My Take | Why the West used to love Hong Kong … but no longer
- The colonial territory not only made money for everyone, but as an ideological construct, it was the perfect poster child of free-market capitalism
“For Hong Kong, freedom to trade is life itself.” – Monthly newsletter, First National City Bank of New York, December 1959
Hong Kong’s post-war success as a laissez-faire economy has fascinated foreigners from very early on. While researching for a book, I recently hit upon this monthly newsletter which did as good a job as anyone, say Milton Friedman, in presenting the city as the poster child of free-market capitalism.
Before the 1997 handover, for almost half a century, the British colony’s success was judged almost exclusively in economic terms, by locals and foreigners alike. Thereafter, it has been considered mostly by political criteria and more specifically, by the pace of democratisation. This led to a historical paradox.
Hong Kong’s colonisation by one of the world’s oldest parliamentary governments was judged a supreme success because of its economic rise, which also involved the deliberate suppression of democratic development by the colonial government, until its last years. But the city was to be put under the microscope for its “failure” to democratise under the one-party state of China. If one were to reverse the criteria, Hong Kong would have fared quite well economically – perhaps even better than during the colonial era – under Chinese rule because of the phenomenal economic rise of the rest of the country.
The legendary Friedman most famously sang the praises of Hong Kong as the perfect example of laissez- faire capitalism. But he wasn’t the only one. Many foreign observers, especially those in the Anglo-American world, were starting to idealise the city by the mid-1950s as a free-market model. Of course, they only tasted the appetising sausages, but didn’t actually look at how they were made. Half a century later, senior government bureaucrats and policymakers would make a similar mistake and pay a heavy political price.
The December 1959 monthly newsletter of the First National City Bank of New York, which later became part of Citibank, makes for fascinating reading. Titled “Hong Kong – a success story”, it cited all the supposed laissez-faire virtues of the city, with the economic numbers and colonial policies competently explained and interwoven. Several key passages are worth quoting for further examination.