Opinion | Time for Hong Kong to craft a strategic pathway to 2047

Name: What is the Hong Kong Dollar Peg?
Uploaded: 2021-11-05T22:45:14.000Z
Duration: 1 min 43 s
Description: What is the Hong Kong Dollar Peg?

Non-interventionism is no longer a fit credo for Hong Kong as it competes with mainland cities that follow a state-market partnership model

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Young people look across Victoria Harbour from the Tsim Sha Tsui promenade on November 1. Hong Kong’s Basic Law, which came into force in 1997, states that the city’s “previous capitalist system and way of life shall remain unchanged for 50 years”. Photo: Felix Wong

Andrew Sheng

Published: 6:45am, 6 Nov 2021Updated: 7:09am, 6 Nov 2021

What is Hong Kong’s pathway to 2047? Since its return to China in 1997 under the “one country, two systems” principle, ending in 2047, Hongkongers have emphasised “two systems”, neglecting the timeline to “one country”.

This was a strategic failure of the first order, since Hong Kong elites should have mapped out different pathways to 2047, rather than hoping that two systems could be maintained or extended beyond 2047, like a renewed lease.

Part of the strategic failure lay in the philosophy of “positive non-interventionism” that became a mantra of the civil service. Implemented in the early 1970s, the mindset suited British colonial policy which saw Hong Kong as a lucrative outpost in the Far East. Non-interventionism meant minimal burden on the British Treasury, maximum freedom for business and the least likelihood of provoking China.

Hong Kong residents were free to develop businesses, provided they did not interfere in politics. Civil servants were trained to execute policies essentially formed by the British governor, who was in close contact with London. What Milton Friedman praised as “laissez-faire” made economic sense given the political reality, as Hong Kong was a borrowed place on borrowed time.

From working within a server economy to the British mainframe, Hong Kong politicians and civil servants had to switch to autonomy under the Basic Law in 1997, but true sovereignty rested in Beijing. The Hong Kong-US dollar peg fit everyone’s strategic and political goals, because the United States and China were on the same side since the 1972 rapprochement.

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What is the Hong Kong Dollar Peg?

But this was where Hong Kong democrats and liberals forgot political realism. What happens if there is a US-China rift in which Hong Kong is caught in the middle?

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