From Third World to First The Singapore Story pdfdrive com

34. Hong Kong’s Transition
I first visited Hong Kong in 1954 on an Italian liner, the 
Asia
. She stayed three
nights in Hong Kong, allowing Choo and me to wander around the colony on
foot. It was a charming city on the island fronting the harbour, with a growing
township across the water on the Kowloon side. It was attractive because behind
the town centre was the Peak, some 1,000 feet high with roads and houses
dotting the hillside.
The people were hardworking, goods were cheap, service was excellent. I
was taken to a shop one morning, had myself measured by the tailor, and ordered
two suits. In the afternoon I went back for a fitting. That night the suits were
delivered to my cabin, something Singapore tailors could not have done. I did
not understand then that when the communists “liberated” the mainland in 1949,
with the influx of some 1–2 million refugees from China had come some of the
best entrepreneurs, professionals and intellectuals from Shanghai and the
provinces of Zhejiang, Jiangsu and Guangdong. They formed a thick layer of
talent that was to transform Hong Kong into one of the most dynamic cities in
the world, helped by the more enterprising and resourceful of the Chinese
workers who had decided to leave China rather than live under communist rule.
To the world at large, Hong Kong and Singapore are two similar Chinese
cities of approximately the same size. To me there were as many contrasts as
similarities. Hong Kong has twice the land area and twice the population packed
on the island, Kowloon peninsula and the New Territories. Hong Kong had a
bleaker economic and political environment in 1949, totally dependent on the
mainland’s restraint. China’s People’s Liberation Army could march in any time
they were ordered to. But despite uncertainty and the fear of a disastrous
tomorrow, or the day after, Hong Kong thrived.
Singapore did not then face such dire prospects. I was relieved we were not
living so precariously under such intense pressures, as Hong Kong was. Even
after Malaya became independent in 1957, Singapore was still linked
economically and physically to the peninsula, with people and business to-ing

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and fro-ing. Only in 1965, after we were asked to leave Malaysia, did we face as
bleak a future. But unlike Hong Kong we did not have a million and a half
refugees from the mainland. Perhaps if we had, and with them had come some of
the best entrepreneurs and the most industrious, resourceful and energetic
people, we would have gained that extra cutting edge. Indeed, a similar refugee
inflow from the mainland in 1949 also helped Taiwan. Without it, Taiwan would
not have had the top talent that had governed China until 1949. Their
administration, with American aid, transformed Taiwan. When all this happened
in 1949, I did not understand the importance of talent, especially entrepreneurial
talent, and that trained talent is the yeast that transforms a society and makes it
rise.
I next visited Hong Kong in May 1962. In eight years, it had moved way
ahead of Singapore, judging from the buildings and shops I saw. After
independence in 1965, I made a point of visiting Hong Kong almost every year
to see how they handled their difficulties, and whether there were any lessons I
could learn from them. I saw Hong Kong as a source of inspiration, of ideas of
what was possible given a hard-driving society. I also wanted to attract some of
their businessmen, especially their manufacturers, to set up textile and other
factories in Singapore. The Hong Kong media did not look kindly upon my
efforts and wrote highly critical reports of Singapore to dissuade their people
from leaving.
In February 1970 the University of Hong Kong conferred on me an honorary
degree of Doctor of Law. In my address, I said, “As pioneers in modernisation,
Hong Kong and Singapore can act as catalysts to accelerate the transforming of
traditional agricultural societies around them. …” I hoped that “they may
become dissemination points, not simply of the sophisticated manufacture of the
developed world, but more vital, of social values and disciplines, of skills and
expertise”. A decade later they both did.
After this visit, I wrote to our Economic Development Board that with the
political uncertainty because of China and the expiry in 1997 of the 99-year
lease of the New Territories to Britain, Singapore could attract some of their
brains and their skilled workers. We could also lend Hong Kong our skills and
credit when they were short.
My admiration for Hong Kong people and their capacity to bounce back after
each setback never diminished. They suffered as grievously in the 1970s as
Singapore did because of the oil crisis, but they adjusted more quickly. Their
shops cut prices, their workers accepted pay cuts. The few trade unions they had

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did not fight market forces. In Singapore we had to soften the blow of inflation
and recession and buffer our workers from a sudden drop in living standards,
helping to sort out problems between management and unions.
People in Hong Kong depended not on the government but on themselves
and their families. They worked hard and tried their luck in business, hawking or
making widgets, or buying and selling. The drive to succeed was intense; family
and extended family ties were strong. Long before Milton Friedman held up
Hong Kong as a model of a free-enterprise economy, I had seen the advantage of
having little or no social safety net. It spurred Hong Kong’s people to strive to
succeed. There was no social contract between the colonial government and
them. Unlike Singaporeans they could not and did not defend themselves or their
collective interests. They were not a nation – indeed, were not allowed to
become a nation. China would not have permitted it, and the British never tried
it. That was the great difference between Hong Kong and Singapore.
We had to be a nation or we would cease to exist. We had to subsidise
education, health and housing even though I tried to avoid the debilitating effects
of welfarism. But the Singaporean cannot match the Hong Konger in drive and
motivation. In Hong Kong when a man fails, he blames himself or his bad luck,
picks himself up and tries again, hoping his luck will change. A Singaporean has
a different attitude to government and to life. He prefers job security and
freedom from worry. When he does not succeed, he blames the government
since he assumes its duty is to ensure that his life gets better. He expects the
government not only to arrange a level playing field but, at the end of the race, to
give prizes even to those who have not done so well. Singaporeans vote for their
MPs and ministers and expect them to distribute whatever prizes there are.
A Hong Kong entrepreneur who settled in Singapore summed it up for me
succinctly. When he established textile and garment factories in Singapore in the
early 1970s, he brought his Hong Kong managers with him and hired several
more Singaporeans. The Singaporean managers were still working for him in
1994, while his Hong Kong managers had set up their own businesses and were
competing against him. They saw no reason why they should be working for him
when they knew the trade as well as he did. All they needed was a little capital,
and the moment they had that, off they went. The Singaporean lacks that
entrepreneurial drive, the willingness to take risks, succeed and be a tycoon. In
recent years there have been encouraging signs of change. When the region was
enjoying rapid growth, more young professionals and executives ventured out,
first as salaried managers with incentive share options, and later on their own,

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when they knew the risks and were confident of making it.
We were able to attract some entrepreneurs in textiles, garments, plastics and
jewellery, a few jade and ivory carvers, and some furniture makers from Hong
Kong. In the 1960s and early ’70s, they were most welcome for the jobs they
created and the optimism they generated. The best stayed on in Hong Kong
where they could make more profits than in Singapore. But they set up branches
as we had hoped, and sent their younger sons to look after the Singapore branch.
After the 1984 Joint Declaration between the United Kingdom and China
settling the colony’s future was announced, I invited a group of their leading
businessmen and professionals to visit us during the week of our National Day
celebrations that August. As a result, a group of Hong Kong tycoons together
invested over S$2 billion in Singapore’s largest convention and exhibition hall
and office complex called Suntec City where we hosted the first ministerial
meeting of the World Trade Organisation in December 1996, a year after the
building was completed. It was one of their many nest eggs scattered across the
Pacific coastal cities, mainly of North America and Australasia. Their media
believed Singapore wanted to cream off their talent, but it was in our interest to
have Hong Kong succeed after it returned to Chinese sovereignty. To raid and
deplete Hong Kong of talent is a one-off exercise. A thriving Hong Kong will be
a continuing source of business and benefits.
Hong Kong’s British rulers had governed in the old imperial tradition –
haughty, aloof, condescending to the locals, and even to me, because I was
Chinese. The earlier governors were promoted from the ranks of the British
colonial service. This changed after 1971. Murray MacLehose was from the
British foreign service, a superior service. He decided to visit Singapore before
he took up his appointment. Hong Kong was plagued by corruption; he wanted
to see how we had kept it under control. He also wanted to see what we had done
in education, especially our polytechnics. Hong Kong had none; they had spent
almost nothing on technical education. He wanted to see our public housing; he
wanted to improve their housing before conditions became critical.
The British provided an honest administration, except for some 10 years
before MacLehose became governor. Corruption then was so bad that he had to
introduce strong measures based on Singapore’s anti-corruption laws and
practices. Of course the colonial rules of the game favoured the British business
community. Hong Kong & Shanghai Bank and Chartered Bank were note

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issuers. The British hongs (big trading companies, later to become
conglomerates) enjoyed a privileged position, but their privileges were gradually
diminished as British rule reached its last decade when many hongs were bought
over by Hong Kong Chinese.
Before governor David Wilson took up his appointment in 1987, he too
visited Singapore to see how a majority ethnic Chinese community had
organised itself and sought to resolve its problems. He was also a foreign service
officer, a China specialist. Wilson wanted to know about Singapore’s experience
in gaining independence. I told him our circumstances were different. We had
been part of Malaysia, then unintendedly became independent and had to
manage our own destiny. The Special Administrative Region (SAR) of Hong
Kong would be part of China. Any Hong Kong chief executive would have to
understand China and learn to live with its leaders, while protecting Hong
Kong’s interests. He would not have complete freedom to act.
Until 1992 British policy was to consult and negotiate with China any basic
change they proposed to make in policy before they announced it publicly. This
was to achieve what the British called a “through train”. In other words, there
was to be no change of either engine or carriages when it came to the crossing
point between British Hong Kong on 30 June 1997 and Chinese Hong Kong on 1
July 1997. After the shock of Tiananmen in 1989, the British government felt it
should do something beyond what was agreed with the Chinese in the 1984 Joint
Declaration. The British wanted to satisfy their conscience that they had done
their best to protect the way of life of Hong Kong people after Hong Kong was
returned to China.
Six weeks after Tiananmen, we offered to give 25,000 Hong Kong families
Approval In-Principle (AIP) permanent residence, without their having to move
to Singapore until the need arose. This AIP would be valid for five years and
could be extended for another five. It did not draw talent away from Hong Kong
at a time of great uncertainty. Huge queues formed outside our Singapore
Commission in Hong Kong to get the application forms, and nearly caused a
riot. When I met Governor Wilson in Hong Kong in January 1990, I assured him
that I had no intention to damage Hong Kong by the offer of AIPs, that we
would lend Hong Kong our skills and credit when they were short, and vice
versa, and each would profit from the capital, skills and talent of the other. We
had not expected such a tumultuous response. Many who applied did not qualify,
because they did not have the necessary education or skills. After a year, we had
granted a total of 50,000 AIPs, double the intended number. By 1997 only 8,500

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had moved to Singapore. Hong Kong soon recovered from the shock of
Tiananmen and was doing well. The people earned good money in Hong Kong,
more than they could in Singapore or elsewhere. Indeed, many who had
emigrated to Canada, Australia and New Zealand later returned to work in Hong
Kong, often leaving their families behind.
Chris Patten, like his predecessors Wilson and MacLehose, stopped in
Singapore in July 1992 on his way to take up his appointment in Hong Kong.
After an hour’s discussion, I sensed he wanted to stretch the limits of what the
British had agreed with the Chinese and asked, “What cards do you have?
What’s new?” Instead of answering he simply repeated my question, “What’s
new?” I felt uneasy that he was contemplating reforms that would breach the
agreement. Hong Kong journalists had come to Singapore to interview me after
my meeting with Patten. To prevent any misreporting, instead of meeting them I
issued a statement: “I believe if the objectives he [Patten] decides upon are
within the framework of the Joint Declaration and the Basic Law, he will have
firm grounds to govern and build upon … the best measure of his success will be
that the system he leaves behind continues to work well for Hong Kong beyond
1997.”
In October 1992, after a visit to China, I went to Hong Kong. Patten had
announced that he would expand the electorate for functional constituencies
representing businessmen, professionals and other special interest groups by
including as voters all their employees. Interviewed by the press, I said,
“Patten’s proposals were very imaginative about increasing the depth of
democracy … Very ingenious. His proposals slip into the blank spaces of the
Basic Law and the Joint Declaration.” But I added, “[Patten’s] blueprint
resembled more an agenda for action of a nationalist leader mobilising his
people to fight for independence from a colonial power, than a valedictory
programme of a departing colonial governor.” Privately I cautioned Patten when
I met him in Government House, that he had negated the meaning of “functional
constituencies” because he had widened it beyond these functional groups of
professionals or businessmen for whom they were intended, to include all
workers employed by them.
In mid-December I returned to Hong Kong for a lecture at Hong Kong
University. Patten, as chancellor of the university, took the chair. In answer to a
question from the audience on his proposed reforms, I read out portions of
speeches made in the House of Lords by two former governors, Lord Murray
MacLehose and Lord David Wilson, and an interview by Sir Percy Cradock, Mrs

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Thatcher’s political adviser who had negotiated with the Chinese. All three had
made clear that Patten’s course of action was contrary to what they on the British
team had negotiated and agreed with the Chinese government. I thought it better
to state my position in his presence so that he could reply if he wanted to. He did
not.
Patten spent the last five years of colonial rule entangled in controversy with
the Chinese government. The Chinese reacted to Patten’s move with anger. If
Britain wanted it that way, they were prepared to scrap the whole agreement.
They announced that they would negate Patten’s changes. In July 1993 the
Chinese formed a preliminary working committee to prepare for the post-1 July
1997 period. In August 1994 the standing committee of the National People’s
Congress voted to replace the legislative council (Legco) and the urban and
regional councils and district boards. The governor and the British government
in London did not take this rejection seriously. Patten held elections in
September 1995; he included nine new functional constituencies and had
widened the electorate to include the whole working population of 2.7 million
voters. The Chinese leaders declared that it would not recognise the electoral
results, that the political structures being set up by the British were not in
accordance with the Basic Law and the Joint Declaration and would be scrapped,
and the legislative council reconstituted. The governor believed that the Chinese
government would eventually acquiesce because not to do so would be to go
against the people’s wishes and would be costly internationally.
I had a glimpse of official British thinking after a discussion in May 1993
with Malcolm Rifkind, then under-secretary of state for defence, later foreign
secretary. The British felt a sense of obligation to ensure that democracy was a
basic way of life in Hong Kong by 1997, and they believed, even without a
referendum, that that was the colony’s desire. I said what many Hong Kong
people wanted was to have nothing to do with China till the end of time. Since
this was not possible, surely the best way forward, if they were to continue to
thrive and prosper, was to get Hong Kong’s administrators and potential leaders
to get to know and understand their counterparts in China and learn to protect the
island’s special needs. Rifkind said they were trying to build an entrenched
constitutional structure in Hong Kong to make it more difficult for China to
destroy democracy, in effect to build a system of guarantees for freedoms which
the West took for granted, such as freedom from arrest and freedom to travel. If
that system were entrenched, it would be more difficult for China to destroy it. I
said it would be an exercise in futility. Hong Kong’s chief executive had to

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adjust and accommodate China’s overriding interests. With only four years left,
it was not possible to imbue Hong Kong people with democratic values and
cultural impulses which had never existed there. This was a test of wills that
Britain could not win.
I came to the conclusion that the British were banking on the Americans to
pick up the cudgels against China on human rights and democracy. America had
the leverage in its trade deficit of US$20 billion for the year 1992, which was to
balloon to US$40 billion by 1997. Another leverage was its yearly grant of MFN
(Most Favoured Nation) status for Chinese exports. But China could counter this
by not cooperating on non-proliferation of nuclear material and missile
technology capabilities.
The Western media wanted to democratise China through Hong Kong, or at
least put pressure on China through democratic changes introduced into Hong
Kong. So they backed Governor Patten’s belated and unilateral political reforms.
This encouraged some of the territory’s politicians to believe they could behave
as if Hong Kong could be independent.
More important than all these political moves between the British and
Americans on one side and the Chinese on the other, was the dramatic,
unexpected economic development that took place in China. After Tiananmen in
1989, when investors from the Western countries stayed away, Chinese
entrepreneurs from Hong Kong, Macau and Taiwan had ventured into China. In
three years they were doing well. They showed a sceptical world that 
guanxi
or
personal relationships – speaking the same language, sharing the same culture
and not following the rules – would make up for deficiencies in the rule of law.
These overseas Chinese were so successful that in November 1993, at the second
World Chinese Entrepreneurs’ Convention in Hong Kong, I warned them that if
their investments in China disadvantaged their own adopted countries, they
would exacerbate their relations with their own governments.
Hong Kong stock and property markets had collapsed after the shock of
Tiananmen at the prospect of the colony’s return to China. Eight years later,
China had achieved a complete turnaround in its economy, and Hong Kong was
looking forward to continuing growth with a thriving China. As 1 July 1997
approached, the Hong Kong property and stock markets went steadily upward,
demonstrating a confidence which no one could have predicted. Hong Kong
businessmen who had decided to stay, and nearly all did, had accepted the
reality, that their future depended upon good relations with China. China’s
business done through Hong Kong would make the territory prosper until such

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time as Shanghai and other coastal cities built up their facilities.
I was in Hong Kong for the week before the handover on 30 June 1997 and
met Tung Chee-hwa. In the six months since he had been chosen as chief
executive-designate of the Hong Kong Special Administrative Region, he had
undergone a sea change. From a very private person who had spent his life in the
family shipping business, he found himself suddenly under the glare of the
media, frequently questioned by tough journalists. He accepted that for Hong
Kong to succeed, China must succeed. It was a sound basis for governing Hong
Kong. I found the business and professional elite had adjusted psychologically to
becoming a special region of China. So had the Hong Kong Chinese language
media. Even the most irreverent of the Chinese newspapers run by a maverick
businessman who had abused and insulted Premier Li Peng had toned down. The
press knew what was out of bounds.
Governor Patten, however, continued his bickering with Beijing to the very
end. British leaders boycotted the swearing-in of the provisional legislature,
declaring it was in breach of the Joint Declaration. Chinese leaders were not
invited to the British farewell but would not have attended in any case. The
Chinese had wanted their contingent of uniformed troops to be in Hong Kong
before the arrival of Jiang Zemin for the handover ceremony at midnight on 30
June. At first the British refused but eventually they allowed some 500 men with
light arms to come in at 9:00 pm. When the Chinese announced the day before
the deadline that they would send some 4,000 more troops to Hong Kong at 4:00
am on 1 July the departing governor denounced this “appalling news”. It was
pointless. Sovereignty would have reverted to China at midnight on 30 June, and
Hong Kong would already be Chinese territory.
In the early hours of 1 July after the handover ceremonies I heard a crowd
using battery-powered megaphones shouting slogans for 10–15 minutes. Later I
learnt that some 3,000 demonstrators had done this with the police clearing the
way for them in empty streets. Martin Lee, leader of the Democratic Party, was
addressing crowds on continuing their fight for democracy from the balcony of
the legislative council building. It was no revolutionary situation. The
international media reported this ritual protest.
Strangely, the mood in Hong Kong was muted. People had had 13 years
since the 1984 Joint Declaration to prepare for this moment. There was no
jubilation at being re-embraced by the motherland. But neither was sadness
visible at the departure of the British, no fond farewells from the multitude at the
farewell parade or when the royal yacht