Objectively, there is plenty of room for both Hong Kong/Guangdong and Shanghai to succeed. Shanghai is not damaged by Hong Kong, but rather by its own internal problems and by an excessive tax burden. (Shanghai provides the bulk of the central government's revenues.)
The only shadow of validity to this argument is that China's tax problems, exemplified by Shanghai's excessive burden and by declining central government revenues during a period of extraordinary economic growth, ensure an early reform of China's tax system. The authors of the forthcoming Eighth Five Year Plan have told a group of economists, including this writer, that the national tax system will be revamped and that the coastal areas are likely to lose some of their special tax privileges. But a fair tax system is not a Shanghai conspiracy, and Guangdong will retain its special cultural and geographic advantages, along with its head start in developing a modern economic system.
IMPLEMENTING "ONE COUNTRY, TWO
SYSTEMS": THE REAL ISSUES
The central issues of Hong Kong's future are not those described above. They concern the ability of both sides to implement a policy of "one country, two systems." The central prerequisites for success of "one country, two systems" are:
1. Neither side must subvert the other's political system.
2. China must actively support Hong Kong's autonomous capitalist economic system.
3. Hong Kong must govern itself with economic efficiency.
Each of these requirements poses severe challenges. One may be optimistic or pessimistic, but either way these three issues are the key to the future. So a disinterested analyst calculating Hong Kong 's future prospects should
focus full attention on these.
two
There are only two alternatives for Hong Kong's future: either one country, two systems or else one country, one system. Making “one country, systems" work is therefore a prerequisite for all discussion of future Hong Kong capitalism or liberalism or democracy. As a corollary, those who speak about democracy without considering the requirements of "one country, two systems" are spitting in the wind.
The central issues:
Non-subversion
Support for HK system
An efficient Hong Kong