were established as special economic zones in 1979, but only one of which has flourished.
Hong Kong has now been included in the central government's economic experiments, and is part of a government-orchestrated contest to see how well it can take advantage of new opportunities created by central policy. If the Bank of China is to be the first to serve as a clearing bank for yuan accounts, the other banks should be angling to see which comes next. However small the openings, it is up to Hong Kong's entrepreneurs to find ways of exploiting them. And if in some areas Hong Kong cannot hurry China up, it should remember that in others, it is slipping behind.
