Hong Kong experiment now threatens communist China

Sin-ming Shaw, Resident Scholar Oriel College, Oxford University, Project Syndicate

Last month's massive demonstrations in Hong Kong, when over half a million residents poured into the streets in protest against the government of Chief Executive Tung Chee-hwa, continues to echo. Never in Hong Kong's history has popular opposition -- uniting investment bankers, street hawkers, off- duty civil servants, and artists, among others -- been so loud. China's communist rulers are dithering about how to respond.

One objective of the demonstrators was to voice their desire to select Hong Kong's future leaders through universal suffrage. Today, 800 electors handpicked by the mainland Chinese government -- who mostly represent big business -- choose Hong Kong's Chief Executive.

The unpopularity of Hong Kong's incompetent and sycophantic Chief Executive, chosen by China for a second five-year term that will only end in 2007, creates a grave dilemma for the country's communist rulers. Before July's protests, they hoped that Hong Kong would provide so attractive an example of the idea of "One Country, Two Systems" that Taiwan would be lured into accepting the sovereignty of the government in Beijing. Now Taiwan's leaders point to Hong Kong as a failed model of a flawed concept.

Indeed, Tung's anticipatory subservience to the real or imagined wishes of China's rulers exposed the congenital flaw in the political architecture of uniting a liberal society with a dictatorship. That flaw infects the heart of the "One Country, Two Systems" notion: The idea that genuine autonomy can exist in a country whose supreme leaders do not believe in rule by consent.

Now China's communist rulers find themselves trapped in a bind. If they back Tung unconditionally for the rest of his term, they can look forward to the collapse of their long-term strategy to re-absorb Taiwan, for the alternative to peaceful reunification with Taiwan is coercion.

But any resort to coercion increases the likelihood of military confrontation with the U.S., Taiwan's protector. In this context, the steady build-up of China's short- to medium-range missile capability is a cause for alarm, such missiles being the principle threat against Taiwan.

As the U.S. Defense Department's "Annual Report on the Military Power of the People's Republic of China" recently put it, "The primary driving force for China's military modernization is Beijing's perceived need to prepare credible military options in any potential conflict in the Taiwan Strait."

Such a nightmare scenario isn't at all likely in Hong Kong, but a steady rot of Hong Kong's vitality is. For if the frustrations of ordinary Hong Kong citizens are allowed to fester without a genuine commitment by China to allow for universal suffrage by 2007, a far more serious eruption of social and political unrest beckons.

Such frustrations are growing. Unemployment now stands at 9 percent -- unimaginable before the handover in 1997, when both Tung and China promised that Hong Kong would do even better under Chinese sovereignty than under British rule. In fact, many observers believe that Hong Kong's real rate of joblessness is much higher, and fear that the trend is not encouraging.

China's leaders, and their handpicked servants in Hong Kong may still believe that Tung's popularity will revive if and when the economy does. So they comfort themselves with the thought that demands for democratization reflect Hong Kong's economic woes, nothing more.

But six years of divisive as well as dismissively haughty misrule by Tung's administration, which pits one group against another as its preferred method of governance, suggest that Hong Kong's problems are much deeper. Hong Kong is now an acrimoniously divided society harking back to the days when Chinese communists routinely classified their own citizens as either "the people" or "enemies of the state."

Most of Hong Kong's people now recognize that their stagnating economy is not merely a matter of bad policy. It also results from deeply flawed political structures. In an oligarchic economy such of that of today's Hong Kong, the costs of stagnation and the fruits of growth are distributed in grossly unfair ways. This cynical structure must be changed if people are to have enough confidence in the future for the economy to recover.

If China's rulers heed the wishes of Hong Kong's seven million people to have the right to elect their own leaders through direct elections, however, they face the prospect that China's 1.3 billion people will demand the same right. Perhaps so. But a political system is only ever truly put at risk when leaders consistently misrule.

Indeed, democracies are so stable because they allow misrule to be ended through regularly scheduled elections. Because stability is their great goal, China's communist rulers, if they are wise, will allow Hong Kong to show the way to a system in which Chinese govern themselves democratically, peacefully, and prosperously. Taiwan has already done so. Hong Kong, linked physically to the mainland, provides a more intimate case study for China's people to watch and one day follow.

But if the goal is merely for the communists to retain their monopoly on power, in both Hong Kong and China, then the rot that has settled into Hong Kong's polity and its economy may begin to infect the mainland. At that point, China might wish it had never heard of Tung Chee-hwa. Indeed, it might wish it had never secured Hong Kong's return.

The writer was formerly a leading Hong Kong investment fund manager.