China, Hong Kong, and the Future of One Country, Two Systems
No political system is perfectly designed at the outset. The confederal system that the United States originally adopted was flawed from the start and was quickly converted into a federal system, which in turn went through significant transformations to cope with the challenges of slavery, the emergence of an industrial economy, and America’s adoption of an active role in world affairs. Worldwide, the third wave of democratization that occurred in the 1980s occurred because various authoritarian rulers in Brazil, Chile, Taiwan, and South Korea recognized, or were forced to recognize, that their systems were no longer working. In some cases, the democratic successors, such as Brazil and Taiwan, didn’t work well either. Given this history, it should not come as a surprise that the “one country, two systems” model that the People’s Republic of China (PRC) crafted for Hong Kong in the 1980s is not performing as well as its designers expected. The Hong Kong that was the point of departure for creating one country, two systems has changed in profound ways, which the Central People’s Government did not and probably could not have anticipated. Perhaps the time has come for the PRC government to consider adjusting the original model to adapt to contemporary circumstances.
Options for Adjusting One Country, Two Systems
So what can Beijing do? China is committed by treaty to preserve the Hong Kong Special Administrative Region (Hong Kong SAR) until July 1, 2047, so canceling the one country, two systems arrangement is not an option.
It is also unlikely that the central government would end Hong Kong’s hybrid regime by restricting civil and political liberties. Technically it has the authority to do so under article 18 of the Basic Law, which states that if “turmoil” in Hong Kong “endangers national unity or security and is beyond the control of the government of the Region,” the Standing Committee of the National People’s Congress (NPC-SC) may decide that the Hong Kong SAR is in a state emergency, in which case the Central People’s Government has the authority to “issue an order applying the relevant national laws in the Region.”1 In that event, and before issuing such an order, Beijing would no doubt ask how vigorously the local police and courts would enforce those laws. As well, Beijing would have to anticipate whether such a step would trigger an economic slump, massive social disorder, and alienation of the Hong Kong elite. Furthermore, the reputational costs to Beijing of such a step in Taiwan, in the rest of the East Asian region, and in the United States would be extreme.
The option that is more likely but still unproductive is to double down on past policy (“persist in sticking obstinately to the same course,” to quote the Chinese historian Zhang Lifan).2 Beijing could continue to act according to its existing playbook:
Although this approach has the purported virtue of consistency with past policy, its benefits have long since declined. The traditional playbook ignores the profound change that has occurred in the city since the early 1990s and the deep mistrust that PRC policies have spread among the Hong Kong public. Instead, Beijing seems to assume that recent turmoil is the work of “a small minority” that must be opposed because it has mounted a deliberate challenge to Beijing’s rule. The Central People’s Government may be correct in believing that the provocative behavior of local radicals has created serious political disruption, but it ignores how its own rigid stance and ill-considered actions have empowered those same radical forces and undermined the position of moderates who might, under the right circumstances, be prepared to support even modest reform. Nor has Beijing recognized that policies favoring the local oligarchy have, at least indirectly, contributed to the deep inequality that helps fuel political protest.
These failures of analysis suggest that whatever approach Beijing ultimately takes, first it must overhaul the way it collects information about Hong Kong developments and frames interpretations about the implications for PRC interests. Beijing likely receives information and analysis colored by a certain political correctness; inaccurate information can only complicate its relationship with Hong Kong and how it addresses challenges from the public. In addition, the Central People’s Government would gain a more honest understanding of the policy context if it ended the reflexive tendency to blame the United States and the United Kingdom for Hong Kong’s problems—this just distracts attention from more consequential local causes.
At least hypothetically, there are three more ambitious and transformative policy responses that the Central People’s Government could adopt. I describe them in their ascending order of change to the status quo and the increasing degree of political resistance that each would meet with. The premise of this hypothetical exercise is that the Central People’s Government is Hong Kong’s sovereign. By its own declaration, the Hong Kong SAR’s “local affairs” are to be run “as authorized by the central leadership. The high degree of autonomy of Hong Kong SAR is subject to the level of the central leadership’s authorization.”3 The situation almost twenty years after reversion is the result of the political strategy the Central People’s Government has employed and the associated policies it has implemented. That strategy created local winners and losers. Beijing sought to fortify its control by giving power to and relying upon the Hong Kong elite, which has certainly benefitted as a result. A more balanced strategy would shift some power to those who were the relative losers under the post-1997 arrangements and place more confidence in the political institutions dominated by the public rather than the oligarchy. None of these three alternatives will happen if the Central People’s Government, as the sovereign, does not actually make the changes to secure the accommodation of its past allies to new arrangements.
GIVING THE GREEN LIGHT TO LOCAL REFORMS
A modest but meaningful alternative to sticking to the past game plan would be for the Central People’s Government to approve and even encourage the steps outlined in the previous chapter, steps that do not require changes in the Basic Law but could be directed as necessary through NPC-SC decisions. These include strengthening education and talent creation; encouraging an economy based on innovation; sharing the benefits of economic growth more broadly, in part by expanding social welfare benefits; expanding the housing supply and reforming underlying housing policies regarding residential and commercial property; improving institutions in the Legislative Council (LegCo) and the civil service; making functional constituencies more transparent and representative; and facilitating a more effective governing coalition. Taken together, these represent incremental yet important changes to the current structure and policies. They would not resolve all the grievances that the public holds toward Beijing and the establishment, but they would be an important start. The emphasis here is on the word “start.”
The main argument against these economic and political reforms is that the Hong Kong business elite would oppose them because they would harm their interests and reduce Hong Kong’s competitiveness. That argument has an element of truth, but there are counterarguments. First of all, the elite’s failure to share the benefits of growth, which it has enjoyed now for decades, has undermined the very stability on which competitiveness rests. Second, at some point the business elite should worry not only about its narrow economic interests but also the interests of the community as a whole. Third, how does the Central People’s Government define its role as Hong Kong’s sovereign? Is it to guarantee dominance for one part of society and minimize the role of the public at large—thus inadvertently empowering radical forces in society? Or has the time come for Beijing to begin to redistribute some of that dominance to the public, to rely less on individuals and groups that are powerful vested interests, and to place more confidence in institutions and the pragmatism of Hong Kong citizens?
“RE-SET” ONE COUNTRY, TWO SYSTEMS?
Under a re-set of the one country, two systems idea, Beijing would not only encourage or require all the steps that Hong Kong can take on its own hook, such as changing local ordinances, but also rectify elements of the Basic Law that have either outlived their usefulness or caused the disarticulation of the Hong Kong SAR system. The purpose would be to create better articulation of the elements of that system and, hopefully, to foster greater process and performance legitimacy.
For example, Percy Luen-tim Lui advocates repealing article 74 in the Basic Law, which requires that “the written consent of the Chief Executive shall be required before bills relating to government policies are introduced.”4 As Lui observes, this means that LegCo members are not “able to initiate bills of any political or policy significance.”5 Also ripe for reform is the system of dual voting, whereby a majority of members in both functional and geographic constituencies is required for “passage of motions, bills or amendments to government bills introduced by individual members.”6 These two provisions effectively prevent legislators from playing any constructive policymaking role. They also encourage tactics, such as filibustering, that impede the legislative process.
More generally, there is a nexus of issues that determines the method of selection of leaders and the role of political parties. The first is the electoral reform effort that was aborted in June 2015. Wherever blame is placed for that outcome, the consequences are bad for governance. Continuing the past methods for picking the chief executive and members of the LegCo feeds the sources of political instability. Indeed, the failure of reform may strengthen them further. One might hope that making the nominating committee more representative and transparent would be sufficient to split responsible moderate democrats off from their radical associates. Those adjustments might have worked in the spring of 2014, but subsequent developments only deepened mistrust. The chances of making progress through such limited changes may now be too small. Other concessions may well be necessary to restart discussions and produce an acceptable package for both selecting the chief executive and electing LegCo members. At this point, Beijing must take the initiative, first of all by dropping the Beijing-knows-best, take-it-or-leave-it stance it adopted from 2013 to 2015. To reduce democratic and public mistrust and marginalize the radicals, an approach that is surprising in its scope (positive “shock and awe,” if you will) is probably necessary.
But that is only the starting point. Altering electoral procedures while retaining other aspects of the basic structure may be satisfactory in the short term but it will not be satisfactory in the medium and long term. Optimally, four issues should be addressed:
1. The chief executive: Above political parties? The first issue is the disarticulation between the chief executive and the legislature. Many Hong Kong observers are convinced that the legal requirement that the chief executive cannot be a political party member is a key reason for the disarticulation.7 A newly elected chief executive who belongs to a party must resign the membership before inauguration.8 Li Pang-kwong of Lingnan University identifies the consequence: “Not affiliated with any political party, the CE has to knit his supporting net by building coalition[s] with social and political groups in the society and in the legislature as well.”9 It frustrates the chief executive’s efforts to enact policy initiatives and opens him or her to criticism even from legislators who generally share the same ideology. The restriction may have made sense in light of the principle of executive-led government as opposed to party-led government. It may have stemmed from Deng Xiaoping’s April 1987 instructions to the Basic Law Drafting Committee that Hong Kong should not have “a British or American parliamentary system.”10 Whatever the theory, experience suggests that this requirement was a major factor in the disarticulation of the Hong Kong system. Successive chief executives have had no readily available support base within the LegCo. The executive-legislative hinge that is the basis of parliamentary systems has been lacking.
2. Elections in geographic constituencies. The second issue is the method used for designing geographic constituencies for LegCo elections. As described in chapter 4, the single-member-district, first-past-the-post system that Chris Patten instituted while he was governor was abandoned after reversion in favor of a multi-member-district proportional representation (PR) system. The goal was to improve the chances of the pro-business Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) to gain seats in its contest for influence against the Democratic Party. It was much easier to do that in a multi-member, PR system than in a winner-take-all system. Generally, PR systems provide more accurate representation of various segments of the political spectrum. The problem was that what was good for the DAB goose was also good for the radical-democrat gander. The result was a proliferation of parties in the LegCo and the tendency of the League of Social Democrats and People’s Power to play to their constituencies by engaging in provocative political tactics and intimidating moderate legislators.11 Instituting the PR system sowed the seeds for the Occupy Movement and the rejection of the government’s proposal for electoral reform.
No single electoral system is best for all contexts. Countries that have a historical British background tend to favor winner-take-all systems and two dominant parties. Continental European nations tend to favor PR and several parties. (There are also mixed systems—for example, Taiwan’s—that give voters two votes: one in a single-member district and the other for their preferred party.)12 Winner-take-all systems tend to be more adversarial and PR systems more consensual, because the latter force an array of parties to work together to form a majority. What is important are the priorities that the designers of an electoral system wish to achieve. Single-member districts tend to create governments with a small number of parties that have to appeal to a wide spectrum of opinion and legislators who are linked directly to their constituencies. They tend to be more decisive when it comes to adopting policies. But the winner-take-all feature grants the majority party a bonus in its number of parliamentary seats. Meanwhile, opposition parties and voters must be vigilant in rendering accountability. Multi-member districts tend to eliminate the winner’s bonus and provide more precise representation of major political tendencies. They also create a large number of parties because each party can appeal to a narrow spectrum of views. As a result, the election of a majority party is less likely, coalition governments are the norm, and parties must cooperate in order to enact policies. Also, legislators are not responsible for a specific set of constituents, and so may be less responsive to their needs.13
Perhaps because the American political system has British roots, I have always had a bias in favor of a single-member, first-past-the-post system—in spite of the advantage it gives to the winning party in terms of legislative seats. The majority has both the opportunity to act on its program and the responsibility to be accountable for the results in the next election. Moreover, each legislator is tied to a specific constituency and must look out for constituents’ interests, creating a form of feedback on how government policies affect individual citizens.14 Recall that in Hong Kong, geographically elected legislators from any one electoral district represent the entire district together, which limits each legislator’s ties and responsibility to any one group of constituents. Indeed, the voters in functional constituencies may get better representation from their legislators than do those in geographic constituencies.
Given the current fragmentation and polarization of Hong Kong’s political system, I am inclined to believe that a British-American system would bring greater coherence, decisiveness, accountability, and stability than exists today. Moreover, the cleavages over policy issues appear to be more cumulative than cross-cutting. A single-member system is more appropriate when one party or a coalition of parties aligns on most issues, as Hong Kong’s democratic camp tends to do on both constitutional and inequality issues. A PR system is better when the views on issues are more scattered along the political spectrum. A shift to a single-member system would produce a consolidation of parties. Doing so on the establishment side, with its mélange of corporate interests, a middle-class party (the DAB), and the Federation of Trade Unions, might be more difficult than the democratic camp. But the ultimate outcome would likely improve the quality of governance.
3. Elections in functional constituencies. The two steps just outlined may facilitate more centrist parties and better executive-legislative relations. Percy Luen-tim Lui’s proposed reforms will give geographic-constituency LegCo members more opportunity to act as legislators, while restarting electoral reform on selection of the chief executive may bring local politics back to where they were in early 2013. But even taken together they will not address the structural reality of over-representation for the special interests that have their own functional constituencies (FC).
There have been a couple of different arguments for preserving FCs. One is what might be called the “original design” rationale. Johnny Mok, a barrister and member of the Basic Law Committee of the National People’s Congress, offers a clear statement of this argument: preserving stability and prosperity has been the long-standing goal for Hong Kong, and the Hong Kong SAR “is constitutionally mandated to guard itself against any degeneration into an over-expanded and over-burdened economy.” Exceptional representation for key sectors in the LegCo and in the election and nominating committees—both of them legacies of British rule—ensures that the interests of those sectors are protected. It is a check against populism and toxic instability in the future.15
The other argument, outlined by Man Mun-lam, a current affairs commentator on political affairs, is that FC LegCo members actually do a better job than their popularly elected colleagues. They are educationally and professionally more qualified, “calmly analyze issues and rationally seek solutions,” and do not engage in “obstructing procedures.” FC members have expertise across different fields, whereas directly elected members are “street-fighters” who “often lack professional knowledge and experience.” The FC members ensure a balance among the interests of various social groups. “Additionally, if the functional constituencies were abolished, representatives from industries and professions could not counter the often negative influence of career politicians.”16
These differences likely have less to do with the character and qualifications of the two types of members than with the small size of their constituency and power within the LegCo (democratic members are more confrontational because they have little power). Most FC members are visible symbols of the protection of narrow sectoral interests and Beijing’s political strategy. Opinion surveys suggest that the public believes that the system is unacceptable and should be changed. In twelve polls taken from November 2003 to January 2013, the share of respondents who favored direct election of all LegCo members was below 70 percent in only one poll (66 percent in March 2006) and was over 80 percent three times.17 It might be possible to preserve a special place for the interests that the FCs represent for a time—perhaps as an analogue to the British House of Lords in a bicameral LegCo. Yet the time may have passed when the public would accept such a solution. Sooner or later, it seems, restoring the legitimacy of one country, two systems may require eliminating the FCs.
4. Budgetary flexibility. Finally, Hong Kong’s aging population and the growing costs of caring for the elderly will require the Hong Kong SAR government to have greater flexibility in shaping annual budgets. Hypothetically, there are ways of doing this within the current system. The relatively light tax burden on individuals and companies could be increased in a modest but progressive way, which not only would generate more revenue but also, through redistribution, would have a useful political effect. The government could relax the unwritten rule that combined expenditures from its operating and capital budgets should constitute no more than 20 percent of GDP. More of the government’s substantial reserves could be used in the short and medium term instead of saving them for the long term. The purposes to which the capital budget is applied, infrastructure, could be broadened beyond traditional projects such as roads, water systems, and tunnels to include more spending on social welfare and poverty alleviation. David Akers-Jones, who served in a variety of positions in the colonial government, rising to chief secretary in the mid-1980s, argues that the Basic Law’s requirements for fiscal balance should be reconsidered. “I just happen to think that if the Basic Law were written today, those chapters on the economy could perhaps be written in a much more imaginative way.… There wasn’t an elderly population … when the Basic Law was being drafted.”18
The LegCo does have the power to repeal the requirement that the CE cannot be a party member and to change the PR basis of the electoral system, although any major change in the FCs, including abolishing them, requires amendment of the Basic Law. Yet because each of the reforms suggested above is quite consequential for those who hold some power in the Hong Kong SAR government, there may be some value in having Beijing formally authorize the changes, if not through an amendment to the Basic Law, then as a decision by the NPC-SC. But, whatever the formal authorization, even attempting to make any of these changes would stimulate opposition in Hong Kong. The end of a PR system will likely spell the end of Hong Kong’s minority parties, so they would naturally put up a bitter fight against ending the PR system. Meanwhile, FC members and the constituencies they represent would oppose an end to their superior political position. Parties with a minority presence in LegCo might be disinclined to support a system where the chief executive was the head of the majority party because it would be more difficult to check. On budget policy, change may require Beijing to send a strong signal that it wants a relaxation of fiscal prudence through an amendment or reinterpretation of article 107, which mandates “striving” for fiscal balance, avoiding deficits, and gearing expenditures toward GDP growth. It would do so not because it no longer cares about fiscal discipline but because too much past fiscal restraint has contributed to political instability.
As sensible as these four reforms may seem in light of democratic theory and practice, actually adopting them would require all those who benefit from the status quo, particularly the FCs, to accept a shrinkage of the representation of their interests. There may be tactical moves that would limit opposition to these reforms, such as packaging several together so that each of Hong Kong’s political forces believes that it will receive some gain. Realistically, however, for a significant reform effort to be pushed through will require the Central People’s Government to make clear that a significant re-set of one country, two systems is in the best interests of the community and the country, and must be passed. In particular, it will have to persuade the business community, which benefits the most from FCs, that defending the status quo is becoming unworkable and that politics must be put on a new basis.
REENGINEERING ONE COUNTRY, TWO SYSTEMS
Each of the suggested reforms is designed to deal with specific problems within the current political structures and policies of the government. Making each change will lead to some improvement in the relevant area, but it is not clear that the whole reform package will be greater than the sum of the parts. Because each of the outlined defects has contributed to the decline of governance in Hong Kong, it is a package of reforms that will improve governance significantly.
Take, for example, the idea of allowing the chief executive to be a member of a political party. The defects of the current system, which requires a supraparty executive, are obvious, but it is not clear that this step alone would resolve the underlying problem in the disarticulated political structure. The unstated but likely assumption of this reform is that, as in the current arrangements, there would be separate elections for the chief executive and the legislature. But if there are different political dynamics for chief executive and LegCo elections (similar to the difference in the United States between presidential and congressional races), the result could be the selection of a chief executive who is a member of a minority party in LegCo. That would create disarticulation of another kind. What creates the dynamic hinge of a Westminster system, in contrast, is that the leader of the majority party usually becomes prime minister and other party leaders, usually legislators, become ministers in the government.
The logic of reforming Hong Kong’s political institutions while temporarily setting aside political constraints flows from two connected assumptions. The first is the need to vest a central role in the political system to healthy political parties. Whether in elections or the legislative process, parties are the key mechanism for aggregating public sentiments and political interests. They are also the training ground for political leaders. Parties are certainly not perfect (see the United States for evidence), but with the right institutional design they can reflect the major poles of political sentiment in society and provide a sort of political system coherence, something Hong Kong currently lacks. Parties or coalitions of parties should play the key role in nominating candidates for the chief executive election.19 For LegCo, most, if not all, candidates should run as party candidates.
The second is the value of a Westminster-style parliamentary system.20 Legislators would be picked in popular elections (with my preference being a single-member district system). Then the Central People’s Government, as the sovereign, would invite the leader of the party that won the most seats—or a coalition of parties, if necessary—to form the Hong Kong SAR government. If that does not work, then the party leader most likely to be able to form a coalition government would be given the opportunity. Once a government is formed, Beijing would appoint both the chief executive and the heads of the various government departments. The government would then seek to enact its policy program based on its parliamentary majority. The chief executive and agency heads would be accountable to both the LegCo and the public for their performance. The voters would then judge the government’s performance at the next election.
However far this reform is adopted, it would represent a major change in the Hong Kong political system. In theory, such significant reform would establish a stronger platform for governance, but it would require several things. First of all, Beijing would have to adopt a different approach in the exercise of sovereignty: give up behind-the-scenes control, place more faith in the pragmatism and good sense of Hong Kong citizens, and be confident that institutions are an effective way to channel and harmonize social conflict.21 Second, it would require that business interests develop new ways to promote their interests (particularly if FCs are abolished at some point). They will have to engage more in electoral and media politics, either as their own political party (an expanded Liberal Party?) or by combining with the pro-Beijing DAB. Even in a new political mode, business would still have substantial resources to make its case to the public. Politicians in the democratic camp would have to seize the opportunity to gain a real share of power and to contribute to the governance of Hong Kong. Finally, there should be a working assumption that change will happen as the result of an incremental process and not as the result of a “big bang.”
TRUST AND SEQUENCING
A focus on process—on devising an incremental process for change—must begin with the recognition that trust among Hong Kong political forces and between them and the Central People’s Government is low. The virtue of an incremental reform process is that it can promote trust building without requiring any party to wager too much along the way. Success at one stage makes it easier to achieve progress at the next stage. The problem with an incremental process is that it raises questions about ultimate outcomes. Some actors will worry that gradualism could perpetually put off the goal they wish to achieve. Others will fear that a series of seemingly innocuous steps taken now will cumulatively produce an unwanted final outcome later.
Trust building is therefore connected to sequencing. The process employed between Taiwan and the mainland in the first term of Ma Ying-jeou’s presidency adhered to the guideline “easy first, hard later.” That made sense because the “easy” steps were mutually beneficial and enjoyed fairly strong support in democratic Taiwan. They enhanced mutual confidence. The process stalled after 2013, not because incrementalism was a bad approach but because there were fewer and fewer easy issues and the new agreements pursued had a negative effect on the interests of some parties on each side. Also, the Ma administration did not do an effective job of explaining to the public why further opening up Taiwan’s economy to the mainland was actually in Taiwan’s interest and would not ineluctably lead to what Taiwan citizens most feared: incorporation into the PRC on Beijing’s terms.22
There is considerable scope for creative sequencing in Hong Kong. Some steps can be taken unilaterally by the government to demonstrate goodwill and regain legitimacy. A good place to start would be the property sector: the Hong Kong SAR government should increase the supply of residential and commercial space, and reform overly rigid regulations, particularly regarding public housing. Other steps can be phased in over time to ensure good implementation and head off unintended negative consequences—for example, phasing in expanded welfare benefits and phasing out functional constituencies. Whenever possible, the benefits of reform should be shared among various stakeholders. This is particularly important for the democrats, who have been disadvantaged under the current system. Indeed, Beijing could greatly enhance confidence among the opposition by signaling the changes that it would support and offering what it has never been willing to provide: a timetable about what new tranche of reforms it will offer later if the first tranche is enacted and does not destabilize Hong Kong.
Yet as of the end of 2015, the prospects that Beijing would demonstrate some degree of accommodation to Hong Kong seemed unlikely. In December, the Hong Kong Communist paper Ta Kung Pao reprinted an article that Wang Zhenmin had originally published in the Hong Kong monthly Tzu Ching. Wang was dean of the Tsinghua University Law School in Beijing and a major articulator of Central People’s Government policy concerning the Hong Kong SAR. In his article, he identified four “deep-seated issues” that plague Hong Kong:
The first, second, and fourth problems are hardy perennials in Beijing’s caution regarding full democracy, namely, that forces within the democratic camp are unpatriotic, have reneged on obligations mandated in the Basic Law, and would end the policy of fiscal prudence. Each is either overstated or unfounded. Further to his point about political conservatism versus radicalism, Wang makes a disturbing allegation: “Political radicalism … no longer wishes to conserve and purposefully wishes to damage the rule of law and challenge tradition, and is itching to launch a full scale violent revolution, overthrow the current regime, and completely shatter the current institutional structure and government machinery.”24
There is no doubt that Hong Kong has become radicalized since the mid-2000s. There is no question that radical elements in the democratic camp frustrated and blocked electoral reform. One effect of several reforms suggested in this chapter would be to defang radicalism and empower moderates. Yet Wang’s placing all the blame for Hong Kong’s troubles on the Hong Kong SAR and his unwillingness to acknowledge that Beijing’s own policies may have empowered the very radicals he accuses of ill will toward the state suggest that creativity on the part of the Central People’s Government is unlikely to be revealed anytime soon.