Pol cal Outlook
Hong Kong has just completed its first exercise in mass democracy, with electors invited to choose just under one third of the seats in the territory's Legislative Council.
On a low turnout the United Democrats won a landslide victory. No candidate either backed by Peking or representing conservative business interests conciliatory to Peking, won a seat.
While called liberals, the United Democrats represent less an identifiably "left wing" economic platform than an insistence on open representative government. The democratic principle of government "by the people, of the people, for the people,” has a special resonance in Hong Kong. The United Democrat triumph represents the protest vote of Hong Kong's affluent and articulate middle class - precisely the section of society which will find it difficult to accept the incompetencies of a communist future.
Hong Kong has traditionally not worried much about legitimacy. The legitimacy of the British administration has traditionally rested on its relative competence and an openness and respect for personal freedom which still has few rivals in Asia. In the last 20 years it has been cemented into place by the territory's astonishing economic success, and the loudly proclaimed assumption that people in Hong Kong are not interested in politics.
Can Hong Kong's Governor respond to the UD's success, by including a significant number of United Democrats in his cabinet, the Executive Council? If so, what will be the repercussions on Hong Kong's relations with China? What will be the repercussions on Hong Kong's economic policies?
If he does not, will the government be able to maintain its previous policies in the face of public opposition?
Peking has warned repeatedly that the pace of democracy in Hong Kong will not be accelerated before 1997. How strong will the pressure become for a faster pace of
liberalization? And can it be withstood?
In the UD, Hong Kong has produced China's first opposition party legitimized by electoral success. How far will it extend its influence into China?
Economic considerations
The normal response to the rise of the UD would be to buy off their aspirations to democracy and human rights before 1997 with a "liberal" programme of increased public services. However, a 12 billion US dollar infrastructural project to build a new airport, puts pressure on resources. In addition, it will put pressure on the territory's financial system, which is at present tied to that of the US through the HK dollar being linked at a fixed rate to the US dollar.
How much of the project will be able to attract private finance?
Will the Hong Kong government have to raise taxes to pay for the project? If so, what will be the political consequences? And what will be the consequences for Hong Kong's comparative advantages in the competition for world GDP?
Hong Kong already has a bad inflation problem, having suffered double digit inflation for the last two years. What will be the inflationary consequences of what is thought to be one of the largest civil engineering projects in the world?
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