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Tung has to build more political bridges

SCHADENFREUDE - what a great word. And looking at the pictures of Tung Chee-hwa's glum face during his visit to Beijing this week it was hard to repress a small twinge of pleasure.

Here was a man who had been given gift after gift - the closer economic partnership arrangement, mainland tourists, a bridge to Zhuhai - and still he and his supporters received a big electoral slap in the face.

A lot of Mr Tung's misfortune - and by extension that of the Democratic Alliance for Betterment of Hong Kong - can be attributed to Hong Kong's economic problems and the shortcomings of the policies drawn up to try to solve them.

But to believe this is solely the case is to miss something more important - that getting the politics right is ultimately more important than getting the economics right.

Of course it is handy to believe - as I do - that getting the economics right, especially in a sophisticated place such as Hong Kong, is easier in a democratic society than in one ruled by appointed officials.

But that is far from being the only reason why Mr Tung should be bestowing a more representative system on Hong Kong. What is needed is something that makes the government simultaneously tougher and more flexible.

It needs to be tougher to make harder decisions than the ones Mr Tung has made, be it to increase government revenues by changing the tax system or ignore vested business interests.

And it needs to be more flexible to cope with a business environment that, principally because of the mainland's strong growth, is changing in ways that are not only fast, but cannot be anticipated.

These are economic - but they also embrace other issues, such as the environment, social unrest, education and culture - all of which need to be viewed in broader ways than the government's economic fixation allows.

Of some consolation for Mr Tung should be that he is far from the only person having to wrestle with such problems. Across East and Southeast Asia, governments which in the 1980s and 1990s saw themselves principally as managing economies are now confronted with not dissimilar political problems. They have found that politics has resurfaced.

At one extreme is Indonesia, where Suharto got the politics so badly wrong that the country still has not recovered. At the other is Japan, whose economic stasis can to a huge degree be attributed to a political system dominated by the Liberal Democratic Party and its grip on patronage.

Elsewhere, the problems may not be so acute, but politics remains the key issue: for Taiwan it is the island's identity and its relationship with the mainland; for South Korea, there is how to handle the North.

For Malaysia's new leader, Abdullah Badawi, the primary test is not just to find a new economic direction but also to sell it to a country that is simultaneously wanting greater freedoms and seeing the rise of a strengthening Islamic opposition.

Even in Singapore, questions of exactly who should be running what and how far the government should oversee every aspect of life are arising. For example, should Temasek, its state-owned holding company, with its controlling stakes in Singapore's 20 biggest businesses, be divesting itself of its interests?

Clearly, economics plays a role in all these issues - even in South Korea, most people would prefer a shaky North Korea surviving to the shock of having to cope with a collapse across the 38th parallel.

But the 1990s, when governments across the region brushed political questions aside with a reference to the primacy of managing economic growth, have given way to a messier era when issues of economic growth and political structure have become intertwined.

For Mr Tung, this means working with Beijing on the one hand and the various interests of Hong Kong on the other - from business to the different classes of society - to devise a system which can legitimately represent their interests and carve out an appropriate economic direction for the next years ahead.

It is not going to be easy - certainly it will call for more than building new bridges to Shenzhen or Zhuhai.

But if he needs a way to sell changes to Beijing, he could do worse than start arguing that the mainland itself will also face similar issues in the coming years.

A more responsive political system in China will help it survive the economic and social pressures that will accompany the reform of its financial system and state sector.

Allowing Hong Kong to test the way, and show possible ways forward for the more developed parts of China, perhaps Shenzhen or Shanghai, would be a better message to carry north than the tidings Mr Tung seems to have taken with him on his visit this week.

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