Posted:  Oct. 8, 2010


Just as the dynamics of Hong Kong’s political reform debate progressed among democrats throughout the summer, so too did a countervailing force that has worked against their movement and its forerunners for a hundred years.  Since the rest of the world usually thinks about Hong Kong primarily in economic terms, and since it is home to one of Asia’s richest most dynamic economies, the consequences in terms of political inertia are rarely considered.  In fact, Hong Kong’s business community always stood as a bulwark against reform both political and otherwise whenever governments and politicians seemed tempted to let down their guard against it.   The present is such a time, given Beijing’s delayed-action promise to allow universal suffrage elections by the end of the decade, and business leaders are trying to strengthen their hand accordingly.   The summer’s events showed both how the ground has begun to shift beneath their feet and how they are digging in their heels to keep from sliding further down the slippery slope.

The most striking sign of Hong Kong’s shifting mood was the negative response to Chinese President Hu Jintao’s meeting with Hong Kong mega-tycoon Li Ka-shing.   More important in real-life terms, however, was the successful culmination of a long struggle to pass Hong Kong’s first ever minimum wage law.    But far from sounding a retreat, Hong Kong’s business community had already begun mobilizing its forces to hold the line.

After serving as target practice for democrats’ year-long campaign to “Abolish the Functional Constituencies,” their representatives rallied in self-defense during the final Legislative Council (Legco) session that approved the compromise political reform package (June 26 post).   Ordinarily, the FC legislators who speak for business, industry, finance, and related professions are not enthusiastic participants in political reform debates.  But rather than leave the field to feuding democrats during the dramatic June 23-25 finale, conservatives answered the challenge with speeches of their own deploring the “demonization” they had suffered during the past year and affirming the virtues of functional representation.  Afterward they sent a delegation to Beijing where they repeated their demand:  “Functional Constituencies, forever,” with or without universal suffrage!


              A decade ago, meetings between Chinese officials and Hong Kong’s business elite were accepted as normal and welcomed as indicators of Beijing’s goodwill toward its new Special Administration Region.  In contrast, the September 6 one-on-one meeting between Hu and Li, billed initially as a rare honor, provoked days of angst and critical commentary.  The occasion was a grand celebration to commemorate the 30th birthday of Shenzhen, Hong Kong’s Special Economic Zone neighbor, which pioneered China’s new capitalist-inspired export-led economic reforms.  The experiment also capitalized on its proximity to Hong Kong’s entrepreneurs who began what would become a global trend by moving their production lines to China.

Partly the bad press was inspired by the business community itself since Li is only one of many who made the experiment a success and President Hu’s message was one of thanks.  He might at least have done a group photo, they said.  But across the political spectrum the more common response was dismay at the unspoken message conveyed by President Hu’s fulsome praise for Li’s past and anticipated future contributions to greater China’s prosperity and economic integration.  The image of big government in alliance with the biggest of all entrepreneurs was an unwelcome reminder of all that seems wrong with present day Hong Kong’s political economy.*

How can this be, asked television host Michael Chugani in mock surprise, is Hong Kong becoming anti-business?  An unthinkable thought, of course.   But Hong Kong’s mood shift derives from the combination of increasing economic inequality and an increasingly articulate political community sensitized by the past year’s consciousness-raising reform campaigns.   Those two, economic and political, trends can also be traced directly to China’s growing influence here, which includes both the impact of its surging economy and Beijing’s now openly-exercised veto power over political reform.  Oblivious to these concerns, Hu’s meeting with Li symbolized perfectly the source of Hong Kong’s growing impatience with a system that seems resistant to meaningful change.

Anywhere else, the Hu-Li meeting would have been chalked up as a public relations fiasco.  Whether Hu Jintao’s staff regards it as such is open to question, but billionaire Li Ka-shing remains aloof from such concerns.  So extensive are his holdings in everything from property to grocery stores that a popular pun on his name refers to Hong Kong as the “Li Family’s City.”


            Some businessmen and women did get the message, however, after one of their own suggested that Hong Kong’s minimum wage should be set no higher than HK$20 per hour (US$2.50, calculated at HK$7.80:US$1).  The man in question was Tommy Cheung Yu-yan speaking last March at a Sunday noontime City Forum event in Victoria Park (Apple Daily, March 22; Ming Pao Daily, March 27).  The topic for the day was the government’s minimum wage legislation, which was working its way toward final approval after years of resistance from the business community.

Cheung is vice-chairman of the pro-business Liberal Party  and FC representative in the Legislative Council where he speaks for catering industry employers.  Since fast-food restaurant workers (along with cleaners and security guards) are among the lowest-paid in Hong Kong, he was only doing his duty by speaking for his constituents.  But poor Tommy “Twenty Dollar” Cheung became an instant success as poster boy for the anti-FC campaign, used to illustrate how the power granted to special interests in an unfair political system was depriving Hong Kong’s most vulnerable of a fair wage.  Cheung’s catering constituency has a total of 7,984 electors who also inspired his outspoken resistance to a new restaurant smoking ban and food labeling law.   The number of low-income earners who would receive a pay raise if the wage is set at $28 per hour is estimated to be about 270,000 of Hong Kong’s 2.78 million workers.   Their median hourly wage is $58.50.

The history of labor relations here is almost as convoluted as that of political reform.  Working conditions have nevertheless improved gradually and are now by comparison with the sweat-shop 1950s and 1960s era as different as night and day.  But the struggle has been long and arduous and has focused during the past decade on the working poor.  In 2006, the government launched a “wage protection” movement. Employers were supposed to increase pay levels voluntarily and the government promised to introduce a mandatory wage if the idea failed, which it did.  The result is Hong Kong’s new law, approved by legislators after a marathon 41-hour debate, July 14-17 ( ).   The only dissenting vote was cast by the tourism sector’s representative Paul Tse.  In order to win the approval of his colleagues in the FC half of Legco, however, democrats and unionists had to compromise.  Consequently, the law does not specify a minimum wage but only that a government-appointed labor commission will fix the level, subject to review every two years.   Employers are lobbying for a $24 minimum and unions for $33.  The figure, soon to be announced, has reportedly been set at $28 and will go into effect next year.

Within the business community, Liberal Party leader Miriam Lau is among the most articulate in bridging the distance between old-style conservatives and those who understand the political need for a kinder gentler face.  She had quickly distanced the party from Cheung’s “twenty dollar” gaffe and is among those now acknowledging that Hong Kong’s growing wealth gap is “shameful.”  But Miriam Lau is also little different than Cheung in saying that $24 is a high enough minimum.  Like him she also says the government, not business, should be responsible for alleviating the growing gap between haves and have nots.  And like him she maintains, as the business community always has, that a minimum wage will actually increase poverty by increasing unemployment because employers will not be able to meet the higher wage bills.

As for poverty levels, a study just issued by the Hong Kong Council of Social Service revealed that during the first half of 2010, there were 470,000 “poor” households, defined as living on less than the median income of HK$3,500 per person.  About 18% of the population or 1.26 million people earn less than the median, up from 1.18 million people a decade ago.  The minimum wage will surely help, says council director Christine Fang  —  unless the argument against it proves correct.  Unionists counter that if it does, the real culprit will be rising rents and property values, not wages. But to mention rents and property values is only to move from one hot button populist concern to another.

The housing problem impacts those “median” households more than the poor who can at least qualify for public accommodation.  The term “sandwich class” was coined years ago to describe families who earn too much to qualify for public rental housing but not enough for anything else.  This has become a major issue among the post-1980s generation of educated young people who suddenly sprang to life last January with their protest against the new high-speed super-expensive railway project that will link Hong Kong with the rest of China.  Most are not unemployed and are earning salaries well above the minimum, but they complain that if they worked a lifetime they would still not be able to afford even a small apartment at today’s prices.

Such grievances inevitably lead the debate back to people like Li Ka-shing and other big property developers who hoard the land that only they can afford to purchase at government auctions, squeeze the maximum profit from every project, and engage in deceptive sales practices for their finished products.   Developers also thrive on the speculative hot money pouring in from across the border that is pushing up prices at the top end of the market and prompting everything else to rise as well.


        Defenders of Hong Kong’s political economy are nevertheless undaunted by its populist critics and unapologetic in rallying to its defense.   The FC half of Legco was actually conceived as the functional equivalent of a two-house system like the American Senate or the House of Lords in Britain.  But anyone looking for elegant disquisitions on wisdom and virtue by FC legislators during the June summation debate would have been sorely disappointed.  The FC system has a practical purpose and its representatives have no higher pretentions.

Chim Pui-chung speaks for the financial services sector and has never been one to mince his words.  Beijing understands that the people of Hong Kong “do not welcome socialism with Chinese characteristics,” he said.  They favor capitalism and who represents capitalism?  We do:  “businessmen and the business sector,” and the FCs represent their interests.  To abolish the FC system would be to deny those interests in favor of a “social welfare system with Hong Kong characteristics” (June 25:

Pan Pey-chyou, one of three labor legislators, defended the FCs as a “microcosm of society” representing both rich and poor.  Nor would a universal suffrage system without FCs necessarily guarantee social justice, if India and the Philippines are any indication.  Without FCs, the power of big capitalists would be upheld by a lobby system as in the United States, and that would not necessarily guarantee Hong Kong a better-run economy either.  Pan represents the pro-Beijing Hong Kong Federation of Trade Unions (June 25:

Jeffrey Lam, one of two commercial representatives, rejected pan-democrats’ charge of collusion between business and government as an exaggeration intended to demonize and trivialize the work of FCs.  Business and industry were pillars of the local economy and their representatives had worked conscientiously with government in the public interest (June 24:

Andrew Leung, speaking for industry, agreed.  FCs were a unique political institution without parallel anywhere else in the world.  But why should that matter?  Legislatures in different countries differed because their situations were different.  “We, members of industrial and business sectors, maintain that political parties are unable to represent us” (June 24:

Old-line conservative Philip Wong may not have the last word on the subject but if so it will not be for want of trying. In the mid-1980s he had participated in drafting Hong Kong’s Basic Law constitution and now argues to retain what he says is its original intent.  The FCs and their legislative veto power were designed to balance interests and impose “reasonable restraints on motions that would harm the long-term development of Hong Kong.”  Maybe pan-democrats do not understand this, he said, but the Basic Law contains not a word about abolishing this system.  “The majority of members of the industrial and business sectors feel that FCs should be gradually perfected and retained …” (June 24:

A month later, representatives from Hong Kong’s Chinese Manufacturers Association visited Beijing where they lobbied officials telling them to ignore pan-democratic demands to abolish the FCs.  They were so valuable a feature of the Hong Kong system that they should be retained indefinitely (Ming Pao Daily, July 21, 2010).

* HK Economic Journal, Sept. 7, 8; Ming Pao Daily News, Sept. 7, 11; South China Morning Post:  Bernard Chan, Sept. 10, Albert Cheng, Sept. 11, Wang Xiangwei, Sept. 13.

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