Why China might be willing to sacrifice Hong Kong's economy: Don Pittis

Would China be willing to kill the golden goose that is Hong Kong just to crush democracy? Don Pittis argues China can save Hong Kong's prosperity and its democracy.

China can save Hong Kong's prosperity and its democracy

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      Would China be willing to kill the golden goose that is Hong Kong just to crush democracy?

      For now, the demonstrators have been given a reprieve, as the authorities try to wait them out. But I am convinced that if China feels truly threatened, economic considerations alone will not rescue the territory.

      Certainly Hong Kong produces golden eggs for China. It is China's little bit of the developed world.

      Hong Kong people are richer than Canadians. According to the International Monetary Fund and the World Bank, Hong Kong's wealth (as measured by GDP per person) is higher than that of the United States or Canada.

      The former British colony has capital markets that are in many ways as sophisticated New York or London, and they continue to serve the Chinese economy.

      "It accounted for two-thirds of foreign direct investment into China last year, up from 30% in 2005," The Economist calculated this week in an editorial insisting that the Hong Kong economy remains vital to China.

      What will China's leaders do?

      Not only that, since 1997, when Beijing took political control, Hong Kong has been China's wholly owned subsidiary, repeatedly transferring the lessons of a free market economy to its parent.

      Tens of thousands of pro-democracy demonstrators, some waving lights from mobile phones, fill the streets in the main financial district of Hong Kong, Oct. 1. While Hong Kong produces golden eggs for China, could the country's leaders kill that golden goose to ensure their rule? (Vincent Yu/Associated Press)

      The Economist and many others have warned that a savage crackdown on pro-democracy demonstrators would change Hong Kong forever, as foreign capital and corporate headquarters look for new, less-brutal Asian bases. Hong Kong's Hang Seng Index is already at a two-month low.

      But is fear of damaging that vibrant economy enough to stop China's Machiavellian leaders? This is what Martin Lee, founder of Hong Kong's Democratic Party, had to say about it:

      "When they feel that their own position is being jeopardized like that, they are going to sacrifice the economy of their own country in order to make sure they can hold on to power," said Lee.

      "That being the case, if they can sacrifice the economy of China, of course they can sacrifice the prosperity of Hong Kong."

      Hong Kong, 25 years after Tiananmen

      Lee could have said that yesterday. But the quote comes from nearly 25 years ago, in a documentary I did for CBC Radio's Sunday Morning about fears over what would happen after China took control of the crown colony in 1997.

      In those days, we filed our stories by sending cassette tapes by plane, and the production values are frankly a little embarrassing. But it is fascinating how accurately the people I interviewed at the time predicted the conflict unfolding in the streets of Kowloon and Central this week.

      Back then, Beijing partisans insisted the Basic Law – the rule book for Chinese Hong Kong – was about stability, not democracy. Businesses were looking for safe havens. Democrats worried that Hong Kong leaders would merely be Beijing's puppets. Independent analysts gloomily predicted the gradual erosion of the territory's freedoms as China's grip tightened.

      In that radio doc a quarter of a century ago, I quoted Nicolo Machiavelli, author of The Prince, who offered instructions to an autocrat who had taken possession of one of the free Italian cities.

      A woman tries to show her son the massive protest in Hong Kong, Oct. 1. (Wally Santana/Associated Press)

      "He who becomes master of a city accustomed to freedom and does not destroy it, may expect to be destroyed by it, for in rebellion it has always the watch-word of liberty and its ancient privileges as a rallying point, which neither time nor benefits will ever cause it to forget."

      Ordinary Hong Kongers have enjoyed wealth and liberties that are inconceivable in the rest of China, and are unwilling to relinquish them.

      To reuse the cruel methods employed in Tiananmen Square in June 1989 would only entrench the longing for the institutions of freedom in Hong Kong. As Patrick Brown pointed out, the contrast between the freedoms of Hong Kong and the rest of China is stark.   

      But many things have changed since 1989. Back then, believing the protests could overthrow the regime, Beijing acted out of fear. Twenty-five years later, China is more powerful, rich and confident, and could in fact turn the current crisis into an opportunity.

      Hong Kong as a living experiment

      Of all the Asian tigers that have gone through the same economic boom as China — Singapore, Taiwan, South Korea — all have gradually changed from autocracies to democracies. As I`ve written before, as wealth and education spreads, it seems like a natural progression. The benefits of democracy as a tool for managing a complex economy are too valuable for China to ignore.

      A gradual concession to local democracy will not change China's ultimate power in Hong Kong. No foreign government is crazy enough to step onto China's doorstep for a fight. The Basic Law makes clear that Beijing controls foreign policy and the army.

      Protesters sit in front of closed shops in the popular fashion district in Hong Kong, Oct. 1. Those aren't the golden eggs that hang above the students. (Vincent Yu/Associated Press)

      Here is a chance for China to use Hong Kong as a living experiment, building upon the region`s existing market economy and relative freedoms to forge a kind of democracy that could work in China.

      Rather than alienate them, Beijing should harness the energies of the young people of Hong Kong. These are the true assets of a diverse and global China, with an understanding of the tools of liberal democracy and an understanding of Beijing. They will make China's future bright.

      As Machiavelli also said, "He who would keep a city accustomed to freedom will hold it more easily by the means of its own citizens than in any other way."

      And as an added benefit, China will continue to have a goose that keeps laying golden eggs.

      About the Author

      Don Pittis

      Business columnist

      Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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