China’s ‘One Country, Two Systems’ Trap; Beijing’s unmet promises to Hong Kong are a lesson for Taiwan

China’s ‘One Country, Two Systems’ Trap

Beijing’s unmet promises to Hong Kong are a lesson for Taiwan.

Updated March 12, 2014 6:23 p.m. ET

The recent stabbing of government critic Kevin Lau is horrible enough for the people of Hong Kong. But it is also damaging to Beijing’s efforts to convince the people of Taiwan to support official negotiations aimed at eventual reunification with mainland China.

In 1984, Chinese supremo Deng Xiaoping promised the world that the British colony would keep its civil liberties and gradually transition to democracy after its return to Chinese sovereignty in 1997. He devised a “one country, two systems” formula not only for Hong Kong, but also as a model for reunification with Taiwan. “We have proposed to solve the Hong Kong and Taiwan problems by allowing two systems to coexist in one country,” Deng said.

Last month China and Taiwan held official government-to-government talks for the first time in more than six decades. China still claims the right to capture Taiwan by force and has some 1,600 missiles pointed at the democratic island, but for now Beijing is deploying more honey than vinegar. Chinese leaders emphasize peaceful integration as the eventual outcome of expanded cross-Strait transport links, tourism and commerce. Beijing hopes that business and fraternal ties will lead the Taiwanese to choose reunification under a “one country, two systems” framework.

That’s where Hong Kong comes in. Before taking over the territory, Beijing promised that its local government would enjoy autonomy over all internal affairs, civil liberties would be protected and the judiciary would stay independent. None of those promises has been fulfilled.

Since the 1997 handover, Beijing has taken an increasingly active role in Hong Kong’s domestic affairs. The central government’s liaison office in the territory has pushed the local government into unpopular policies such as mandatory “national education” classes in Hong Kong schools that would teach not only love of country but admiration for the ruling Communist Party. Only mass protests forced the local government to scrap the scheme.

In 2003, Beijing asked Hong Kong’s government to draft an antisubversion law that threatened to criminalize political dissent. That gambit died after half a million Hong Kongers took to the streets in the largest protests since 1989.

Hong Kong’s press freedom is also eroding. Outspoken newspapers and magazines have increasingly lost advertising from companies with business in the mainland, while prominent critics of China have often lost their jobs or worse. The Feb. 27 knife attack on Mr. Lau came a month after he was fired as editor of the Ming Pao daily newspaper and days after several thousand Hong Kongers marched in a “Free Speech, Free Hong Kong” rally. An estimated 13,000 rallied again after the stabbing, and Mr. Lau has begun a recovery that doctors say will take two years.

In a series of decisions, the National People’s Congress in Beijing has also overruled judgments of Hong Kong’s Court of Final Appeal by issuing tortuous reinterpretations of the territory’s mini-constitution, the Basic Law. Mainland officials and legal scholars have criticized Hong Kong judges for not helping the government achieve its objectives.

Beijing’s most important promise in the Basic Law was the eventual election of Hong Kong’s chief executive by universal suffrage. It subsequently agreed that this would happen in 2017 but is now trying to rig the system so that only its favored politicians could qualify as candidates. This backsliding is especially dangerous, since local pro-democracy leaders are promising mass demonstrations this summer.

Hong Kong’s travails help explain why most Taiwanese reject any discussion of unification with the mainland, even after several years of cross-Strait calm. Talks between Beijing and Taipei may open the way for further cooperation on trade and other matters. But a breakthrough on reunification won’t happen as long as Beijing remains authoritarian and continues to break its promises to Hong Kong.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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