Sunday, April 14, 2013

Baroness Hong Kong

As the swinging 70s gave way to the more anxious 1980s, people in Hong Kong became increasingly apprehensive about a fast-approaching, though once comfortably distant, date – 1997, the expiry date for the vast (by Hong Kong definition) hinterland acquired in 1898 on a 99-year lease and still known as the “New” Territories.

Many businessmen were growing anxious about the uncertain impact of this impending change would have on business basics: would land leases be extended beyond that date (virtually all land in Hong Kong then as now is “crown” land and parceled out on long-term leases?) Would contracts be honored? More to the point: What did China intend to do with Hong Kong?
It was against this background that British Prime Minister Margaret Thatcher made her famous first visit to Beijing in September, 1982, to begin negotiating the future of the British colony with the Chinese Communist government of Deng Xiaoping. The meeting did not go that well.

Thatcher went to Beijing hoping to persuade China’s leaders that continuing British administration of the territory was necessary for the stability and prosperity of Hong Kong. The chaos of the Cultural Revolution, which essentially ended only with Mao Zedong’s death in 1976, was still a vivid memory, China’s revolutionary opening and reforms only just beginning.
She knew relatively little about China or Hong Kong, although she was undoubtedly briefed that China did not recognize as valid the 19th century treaties that had ceded Hong Kong island and the tip of Kowloon peninsula to Britain “in perpetuity” after the Opium Wars. She must also have known that   Hong Kong could not continue as a viable entity without the New Territories.

The prime minister,  however, seemed to think she had a duty to at least try to uphold the validity of 19th century treaties, that she claimed were still valid under any consideration of international law. The issue came down to sovereignty. Would Britain keep it beyond 1997, or would they have to surrender the entire territory?
For his part, Deng Xiaoping was unmovable on the notion that China would resume full sovereignty. Anything less would make him complicit in the treasonous territorial giveaways of the late Qing Dynasty. Otherwise, he was willing to grant generous concessions guaranteeing Hong Kong’s way of life and liberties post-1997 under his famous but never before tried one-nation, two systems formulation.

Much has been made in retrospectives following Mrs. Thatcher’s recent death of how the “Iron Lady” had met her match in Deng. This is unfortunate. To be sure Deng, a former revolutionary war commander, was a tough hombre. But in truth Thatcher had a weak hand, which she was smart enough to understand. As the British would say, continued colonial administration of Hong Kong was just not on.
It took two more years of difficult negotiations for the British to finally come around to this position. They were trying times. In October, 1983, when it appeared that negotiations might collapse, the Hong Kong dollar began to plunge in value. That led to the pegging of the currency at 7.8 to the U.S. dollar, a peg that continues to this day.

In 1984 London formally agreed to surrender sovereignty over the entire territory, which Thatcher confirmed in a letter to Chinese premier Zhao Ziyang. Later she made her second trip to Beijing to formally sign the Joint Declaration at a ceremony in the Great Hall of the People.
Thatcher had been out of office for seven years when the actual transition ceremony took place at midnight June 30, 1997, so she didn’t have to sit on the dais and watch the Union flag lowered for the last time. That role fell to newly minted Prime Minister Tony Blair. She was probably happy to be out of it.

In 2007 Thatcher gave an interview that expressed “regret” that she could not have persuaded China to accept continued British rule. But there is no shame in playing a leading part in what was one of the most enlightened yet practical acts of diplomacy in modern times. It gave Hong Kong people far more autonomy over their affairs than any of the so-called “autonomous regions” in China proper.
Most of the commentary on Thatcher’s death both in Hong Kong and China was laudatory. “We have no reason not to show our respect to this woman who signed the Sino-British Joint Declaration,” wrote the Global Times, an affiliate of the official government organ the China Daily.

Actually, the British political figure that Beijing truly hated was the last governor Christopher Patten (appointed by Thatcher’s successor John Major). He took a confrontational attitude tone with Beijing which hit back with such endearing terms as “sinner of a thousand years”. It will be interesting to see how the Chinese press handles his death, if it acknowledges it at all.
As Hong Kong and China look back on the nearly sixteen years since Hong Kong reverted to Chinese sovereignty, both find their worst fears unrealized but so too their best hopes. Many Hong Kongers, though recognizing that their basic liberties are intact, are still disappointed that the territory is only partially democratic with only vague promises if more to come later.

For its part, Beijing is happy that the territory has not become, as it had feared, a base to subvert the communist rule on the mainland. But it is a source of disappointment that their punctilious observation of the terms of the Joint Declaration has not earned them much love. Hong Kong people still think of themselves as Hong Kongers first and Chinese (as in citizens of the People’s Republic of China) second.
Indeed, tensions between Hong Kong people and mainland Chinese visitors have been rising in recent years as newly rich Chinese jack up property prices and hog space in maternity wards to give birth to “anchor babies”. Of late, protestors have taken to displaying the old British colonial flag. It is meant mostly to irritate Beijing, not nostalgia for colonial days. But one imagines that Thatcher would take a quiet satisfaction from the sight.

*Todd Crowell is the author of Farewell, My Colony: Last Days in the life of British Hong Kong





Thursday, April 11, 2013

Abe's Juggernaut

Ever since Franklin D. Roosevelt began his presidency in 1933 with an unprecedented burst of legislation and other government initiatives to try to stem the tide of the Great Depression, the “first hundred days” has been the benchmark for judging every new administration. Few if any have lived up to that demanding standard.

Japan’s Prime Minister Shinzo Abe is an entirely different kind of politician from the American model, facing an entirely different situation. Yet the start of his new government, which won a landslide majority in mid-December, has the much the same feel of the first frenzied 100 days, a benchmark that it passed on April 4.
In those 100 days Abe has not made one misstep. No cabinet member has resigned for making a gaffe or for even a minor scandal. It is about this time that the cabinet’s approval ratings begin to start the long decline into the teens leading to the boss’s resignation. The Abe cabinet’s ratings are actually climbing – 65 percent approval in the Asahi poll; 72 percent in the Yomiuri. It all seems very un-Japanese.

Abe knows the drill from personal experience, as he was the first of the recent spate of one-year prime ministers, serving from September, 2006, until he resigned in September 2007. At the time of his resignation, he was suffering from deep disapproval ratings, which translated into a major defeat for his Liberal Democratic Party (LDP) in that year’s House of Councillors election.
So it was a surprise when his party decided to give him a second chance, and it is evident that he used his several years in the political wilderness to reflect both on his own mistakes as premier but also, as an opposition member of parliament, the mistakes made by the predecessor government. He is said to carry around a booklet with notes on his mistakes as a reminder.

Of course, his government’s most far-reaching100-days initiative was his plan to bring the Japanese economy out of the doldrums, dubbed “Abenomics” even before the new government took office. He pushed for the early resignation of the Governor of the Bank of Japan and had installed his own nominee, Haruhiko Kuroda to head the central bank.
Kuroda has lost no time seeking to implement Abe’s inflationary monetary policy through aggressive buying of government bonds, essentially doubling its holdings in two years and doubling the amount of money in circulation. “This is monetary easing in an entirely new dimension,” Kuroda said at a press conference after announcing the bank’s decision on April 4. The bank is aiming for a 2 percent rate of inflation.

These plans of course, are not without critics, who wonder whether the injection of this much money into the economy will spark a corresponding increase in demand, leading to higher growth and more jobs. True or not, the decision feels like – indeed, it is – bold action, which sits well with the population used to the more timorous efforts of previous governments.
The concern over increasing demand is one reason for the second pillar of Abenomics, namely .more spending on public works and structural reformation. Neither h as really got rolling as yet, leaving some to worry whether the government is placing too much attention on monetary policy, to the exclusion of other tools. The spending is said to have opposition in the Ministry of Finance, which wants to return to deficit reduction as soon as possible..

Success depends a lot on bending the civil service to the will of the politicians. Ending “bureaucrat-led politics” was a main theme of the previous government, but it went about it in a clumsy way that alienated key civil servants needed to implement its programs. The Abe government has shown more finesse in managing the bureaucracy, partly by co-opting important bureaucrats into policy making.
Structural reform seems is more distant. The last real effort to reform the bureaucracy was former premier Junichiro Koizumi’s plan to privatize the postal service, a plan that died on the vine. There is, however,  a good chance for major restructuring of the electric power system, breaking the monopolies that Japan’s ten utilities have over individual rate payers.

Such a reform, recently endorsed by the cabinet, has momentum because of the unpopular rate hikes that utilities need to cover the costs of importing fossil fuels to replace the power from the 48 nuclear reactors that are shut down. More money is needed to comply with stricter safety measures to be promulgated this summer so that some of the plants can return on line.
Nor has Abe neglected foreign policy. His administration kicked off with an unprecedented diplomatic blitz that took high-level LDP leaders, including Abe himself, to visit half a dozen Asian countries. Abe has maintained the pace by visiting the United States, Mongolia, and soon a trip to Moscow.

It is widely predicted that he and President Vladimir Puten will reach an agreement resolving the long-standing territorial dispute over the southern Kuril islands, known to Japan as the “Northern Territories.” The proposal on the table would essentially divide the four disputed islands between the two countries.
If Abe is able to come back with such an agreement, it would be a triumph and a major boost for his party in the run-up to the July election for half of the House of Coincillors, the upper house of Japan’s bicameral parliament. Considering that Abe resigned his first government after a poor showing in the 2007 election, any major success this time would certainly be sweet. “I cannot die without winning,” Abe has said.

One of the lessons Abe learned from his first tour as PM, was to put domestic, economic issues ahead of his conservative hobby horses, such as amending the American-written constitution and watering down its pacifistic provisions. He has shown considerable self-restraint during the first 100 days from pushing these ideological issues, but he had not abandoned them.
Once the upper house election is out of the way, he may pivot back to these issues feeling that having satisfied the public’s main economic concerns with his initial initiatives, that the public will give him some slack when it comes to his more ideological priorities.