HONG KONG’S HANDOVER FROM HOLDOUT TO HANDOUT ECONOMY: A Tale of Two Chinas
This was written on April 27, 1997, by the great Australian commentator Viv Forbes.
Looking at Hong Kong today and the direction of progress, what do you think of this essay?
I was saddened to read, last week, that the first Red Army soldiers had slipped into Hong Kong, like Jackals in the Night.
This marks the end of a huge social experiment lasting for decades and involving millions of people — a contest between the command society and the contract society, between socialism and free enterprise, between the closed economy and free trade.
Judy and I first saw the two faces of China about 25 years ago, and the stark contrast will remain in my mind forever.
The plane came into Hong Kong at night, below the tops of the glittering towers lining the sides of the runway. Next day we went shopping. We wandered freely through the little shops full of porcelain and china, silk and ivory, turquoise and jade, silver and gold and an abundance of electronic and other gadgetry at unbelievable prices. It was a magic city full of friendly industrious people.
Then we went across the bridge into the other China for a visit to Canton.
Our welcome was a line-up of uniformed and unsmiling customs officials who treated us as dangerous subversives. We were forced to list almost every item we carried and every dollar in our pockets. These all had to be accounted for on exit. I remember thinking at the time, they seemed to fear we were carrying money or goods which could end up in the hands of subversives. But I was carrying much more dangerous weapons of subversion — a copy of Ayn Rand’s Atlas Shrugged and a head-full of anti-socialist philosophies. I didn’t declare them.
Everywhere, we were accompanied by a vigilant government guide (guard). Walking the streets of Canton was like visiting the poorest rent-controlled housing commission estate you can imagine. It was a dilapidated museum of graceful colonial buildings which last saw paint and maintenance in 1948.
Our special tourist “money” could only be spent in quarantined “Friendship stores”. As a tourist group of just Judy and I, we were shepherded into deserted friendship stores of shoddy goods staffed by bored attendants, waiting for us to leave so they could switch off the lights and close the doors. No smiling salesmen here. We visited a commune. Again there was indication everywhere of under-employment. Quiet resignation, universal poverty, and all the enthusiasm for life you see on a state prison farm.
The whole place was dreary, despondent, poor and suspicious. It was a relief to get past the Red Guards and cross back into the city of little shopkeepers.
The unfolding of the Tale of two Chinas has taken most of this century but the most instructive period is since the Japanese invaders were forced out of Asia and back to their islands in 1945.
Both Chinas had seen colonial powers use force to open and protect their trading centres in places like Shanghai, Hong Kong, Macau and Canton. Both suffered invasion and destruction of lives and property during the war.
Big China started the post war era with huge human, agricultural, cultural and mineral resources. It could and did command all the human and material resources needed to create one of the richest and most powerful nations in the world.
The great socialist experiment started in 1948, when Mao expelled Chiang to Taiwan and led his army of reforming and revolutionary zealots into Peking. At last all the colonists, capitalists, foreigners and invaders were gone. The great reformers were free to plan and command all the resources of a huge country and a talented, industrious and homogeneous race of people towards creating the new Marxist utopia.
In contrast, Hong Kong started the great capitalist experiment with immense handicaps — a small barren rocky island far from the great markets of Europe and America. It had no minerals, no coal oil or water, little flat land, and negligible agriculture or infrastructure. A war torn population of maverick refugees most of whom had fled to Hong Kong with no money, skills, tools or family support. This unpromising multicultural conglomeration was ruled by a government of unelected foreigners taking orders from the other side of the globe. They just had the rule of law, sound currency, free trade, low taxes and no government subsidies or welfare.
Yet, after only thirty years into the great experiment, the mainland giant was paralysed, millions of its people killed by starvation or execution, its borders closed and its industry stagnant. The island pygmy, however, had become a glittering magnet, not only for visitors and shoppers like us, but also for thousands in the dreary mainland prison who risked death and the unknown to abandon the land of their birth to sneak, swim or crawl into the hands of the foreign barbarians controlling Hong Kong. (When we visited, the average wages in Hong Kong ten times higher than those in Canton).
Who won the great experiment? The people themselves delivered an unambiguous verdict — hundreds of thousands fled from the mainland to Hong Kong every year. Only an occasional idiot went the other way, often getting executed for their trouble. It was a one way street and all guards on both sides of the border looked the same way.
Despite this flood of refugees and the lack of resources, Hong Kong became an island of tolerance and prosperity in Asia — no confiscation of property, no unemployment, low taxes, no starvation, no forced labour, no indoctrination camps, no riots, no conscription, no slave labour, no state religion, no massacres of dissidents, no great leaps backwards.
What are the lessons the world can learn?
The first lesson is, command societies do not work. No matter how good the intentions, any government which believes it can create utopia using the bludgeons of regimentation, taxation, confiscation, dictation, welfare, conscription, nationalisation or central planning is either very stupid or very dangerous, probably both. The only westerners to see anything worth admiring in the rule of the red mandarins were blind local Marxists and their fellow travellers in the unions, the media and academia.
The China experiments show that the Mainspring of human progress is not more power to the government — it is more freedom to the people. The government does not have to be democratic, but it must understand the rule of law. Even an unelected government of foreigners backed by alien troops can deliver peace, justice and prosperity as long as their laws merely set the unchanging rules of the game and ensure their monopoly on power is used only for preventing real crime and maintaining a fair field and no favours — authoritarian on crime, laissez faire on the economy. Just as the free trade of the Whigs made little England into “Great Britain”, so too did free trade create a great trading nation out of the tiny rocky island in the far east.
There is no middle way. A little bit of poison is still poison, and the results will be proportional to the dose. Australia today is closer to the failed policies of Big China than to the successful policies of the three little Chinas.
As the Black Watch pulls out and the Union Jack is lowered, we are seeing the end of the most benign and constructive empire the world has ever seen. We English speakers the world over should never let them make us feel guilty. As much of the old Empire slips back into real barbarism or destructive dictatorship, many ordinary people the world over must wish for the peace, the prosperity and the rule of law such as was delivered for a couple of centuries of unbelievable progress by a handful of undemocratic, warlike, inventive, bold, arrogant, foolhardy, invincible, grasping but generally fair-minded Englishmen.
So I am sad to see the first Jackals slink into the magic free city of Asia. A bit like watching the first Huns swagger down the streets of Rome. Pax Romana disappeared, but Rome survived, as will Hong Kong.
But Rome, and Hong Kong, will never be the same again.