The Hong Kong Triangle: An Assessment of Sino-British Relations Concerning Hong Kong

Lorilee Zimmer

Writer’s comment: I wrote “The Hong Kong Triangle: An Assessment of Past, Present, and Future Sino-British Relations Concerning Hong Kong” for the Davis Honors Challenge seminar entitled “China and Cuba: Thorns in America’s Side.” Because of China’s growing economic importance to the United States, I chose to focus my studies in this class on the recent changes taking place in Hong Kong during its transition from British to Chinese rule. Researching this topic gave me a much greater understanding of mainland China’s perspective on this transition as well as the likely outcomes of this historic political change. I hope this essay will enhance your knowledge, too, of this part of the world, because China’s renewed sovereignty over Hong Kong will inevitably have political and economic implications that in various ways will affect countries around the globe.
—Lorilee Zimmer

Instructor’s comment: My Winter Quarter seminar in the Davis Honors Challenge was centered around an analysis of why the United States pursued substantially different policies toward two of the few remaining Communist regimes. The United States has attempted to isolate Cuba while simultaneously pursuing policies toward China that have led to significant amounts of investment there as well as increased levels of tourism, even when China’s policies on human rights, for example, are not significantly better than those of Cuba. Lorilee Zimmer’s paper focuses on Hong Kong in Sino-British relations, and most importantly tries to gauge the future significance of Hong Kong as an issue of contention in the politics of the United States, the United Kingdom and China. Her conclusion is not a happy one: Hong Kong will be at China’s mercy.
—Randolph M. Siverson, Department of Political Science

A chapter of history will be closed on June 30, 1997, at midnight when Hong Kong returns to China after having been an English colony for 99 years. This event is the end result of British imperialism in 1898 when China—under duress—was forced to concede the territory of Hong Kong to England. Not only has this concession been a source of personal defeat and humiliation for China, but it is also an extant part of British imperialism that China wants to abrogate. Thus, when Hong Kong reverts to China, the ensuing political and economic changes will be fascinating to watch because the world is curious to see if China will uphold its Special Administrative Region (SAR) agreement with England and maintain its “one country, two systems” policy. In order to understand the importance of this imminent historical event, I will first explain how and why the relations between China and England have changed and illustrate their impact on the Joint Declaration. Then I will reveal inherent problems in the SAR agreement and explain why Western nations question China’s “one country, two systems” plan as described in the SAR agreement. Finally, I will discuss why neither the United States nor England will strongly object to China’s possible recession of the Joint Declaration and then give my predictions of what the world can expect to see in Hong Kong and mainland China after July 1, 1997.
         Hong Kong was literally a “land-grab” by the British in the 19th century because China was vulnerable and unable to properly defend its territories due to its military and economic exhaustion from the Sino-Japanese War of 1894 and the Opium Wars with England. Thus, China had no choice but to sign the New Territories Treaty which transferred sovereignty of Hong Kong from China to Great Britain. This act of overt English imperialism greatly angered the Chinese, who vowed to recover Hong Kong in the future. But for several decades, China remained too weak to do so because of the Boxer Rebellion, the Chinese Civil War, and a general lack of internal cohesion. However, when the Communists assumed power in 1949, the People’s Republic of China (PRC) reasserted its claim that the New Territories Treaty was illegal and that China would recover Hong Kong in the future. But the Chinese decided not to concentrate on recovering Hong Kong immediately because other issues were more urgent, such as reunifying the country through the reacquisition of Taiwan. In fact, immediately after the PRC was established, when perhaps the rationale for recovering Hong Kong might have been strongest, China’s Foreign Minister, Chen Yi, said, “We must first resolve the most important problem, Taiwan. And then, at the opportune moment, we will claim … Hong Kong” (Lane 15). Although Chinese officials did not say when China would reclaim Hong Kong, this issue was never forgotten—even China’s leader, Mao Zedong, said that China would settle the “Hong Kong question in an appropriate way when conditions are ripe” (Wang 24). Thus, while Mao worked toward reunifying his exhausted country and establishing a strong central government, China was in no position to reassert sovereignty over Hong Kong, even though this was still a future objective.
         When Mao died and Deng Xiaoping came to power, the PRC’s reasons for complying with the unequal New Territories Treaty changed. Whereas China had previously lacked sufficient military and economic power to take Hong Kong back, the PRC in the 1970s decided to maintain the status quo in order to improve its economic relations with Hong Kong, which by this time had become a major financial center. Deng pursued a national goal of modernization for China, which included improving agriculture, national defense, science and technology, and industry. Since Hong Kong had benefited from the PRC in the past, Deng expected the colony to be a major part of this modernization process. Thus, the leadership of the PRC began to solicit Hong Kong’s support by changing how they referred to British control; they used to call the colony’s officials the “British authorities in Hong Kong,” but now that China wanted their help, Foreign Trade Minister Li invited Hong Kong Governor Sir Murray MacLehose to Beijing as “the governor of Hong Kong” (Lane 85). China’s tone became even more civil, which was evident in Li’s request to MacLehose: “I hope that our friends in Hong Kong will invest in China” (Lane 86). PRC leaders reiterated their desire to MacLehose that Hong Kong participate in the PRC’s modernization plan, but when it came to the question of Hong Kong’s future status in light of the upcoming expiration of the New Territories lease, Chinese officials were publicly close-mouthed. However, the British officials decided to aid China in its quest to industrialize because they felt that both sides would benefit from an ensuing increase in trade.
         Hong Kong and China soon began to enjoy the benefits of the colony’s participation in the modernization of China. Hong Kong entrepreneurs were able to provide expertise and capital for joint venture projects on the mainland, since there were close ties between the two lands due to linguistic, cultural, and geographical similarities. As a result of this improvement in communication and collaboration, the PRC increased and changed the types of investments it made in Hong Kong. For example, in the 1970s investments in Hong Kong were mainly centered on transport, shipping, finance, and distribution. By the early 1980s, investments began to include a cigarette factory, real estate businesses, department store chains selling mainland products, printing presses, periodicals, gas stations, and a big trading organization called China Resources, which organized Chinese trade through Hong Kong. Furthermore, there were also many banks and insurance companies that were joint ventures with Hong Kong investors. In fact, between 1976 and 1981, the value of Hong Kong’s domestic exports to China multiplied 120 times, and the number of Chinese goods reexported from Hong Kong—now China’s “door to the world” because of its trade with Western and other Asian countries—comprised 31 per cent of the territory’s total in 1981 (Lane 88-89). Clearly, both sides were enjoying a significant increase in trade as a result of Hong Kong’s decision to help China reach its goal of modernization.
         In addition to profiting from Hong Kong’s entrepreneurship, China’s desire for respect from the international community was another reason why Deng and the PRC decided not to disrupt the status quo with England and Hong Kong. Because of China’s interest in improving its economy through modernization and increased trade, the Chinese wanted to show the world that the Communists could be “responsible” by not allowing the British control and presence in Hong Kong to slow down the development of Sino-British relations. Relations with the United States also improved when Americans saw the change in Chinese willingness to welcome foreign assistance and investment of technology, expertise, and capital. This peaceful strategy of improving foreign relations without allowing the “Hong Kong question” to interfere was an astute strategy, especially since Western nations would have likely condemned China if the Chinese had tried to reassert sovereignty over the colony. However, the Chinese knew such “aggression” could have damaged more important foreign policy goals, such as increasing foreign trade. Hence, by acquiescing to the British government’s control in Hong Kong, China avoided any unnecessary and potentially damaging international disputes while simultaneously reaping the benefits of increased trade.
         As relations between China, Hong Kong, and England improved through their growing entrepreneurial cooperation, the question of Hong Kong’s future inevitably arose. National reunification was still a top PRC policy goal, but China wanted to avoid the “Hong Kong question” because the Chinese feared that arguing over Hong Kong with England would only disrupt Hong Kong’s peace and prosperity from which China was profiting. Thus, when the question of the future of Hong Kong was pressed, Vice Foreign Minister Song Zhiguang reasserted that “Hong Kong is a part of China. . . . [W]hen the lease expires, an appropriate attitude will be adopted in settling the question” (Lane 87). Although the Chinese government still hadn’t been very direct about its plans for the colony’s future, Hong Kong and Chinese investors did not feel overly threatened because they continued to increase trade with each other. One thing the PRC did make clear, however, was that it was in everyone’s best interest to maintain the prosperity that both lands were enjoying, no matter what would transpire in 1997. Zhao Guanqi, director of the State Council’s Bureau of Government Offices Administration, commented, “Our government recognizes that whatever solution [is arrived at] for the future of Hong Kong, it must not materially change the livelihood of the people of Hong Kong. Indeed, any instability that may visit Hong Kong will be detrimental to us too” (Lane 88). However, because China was now internally unified and was quickly gaining economic strength, the time had come to answer the “Hong Kong question.”
         Answering the “Hong Kong question” was challenging because the English and Chinese argued over how Hong Kong should be transferred back to China. After the notion of “special administrative region,” or “SAR,” emerged, the debates during the SAR negotiations created much friction between England and China because Prime Minister Margaret Thatcher not only insisted on British sovereignty in Hong Kong, but also insisted that the New Territories Treaty signed in 1898 was legal. This outraged the Chinese government because China had swallowed a great amount of pride for many years while it remained too weak to recover its long-lost territory. Moreover, these British assertions were even more insulting because it was China that had taken steps to initiate civil diplomatic relations with England, even though they never saw English sovereignty over Hong Kong as legal. In fact, the Chinese still greatly resented how Britain exploited them, which explains why the true principle of Hong Kong’s transformation was really about China’s right to reclaim what veritably belonged to the Chinese. Thus, in response to Prime Minister Thatcher’s affront, the Chinese circulated an article entitled, “China’s Stand on the Hong Kong Issue is Solemn and Just.” The article repeated China’s feelings regarding English sovereignty since 1898:

These treaties, which were forced upon the Chinese people, provide an ironclad proof of British imperialism’s plunder of Chinese territory. The Chinese people have always held that these treaties are illegal and therefore null and void. . . . It was not until the founding of the People’s Republic of China in 1949 that the Chinese people finally won independence and emancipation. Now that the Chinese people have stood up, it is only natural that they find these treaties . . . unacceptable. (Lane 120)

Seeing how resentful the Chinese were, coupled with Hong Kong’s diminishing value to England, the English Parliament reconsidered its stand on Hong Kong.
         Hong Kong lost much of its importance to England when the Empire fell after World War II. For several decades, England had ruled many parts of the world, including significant Chinese territories. After forcing the Chinese to sign the New Territories Treaty in 1898, England had brought China into its sphere of influence. As a result, during the 19th century England monopolized China’s trade and held a formidable naval presence in Asia, especially in Hong Kong and Singapore. Although English dominance in this region began to weaken in the 1920s due to competition from American and Japanese goods, Great Britain still controlled one-third of China’s foreign trade. The English ultimately lost their dominance in Asia, however, because the destruction of World War II completely exhausted England’s military and economic resources, leaving the English so weak their colonial empire collapsed. Thus, as the former colonies gained independence, the power relationships between Britain and its former colonies changed, and Hong Kong consequently lost its strategic military and economic importance to England. As a result of Hong Kong’s diminishing value, in 1952 the British government abandoned its plan to defend Hong Kong against a full-scale attack from China by reducing its forces in Hong Kong to a level just barely capable of maintaining the internal security of the colony. The British took more steps that showed Hong Kong’s declining strategic value by reducing the garrison in Hong Kong from 30,000 in the early 1950s to 8,000 in the 1970s and thereafter (Tucker 65). England also closed its naval dockyard in Hong Kong and moved the ships of the British Royal Navy Forces to a harbor in Singapore. Another indication that Hong Kong had lost its importance to England was the fact that at one point only eight per cent of the members of the English Parliament bothered to attend a debate over the Sino-British draft agreement of the SAR (Tucker 67). Thus, due to Hong Kong’s diminishing significance to Britain, it was ultimately not a great sacrifice for England to sign the Joint Declaration in 1984.
         Although the Joint Declaration was the long-awaited answer to the “Hong Kong question,” the contract itself was inherently weak for several reasons. For example, in the Joint Declaration, China makes several references to the “high degree of autonomy” that Hong Kong will enjoy regarding such things as financial freedoms, land ownership, and trade. However, China also plans to withhold a significant amount of power from Hong Kong because the mainland will control the colony’s defense and foreign affairs, as well as make the ultimate decisions about who will have political power in Hong Kong: “[Hong Kong] will be given a high degree of autonomy. The chief executive will be appointed by Peking on the basis of local elections or consultations. This executive will nominate principal officials for Peking’s appointment” (Basic Law 2). However, the power that the PRC wants to exert in Hong Kong is conflictive with China’s definition of sovereignty as expressed in its legal journals: “[sovereignty is] the supreme power of a state to decide independently its internal and external affairs in accordance with its own will” (Bueno de Mesquita 56). Thus, according to the Chinese, to be truly sovereign a state must have the power to make its own choices. But if Hong Kong will not have the power to decide its own affairs—specifically its defense and foreign affairs—then the notion of being “highly” sovereign is meaningless.
         Another dubious component of the Joint Declaration is the notion of “one country, two systems.” On July 1, 1997, Hong Kong will return to China, but Hong Kong’s economic system is to remain unchanged. The United States and other Western nations are skeptical that an intolerant communist country like China can coexist with Hong Kong—which is capitalistic and democratic—because of the political suppression the PRC displayed during the 1989 Tiananmen Square demonstration. Western scholars also question Hong Kong’s future under Chinese sovereignty for economic reasons. Milton Friedman, an American Nobel Prize-winning economist, thinks the “one country, two systems” plan will inevitably fail because of the coexistence of two currencies in one country. He argues that two separate currencies “might be very desirable economically, but it’s almost inconceivable politically. . . . The only choice is for the Hong Kong dollar to be absorbed by the yuan and for Hong Kong’s foreign reserves and foreign assets to be taken over by China” (Bin 114). Although the West has openly admitted its concern for Hong Kong’s future under the “one country, two systems” plan, many politicians fail to examine all of China’s valid reasons for pursuing this goal.
         In 1984, Deng Xiaoping explained that China was intent on following the “one country, two systems” policy because both Hong Kong and China did not want to change their political and economic systems. Thus, if peace were to be preserved during the transformation, there would simply have to be two different systems. In 1984, the market sector was still very limited in China because its socialist system, under the leadership of the Communist party, was still planning much of China’s economy. Hence the “two systems” were interpreted as two different political and economic systems. Now, however, the mainland has developed dramatically toward a market economy. If the mainland’s economy catches up to Hong Kong’s economy by 2047, as expected, then China and Hong Kong will be economically similar. Deng argued that converging socialism with capitalism would actually help socialism develop more fully: “It is a supplement to the development of socialism that China pursues an open policy and allows some methods of capitalism to be introduced. It will benefit the expansion of the forces of production” (Wang 50).
         Deng was correct, because the two economic systems have indeed become increasingly interdependent and similar. Since China started opening its economy, Hong Kong has become a reliable source for China’s badly-needed foreign capital, accounting for 60-70 per cent of China’s total foreign investment in the early 1980s. Hong Kong has also benefited because 90 per cent or more of the colony’s investment in manufacturing is located in South China, where over three million Chinese workers are employed by Hong Kong companies. The economic interdependence between China and Hong Kong now consists of land masses with factories on the mainland and company headquarters and business offices in Hong Kong. Thus, perhaps two different political systems will continue to coexist after 1997, but the economic systems—especially between South China and Hong Kong—will remain similar because both sides have too much to lose if this economic connection were broken. However, what Deng failed to explain is how Hong Kong would benefit from being submerged into a socialist system, especially since the colony’s residents have enjoyed the benefits of democratic civil and political rights.
         In the SAR agreement, the PRC pledged to protect Hong Kong residents’ political and civil liberties, such as the “freedoms of speech, of the press and publication, freedom of association, of assembly, of procession and of demonstration” (Basic Law 27). However, it appears that the PRC wants to “revise” its promises to protect these freedoms. China has already decided to dissolve Hong Kong’s Legislative Council, which was elected under Governor Christopher Patten’s democratic reforms. The Beijing-backed committee to replace Hong Kong’s democratic legislature is currently deciding how it wants to amend the territory’s Bill of Rights. Many people in Hong Kong, such as the pro-democracy politicians, fear that personal freedoms may be lost as a result. Tung Chee-hwa, Hong Kong’s future governor, said he supports the Beijing-backed committee’s proposals to limit the scope of Hong Kong’s Bill of Rights and to reimpose the need for police permission for political demonstrations (Lucas and Ridding “Hong Kong's”). According to Mr.Tung, the requirement to obtain police permission is a way to find equilibrium between individual rights and social order. These actions by the committee and Tung clearly oppose the rights guaranteed in the Joint Declaration, which is why the Democratic party, the largest group in the Hong Kong territory’s legislature, said it could no longer expect Tung to fight for human rights (Lucas and Ridding “Hong Kong's”). Pro-democracy leaders feel that not only is Tung the PRC’s servant, but that the new attorney-general, Elsie Leung, is also a puppet of the PRC because she appears pro-China and is politically conservative like Tung. Leung, who was approved by the PRC, was publicly supported by Tung when he said, “The fact that she has a lot of feelings for China is perfectly all right. I am confident she will make sure the rule of law remains strong and gets stronger” (Lucas and Ridding “Tung's”). Hong Kong residents, however, are questioning which laws will get stronger and which will be expunged.
         The foremost question remaining is this: What will happen when China violates the Joint Declaration? China has promised that Hong Kong’s residents’ lives will remain virtually unchanged after the transition and that the rights they presently enjoy will be upheld. But China is infamous not only for its human rights abuses (which were made evident on a global scale with the Tiananmen Square incident), but also for violating many Sino-American contracts regarding music and software copyright infringements. The U.S. has argued with China over contract violations before and has also protested China’s human rights abuses, but mostly these objections have failed to change anything because the United States continues to grant China Most Favored Nation status. Hence, if China were to violate its SAR agreement with England, any protest the United States might bother to make would be futile.
         England would probably not protest to a great extent, either, if its agreement with China were broken. For reasons discussed previously, Hong Kong is no longer politically critical to England’s status in the international community. Thus, if China violated the Joint Declaration, England’s paramount concern would be the possible financial consequences. However, since it is in China’s best interest that trade remain undisturbed during and after the transition, it is highly unlikely that China would violate any part of the SAR agreement that could diminish trade with England.
         For almost a century China has experienced different phases of socio-economic-political changes shaped by various internal and external political forces, ranging from Republicanism, Nationalism, and Communism to colonialism and military occupation by foreign forces. England’s control of Hong Kong has been a thorn in China’s side for many years, but now that China is internally unified, has a formidable military, and is able to concentrate on economic reforms, nothing is going to stop it from reclaiming its long-lost territory. However, it is not only for economic and political reasons that China is determined to recover the colony; national pride has certainly been a significant factor throughout Sino-British relations since 1898 and clearly drives the Chinese to reassert sovereignty over the land that has rightfully been theirs all along.
         Therefore, I believe that China will do whatever it wants with Hong Kong after it legally returns to the mainland. China has swallowed a tremendous amount of pride since Hong Kong was literally stolen by England in 1898. When the international community recognizes Hong Kong as belonging to the Chinese on July 1, 1997, China will finally be free of English entanglements in Chinese-Hong Kong affairs. Hence, after the transformation, the PRC will have no reason to uphold the Joint Declaration because the promises made in the SAR agreement regarding the preservation of civil and political liberties were clearly a way to pacify the West’s concerns about human rights. It is simply illogical to think that China would permit such freedoms within Hong Kong when the authoritative PRC government denies these rights to its mainland citizens. In addition, since no other country is willing to risk its economic investments in Hong Kong by intervening in the transformation, China knows it is free to make any reforms it desires. In fact, China will likely repress rights in Hong Kong more than Deng Xiaoping and his fellow leaders had planned, because the PRC fears that democratic freedoms could cause “premature pressure for reform at home [in the mainland]” (Lucas and Ridding “Hong Kong's”). Furthermore, Deng’s successor, Jiang Zemin, is in a position in which he needs to secure his political support and power. Therefore, Jiang needs the transition to be successful—from the PRC’s perspective—if he is to retain his authority in Beijing. One politician in the colony lamented, “China simply wants to control Hong Kong. I can see the danger that when the Chinese leadership feels insecure about their own present position, they may adopt an even harder line” (Lucas and Ridding “Tung's”). Hong Kong, then, is literally at China’s mercy.

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