Tuesday, December 06, 2005

Regimes and Change

-- yuan --

Now that I am back in the good old USA, I feel free to note a few things about the government presently in custody of Hong Kong. Not that my opinions won’t be thoroughly predictable, but it is important for people to understand why, while is indeed the Pacific Centuryt, it bodes better for America than China in that regard.

Hong Kong has a less than perfect birth story. In short order, when the British Empire found it difficult to import Opium into China in exchange for the goods it desired, because of opposition from the Celestial Court, the Crown set up the island of Hong Kong as a port city under its firm control. The Chinese Emperor was unable to dislocate the island fortress, and summarily a treaty was drawn up, which made Hong Kong a British protectorate until 1997, when it reverted to China. It should be understood, however, that there essentially was no such city as Hong Kong before the British built it up, and this has everything to do with the character of the island.

China wanted Hong Kong back for two main reasons; pride and profit. Pride, because a foreign foothold on Chinese soil was perceived as an insult, and profit because Hong Kong was a shining diamond among Asian cities for commerce, banking, commodities, and all manner of investment. Even the Politburo in Beijing understood the value in holding Hong Kong, which is why Hong Kong is an “autonomous” region, which in practical terms just means that Beijing still runs things, but differently than other areas.

The first five years back under Chinese rule were abysmal. The mainland government very nearly killed the golden goose, with heavy restrictions on business and even heavier taxes. It is no surprise that many businesses moved the bulk of their capital into Malaysia, South Korea, and Thailand, where the governments were more welcoming and better eductated in business priorities. But China gradually came around. Using Shanghai as an economic laboratory of sorts, lessons were learned and the Beijing government set up offices to approach targeted businesses directly, trying to lure strategic industries and investors to the city which once represented the pinnacle of business in Asia.

But the Midas touch has a problem for the Communists. You cannot handle large amounts of money at close hand without considering what it can do, and money has always bought a sort of perspective which clashes with the sort found in the Little Red Book. Beijing has discovered it is all but impossible to give people access to computers, faxes. and satellite reception on a wide scale, and still expect to control the flow of information and communication. The next Tienemen Square will not take place in a stone plaza, but across a network of chat rooms, and there is no way to get a division of tanks there.

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