28 October 2016
A man wraps himself with a Chinese flag in Causeway Bay in a show of anger at pro-democracy activists during last year's Occupy movement. Photo: Bloomberg
A man wraps himself with a Chinese flag in Causeway Bay in a show of anger at pro-democracy activists during last year's Occupy movement. Photo: Bloomberg

Why the China factor can be a drag on HK in Singapore rivalry

There have been quite a few calls on the Hong Kong government to draw on the experience and wisdom of Lee Kuan Yew, the founding father of modern Singapore who passed away recently.

The calls sound logical, given the seeming similarities between the two cities. But before we go further, we need to give some thought to the underlying reasons why Singapore has measured up better than Hong Kong in some aspects.

In terms of maintaining a competitive talent pool, Singapore can formulate immigration policies on its own, thanks to its sovereign independent status, a luxury that Hong Kong never had. Both the territories face some common pull factors like local elites being able to travel to Europe or the United States for better tertiary education, but Hong Kong is also beset with several acute push factors.

Hong Kong has always been a city of immigrants but people do not just stop here. Instead, many use the place as a stepping stone to their final destinations elsewhere.

During the second half of the 20th century the colonial authorities’ enhanced governance aligned with Beijing’s self-restraint to maintain Hong Kong’s unique status. This prompted a lot of emigrants to stay in the city and make it their home.

But political turmoil in the mainland since the 1980s triggered a wave of exits from Hong Kong. While there have been some returnees in the following decades, many wasted their time and expertise in the process. Recent years have also seen another noticeable spike in the number of outgoing Hongkongers.

Singapore is largely free from these adverse push factors.

Hong Kong’s woes largely stem from its massive neighbor across the border to the north. The mainland has a confounded and troublesome society which, once in a while, is not shy in displaying its vicious and ferocious nature.

Singapore’s neighbor Malaysia, comparatively, is not so massive in size. With a much bigger population, Malaysia’s economy is just two times that of Singapore. Out of historical disputes, Kuala Lumpur occasionally becomes less friendly, but that is already the worst scenario.

On the political front, the mainland is also tearing Hong Kong apart. After the Communist Party took over China in 1949, local communists have lost no time in growing their power while exploiting the locals’ awakening of nationalism.

Since the 1980s economic sweeteners from the mainland have been another well-trodden means to win locals’ hearts. All of these have turned 20 percent of eligible voters into core supporters of the pro-establishment camp. With coordinated efforts, up to 40 percent may vote for pro-Beijing candidates at local elections.

Thus, there has been a split between pro-communism/anti-communism and patriots/”traitors” in Hong Kong, and the feud and conflict between the two camps have become irreconcilable.

Singapore is lucky as it does not have a deep ethnical tie with Malaysia — ethnic Malays only make up 14 percent of the city-state’s population.

Lee Kuan Yew ruthlessly rounded up all the commies and nipped their activities in the bud shortly after his country gained independence, something impossible to the then colonial authorities in Hong Kong given that the city was separated from communist China just by a river.

Lee’s anti-communist purge paved the way for a cohesive society and his moves were also endorsed by Kuala Lumpur as commies were the common foes of the two nations.

The Western powers share a tradition of tolerating third-world dictators as long as a leader opposes communism. That was why they allowed and even trusted Lee’s autocratic rule. Singapore’s location as a port on the busy Malacca strait was also an advantage.

But in the case of Hong Kong, since the 1997 handover, the Western world has become mindful of the territory as the place is becoming more and more mainlandized.

Hong Kong economy used to lean on both Western economies and mainland. But now, as the city becomes increasingly reliant on China as the sole growth engine, it is prone to a much bigger setback if something goes wrong with the mainland economy.

Meanwhile, Kuala Lumpur-Singapore relations are on an equal footing. Singaporeans and the business community there do not need to worry about any bullying from their bigger neighbor.

Hong Kong’s external relations are far more complex as Beijing likes to stress its suzerainty and assert imperial power, and regards the territory as just its subordinate.

Beijing mouthpiece Global Times describes Hong Kong tycoons and their financial strength as “a tiny trickle compared with a vast ocean”. As China grows its economic muscles, local business titans have to heed Beijing’s opinions very carefully.

Independence and free will are at the core of capitalism and entrepreneurship. If businessmen are all rushing to pledge allegiance to Beijing in exchange of economic rewards, surely their proaction and stamina will be lost for good, and a major pillar of Hong Kong is gone.

Some would insist that Hong Kong does benefit substantially from the mainland.

The truth, I believe, is that these benefits come at exorbitant costs. The individual visit scheme, for instance, has brought a retail boom yet other industries and employees are being crowded out. In the end, only a few fat cats pocket all the gains.

The rise of China also dealt a crippling blow to the manufacturing sector. The dampening impact is not only felt in Hong Kong, but also in Japan, Taiwan, Southeast Asia and even in some European and American countries.

Hong Kong’s GDP has been growing, but not all social strata are benefiting from the growth.

Singapore is luckier in a sense as it will never be mandated to integrate into a system where corruption is rampant and the core values and way of doing things are vastly at odds.

This article appeared in the Hong Kong Economic Journal on April 13.

Translation by Frank Chen

[Chinese version 中文版]

– Contact us at [email protected]


A Chinese flag flies in Hong Kong’s Central district. Businesses in the city need to move carefully and be always on the right side of Beijing if they want to thrive. Photo: Bloomberg

Former full-time member of the Hong Kong Government’s Central Policy Unit, former editor-in-chief of the Hong Kong Economic Journal

EJI Weekly Newsletter