FT : In The Shadow Of The Dragon

Thursday, December 14, 2006

One of the best articles in a long time highlighting the long term mal-effects of closed/authoritarian regimes.  The point made about the difference between administration & government is simply brilliant.  Excerpts from the article in the Financial Times entitled “Delaying democracy will damage Hong Kong” –

…..Despite the two economies’ growing inter-dependence, they are profoundly different and likely to remain so for years to come.  Hong Kong’s income per head is among the highest in Asia.  Its small, services-dominated economy is one of the world’s most open, unencumbered by trade barriers or exchange controls.  China, though the world’s fourth biggest economy, has only one 15th the output per head, derived mainly from manufacturing and agriculture.  Its monetary policy is primitive and its capital account is closed.  Two partners less suited for a currency link-up are hard to imagine.  Their disparate levels of development are hugely to Hong Kong’s advantage.  Mainland companies flock to list their shares there precisely because it offers the liquid capital markets, financial expertise and transparent regulation that do not exist at home.  The territory’s rule of law, efficient bureaucracy and congenial business climate make it a magnet for commerce of all kinds.  That much might seem self-evident.  Yet a belief persists in Hong Kong that its future interest lies, not in accentuating its distinctive strengths, but in blurring them by throwing in its lot with the mainland.  Sooner or later, the argument goes, it will be enveloped economically by its giant neighbour, so why not simply accept the inevitable now?  More self-servingly, the argument has been appropriated by Hong Kong tycoons, who calculate that telling Beijing what it wants to hear will win them commercial favours.  Beijing, in turn, treats their special pleading as the voice of informed opinion in the territory.  In well-ordered societies it is up to governments to place the common interest above such purely sectional ones.  But not in Hong Kong.  Though superbly administered, it is inadequately governed.  The distinction is critical.  Public administration is about making the trains run on time.  Government is about making fundamental choices on behalf of the community as a whole. 

Though not as hopelessly at sea as its predecessor, the executive led by Donald Tsang lacks a political compass.  Its strategic vision is dominated by an infatuation with big projects.  Many appear conceived less to meet any obvious need than out of a stubborn desire to display political authority.  When, like a recently mooted goods and services tax, they sink for want of public support, Hong Kong’s leaders are wont to conclude that the reason is not bad policies, but failure to push them hard enough.  Meanwhile, serious problems go untackled.  The government appears in denial over the worsening smog that is driving away expatriates on whom the financial services industry – the city’s economic engine – depends.  It uttered not even a whimper when Beijing trampled all over Hong Kong’s supposedly inviolable commercial autonomy by blocking the sale to foreign bidders of PCCW, its biggest telephone company, this year.  Admittedly, Mr Tsang has a tough hand to play.  As well as being answerable to Beijing, he is serving out his predecessor’s term.  But the biggest constraint is not meddling or iron control by the mainland.  It is that his government is out of touch with its own citizens.  Run by bureaucrats lacking a broad popular mandate, it is cut off from vital signals and pressures from below.  Its policies are often flawed because they are developed in a political vacuum.  The system also prevents Mr Tsang from representing Hong Kong’s interests effectively to Beijing.  He lacks both convincing political legitimacy and the means – or much incentive – to attune himself to the will of the territory’s people…..In many countries economic development has paved the way for democracy.  In Hong Kong things are the other way round.  It is already a wealthy place, dominated by solid middle-class values.  But unless its government can connect more directly with the governed, it will become increasingly isolated and even less able to formulate the policies needed to sustain its prosperity.  Even China’s leaders, whose own grip on power depends on engineering ever higher economic growth, should be able to grasp the logic of that.

Reference : http://www.ft.com/cms/s/f5c7ab1a-8ad8-11db-8940-0000779e2340.html

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