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Hong Kong ...
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This is the story of a year in the life of a unique place, long known for its material superlatives but now also the scene of an unparalleled political experiment. It also happens to be the last year of a century in which Hong Kong grew from being a small, unconsidered fragment of the predominant empire on the planet to a treasure house whose wealth was proportionately greater than that of the colonial master on the other side of the globe. More recently, it has undergone a unique passage from being the final major possession of a liberal democracy to becoming the freest city in the last major power ruled by a Communist party. A meeting place of East and West at the crossroads of the twenty-first century, this territory of only a thousand square kilometres and 6.8 million people has a gross domestic product of US$175 billion and the world's fourth largest foreign exchange reserves. An accident of history and geography, it has become a theatre for major questions of our times, not in theory but in everyday life.
Since British rule ceased at midnight on 30 June 1997, the Hong Kong Special Administrative Region (SAR) of the People's Republic of China has been the most advanced and richest city in the biggest developing nation on earth. As it boomed in the 1980s and 1990s on the back of the opening-up of mainland China, what had once been dismissed as a rocky outcrop of little interest to Victorian empire-builders attracted international companies in their thousands to make it one of the great cosmopolitan metropolises. Apartfrom its 95 per cent Chinese population and its own dealings with the mainland, it has long been the unofficial capital of the diaspora of 100 million overseas Chinese, who see Hong Kong as a safe haven for their money and as a gateway to the mother country. Going in the other direction, it has been the main conduit for funds coming out of China, legally or illegally, some destined for licit investment, others moving through clandestine channels; and for spectacular criminals moving to and from the mainland.
Coming out of a long and deep slump, the SAR still has more billionaires than its former sovereign. Even in the depths of recession, the best-known tycoon, Li Ka-shing, whose empire stretches from property and container ports to supermarkets and mobile telephones, took tenth place in the listing of the world's mega-rich by Forbes magazine. Income tax is a flat 15 per cent, and only a quarter of the population pays it. The wealthy are further comforted by the absence of tax on dividends or capital gains. `Here, the money we make, we keep,' as the owner of a big Chinese herbal pill business puts it. When it changed sovereign powers in 1997, Hong Kong made up 20 per cent of China's wealth, with 0.5 per cent of the mainland's population. The head of its government earns HK$287, 141 (US$36,900) a month — more than his counterparts in the US, Britain or Japan. His number two, the Chief Secretary for Administration, who heads the civil service, is paid HK$229,713 a month, and the Financial Secretary, the equivalent of the Chancellor of the Exchequer, HK$217,149. Dwarfing their pay, the golf-champion boss of the central bank gets eight times as much as the chairman of the US Federal Reserve Board. Leading barristers can pull in 45 per cent more than their London counterparts. In the 1997 bull market, the stock exchange was the sixth biggest in the world, and membership debentures at the main golf club cost US$1.5 million.
Despite a poor construction safety record, pollution, and bureaucratic blunders such as paying China the equivalent of US$200 million a year for water which overflows into the sea, Hong Kong is generally a model of urban development. It has a superb infrastructure and a spectacular new airport, reached over the world's longest two-level suspension bridge to the mountainous island of Lantau. The harbour, which has ranked as the world's most used container terminal in all but three of the last twelve years, is a constantly shifting pattern of slow ferries and fast ferries, jet foils, tugs and container barges, cargo ships, rusting liners that ply up the China coast, sampans, powerboats and yachts, cruise liners, corporate entertainment launches, visiting warships, a big brightly-lit blue and white gambling craft which takes punters on trips out of Hong Kong waters, and the emblematic green and white Star Ferry shuttling endlessly between Hong Kong Island and the Kowloon peninsula.
The local anthem is the sound of the pneumatic drill; the national bird should be the crane. Sheer walls of apartment blocks perch on the edge of steep slopes. Plans for new buildings rise a hundred floors up into the sky. Though too many developments are unimaginative concrete, glass and steel towers designed to make the most money from the allotted plot ratio, there is no finer office building in the world than the triangular masterpiece designed by I. M. Pei for the Bank of China which dominates the Hong Kong skyline. If road traffic is increasingly caught in gridlock in busy areas, the territory's transport network encompasses an underground system to put most others to shame, along with surface trains, trams, minibuses, double-deckers, shuttles, ferries, taxis, three cross-harbour tunnels, three tunnels through the mountains, plus the funicular railway up the Peak towering over Hong Kong Island. Carrying half the territory's population each day, the underground Mass Transit Railway (MTR) is the world's most heavily used people-carrier, and probably the most efficient. As for other means of getting around, taxis are cheap, the flat fare on the tram is 26 cents, and you can cross the harbour on the upper deck of the ferry for only a penny more.
Above ground is an amazing array of road bridges, overhead pedestrian walkways and an 800-metre-long escalator system up the slopes above the main business district. The sprawling squatter camps without electricity or running water that once housed refugees and were the scene of massive fires and landslip disasters have long gone. But there are still indigent `street sleepers' and `cage homes' occupied by unmarried, unemployed, unskilled men who live in railed-off bunk spaces. The early housing estates with their shared toilets and communal cooking facilities belong to history. Still, space is often woefully inadequate, with an average of under 500 square feet per home. More than 100,000 people live in temporary accommodation. But the vast blocks of public flats built on what were once rice paddies or virgin land have made Hong Kong — for its size — the site of one of the world's major urban housing developments.
Though the potential for fast or long driving is severely limited by the small size and steep geography of the place, there are more luxury limousines per head of population here than anywhere else on earth. The owners of the flat on top of the apartment block my wife and I lived in kept a black stretch limousine waiting permanently downstairs but never seemed to use it. The son of the house switched between Porsches and Ferraris with the occasional Maserati thrown in. The last time we visited the home of the leader of one major political group, he had a large Mercedes, a Porsche and a Ferrari in the driveway, and a Rolls inside the garage.
Real-estate and textile barons rendezvous in secluded coves in the South China Sea on Sunday afternoons aboard huge, personally designed luxury boats made in Italy, with resident chefs and dining rooms as big as the average flat: one can seat eighteen. Although the boats could sail the globe, they generally don't venture far for fear of pirates, and watchful crew members keep their eyes open for kidnappers. One younger socialite doesn't go anywhere at all. He keeps his yacht permanently moored in a bay on the south side of the island to be used as a floating dining room: the champagne is Dom Pérignon and the cheese is flown in from France to order.
Hong Kong is home to more luxury hotels than any other place of its size, and almost certainly holds the record for atrium space. With one eating establishment for every 650 inhabitants, it may well also have the highest restaurant penetration, including five of the ten busiest McDonald's outlets. Times Square in the Causeway Bay district of Hong Kong Island is one of the world's two busiest shopping centres, and few other cities have such a concentration of retail outlets — from the luxury stores of the Central District and the jostling shops of Tsim Sha Tsui across the harbour to the streets round the Wanchai market with their stalls selling meat, vegetables, fruit, dried fish, shoes, women's panties, videos, watches, nuts, flowers, towels and food from all over South-East Asia.
The streets are alive not only with the sound of people, but with signs jutting out overhead: in the first hundred yards of Mody Road in Tsim Sha Tsui, you walk under signs for Baron King's Tailor, Rio Pearl, Nikon, Surge Restaurant, Hong Kong Fur, Spring Deer Restaurant, Kam Chien Shoe Store, Tourist House, Maclary Fashions, Holdrich Guest House, Laser People, Club 38, Sandalwood Club, Fantastic Beauty and Image, Home Town Guest House and the Choy Kee Cleaning Service.
While under British rule, Hong Kong created templates for popular culture — Cantopop and kung fu — that had absolutely nothing to do with the colonisers, even if some of the stars took names like Bruce, Aaron and Lionel. The territory's take-no-prisoners crime epics made directors like John Woo into post-modernist icons. Though the film output is only a quarter of what it was in the early 1990s, the major attraction, Jackie Chan, is one of the most popular stars in the world. Chow Yun-fat, who was voted Premiere magazine's `sexiest action star of 1999' before becoming the King of Siam to Jodie Foster's Anna, was striking serious attitudes with a matchstick in the side of his mouth well before Quentin Tarantino drew his inspiration for Reservoir Dogs from Hong Kong gangster flicks.
This is media city incarnate. With a population equivalent to that of London, it supports no fewer than fifteen newspapers. In the go-go years around 1997, the dominant English-language daily made a pre-tax profit equivalent to US$90 million. Hong Kong is awash with magazines, and the air buzzes with in-your-ears radio: one leading talkshow host so offended somebody that he was the target of a severe attack with a chopper that left him badly maimed. As for television, an executive reckons Hong Kong's programmes are watched by 16 million people across the border.
Business rules, and its practitioners are lords of the universe. There is nothing new about this: the only public statue in the Central District is of a Victorian general manager of the Hongkong Bank. Names of firms and buildings translated from Chinese reflect the aspirations and preoccupations of owners and inhabitants — Brilliant Trading, Joyful Construction, Good Luck Corrugated Carton, or Tycoon Court, Wealthy Heights, Good Results, Prosperity Centre and Everprofit.
A ranking of top wealth creators in Asia at the end of 1999 placed seven Hong Kong firms in the top ten. Business figures regularly lead polls of the territory's most admired people, and their interests stretch across the globe. Apart from major investments on the mainland of China, they own real estate by the Thames, the Hudson and the Pacific coast of North America, luxury hotels from Tokyo to Knightsbridge, textile works in Cambodia and Pringle knitwear in Scotland, the Harvey Nichols store in London, sheep farms and electric power stations in Australia, palm oil plantations in Indonesia and container ports in Felixstowe and the Panama Canal. Hong Kong entrepreneurs turn out goods for top American brand names, operate casinos in North Korea and ski resorts in Canada, and bankrolled Donald Trump's latest development on the West Side of Manhattan.
They are renowned as flexible, on-the-ball traders. Few restrict themselves to a single line of activity. Property, garments, shipping, the Internet, mobile phones, retailing, the stock market and mainland China: mix and match to maximise profits. As middlemen, they set up deals around the globe at the drop of a fax, an e-mail or a telephone call. They employ millions of people at factories in China turning out export goods that have fuelled the mainland's economic rise. Costs at home are too high to allow Hong Kong to compete. So what was once a low-cost centre turning out cheap clothes, toys, watches, wigs and a hundred other products has seen its manufacturing shrink dramatically, leaving a pool of middle-aged and elderly men and women without work or a future.
The destiny of the once mighty textile industry stands as a measure of the changes in the last two decades, and of the flexibility of Hong Kong's business culture. In 1980 textiles accounted for 23 per cent of the economy; now this is down to 6.5 per cent. The industry's workforce of 93,000 in 1995 was 58,000 two years later. Holding a quota licence to export textile goods to the West remains a ticket to riches, but the sweaters and jeans and T-shirts do not have to be made in Hong Kong. So the quota-holders either moved their factories to southern China where wages were far lower, or subcontracted production to others and pulled down their factories to make way for real-estate developments.
From the heights of the Peak to people scrabbling with bank overdrafts to get on the escalator to wealth, property dominates. Go out to a friendly dinner, and the prices of flats — there are few houses here — will inevitably come up at some point. Property tycoons are the masters of the city. Li Ka-shing is known simply as `Superman'. Lee Shau-kee of Henderson Land earned a cool US$1.1 billion from dividends alone in 1997. A real-estate heiress, Nina Wang, was listed as the richest working woman on earth with US$7 billion to her name. Property companies constitute 30 per cent of stock market capitalisation. Solicitors become multi-millionaires on conveyancing fees. Ask many a Rolls-Royce or Mercedes owner where his money comes from: he will name his business, but then add, `Of course, the real money's from property.' The Mass Transit Railway system is building massive office and apartment blocks on top of its stations; the latest project is for a 102-storey office tower in Kowloon. After the territory's leading gangster was caught in 1998, he was found to own thirty-one pieces of real estate. At the other end of the scale, tenants of public housing are being urged to get into the game by buying leases on their homes. In any case, demand usually exceeds supply. Apart from the Anglican cathedral, all land belongs to the government, and it parcels it out carefully at land auctions, drawing 40 per cent of its revenue from sales of leases, redevelopment fees and stamp duty.
The result is both some of the highest prices in the world and great population density. The Kwun Tong area of Kowloon has 54,000 people per square kilometre. In slum blocks elsewhere, average living space is 21 square feet, and more than a dozen people share a toilet. Such is the pressure on space that Hong Kong is riddled with 6,000 illegal structures. The soaring property prices and the government's income from them are the territory's hidden tax. Real-estate inflation is a big element in the high cost of shopping, eating out or doing business.
Speculation is not confined to the rich. Visiting flats is a local pastime. Foreign property is snapped up sight unseen at exhibitions in plush hotels. A software salesman and his secretary wife I know had three flats in Hong Kong during the mid-1990s bubble, plus a house in Beijing. They also bought a one-bedroom flat in the former County Hall in London at a property road show in Hong Kong, but soon sold it, never having set eyes on their place by the Thames. Li Ka-shing tells of being approached during an early morning golf round by a greens sweeper wearing the traditional wide-brimmed hat of the original inhabitants of Hong Kong, the Hakkas. She said the flats she had bought from his company had been hit by the slump, and asked him not to sue her if she fell behind with the payments. How many flats had this woman bought? Four. `I bluntly told her that she should not do that with her income level,' Li concluded. `And I asked her not to disturb my golf game.'
Between 1984, when an agreement between Britain and China removed uncertainty about Hong Kong's future, and the great Asian crash of 1997, property values rose by 2,000 per cent, with the average price of luxury accommodation hitting US$2,250 a square foot. High inflation meant low, or even negative, real interest rates. The currency was rock solid, pegged to the US dollar. Demand was booming. No wonder that this small parcel of land bereft of natural resources and without enough food or water to sustain itself came to outstrip its colonial sovereign in the wealth stakes.
Geography has always been a key to success here. As the estate agents say, what counts is location, location and location. Perched on the flank of the great dragon of China, Hong Kong has been perfectly placed as an entrepôt city, a channel for goods, people and services. As an outpost of Western good practices, with a clean civil service and a reliable legal system, it has benefited from a trust that the West is still hesitant about extending to the mainland. Hence its eminence as a container port, and its position as the centre for financial, legal and managerial services for companies operating in China. If Hong Kong became part of the People's Republic in 1997, geography still gives it the destiny of being a bridge between the mainland and the rest of the world. But that location also makes Hong Kong much more fragile than such a rich and successful place should be. It is at the mercy of events it cannot influence, far away in America, nearer at hand in Tokyo, or across the border in the rest of China.
The currency link to the US dollar means that monetary policy is made by the Federal Reserve in Washington. Changes in US policy towards Beijing have major consequences for Hong Kong. Japan's enormous weight in the Asian economy cannot be escaped. Most of all, there is the China factor: increasingly, it cuts both ways. If mainland economic development stalls, Hong Kong will feel the repercussions first. If Beijing devalues its currency, could the Hong Kong dollar resist the pressure to follow suit? If, on the other hand, the looming superpower-in-the-making relates to the world and ploughs its own furrow in the international economy, there will be much less need for the Hong Kong bridge.
If that happens, how many firms will follow the example of the French communications company Alcatel, which has made Shanghai its regional headquarters, or the electronics division of Philips, which has moved its top management executives to the mainland? If Shanghai can reinvent itself as a great world centre, with double the population and the huge backdrop of the Yangtze basin, who needs this pimple on the backside of the dragon to the north? If container ports in southern China can undercut Hong Kong, why transport goods through the SAR? An artificial place, created by refugees and colonialists, Hong Kong could then move to the wings of China's evolution. An early beneficiary of globalisation, it could be marginalised by the biggest global link-up of all between 1.2 billion consumers and the rest of the planet.
Like any people living on the edge, the inhabitants of Hong Kong have more than their share of contradictions. They are famed for their entrepreneurial spirit, but local Chinese firms are run on a strict top-down basis. Bosses command huge deference, and do not expect to be argued with. Delegation is seen as a potential source of weakness. The result can be a stultifying absence of initiative as decision-making is referred upwards and executives avoid taking responsibility for fear of incorrectly anticipating the wishes of the man on high. Within companies, `little potato' employees know their place, though the more adventurous waste no time in striking out on their own to fuel the constant flow of new businesses which give Hong Kong its special dynamic.
However sophisticated the city may be, it is still subject to old superstitions and new scares. Women with big mouths are considered bad news because they `eat' the family's luck and money. Various foods are imbued with special powers. Eat lotus seeds to have a child within the year; water chestnuts promise good fortune; candied coconut stores up family togetherness down the generations; peach blossoms denote longevity, jonquils prosperity, and camellias rebirth.
A massive apartment block on the south side of Hong Kong Island has a large hole in the middle to allow evil spirits to pass through without causing any damage. An executive of a start-up software firm pointed down from his twenty-sixth-floor office at the traffic coming and going on an expressway below as a sign that if money flowed out it would certainly return. In 1997, Hong Kong's Chief Executive used the supposed bad feng shui of the residence of the former colonial governors — which has the sharp edge of the Bank of China building pointing directly at it — as an excuse for not moving in. Asked by the South China Morning Post, the main English-language newspaper, to rate major buildings in the middle of Hong Kong, an expert who says he advises film stars, banks and the Hong Kong Futures Exchange found that the Hongkong and Shanghai Banking Corporation would benefit from the air passing beneath Sir Norman Foster's building for its headquarters in Central, which has the additional safeguard of escalators running diagonally to the sea so that the money will not go out to the water.
The tradition of lucky and unlucky numbers is alive and well. Eight is prized because it sounds like `wealth' in Cantonese, and 9 is good too because it sounds like the word for `long-lasting'. But 4 is to be avoided at all costs since it sounds like death. The lease of our flat — number 4B — said it was also known as 3F, which does not exist. An apartment block opposite has an Upper 3 floor, Upper 13 and Upper 23 — anything to avoid the dreaded 4.
There have been times in the past few years when Hong Kong has needed all the good feng shui it could get. The handover year of 1997 saw a mysterious outbreak of a lethal virus called bird flu, carried by poultry: all the chickens were slaughtered to stop the spread of the disease. `Red tides' swept down the Pearl River from China from time to time and killed the fish. In 1999, three people died from virulent bacteria called Staphylococcus aureus, for which there is no known treatment.
As befits a place that fancies itself to be at the cutting edge of modernity, Hong Kong puts a premium on smartness, not only among the middle and upper classes who throng the charity galas and fashion shows but also among office workers who preen themselves in their frequently fake designer labels. Mingle with the lunchtime crowd in Central and you will not see a hair out of place or a shoe unshined. `I can't imagine anybody getting married at this time of year,' says a young woman before going to a wedding in hot and humid June. `Their make-up just has to run.'
The mood-swings from depression to optimism are extreme — and extremely swift. Launch a new cake or a fresh brand of sunglasses and the queues will form. Nobody wants to miss out anything, from the crowds which besieged McDonald's to buy cut-price Snoopy dolls, to the property companies that rushed pell-mell into Internet offerings and the sober-suited bankers who lined up to lend money to less than transparent mainland enterprises. When would-be immigrants from the mainland formed a long line outside a government office in 1999 seeking authorisation to stay in Hong Kong, several locals joined the queue in case something was being given away.
The essential attribute of the modern Hong Konger is, of course, possession of a mobile phone. Only the Nokiaworld of Finland has more per head of population. Hong Kong people simply cannot live without them. The outcry when mobile phone companies owned by some of the city's biggest tycoons tried to raise rates at the beginning of 2000 was such that even they had to retreat. Ringing so disrupted the opening night of Othello by the Royal Shakespeare Company in 1997 that the actors threatened to walk off if there was a repetition during the second performance. A hospital surgeon was suspended after being accused of discussing the purchase of a silver BMW with another doctor over his mobile while operating on a patient's polyp; distracted, he allegedly pierced the man's colon.
Not all the smart objects are genuine: this is a mecca for counterfeit watches and imitation fashion goods, run up for a fraction of the price of the real thing here or over the border in China. Half the people of Hong Kong admit to buying fake goods. Forty per cent of home videos sold in the SAR are rip-offs: in one raid police made what they called the world's biggest seizure, of 22 million pirate video compact discs. Some eighty factories churn out counterfeit music, videos and software. In 1999, copies of the new Star Wars epic were on sale within a day of the film's release in the USA.
In a different domain, it is increasingly hard not to see democracy in Hong Kong as something of a counterfeit, too. At the apex of the extraordinary political system under which Hong Kong has lived since 1997 stands the Chief Executive, chosen by a carefully constituted and Beijing-friendly committee. He is advised by a secretive Executive Council whose membership is for him to determine. Then there is a raft of senior civil servants running government departments. That may seem a quite straightforward example of an executive-led government, perpetuating the old colonial system for the benefit of Beijing rather than London. But then there is the legislature, which is meant to represent the democratic element in the way Hong Kong is run.
The Joint Declaration on Hong Kong's future signed by Margaret Thatcher in Beijing in 1984 after tortuous negotiations said that the Legislative Council (LegCo) was to be `constituted by election'. That formulation was acceptable precisely because it could be interpreted differently by each of the consenting parties. When the agreement was presented to the House of Commons, the British government could allow MPs to imagine that `election' meant Westminster-style polls. The Chinese, for their part, could be reassured by the fact that in their many elections since 1949 no Communist candidate had failed to be returned. As one former senior colonial official noted, the Chinese didn't mind elections but they rather liked to know the result in advance.
The pressure to introduce democracy became overwhelming in Hong Kong in the late 1980s, particularly under the impact of the massacre of demonstrators in Beijing's Tiananmen Square on 4 June 1989. There was a timid move to bring some independent voices into the Legislative Council, which was appointed by the Governor and used to sit in a government building. Then the last British Governor, Chris Patten, delighted local democrats and horrified Beijing by introducing genuine democracy at elections in 1995, which produced a triumph for pro-democracy parties critical of China. It was a key sign of how Hong Kong was growing up politically, of how it was no longer simply an economic city, but was able to embrace modern accountability, even if the administration continued to keep a careful check on the powers of the legislature.
But the looming date of the handover meant that Patten's experiment was bound to be short-lived, a bouncing baby condemned to death by its morally laudable but practically untenable conception. In the early hours of 1 July 1997, the elected legislature was dissolved and replaced by a body with no popular legitimacy picked by a Beijing-approved committee. Ten months later, in May 1998, a degree of democracy crept back with a newly constituted legislature of sixty members. But only twenty were elected by popular vote, the others representing professional groups (known as functional constituencies) or picked by yet another committee of friends of Beijing and the local administration.
Copyright © 2000 Richard Francis. All rights reserved.