Implications of the Second Term of Tung Chee-hwa

Ray Yep
Ray Yep Professor and Assistant Head, Department of Public and Social Administration, City University of Hong Kong - CNAPS Visiting Fellow, 2001-2002, The Brookings Institution

March 15, 2002

Tung Chee-hwa returned for a second term as the chief executive of the Hong Kong Special Administrative Region (HKSAR) with the massive support of 714
electors from the 800-member Electoral College. However, this reflects neither his popularity in society, as the overwhelming majority of the 6.7 million people living in the territory are excluded from the voting process, nor his cordiality with local political elites, given that
segments of business and pro-Beijing camps had vehemently complained against his policies not long ago. The triumphal pomp is, rather, a melody orchestrated from Beijing.

Beijing made no secret of its intention of keeping Tung for another term. Top leaders, including President Jiang Zemin, had repeatedly expressed their support for Tung. Politically, Tung accomplished two important
missions during his first term: cornering the democrats and maintaining stability. The Legislative Council, the popularly elected law-making body,
has remained ineffectual in checking the administration and exerted very limited influence in policy processes. Despite growing social tensions, Hong Kong remained relatively stable during the first five years of the
post-transition period.

Tung may not score high in luring Taiwan toward the idea of “one country, two systems,” but Beijing may see Taiwanese Presidents Lee Teng-hui and Chen Shui-bian, instead of Tung, as the major culprits. In fact, Tung?s
lukewarm responses to various appeals for exchange and cooperation from Taiwan may have even won him praise.

On the economic front, Tung?s performance is hardly impressive. During his first term, Hong Kong?s economy endured a long period of slow growth and confronted a record-high unemployment rate of 6.1 percent. Budgetary deficits reached an alarming level of $8 billion in the fiscal year 2001-2. While Tung may have failed to prove himself as an astute economic manager, he seems to have won sympathy from the top and succeeded in shifting the blame onto international economic adversity.

Tung?s re-coronation heralds a further integration of Hong Kong into the mainland economy, a move regarded as the means for putting Hong Kong back on the right trajectory for growth. Beijing has looked positively on Hong
Kong?s recent integration initiatives and pledges for special privileges. The idea of setting a free-trade zone between Hong Kong, China, and Macau is under consideration, and Beijing also shows support for Hong Kong
developing into the region?s leading logistics hub. Accelerated interflow of goods and people between Hong Kong and southern China is deemed inevitable, and demands for 24-hour operation of border control between Hong Kong and Guangdong have increased. Local professionals are also
anxious to ply their trade in the mainland and Tung?s administration has promoted the idea of allowing Hong Kong firms to practice mainland law.

Intensifying integration during Hong Kong?s economic downturn may have implications for the territory?s autonomy. The sense of insecurity and inferiority has caused Hong Kong to forget its self-image as the “window to
the world for China” and to worry about the challenges posed by Shanghai and Shenzhen. Most important, Hong Kong?s perception of China as the way out of economic crisis, and the dependent mentality that results, will
enhance Beijing?s ability to enlist obedience from Hong Kong as
unwillingness to collaborate with the central government may incur
substantial economic losses. The possible readiness to collaborate with attempts to bypass Hong Kong?s jurisdiction prompted by growing pragmatism, and a failure to resist immediate economic gains may do long-term damage to the territory?s autonomy.

The full backing of Beijing arms Tung with a new device for strengthening his authority: his idea of a ministerial system is likely to materialize. The freedom to choose department heads can strengthen his position
vis-à-vis the career civil service and entice cooperation and support from the community. Pro-government and pro-Beijing elements will inevitably grasp the main prizes in the forthcoming reshuffle of the Executive Council (the Cabinet equivalent in HKSAR) and the appointment of department heads.
Consequently, opposition parties such as the Hong Kong Democratic Party will be further marginalized. Optimists in the democratic camp may look toward the 2007 constitutional review as stipulated in the Basic Law, the
mini-constitution of HKSAR. This can be a genuine opportunity for
deliberation and reflection, but only if these democrats can survive the second term of Tung.

As far as Taiwan is concerned, the gloomy prospect for democracy further complicates its relationship with Hong Kong. The Hong Kong model remains a
non-starter and President Chen bluntly dismissed Tung as “a puppet of Beijing.” Yet, Beijing?s recent shift in Taiwan policy will certainly provoke a re-positioning of Hong Kong. Vice Premier Qian Qichen?s January speech and the Government Report delivered by Premier Zhu Rongji in the
recent National People?s Congress meeting expressed a moderate tone toward Taipei. Most notably, dialogue with the DPP is now seen as acceptable. China and Taiwan?s WTO and the latter?s relaxation of control over investment in the mainland may also prompt readjustment of Hong Kong?s policy toward Taiwan. Moving away from the policy of indifference and
playing an active role in facilitating the growing political and economic exchanges across the strait, without compromising Hong Kong as a platform for separatist propaganda, will be a key challenge for Tung in his second term.