Hong Kong’s Handover Stands the Test of Time

Hong Kong's Handover Stands the Test of Time

By measure of an historic 20-year period Hong Kong and China have done a solid job in a One Country Two Systems world. 

Twenty years is a long time in any person’s life – never mind that of a nation or of our world. That is especially true at a time when it seems like technology drives everything forward at a quicker and quicker speed. That is possibly the most relevant thing I can think of saying on the eve of the 20th Anniversary of the Handover of Hong Kong to China. 

On that day two decades ago I was a younger man who had finally made the full time move from Canada to Hong Kong and Beijing. I was invited with my Chinese wife-to-be to a Handover party on an amazing yacht lent by a Malaysian tycoon to a British friend in the financial services area. It was a rainy day in Hong Kong harbor and the free flow of champagne made for a warm atmosphere aboard this luxurious vessel.

It was from this drizzly perch that I calmly watched the clouds roll across Fragrant Harbor as proceedings unfolded on this most landmark day. There was a sense of history the air, the dawning of a new era, and no one was quite sure what it would mean, least of all a collection of young Western expats, most of whom were either from the United Kingdom or one of the many colonies of the former British Empire.

Looking Back

To celebrate the Handover event, I published a cover story called “Two Worlds, One China” in my China Capital Markets & Investor Relations Review, the premier bilingual financial magazine circulating in China at that time. The magazine was out and it was testament to a historic moment, filled with views from the leading financial voices from China and Hong Kong.

“The steaming weather of South China in the summer of 1997 is nowhere near as hot as the world’s expectations over the return of Hong Kong to Chinese sovereignty,” I wrote in the Editor’s Letter. “Over the last century, Hong Kong has risen from its status as a small trading post to a renowned economic, financial and trading dynamo. During this same 100 year period, Mainland China has transformed from a weak imperial nation founded on feudalistic principles into a strong nation that is creating the world’s largest economy. Through different experiences and development paths, the Mainland and Hong Kong have thrived in two different worlds.

“In order to smoothly integrate the powerful capitalist machine that Hong Kong has become into the socialist market economy, the Chinese government has designed the One Nation, Two Systems principle. This guiding formula will rule Hong Kong for the next 50 years. Whether this creative structure is successful will become a focal point of China watchers from now until deep into the 21st century. How the systems of China and Hong Kong will unite under one nation and promote each other’s prosperity and development, and how Hong Kong will serve the development of the Chinese economy, is a story that will take years to unfold.”

Well, 20 of those 50 years have unfolded. Of that watershed, I guess the second most profound thing I can say is that 20 years later I remain in Hong Kong, a testament to the success of the One Country, Two System principle and experiment. The hospitality this city – and China for that matter – has shown me, and continues to show me, is remarkable.

Sure, many things have changed over this period, but much has remained the same – relatively speaking. That was one of the things running through my mind when I met Lord Patten in London for this SBR issue. For me it was a crowning achievement to meet the man I admired and had watched from afar aboard that Malaysian yacht on that significant day.

Hong Kong has certainly gone through its paces during this period. The city has a more Mainland flavor with more tourists, more China residents and much more business emanating from north of the border. All in all, prosperity has been maintained, property prices remain at a high (up 100% since 1997), and despite the power of financial centers like Shanghai and Shenzhen, Hong Kong remains China’s window on the world. 

This is important at a time when the Chinese nation is globalizing at an incredible rate. The outflow of tourists, globalization of investments and the mark that China’s enterprises have made on the world in this emerging era of One Road, One Belt has increased the importance of Hong Kong. While Chinese have crisscrossed the globe, building infrastructure and finding business opportunities, there is a certain comfort for Mainlanders in the global arena to stage this initiative from Hong Kong.

20 Year Perspective

That’s what happened to Hong Kong – more or less – in the last 20 years. And, it all seems particularly tame compared to what we have witnessed in other parts of the world during this same period. 

First, there was a series of financial crises to live through. The Asian Financial Crisis started almost immediately after the Handover ceremony and called into question the Asian success story. This was followed by the dotcom bust at the turn of the millennium and the much more serious events of 2007-2008, a financial meltdown led by the US and considered as the worst since the Great Depression in the 1930s. What first started in American sub-prime mortgage markets led to a banking confidence crisis that came close to collapsing the world’s financial system.

Once the storm of 2008 was weathered it was time for the economic trials and tribulations of the Europe Union to begin. Greek, Spanish, Portuguese and Italian crises have all caused concern for an implosion of the EU financial system framework. Further damage was done at the very tail end of the two decades with Brexit. We are still living with the fall-out of these events and there is no end in sight as EU leaders search for solutions.

Life in the geopolitical world has fared little better. The tragic events of 9/11 kicked off a series of major conflicts in key parts of the world, mainly related to, but not limited to, the Middle East, Afghanistan and Pakistan. More than 15 years after the September 9/11 Twin Towers collapse, we are still living in the fall-out, with, once again, no end in sight to terrorist attacks around the world and dangerous global conflicts.

Another Two Decades

It was not all doom and gloom over the last 20 years, at least no more than is evident in any slice of history. There were numerous positive highlights for the planet during this period in terms of amazing technological developments, impressive health care advances, exciting global sporting events, positive interchanges of cultures, and last but not least the economic miracle that The Last Hong Kong Governor Chris Patten calls “one of the two most significant events in his lifetime”. 

The good always comes with the bad when taking a two decade historical snap shot, but I guess the point here is that from the eyes of a Canadian expat who has lived in Greater China for all this period, there is a lot more good and very little bad to speak of. And, I would add, in a rough poll of those around me who have spent the last 20 years in Hong Kong the same could be said.

Now, what about the next two decades? Well, with any luck, and betting on the average life expectancy of a man on the global highways and byways in a business filled with stress, I hope to write about this in 2037.

What will Hong Kong look like in 2037 – some 20 years from now? Where will China be at that point in the future? What will the rest of the world look like then? I have no idea, echoing the words of Lord Patten once again. However, given that all of you will have forgotten this column and not hold it against me, I will make a prediction – Hong Kong will remain prosperous and important to China, the Mainland will continue its economic emergence with the usual speed bumps in the road and the rest of the world will repeat history.   

 

David Lake, SBR Editor-in-Chief, has worked in media for over three decades, published five books and contributed to leading business publications in New York, London, Tokyo and Hong Kong. Current duties include managing a range of media businesses in China, Central Asia, Turkey, the Middle East and Italy. In the Lake Lament's column he brings unique insights to the world of business and finance, drawing from his long experience in global markets, with a particularly focus on Mainland China events.

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