Clampdown Marks the End of Hong Kong's Honeymoon

The fate of the free city of Hong Kong is a matter of some considerable importance to the world as well as to the nearly 7 million people who live there. If the difficult political and economic balance in Hong Kong could be sustained, it has been recognised since the handover in 1997, it would suggest a Chinese capacity for skilful management, and an ability to rise above its impulse to control and dictate, which would reassure people in the rest of east Asia. Hong Kong is like the canary in the miner's cage. While it sings, all is well, but if the song begins to falter, there could be danger ahead.

Hong Kong's economic troubles - from the rising unemployment which is making life miserable for the poorer classes to the falling property market which is eroding the security of the middle classes - cannot be blamed on Beijing. They are partly the lingering consequences of the Asian economic crisis of the 90s, and partly the result of regional economic changes which Hong Kong's own business class pioneered, notably the transfer of Hong Kong-financed industrial activity from the territory to mainland China.

Hong Kong, not for the first time, needs to reinvent itself in such a way as to provide satisfying employment for its large workforce as well as satisfying profits for its tycoons. But in Hong Kong the economic cannot be divorced from the political. Here Beijing can be faulted on several counts.

The Chinese solution to the problem of Hong Kong governance was to pick as chief executive Tung Chee-hwa, a man of only middling qualities and with no serious constituency of his own, and expect him to somehow make coherent the disparate bundle of institutions inherited from the British. That disparity was the greater because of the careful constitutional arrangements the Chinese had insisted on so as to allow Hong Kong a measure of decorative democracy while ensuring that all serious decisions were kept away from elected representatives.

Put simply, Hong Kong politics, both formal and informal, now make very little sense. The Democratic party, the largest, which represents liberal thinking in the territory, has little influence in a legislature where it is outnumbered by members who are not directly elected. The pro-Beijing party, the Democratic Alliance, gets the votes of many of the poor, but has, no doubt with gritted teeth, to support the policies of a pro-business chief executive whose best friends and closest allies are all rich scions of Hong Kong merchant dynasties. The chief executive does not get on with the civil service or the judiciary, nor they with him.

It is not just a matter of personality. The ethos of the various elements in the Hong Kong political mix is so different that they could only come together in a working and evolving system, rather than one designed to freeze movement and facilitate manipulation. Tung is, according to Lo Shiu Hing, a political scien tist at the Chinese University of Hong Kong, "a lonely leader divorced from the civil service, from the politicians, even from the pro-Beijing elites", and the result is "a very serious governance crisis". These are not the best circumstances in which to set Hong Kong on a new course. They militate against the formation of a consistent programme of new policies, as was shown by the eccentric reform initiatives of Tung's first term.

Even if desirable new policies emerge, the question is whether an isolated chief executive can carry Hong Kong with him. The reaction this week to Tung's annual policy address seems to bear both these points out. There has been anger at his proposal to raise taxes and complaints that his broader plans for Hong Kong's future are too generalised and rhetorical. He seems, in a speech on which some had set great store in advance, to have again missed the chance to offer a vision which would engage the enthusiasm and gain the confidence of a sceptical and anxious people.

China surely did not set out to undermine Hong Kong. But the arrangements it has wished on the territory, and the man it twice chose to head its government, have not helped. Nor has the latest and most serious development in the already vexed history of relations between the legal systems of Hong Kong and China. This is the preparation of a set of security laws, under article 23 of the Basic Law, Hong Kong's constitution. Due to be passed in the summer, they import into Hong Kong law Chinese concepts and forms which polls show are disliked by 70% of the population.

They would, among many objectionable provisions, make it a crime to publish information that the government had not specifically released, including information about the relations between Hong Kong and Beijing, and allow searches and seizures without warrant under some circumstances.

But the most dangerous provisions, according to the many critics, are those which would force the Hong Kong government to ban in the territory any organisation that was proscribed in China.

The most immediate object of such laws might be the banned Falun Gong sect, but there are other possible victims. For Martin Lee, the veteran Hong Kong democrat who led the Democratic party until recently, this is "the evil of all evils". He believes the new laws show that "the honeymoon is over... they're going to suppress Hong Kong more and more". The Far Eastern Economic Review also went so far as to speculate that article 23 represents "the real handover".

Others, like Christine Loh, the head of a liberal thinktank, are less sure of Beijing's more general intentions, but deplore proposals that would both take away from the rights of Hong Kong people and diminish the attraction of Hong Kong for international business. She says that "this is a business town and the voice of business matters", and that protest against the new laws has united students, lawyers and intellectuals with bankers and merchants, an unusually broad coalition for Hong Kong. The government says it was duty bound to replace the existing British security laws, which are also pretty swingeing, with new ones, and that some proposed provisions may well be withdrawn or amended.

These legal issues are critical. Even if the optimists who forecast that the powers will never be used were to be proved correct, they could not fail to affect behaviour and the atmosphere in which political, intellectual and journalistic decisions are taken. But the furore over article 23 has wider implications still. It shows a Hong Kong which lacks full confidence in its own government, in Beijing and in its own future. Some say that Hong Kong people have allowed themselves to drift into too dire a view of their problems. But they are surely right in sensing that their city needs both a new economic model and a new social compact, and that neither of the governments which control their affairs seems able to grasp the urgency of these tasks.