American Policy: The View from Hong Kong

American Policy: The View from Hong Kong

Asia Society
Hong Kong One Year After Transition:
Business Opportunities and Policy Challenges
Asia Society Policy and Business Conference
Seattle, June15–16, 1998

Ladies and gentlemen, a very good morning to you all.

For a community of only six million, Hong Kong is important to the United States. The fact that this conference is taking place is evidence of that. Indeed, by the time this conference is over, I am sure that we will all have learned the following basic statistics off by heart.

There are 50,000 American citizens in Hong Kong. There are some 1,100 American companies operating in our City. According to some estimates, these employ around 10 percent of the Hong Kong workforce. Americans have some 16 billion US dollars’ worth of direct investment in Hong Kong. And Hong Kong is one of those rare places with which the United States actually has a trade surplus.

Yet the relationship with Hong Kong means much more than this. Hong Kong is part of the People’s Republic of China. It is, therefore, part of a country that will assume a far greater political and economic role in the world in the years ahead. And it is a highly unusual part. Hong Kong is he only part of China that can claim some element of a common cultural heritage with the United States. Rule of law, freedom of worship, freedom to travel—these have long been features of Hong Kong.

One year ago, some American observers were voicing doubts that these features would continue after the handover. Yet Hong Kong has retained its freedoms, just as Beijing had said it would. Indeed, Beijing is keeping Hong Kong insulated from the traditions and the structures that give Mainland China its current characteristics. Those characteristics are not greatly admired in some quarters here in the Untied States. A particular Senator from North Carolina devotes much time attempting to change them.

As someone from Hong Kong, I have mixed feelings about such efforts. I appreciate the concern in the United States for the well-being of the people of China. I know that such consideration is, mostly, born of idealism and the highest of moral principles, as is the whole Country. On the other hand, I have to question the practicalities of changing the way China is run by passing laws in Washington. I would also question the desirability of such efforts.

Most Chinese people—in Hong Kong and in the Mainland—have a very positive opinion of the United States. But few, if any, believe that Americans are better qualified than Chinese to decide how their Country is run. I do not believe that the United States would want to give Chinese people this impression. However, there is a danger that the People’s Republic of China may perceive American policy as hostile in some way. In particular, it may be seen as a deliberate attempt to interfere in China’s internal affairs. And, if this happens, Chinese people will lose their respect and admiration for the United States. This would be damaging for all concerned. It could be especially damaging for Hong Kong.

And this brings me to my main point. American policy towards Hong Kong, and American policy towards the People’s Republic of China as a whole, cannot be separated. If something is good for Mainland China, it is good for Hong Kong and vice versa. If something is bad for Mainland China, it is bad for Hong Kong.

This was made very clear to us in Hong Kong in 1993, when the Administration decided to link the renewal of China’s Most Favoured Nation status with the issue of human rights. This was a great concern to us, because our business in Hong Kong is facilitating trade and investment between China and the United States. To his credit, President Clinton soon recognized that such a policy would undermine American influence in China. And he recognized that it would slow down—not speed up—China’s development and reform. Many American policymakers also pointed out that Hong Kong, as well as Mainland China, would suffer if China’s access to the United States market were reduced. And, of course, 250 million American consumers would also have suffered.

In 1992, Congress enshrined a policy on Hong Kong in an Act known appropriately as the United States–Hong Kong Policy Act. This Act acknowledges the agreement on Hong Kong between the United Kingdom and China. And it recognizes Hong Kong as an autonomous region. In effect, it authorizes the US Government to maintain direct relations with Hong Kong. This reflects the fact that the autonomy of Hong Kong extends to such international matters as shipping, aviation, extradition, trade and finance.

However, the Act does not stop here. Under the Act, Congress could recommend that the United States withdraw special treatment for Hong Kong if China does not honour the agreement it signed with the United Kingdom. For example, Hong Kong could lose its own Most Favoured Nation status. I would be interested to know whether any people at this conference see this as a realistic possibility.

The legislation is not binding on the Administration. And, more importantly, China has made it plain—before and after the handover—that it would honour the agreement it signed to the letter, as well as in spirit. The United States–Hong Kong Policy Act may seem to offer Hong Kong some sort of assurance from the United States. However, it could also be said to threaten Hong Kong. It raises the possibility—however remote in practice—that the United States would punish Hong Kong if China acts a particular way. Seen from Hong Kong this is not necessarily assuring.

If we come to the present day, we see yet more examples of uncertainty in American policy towards China and Hong Kong. Just six weeks ago, a Member of Congress proposed export controls that would limit Hong Kong’s access to high-performance computers. His fear is that the equipment could be passed on to Mainland China, which can only buy such computers with special permission. We see a rash of proposals moving through the Senate concerning China and the status of the clergy, population control, World Bank loans and the sale of arms to Taiwan. We see the postponement of a Congressional visit to Tibet—with China and Congressman giving conflicting reasons. And, yet again, we see disagreement over renewal of MFN status for China.

I do not intend to comment on the rights and wrongs—the righteousness and self-righteousness—of these issues. Nor do I seek to disguise the very serious and difficult disagreements that exist between the United States and China—notably where China’s efforts to join the World Trade Organization are concerned. My point is that the scope for misunderstanding is as wide as ever. Hong Kong needs clear, consistent American policy on China. Yet the White House and Congress produce conflicting policies. (I recognize that they do so not only on China, but on a wide range of domestic issues.)

I believe that American policymakers should bear in mind two essential facts about China and Hong Kong.

First, China is allowing Hong Kong to run itself, as promised. I hope that this will be recognized in the many “first anniversary” commentaries that we will read and see in the media in the coming weeks. We retain our freedoms, our rights and our lifestyle. The Central Government has pledged its full support of the Hong Kong Dollar, and we have had free elections to our Legislative Council.

Second, China is determined to continue to reform. This means, above all, modernizing its industry and its financial system. But it also means liberating its people from the tradition of comprehensive state provision. It means nurturing informed consumers, with freedom of choice and consumer rights. And that means building a type of civil society that China never had. It needs a modern legal system, and new mechanisms to ensure equity and accountability.

I do hope that President Clinton and his advisors come away from his forthcoming trip to China with a clear idea of what a profound change is taking place. And I hope and pray that they will find a way to communicate this to the sceptics and doubters in this Country.

American policymakers who compare China with the United States are missing the point. They should compare China with China—China 20 years ago, China 50 years ago, China 100 years ago. Twenty years ago, farmers could not choose which crops to grow, or how much to sell them for. Fifty years ago, the Country was in its second decade of war, and mainly destroyed by famine and chaos. A hundred years ago, China and its people were under the thumb either of foreign powers or corrupt, feudal rulers.

The trend is unmistakable, and one that the United States should support to the full. The Chinese people are freer and more prosperous today than they have ever been. And this is just the beginning. China is undergoing a historic transformation—the greatest economic restructuring the world has ever seen. It is vital for all of us that American policy encourages this process. It will help China. It will help Hong Kong. And it will bring immeasurable benefits to the United States.

Thank you very much.