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Sunday, Aug. 24, 2003

Beijing betting that a better economy will calm restless Hong Kong democrats

HONG KONG -- China's strategy for dealing with the political situation in Hong Kong in the aftermath of the massive rallies last month -- when more than half a million people took to the streets -- is two-pronged: On one hand, Beijing is waging a massive economic campaign to prop up the Hong Kong economy. On the other hand, it is issuing strong statements warning people in the territory against attempting to step up the pace of democratization.

In a series of toughly worded commentaries in the official China Daily newspaper, Beijing has decreed that stability, not democracy, is most important. On July 10, the China Daily warned: "It is high time for the 'democrats' to cool down. If they cling obstinately to their course of creating disturbance, they will find themselves standing opposed to the people."

Four days later, another commentary warned the "democratic" camp against "transplanting Western political systems to Hong Kong." Then, on July 24, the paper warned ominously that "pushing too hard on democracy will be fatal."

Beijing is hoping that the mood in Hong Kong will change once the economy rebounds. And it is doing everything it can to make that happen. In fact, China was already taking steps to help the Hong Kong economy recover from the virtual downturn from which it has suffered since the territory reverted to Chinese sovereignty six years ago. On June 29, Prime Minister Wen Jiabao presided over the signing of the Closer Economic Partnership Arrangement between mainland China and Hong Kong.

The agreement, negotiated over a period of 18 months, was designed to give Hong Kong goods and services privileged access to the mainland market. Beginning next January, more than 90 percent of Hong Kong goods will be allowed into the mainland duty free. Moreover, the mainland has decided to open its market to services from Hong Kong several years before opening it to other World Trade Organization members.

After July 1, when more than half a million people took to the streets, Beijing decided to pull out all the stops to help the Hong Kong economy. It is allowing tourists from Guangdong province as well as Shanghai and Beijing to visit Hong Kong individually, rather than in tour groups, which is expected to result in millions of visitors a year.

Moreover, the central government has approved the construction of a bridge to link Hong Kong with Macau and Zhuhai, a project that should increase integration of the Hong Kong economy with that of the Pearl River Delta. Beijing is even telling Guangdong province to lower the price of the water that it supplies annually to Hong Kong even though, strictly speaking, the price is governed by a contract between the province and Hong Kong and does not involve the central government.

What lies behind all these steps is Beijing's assumption that the primary reason behind Hong Kong people's unhappiness is the state of the economy. They think that once the economy is buoyant again, calls for Chief Executive Tung Chee-hwa to step down will cease.

While many people are angry because of the economy, that is by no means the only factor. The fears aroused by the government's proposal for legislation on subversion, sedition, secession, treason and other offenses are genuine. Moreover, the middle class is deeply dissatisfied with the performance of the Tung administration not simply because of the economy but because the government has ignored public views, making decisions behind closed doors with no transparency.

One example is Tung's highly trumpeted decision, when he assumed office in 1997, to provide affordable homes by constructing 85,000 flats a year. The plan was dropped after real estate prices plummeted, but until today there has not been an official announcement.

Frustration built up over the years leading to widespread calls for more democracy. These demands are unlikely to die down even if the economy does recover. This means that a conflict between Hong Kong and Beijing may well be shaping up down the road if Hong Kong people continue to demand democracy and Beijing refuses to yield.

While stability is certainly important, the suppression of the yearning for democracy itself can turn into a destabilizing factor. Beijing may find it necessary to accommodate middle-class yearnings for democracy precisely because of the need to maintain stability in Hong Kong.

Frank Ching is a Hong Kong-based journalist and commentator.

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