Contents

256 Public Administration in Southeast Asia

13.1 Introduction1

The establishment of the Hong Kong Special Administrative Region (the Hong Kong SAR) on July 1, 1997 is a political and constitutional milestone in the history of the People’s Republic of China (the PRC). Hong Kong and Macao are granted the policy of “One Country, Two Systems” (OCTS) so that under Chinese sovereignty, the two areas would continue with their capitalist economic and social systems and enjoy “a high degree of autonomy” for 50 years. The OCTS policy constitutes an important experiment of local autonomy in a unitary and socialist state like the PRC.2 Hong Kong’s experience in implementing OCTS since 1997 shows a tortuous path in maintaining autonomy within a unitary Chinese state governed by the Chinese Communist Party (CCP). This chapter is an overview of the changing relations between the central government in Beijing and the Hong Kong SAR since 1997.3 My overall observation is that the Hong Kong SAR does enjoy a very high degree of autonomy, but its autonomy varies across different domains. Hong Kong’s autonomy is much more evident in socio-economic and external affairs, but its autonomy over political and constitutional matters is much more subject to constraints imposed by the central government. The strategy of the central government toward Hong Kong has also shifted over time. This chapter has four parts. Part one introduces the historical context of the OCTS policy for Hong Kong. Part two discusses the key characteristics of the formal constitutional framework for OCTS set out in the Basic Law, the mini-constitution of the Hong Kong SAR. Part three examines the changing interactions between Beijing and Hong Kong in four areas, namely, the constitutional, political, economic, and external dimensions, and their implications for OCTS. My conclusion in part four discusses the implications of Hong Kong’s experience in implementing the OCTS policy in the past decade and explores its prospects.

13.2Historical Context of the “One Country, Two Systems” Policy

The cession of Hong Kong to the British under the Treaty of Nanjing in 1842 marked not only the beginning of China’s humiliation by western powers with the conclusion of a series of unequal treaties, but also the metamorphosis of this small fishing village into a trading port in south China. When the future of Hong Kong emerged as an issue in the late 1970s, Deng Xiaoping, China’s preeminent leader at that time, proposed the OCTS model as a pragmatic strategy to reunify Taiwan, Hong Kong, and Macao in view of the huge socio-economic gap between Mainland China and these areas at a time when China began to open up and reform its socialist system.

After the Sino-British agreement on Hong Kong’s future was signed in 1984, Hong Kong entered into the transition period. However, the city experienced many more ordeals before rejoining the Mainland in 1997, of which the most important was the political crisis in China in spring

1The author would like to acknowledge the support from a Small Project Fund from the University of Hong Kong and the research assistance offered by Kelvin Sit. In particular, I would like to thank Dr. Kitty Poon for sending me her latest book and to Professors Albert H. Y. Chen and Sonny Lo Siu-hing for sharing

their recently published works and offering valuable comments on an earlier draft of this chapter. All the remaining errors are the author’s sole responsibility.

2This section draws from any chapter, “Towards Federalism in China? The Experience of the Hong Kong Special Administrative Region (Cheung, 2007)”.

3Given the limitation of space, I can only highlight the key issues in this complex, evolving relationship, rather than provide a comprehensive analysis.

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(Ghai, 1998: 32). The maintenance of Hong Kong’s capitalist economic system after 1997, rather than the preservation of autonomy per se, constitute the primary goal of the central government (Ghai, 1998). The Basic Law of the Hong Kong SAR is the mini-constitution promulgated to implement the basic policies of the central government toward Hong Kong and it is meant to guarantee its separateness under OCTS. For instance, Article 22 maintains that no offices or local authorities of the Mainland may interfere in the affairs of the Hong Kong SAR that it administers under the Basic Law, and Mainland residents who want to enter into the Hong Kong SAR must seek approval. The Hong Kong SAR is granted a much wider range of powers than constituent units in a federation, although the central government, like other federalist governments, would be mainly responsible for diplomacy and defense. For instance, the Hong Kong SAR has powers in final adjudication, its own monetary and financial system, and a separate customs and immigration control mechanism. Hong Kong is neither taxed nor regulated by the central government in Beijing. Its extensive powers in external economic relations include a convertible currency as well as membership in key international bodies such as the World Trade Organization (the WTO).

The constitutional foundations for Hong Kong’s autonomy are to be provided in the Basic Law. According to Yash Ghai (2007: 4), autonomy is “self-government, where within the division of responsibilities between the centre and the autonomous area, the inhabitants of the autonomous area are free to make policy and organise and run the government.” However, other important conditions critical for maintaining autonomy, such as a democratic government, a clear division of powers, and an independent mechanism to adjudicate central-local disputes, are absent in the OCTS model. Although the Basic Law pledges that the adoption of universal suffrage in electing both the chief executive and the legislature is an ultimate goal, the political system designed in the OCTS model is not a full democracy (Chen, 2003).4 The first chief executive was elected by a committee of 400 people and the second and third chief executive by an 800-member Election Committee comprised of four professional and societal sectors. These four sectors are: (a) industrial, commercial, and financial sectors; (b) the professions; (c) labor, social services, religious, and other sectors; and (d) members of the Legislative Council (the LegCo), representatives of district-based organizations, Hong Kong deputies to the National People’s Congress (the NPC), and representatives of Hong Kong members of the National Committee of the Chinese People’s Political Consultative Conference (the CPPCC). Each of these four sectors can return 200 members to the Election Committee. However, the candidate elected needs to be formally appointed by the central government before assuming the office of the chief executive. Further, no more than half of the legislators are directly elected for the first three terms of the legislature, and the rest are elected from functional constituencies composed of different social, professional, and business sectors. The following sections examine the institutions of the central government dealing with Hong Kong affairs and the division of powers between the central government and the Hong Kong SAR under the OCTS framework.

The Hong Kong SAR is directly under the authority of the central government (Yep, 2007). The highest level of the CCP, namely, the central leadership under Hu Jintao, decides on the policy toward Hong Kong. The top central body that takes charge of Hong Kong matters is the Hong Kong and Macao Work Coordination Group of the CCP, which was formerly chaired by Vice President Zeng Qinghong, a member of the powerful Standing Committee of the Politburo of the CCP. A rising political star, Xi Jingping, also a member of the Standing Committee of

4“Universal suffrage” is the term used in the Basic Law, although what it means is not clearly defined, and hence may be subject to further constitutional interpretation in future. In this chapter, it refers to the right to vote in directly electing public officials.

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Intergovernmental Relations Between Mainland China and the Hong Kong SAR 259

the Politburo and a newly appointed vice president, assumed this portfolio after the 17th Party Congress held in November 2007. Aside from assisting the premier and serving as a supporting office for the Coordination Group in dealing with Hong Kong and Macao affairs, the Hong Kong and Macao Affairs Office under the State Council mainly serves as a gatekeeper coordinating the interactions between the Hong Kong and Macao SAR governments and other Mainland government agencies and localities and managing the social, economic, and cultural relations between them and the Mainland.5 The office also monitors and carries out research on the developments of the two SARs.

There are three central government offices in Hong Kong, namely, the Office of the Commissioner of the Ministry of Foreign Affairs of the PRC, the Hong Kong Garrison of the Chinese People’s Liberation Army (the PLA), and the Liaison Office of the Central People’s Government in the Hong Kong SAR. Officially, the Liaison Office, formerly the “Xinhua News Agency (Hong Kong Branch),” is the main agency of the central authorities in Hong Kong, monitoring local affairs, facilitating exchanges between the Mainland and the local community, coordinating with and helping Mainland agencies in managing their enterprises and other units in Hong Kong, and handling Taiwan-related matters.6 But it also conducts united front work in Hong Kong that aims at winning over the support of the community and influencing local developments. The Liaison Office also coordinates the activities of the CCP in Hong Kong and its director likely serves as the party leader of the Hong Kong Party Committee located inside the Liaison Office, although the actual operation of the Communist Party in Hong Kong remains highly secretive (Yep, 2007: 250).7 As in other federal states, the central government has exclusive control over national security and diplomatic affairs. The Hong Kong Garrison of the PLA serves as an important symbol of Chinese sovereignty. The Hong Kong police are responsible for public security, and the PLA would only be asked to help with public order and disaster relief if requested by the Hong Kong SAR government through the central government. The Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong is responsible for handling foreign affairs. Nonetheless, according to Article 18 of the Basic Law, the central authorities can declare a state of emergency, and apply relevant national laws to Hong Kong in case of war, or “by reason of turmoil within the Hong Kong Special Administrative Region which endangers national unity or security and is beyond the control of the government of the Region.” It is unclear exactly how Beijing would interpret the emergence of circumstances described in this clause, however. If any departments of the central government or the provinces want to set up an office in Hong Kong, they need to obtain the consent of the Hong Kong SAR government as well as the approval of the central government. According to the Basic Law, these central government offices shall abide by the law of the Hong Kong SAR. However, in the colonial era, the “Crown” would be exempted in the laws unless it was expressly bound. The adaptation of laws by the Hong Kong SAR government after 1997 seemed to result in government agencies of the PRC in Hong Kong not being subject to certain Hong Kong laws, where such laws do not expressly bind them, because “the state,” which replaces “the Crown” in various laws, encompasses the central government and its subordinate

5 The official description of the work of the Hong Kong and Macao Affairs Office can be found at http://www. hmo.gov.cn/public/jj/t20040102_2024.htm.

6 The official descriptions of the work of the Liaison Office can be found at http://www.locpg.gov.cn/jgjj/zyzn/.

7For a study of the CCP in Hong Kong in the pre-1997 period (Burns, 1990). The memoirs of Mr. Xu Jiatun, the former chief of the New China News Agency in Hong Kong, remain the most authoritative account of the CCP’s activities in Hong Kong in the pre-1997 period, Xu Jiatun’s Hong Kong Memoir (in Chinese), Vols. 1 and 2 (Taipei: United Daily News, 1993).

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organs.8 While this may deride the rule of law in Hong Kong and violate the Basic Law, the review of the application of specific laws to these central government agencies has been slow and not fully completed by the Hong Kong SAR government, more than 10 years after 1997.9 As of April 2009, the Hong Kong SAR government is still studying whether the remaining 12 pieces of legislation will apply to the three Mainland government offices in Hong Kong.10

The Hong Kong SAR has powers for final adjudication, a prerogative unlikely in other federal systems. While there may be two systems of courts in some federal systems, they still belong to the same legal system. A political organ of the central authorities, namely, the Standing Committee of the National People’s Congress (the NPCSC), rather than an independent judicial body such as a federal supreme court, interprets the Basic Law. Nonetheless, in practice, Hong Kong’s own courts have decided on numerous cases in the course of litigation involving interpretations of the Basic Law since 1997.11 Further, no national laws, except those listed in Annex III of the Basic Law, would be applied to Hong Kong. Only the national legislature, i.e., the NPC, can amend the Basic Law. Aside from the NPCSC, the executive arm of the central government—that is, the State Council—also has the power to initiate an amendment. Although the Hong Kong SAR could also introduce an amendment, it would require two-thirds of the Hong Kong delegates of the NPC, two-thirds of all the members of the Hong Kong legislature, as well as the consent of the chief executive, who is appointed by the central government. The Committee for the Basic Law of the Hong Kong SAR also studies the amendments and gives its opinions before the amendment bill is put on the agenda of the NPC. Nonetheless, the Basic Law explicitly states that no amendments shall contravene the basic policies of the PRC regarding Hong Kong.

The legislative power of the Hong Kong SAR is substantial, but there are still certain constraints. First, while the legislature can enact laws and then report its legislation to the NPCSC for recording, Article 17 of the Basic Law indicates that the NPCSC can return any law deemed to be in violation of the mini-constitution regarding affairs within the responsibility of the central government or regarding the relationship between the central government and the SAR. Such laws will be immediately invalidated. Although this power has never been used by the NPCSC, what falls within these two areas is not clearly defined in the Basic Law. While the Committee for the Basic Law should be consulted and give its opinion on whether the laws of Hong Kong have violated the Basic Law and whether they should be returned, this body is “neither a judicial organ nor a political decision-maker” (Li, 1999: 170). The Committee for the Basic Law, which is under the NPCSC, is also appointed by Beijing with six of its twelve members from Hong Kong and the remaining six from the Mainland. Second, while no national laws would be applied to Hong Kong except those in Annex III of the Basic Law, such as nationality laws, the NPCSC may add or delete from the list after consulting the Committee on Basic Law and the Hong Kong SAR government. The list, however, would be restricted to the area of defense and foreign affairs as well as “other matters outside the limits of the autonomy” of the Hong Kong SAR.

Hong Kong has 36 seats in the NPC, hence enjoying representation disproportional to its population. Beijing can exercise strong influence over the selection of NPC delegates. Hence, these deputies are considered more as agents of the central government, rather than advocates defending

8 I am indebted to Professor Albert H. Y. Chen for his advice on this issue.

9For the latest situation, please refer to the government’s papers submitted to the Legislative Council: http:// www.legco.gov.hk/yr07-08/english/panels/ajls/papers/aj0319cb2-1356-1-e.pdf and http://www.legco.gov.hk/ yr07-08/english/panels/ajls/papers/aj0319cb2-1356-2-e.pdf.

10http://www.info.gov.hk/gia/general/200904/P200904290197.htm.

11I would like to thank Professor Albert H. Y. Chen for his comment and advice on this point.

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Intergovernmental Relations Between Mainland China and the Hong Kong SAR 261

Hong Kong’s interest in the Mainland (Fu and Choy, 2007). These Hong Kong deputies can be involved in the discussions of the amendments to the national constitution and national legislations, but they cannot interfere in Hong Kong’s local affairs. These deputies are also responsible for submitting amendment proposals of the Basic Law to the NPC for consideration. Further, there are Hong Kong delegates in the CPPCC, which is a united front organization for incorporating and wooing non-CCP elites to support the Chinese government. Together with legislative councilors and representatives of district organizations, these CPPCC delegates and NPC deputies form one of the four sectors in the 800-member Election Committee that chooses the chief executive.12

As the PRC is a unitary state, the autonomy enjoyed by the Hong Kong SAR under OCTS comes from the delegation or authorization by the central authorities. Several mechanisms can be used by Beijing in controlling Hong Kong. First, Article 31 of the Chinese Constitution provides the constitutional provision for the creation of SARs.13 But this article does not specify the form of autonomy that would be applied to the SARs (Ghai, 2005). China’s legislature has the constitutional power to decide on the specific systems to be implemented in the SAR. Article 2 of the Basic Law explicitly states that the “high degree of autonomy” and the powers of the SAR are authorized by the NPC. Second, there are two key constitutional powers that the central government can deploy to control the Hong Kong SAR, namely, the power to appoint the chief executive and the principal officials and to interpret the Basic Law. In other words, the central government’s preference could be delivered through the chief executive and his administration, although Beijing would be careful to avoid overt intervention. The Basic Law also provides for a weak legislature, hence executive power is not as effectively checked as in other democracies. Challenging the Hong Kong SAR government may even be interpreted as questioning the policies of the central government toward Hong Kong. The undisputed authority of the NPCSC to interpret the Basic Law is also amply shown in the last decade. These key features of the unitary state enshrined in the Basic Law are proven to be critical in shaping the relations between Hong Kong and the Mainland in the post-1997 era.

Third, Hong Kong’s high degree of autonomy and its executive, legislative, and independent judicial powers are only restricted to those areas laid down in the Basic Law. On the contrary, other autonomous systems can exercise their powers once they are granted, often only subject to general principles such as a bill of rights. However, while the scope of autonomy of the Hong Kong SAR is larger than other autonomous regions or states and provinces in federal systems, the exercise of these powers would be subject to scrutiny or monitoring by Beijing. Senior Mainland officials and legal scholars have repeatedly reminded the Hong Kong community that residual powers not stipulated in the Basic Law belong to the central government, not the SAR, because China is a unitary state, rather than a federal system. Although chapter two of the Basic Law delineates the sharing of powers between the central government and the Hong Kong SAR, there is still much room for interpretations concerning what falls under this category and other gray areas of the Basic Law, as shown in the various constitutional controversies that have emerged since 1997. The central government has rejected demands for clarifying such ambiguities, which means that it can enjoy much greater flexibility in interpreting the Basic Law, if controversies arise (Ghai, 1998).

12There are over 100 Hong Kong delegates in the CPPCC, but only some of them sit in the Election Committee. The latest number of Hong Kong delegates appointed into the CPPCC is 125, see Hong Kong Economic Times, January 26, 2008, p. A14.

13Article 31 of the Basic Law states that “The state may establish special administrative regions when necessary. The system to be instituted in special administrative regions shall be prescribed by laws enacted by the National People’s Congress in the light of the specific conditions.”

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