BANKERS TRUST SECURITIES RESEARCH
Small but disturbing
outbreaks of
successful
self-indulgence
THE BURDEN OF AUTONOMY
The third question has little to do with China. Assuming that China gives Hong Kong the high degree of autonomy that it has promised, will Hong Kong be able to cope with autonomy?
The Hong Kong debate has generally been conducted on the assumption that autonomy, democracy, and a high rate of economic growth are all connected. In proper circumstances, such as for instance modern Japan, they can be. But self-rule can also bring self-indulgence, and a degree of democracy can also mean a degree of populism that impedes proper economic management. One does not have to be an ultra-conservative to look across the South China Sea to the Philippines and fear the consequences of populism there.
The Asian countries that have achieved high growth have generally done so under strong leadership Lee Kwan Yew, Park Chung Hee, Chiang Kai Shek and Chiang Ching Kuo, and in Hong Kong's case a firm British governor. Thailand, a partial exception, achieved takeoff only during the Prem years of stronger leadership in the 1980s and suffered serious problems from populism during 1973-1976.
Hong Kong shows no signs of producing a strong leader, nor is it clear that China would encourage a strong local leader. While Hong Kong is full of highly educated managers and other talented people, so is the Philippines. So far, good sense and stability have largely prevailed. Both the British and the Chinese have sought to create a post-1997 Hong Konkg that is elitist rather than populist. But there are signs of self-indulgence that need to be watched.
The successful campaign by the Law Society to prevent American law firms from being able to hire Hong Kong lawyers and thereby advise on Hong Kong law was potentially destructive of Hong Kong's progress in becoming the regional headquarters of a booming regional service economy. Moreover, the intemperate xenophobia of that campaign was if anything more disturbing than its outcome.
Second, the ability of local teaching groups to abort efforts to raise Hong Kong's standard of English by effectively freezing out native English speakers is equally disturbing. It is perhaps unfair but nonetheless true that the economic future of Hong Kong lies largely with English and Mandarin (with Japanese increasing). The subtle populist resentment of this unfair fact of international economic life increasingly impedes the ability of international firms to get their work done efficiently, and now interest groups are presenting formidable obstacles to reform of the system. Executives find that PRC-trained employees are far better prepared and far
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