The Making of a Corporatist State in Hong Kong: The Road to Sectoral Intervention

Transcription

1 JOURNAL OF CONTEMPORARY ASIA, 2016 VOL. 46, NO. 2, The Making of a Corporatist State in Hong Kong: The Road to Sectoral Intervention Ma Ngok Department of Government and Public Administration, Chinese University of Hong Kong, Shatin, N.T., Hong Kong ABSTRACT Extant Hong Kong studies have under-stated the corporatist nature of the Hong Kong state. From the 1980s, as part of its political strategy, the Chinese government had helped to build a corporatist state in Hong Kong that incorporated various sectoral elites, leading to a change in the role of the state after Through an empirical study of the behaviour of functional constituency legislators and policy outputs after 1997, this article shows that the functional constituencies as a corporatist structure introduced many sector-oriented demands. These sectoral representatives lobbied for favourable polices, increased representation for their sectors, and more state resources. This drove the post-1997 Hong Kong state to sectoral intervention, as resources were diverted to selected sectors, creating new legitimacy problems for the regime. KEY WORDS Corporatism; Hong Kong politics; sectoral intervention; state; functional constituencies For decades, it was common for studies on Hong Kong to consider it as having a largely non-interventionist state, which pursued a free market or neo-liberal ideology and which was largely autonomous from social forces. This minimalist state was in turn seen as the major reason for Hong Kong s economic success. This conception failed to address the corporatist features of colonial and post-colonial political arrangements, and paid insufficient attention to how political changes since the 1980s have institutionalised a corporatist political structure that drove the Hong Kong state to engage in various sectoral interventions. This article shows how the Chinese government, out of its political needs during the transition era, helped to build a corporatist state for post-colonial Hong Kong. A linchpin of this corporatist regime is the functional constituency (FC) system, an electoral method returning half of the seats of the Hong Kong legislature since 1995, which guarantees the representation of major business and professional elites. By an empirical study of the behaviours of FC legislators and policy outputs, this article shows that the introduction of functional representation and related political designs have driven the state towards sectoral intervention since While the pre-1997 state had largely refrained from sectoral intervention, the post-1997 government was pushed to spend more resources on sectoral development and subsidies, and set up new CONTACT: Ma Ngok mangok@cuhk.edu.hk Department of Government and Public Administration, Chinese University of Hong Kong, Shatin, N.T, Hong Kong Journal of Contemporary Asia

2 248 MA NGOK institutions to promote sectoral growth, which led to a more complicated state structure. The political dominance of business and professional elites after 1997 brought a more activist state embedded in sectoral interests, driving the post-1997 state to adopt sectoral interventionist measures. Autonomous versus corporatist state The dominant image of the Hong Kong state has been of an autonomous state. The colonial state was seen as an administrative state or bureaucratic polity, with British civil servants making major policy decisions autonomous from societal demands (Harris 1978; Lau 1984). Different from the developmental state perspective commonly used to explain the rise of other East Asian tigers (Amsden 1985; Johnson 1982; Woo-Cummings 1999), Hong Kong s economic miracle was usually attributed to its free market economic philosophy, partly resulting from an isolationist and autonomous state (see Deyo 1987; Haggard 1990). There were different and conflicting explanations for this assumed state autonomy. Lau s (1984) famous minimally-integrated socio-political system formulation explained state autonomy by the political culture of the Hong Kong Chinese in the early post-war years. The Hong Kong Chinese were seen as harbouring utilitarianistic familism, stressing material values and solving their livelihood problems through familial networks. This brought a low level of political participation and weak linkages between social groups, putting little pressure on the colonial government. To Lau, colonial politics was marked by boundary maintenance between state and society, as the colonial masters and Chinese society had a value consensus on mutual nonintervention. The colonial regime refrained from intervening in society and the economy, in exchange for the quiescence of the refugee Chinese who would prefer the state to leave them alone. Chiu (1996) attributed the non-intervention strategy to the colonial principle of financial self-sufficiency and the political dominance of the British trading firms. The colonial government and the British trading firms were both adamant that Hong Kong s prime value was to serve as a low-tax free entrepôt for trade with China. With the uncertain political future of the colony, a more developmentalist approach that required more social and industrial investment was deemed too risky. Quite a few scholars have contested this non-interventionist and autonomous state narrative, pointing out that the colonial government intervened in society and the economy from time to time. Studies in post-war rural politics have shown that the colonial regime actively intervened to force the reformulation of Heung Yee Kuk, the indigenous people s organisation of the New Territories, for its own governance and developmental goals (Chiu and Hung 1999). Ngo (1999) showed that business and industrial groups had lobbied the colonial state for subsidies, so the latter was not as autonomous as commonly assumed. Schiffer and others asserted that the colonial state had been using public housing to subsidise a social wage to lower costs for export industries and maintain the price stability of foodstuffs by intervention (Schiffer 1991; Chiu and Hung 1997; Castells,Goh,andKwok1990). Recent studies of the London archives show that post-war British governments, and usually Labour governments, exerted much pressure on the Hong Kong colonial administration to improve social welfare, only to be fended off by an alliance of the

3 JOURNAL OF CONTEMPORARY ASIA 249 colonial governors and the Hong Kong bourgeoisie (see Bickers and Yep 2009; Goodstadt 2005; Lui2012; Ure2012). Ngo (1999) and Goodstadt (2005) concurred that the key economic and political strategy of the colonial state was to stay away from sectoral intervention and direct subsidies to specific sectors or firms. As the colonial regime had weak legitimacy, noninterventionism was a good pretext to turn down competing interventionist demands from Chinese industrialists and British merchants. In this light, the low level of intervention by the colonial state did not originate from free market ideology or an autonomous state. Rather, it was a careful managing of state society relations by the colonial government out of legitimacy concerns. Countering the autonomous state image, there were scholars who suggested that the colonial state had consciously and actively engineered a contract with Chinese society, by using middlemen, intermediary organisations and the co-option of elites. In this view, the colonial state co-opted influential groups and social leaders to enhance legitimacy and defuse possible opposition from Chinese society. Scott (1989) claimed that the colonial regime had faced repeated legitimacy crises since the 1840s, and responded each time by incorporating more groups into an increasingly corporatist decision-making structure. King s famous administrative absorption of politics thesis posits that Hong Kong maintained stability amidst rapid industrialisation by co-opting Chinese elites through appointment into councils and advisory committees or granting colonial honours (King 1975, ). These co-opted Chinese elites bridged the gap between the British and the Chinese, creating a synarchy of colonial bureaucrats and Chinese elites. Law (2009) and Sinn (2003) stressed the role played by Chinese collaborators and intermediary bodies such as the Tung Wah Group of Hospitals in managing state society relations for the British in colonial history. From this perspective, colonial governance had a corporatist flavour, as the colonial state actively incorporated social and business groups into the decision-making structure to maintain legitimacy and stability. This corporatist practice, however, was informal, not well institutionalised and relatively restricted, but it did form an important part of a state society contract, which served to bring about relative stability in the post-war years. Functional elections as corporatism Corporatism as a principle of social and political organisation has a long history in European political thought. The central idea was that human society as an organic whole should be constituted by functional units. Societal groups that shouldered major social functions, such as church organisations and guilds, should form the major basis of organising the polity. In the nineteenth century, corporatism was a social movement that was seen as an alternative to socialism and free-wheeling capitalism (Wiarda 1997; Williamson 1989). Italian and Iberian Fascist states in the inter-war years designed corporatism as a model of top-down, hierarchically-organised developmental dictatorship (Gregor 1979). Fascist Italy and Portugal under Salazar tried to build a corporate state and structure national assemblies along sectoral lines, controlled by the Fascist state. Because of this, corporatism was long cast in a Fascist or authoritarian tint.

4 250 MA NGOK Corporatism was reinvented in the 1970s to analyse European industrial democracies. Corporatism in Western Europe was marked by inclusion of key social groups in formal institutions, most notably representatives of employers and employees in tripartite policy-making structures, as a form of interest representation. Schmitter s authoritative definition had corporatism as: a system of interest representation in which the constituent units are organised into a limited number of singular, compulsory, non-competitive, hierarchically ordered and functionally differentiated categories, recognised or licensed (if not created) by the state and granted a deliberatively representational monopoly within their respective categories in exchange for observing certain controls on their selection of leaders and articulation of demands and supports (Schmitter 1974, 93 94). Several features of European corporatism at the time were identified (see Schmitter 1974; Cawson 1986; Wiarda1997; Williamson 1989, Lehmbruch1982). First, major interest groups were represented in formal decision-making structures to deliberate public policy. They were responsible for representing group interests and mediating between the state and the groups in the policy-making process. Second, not all interest groups were to be represented, meaning that selected groups could monopolise representation and marginalise other non-represented groups. Third, the state was not politically neutral as assumed by pluralists, with major groups going through a process of state-licensing as they entered into a contractual relationship with the state as interest regulators in exchange for their exclusive representation status. In Hong Kong, the colonial regime co-opted local elites by a system of appointment. The most powerful British trading firms such as Jardines and Swire were more or less guaranteed seats in the Executive Council (Exco), the colonial cabinet. Leaders of major chambers of commerce and top professional elites were appointed into the Exco or the Legislative Council (Legco). Goodstadt (2006) saw this appointment system as an early form of functional election by which the colonial state co-opted major social and economic groups in an informal manner. With decolonisation and democratisation imminent after the signing of the Sino- British Joint Declaration in 1984, a new formula for co-optation was necessary. The introduction of FCs was a corporatist formula that suited the needs of both the Chinese and British governments. Scott (1989, 269) claimed that decolonisation in the 1980s brought the colonial government the fourth and final legitimacy crisis, to which it responded again by enlarging the corporatist structure to incorporate more business and professional elites. As a method of election, the franchise of which was limited only to members of major business and professional groups, the FCs sought to enlist the support of these elites to the outgoing regime. The 1984 Green Paper which initiated political reform stated unequivocally that the goal of the FCs was to institutionalise the previously informal system of appointment by a form of election, 1 because full weight should be given to representation of economic and professional sectors of Hong Kong which are essential to future confidence and prosperity (Hong Kong Government 1984, Article 27). In 1985, 12 FC seats were introduced into the Legco, giving representation to nine economic or professional sectors: Industrial (two seats),

5 JOURNAL OF CONTEMPORARY ASIA 251 Commercial (two seats), Legal, Medical, Engineering, Education, Social Services, Architectural and related professions, and Labour (two seats). Since its inception in 1985, FCs gradually expanded to include more economic and professional sectors. From 1998 to 2012, 30 seats or half of the legislature was elected by FCs, including 28 sectors, with the other half popularly elected after These FCs could be divided into four categories: Designated Organisations: some groups represented in colonial times were virtually guaranteed a Legco seat, as voter eligibility was defined by membership of these groups. This included two seats for the industries and two seats for commerce, and one for rural indigenous representatives. For example, only members of the Hong Kong General Chamber of Commerce (HKGCC) can vote in the Commerce (I) constituency. Commercial corporations which are not HKGCC members are not eligible. These seats (five out of 30 FC seats in the 2008 Legco 2 ) are thus effectively reserved for these designated groups. Professionals: nine professional sectors elect their respective representatives through one-person-one-vote by registered professionals, taking up nine seats out of 30 in The sectors include lawyers, schoolteachers, medical doctors, health care professionals, information technology professionals, engineers, accountants, architects and related professionals, and social workers, each with one seat. Corporate Sectoral Representatives: Corporations or associations in 11 different economic sectors elect their respective representatives by corporate voting. Employees in the sector or members of the associations do not have the vote; only the corporates hold the vote. For example, the voters in the Financial FC are licensed banks, while tens of thousands of bank employees cannot vote. Fishermen s associations can vote in the Agriculture and Fisheries FC, but fisherfolk cannot. These 11 sectors included tourism, insurance, catering, finance, financial services, import and export, wholesale and retail, transport, textile and garment, real estate and construction, and agriculture and fisheries. Social Organisations: social organisations including labour unions (three seats), sports and cultural groups, and District Councils returned five seats in Most of them adopt corporate voting. For example, workers do not have a vote in the Labour FC, but each registered trade union has a vote (Ma 2009a). Compared to European forms of corporatism, FCs have important corporatist features, though not without significant differences. The FC system is an institutionalised system of interest representation and intermediation, with sectoral representatives chosen by election. As there are few objective criteria to determine which sectors or groups should be represented, the granting of FC status is more or less a state licensing process, through which the state can choose to co-opt pro-state groups or sectors. By granting privileged and exclusive representation to selected groups, these groups have attained some sort of monopoly and non-competitiveness in representing group interests. There are also significant differences with the European forms. European corporatist structures are mostly appended to the administrative structure; there are few cases where legislatures are elected along functional or sectoral lines. 3 European corporatism, as an alternative democratic form, rests on the assumption that the represented social groups are run and elected democratically. As most of the Hong Kong FC corporate voters are commercial corporations which are seldom run democratically, it largely became a system representing sectoral leaders and corporation bosses (Ma 2013).

6 252 MA NGOK The FC system befitted China s strategy during the political transition. The top official of the Chinese government in Hong Kong from 1983 to 1990, Xu Jiatun, saw his most important task in the transition era as rebuilding the united front in Hong Kong, and maintaining the capitalists confidence (Xu 1993, 59). Support from major business and professional groups was seen as vital for maintaining confidence, stability and prosperity before and after The FC system could ensure the business and professional elites continued representation after 1997, despite decolonisation and democratisation. In the face of the burgeoning democracy movement in Hong Kong, the politically conservative business class was a convenient ally for Beijing to help fend off the democrats demand for full-fledged democratisation. The FCs guarantee the continued political dominance of the business and professional elites and serve as a bulwark against full democratisation. Driven by this political strategy, the Chinese government structured the pre-1997 cooptational organisations and post-1997 political design along sectoral lines. Since the 1980s, various Beijing-appointed decision-making and advisory bodies, including the Basic Law Drafting Committee (23 Hong Kong members), Basic Law Consultative Committee (180 members), three batches of Hong Kong Affair Advisers (total 143 members), the Preliminary Preparatory Committee (94 Hong Kong members), and the Selection Committee (400 members) were all structured along sectoral lines (Ma 2007, 42 44; Cheung 2000, 303). Members were selected from various business, professional and social sectors, with the labour sector grossly under-represented (Goodstadt 2000; Wong 1997). This ensured that the voices and interests of these elitist and economically influential groups were adequately reflected during the transition. The FC system and the Election Committee (EC) that elected the Chief Executive after 1997 perpetuated the interests of these entrenched groups, instituting a sectoraloriented corporatist state after Documents related to the drafting of the Basic Law cited the following reasons for electing the Chief Executive by the EC: (a) It allows representation and the Hong Kong people have had experience in FC elections; (b) It ensures the Chief Executive will not be controlled by the Legco or any of the social strata or organisations; and (c) The industrialists and businessmen will continue to stay in the establishment (Young and Cullen 2010, 14). The goal of the EC was thus to guarantee continued representation and dominance of industrialists and businessmen in the selection process of the Chief Executive. The composition was largely sectoral, heavily weighted in favour of business and professional elites. 4 The 2012 EC was divided into four major sectors, each returning 300 members. The four sectors include: industrial, commerce and financial sectors; professionals; labour, social services, religious and other sectors; and the political sector. Most of the EC members are elected from various sub-sectors that are already represented in the FCs. The 28 FC sectors elected a total of 940 EC members (78.3%) in the 2012 Chief Executive election. The research method: assessing FC sectoral demands For years, research on the FC system has been focused on its undemocratic nature and its implications for democracy in Hong Kong (see Kwok and Chan 2001; Loh and Civic Exchange 2006; Ma 2009a). There was little research on its impact on the role of the

7 JOURNAL OF CONTEMPORARY ASIA 253 state. If we see the FC as a corporatist structure that has grown more inclusive since the 1980s, its introduction and growth should have brought changes to the role of the state. The natural conjecture is that these sectoral groups privileged access to power will bring more sectoral demands, which could drive the state to be more interventionist. Latter (2006) analysed Legco s deliberations on economic policy during the term and found that most FC legislators focused on issues of their own sectors and did not have holistic views on economic policy. They would pursue their own sectoral interests and seldom opposed demands from other sectors, which drove the government to become more interventionist. This would imply a major departure from the colonial governing strategy which refrained from sectoral intervention. This research examines the impact of the FCs on the role of the state in Hong Kong. I start with the hypothesis that policy demands of the FC legislators will be different from demands of those popularly elected from geographical constituencies (GCs). The research method is to analyse and compare the patterns of policy demands put forward by the FC and GC legislators in I analysed all the policy demands made by individual legislators in the annual Budget Debate (usually in March) and the Policy Address debate 5 (usually in October), in the period It is impossible to count all the policy demands made by a legislator during his/her term. Limiting the count to the demands in these two annual debates has three merits. First, the Policy Address and Budget Debate cover government policies and public expenditure in most if not all policy areas. The debates on these two documents give legislators the opportunity to express their positions on the whole range of policy areas. Second, the legislators have equal chance and equal time to speak in these two debates, regardless of their party status or electoral origins. Most legislators will choose to speak since these are the two major debates of the year. This allows the researcher to capture the legislators most important policy positions, and the legislators can be judged on more or less an equal basis. Third, the Hansard as the proceedings of Legco carries a word-by-word record of all the speeches made by every legislator in both debates, which gives a reliable basis on which to gauge the positions and demands of the legislators. 6 A research assistant excerpted all the speeches of the FC and GC legislators in these two debates from All policy demands of the legislators were recorded, 8 and then classified according to (a) the (potential) major beneficiary of the demand (the beneficiary code ); or (b) the (potential) impact on public revenue and expenditure (the finance code ). In the end, every policy demand will be given a binary code (1A, 2B, 3E, etc.) that describes the major beneficiaries and public finance impact of the demand. The coding process was carried out by two coders, who would check with one another to ensure that the coding was consistent throughout all the years, for all members, in all the cases and in both debates. The beneficiary code classifies the demands into four categories, according to the major beneficiary of the demand: (1) The code is 1 if the legislator s own sectoral constituents (for FC) or geographical constituents (for GC) are the major beneficiaries. For example, if the medical FC legislator demands more resources for public hospitals, it will be coded 1. (2) The code is 2 if the business sector in general is the major beneficiary. This usually includes demands for cost reduction for business (for example, reduction of license fees, rates, corporate tax) or subsidies or promotion for businesses.

8 254 MA NGOK (3) The code is 3 if most people or the general public can benefit. This usually includes calls on the government to improve efficiency, demands to improve the environment, food safety, education, and other public goods demands. 9 (4) The code is 4 if the major beneficiary is the lower class or under-privileged (including the elderly, ethnic minorities, the disabled, the poor, the unemployed, and the like). The finance code classifies the demands into five categories, according to the potential financial impact of the demand (if implemented). (1) The code is A if the demand is financially neutral, which means it does not bring an ostensible increase or decrease in revenue or expenditure. 10 (2) The code is B if it brings an increase in government expenditure. It includes demands for more subsidies to sectors or businesses, demands that involve more spending on services, new structures, more staff or resources for a certain policy, or benefits to selected groups and/or communities, and so on. (3) The code is C if it reduces government revenue. It usually includes demands for reduction of taxes and government fees, of public housing rents, and similar demands. (4) The code is D if it reduces government expenditure. It includes demands for reduction in social benefits, pay-cuts for civil servants, slimming of government structures or other specific cost-cutting suggestions. (5) The code is E if it increases government revenue. It includes suggestions for raising new taxes or increases fines or fees to achieve a certain policy purpose. After calculating the binary codes of all legislators in the 10-year period, the behaviour of the FC legislators was compared with that of the GC legislators. A comparison was made of the behaviours of the four types of FC legislators (that is, designated organisations, professionals, sector representatives, and other social sectors). The second part of the empirical work deals with the policy outputs. Legislators demands may or may not lead to policy changes. It is almost impossible to trace whether every policy demand has been answered by the government, so I analyse the annual Budget Debates and Policy Addresses since 1997 to examine the extent to which government polices became more sector-oriented after In the Budget Debates and Policy Addresses in the period, coders recorded the major policy initiatives of the government, including: (a) changed allocation of resources; (b) policy actions, such as new legislations or policy changes; and (c) setting up of new structures, including committees, advisory bodies or units. For every new policy initiative, coders determined the finance code and beneficiary code just as in the case of legislators demands. The total count and distribution of codes provides a first glimpse of the nature of government policy output after The following sections of this article examine the findings derived from the analysis of the data. Legislators demands Comparing the beneficiary codes and finance codes of FC and GC legislators, there are two major observations. First, in terms of beneficiaries, in both the Budget and Policy Address debates, the FC legislators had a high percentage of demands having

9 JOURNAL OF CONTEMPORARY ASIA 255 Table 1. Distribution of beneficiary codes, FC compared with GC, Period Sector FC GC Policy Address Debate (56.8%) 0 (0.0%) 2 45 (15.0%) 9 (5.00%) 3 83 (27.6%) 95 (52.8%) 4 2 (0.66%) 76 (42.2%) Budget Debate (38.4%) 0 (0.0%) 2 68 (19.0%) 20 (8.47%) (39.5%) 179 (75.8%) 4 11 (3.08%) 37 (12.7%) Policy Address Debate (59.0%) 36 (7.19%) 2 94 (15.9%) 75 (15.0%) (20.6%) 254 (50.7%) 4 27 (4.55%) 136 (27.1%) Budget Debate (52.3%) 18 (4.51%) 2 63 (10.8%) 53 (13.3%) (34.3%) 281 (70.4%) 4 15 (2.58%) 47 (11.8%) Policy Address Debate (51.4%) 61 (5.36%) (12.4%) 132 (11.6%) (24.9%) 700 (61.5%) (11.3%) 245 (21.5%) Budget Debate (66.2%) 58 (7.76%) 2 50 (7.55%) 79 (10.6%) (20.2%) 447 (59.8%) 4 40 (6.04%) 163 (21.8%) Policy Address Debate (54.4%) 97 (5.33%) (13.8%) 216 (11.9%) (24.0%) 1049 (57.7%) (7.75%) 457 (25.1%) Budget Debate (54.9%) 76 (5.50%) (11.3%) 152 (11.0%) (29.6%) 907 (65.6%) 4 66 (4.13%) 247 (17.9%) Notes: Key: 1. Sectoral constituents (for FC) or geographical constituents (GC) as major beneficiary; 2. Business community as major beneficiary; 3. General public as major beneficiary; 4. Underprivileged class as the major beneficiary. their sectoral constituents as major beneficiaries. In the Policy Address debates in , 54.4% of the FC demands had their sectoral constituents as major beneficiaries. In the budget debates, 54.9% of the FC demands were sectoral in nature (see Table 1). In contrast, only a small proportion of the GC demands were about their local constituency interests 5.3% for Policy Address debates and 5.5% in Budget Debates in Most GC demands were coded 3, having the general public as the major beneficiary 57.7% coded 3 in Policy Address debates and 65.5% in Budget Debates. The FC members only had 24.0% of their Policy Address demands and 29.6% of Budget Demands having the general public as the major beneficiaries. The GC members had a much stronger concern for the under-privileged. In , 25.1% of the GCs Policy Address demands and 17.9% of the Budget demands had the under-privileged as major beneficiaries (including ethnic minorities, the disabled, the poor, the unemployed, the elderly, etc.). In contrast, the FCs only had 7.8% (Policy Address) and 4.1% (Budget) of demands targeting the under-privileged. Surprisingly, comparing FCs and GCs, there was only a minimal difference in the proportion of demands benefitting the business class in general. The FCs had 13.8% (Policy Address) and 11.3% (Budget) of their demands benefitting the business class, not much different from the GCs: 11.9% (Policy Address) and 11% (Budget).

10 256 MA NGOK The second observation is about the financial impacts. Since democratisation started in Hong Kong in the 1980s, business conservatives had claimed that popularly elected politicians would only placate lower-class voters who are usually in abundance, leading to a massive increase in public spending. This will then create a tax and spend cycle that would hurt the low-tax, low-welfare capitalist haven of Hong Kong. The FCs could thus serve as a buffer to this trend (see, for example, Wenweipo, August 13, 2013). Following this assumption, we should expect the GC members to have more demands for increased public expenditure, and maybe also for more increases in taxes and fees to finance increased expenditure. Table 2 shows the frequency distribution of the finance codes of the two groups of legislators. Most striking was the similarity of the two distributions. The GC and FC legislators shared a similar ratio of financially neutral demands, as more than half of Table 2. Distribution of finance codes, FC compared with GC, Period Demands FC GC Policy Address Debate A 160 (57.6%) 123 (67.2%) B 81 (29.1%) 52 (28.4%) C 25 (8.99%) 3 (6.90%) D 12 (4.32%) 4 (2.73%) E 0 (0.0%) 1 (0.48%) Budget Debate A 225 (63.0%) 144 (61.0%) B 66 (18.5%) 42 (17.8%) C 34 (9.52%) 27 (11.4%) D 14 (3.92%) 7 (2.97%) E 18 (5.04%) 16 (6.78%) Policy Address Debate A 383 (61.5%) 288 (57.6%) B 177 (28.4%) 154 (30.8%) C 43 (6.90%) 43 (8.60%) D 17 (2.73%) 8 (1.60%) E 3 (0.48%) 7 (1.40%) Budget Debate A 307 (50.2%) 230 (57.6%) B 157 (25.7%) 74 (18.5%) C 76 (12.4%) 30 (7.52%) D 33 (5.40%) 18 (4.51%) E 38 (6.22%) 47 (11.8%) Policy Address Debate A 750 (65.6%) 788 (69.2%) B 307 (26.9%) 275 (21.1%) C 52 (4.55%) 40 (3.51%) D 17 (1.49%) 16 (1.41%) E 17 (1.49%) 19 (1.67%) Budget Debate A 302 (45.6%) 349 (46.7%) B 231 (37.1%) 300 (0.40%) C 92 (14.8%) 52 (6.96%) D 11 (1.66%) 11 (1.47%) E 26 (3.93%) 35 (4.69%) Policy Address Debate A 1293 (63.3%) 1199 (65.8%) B 565 (27.6%) 481 (26.4%) C 120 (5.87%) 86 (4.72%) D 46 (2.25%) 28 (1.54%) E 20 (0.98%) 27 (1.48%) Budget Debate A 834 (51.2%) 723 (52.3%) B 454 (27.9%) 416 (30.1%) C 202 (12.4%) 109 (7.89%) D 58 (3.56%) 36 (2.60%) E 82 (5.03%) 98 (7.09%) Notes: Key: A. Financially neutral: no significant increase or reduction in government expenditure or revenue; B. Increase in government expenditure; C. Reduction in government revenue; D. Reduction in government expenditure; E. Increase in government revenue.

11 JOURNAL OF CONTEMPORARY ASIA 257 their demands would not entail ostensible change in government expenditure or revenue. The two types of members also had similar proportions of demands that would lead to increased public expenditure. The FC members had more demands for reductions in government revenue (mostly reductions of government fees and taxes related to businesses), with 12.4% of demands in budget debates, compared to 7.9% for GC members. When it comes to the Policy Address debates, however, there was only a 1.1% difference between the FC and GC demands. Among the four types of FC members, the sectoral representatives had a dominant percentage (more than 60%) of demands coded as sector-oriented (see Table 3). They also had fewest demands benefitting the general public (17.8% for Policy Address and 22.2% for Budget Debate). In comparison, professional FCs showed more concern for the under-privileged and the general public, with 11.9% of demands (Policy Address) Table 3. Comparison of distribution of beneficiary codes and finance codes, between four types of FC legislators and GC members, Period Code Designated organisations Professionals Corporate sector representatives Social organisations 1 26 (53.1%) 49 (55.1%) 56 (54.9%) 40 (64.5%) 4 (2.19%) 2 2 (4.08%) 11 (12.4%) 18 (17.6%) 14 (22.6%) 9 (4.92%) 3 20 (40.8%) 28 (31.5%) 28 (27.5%) 8 (12.9%) 95 (51.9%) 4 1 (2.04%) 1 (1.12%) 0 (0.0%) 0 (0.0%) 75 (41.0%) A 29 (53.7%) 61 (61.0%) 63 (62.4%) 34 (55.7%) 123 (67.2%) B 15 (27.8%) 18 (18.0%) 18 (17.8%) 24 (39.3%) 52 (28.4%) C 8 (14.8%) 11 (11.0%) 10 (9.90%) 3 (4.92%) 3 (1.64%) D 2 (3.70%) 10 (10.0%) 10 (9.90%) 0 (0.0%) 4 (2.19%) E 0 (0.0%) 0 (0.0%) 0 (0.0%) 0 (0.0%) 1 (1.64%) (39.0%) 118 (52.7%) 132 (59.5%) 84 (61.3%) 36 (7.21%) 2 8 (19.5%) 32 (14.3%) 45 (20.3%) 9 (6.57%) 75 (15.0%) 3 17 (41.5%) 63 (28.1%) 42 (18.9%) 31 (22.6%) 253 (50.7%) 4 0 (0.0%) 11 (4.91%) 3 (1.35%) 13 (9.49%) 135 (27.1%) A 18 (43.9%) 139 (62.1%) 144 (64.9%) 82 (59.9%) 289 (57.6%) B 18 (43.9%) 60 (26.8%) 51 (23.0%) 47 (35.0%) 154 (30.8%) C 3 (7.32%) 18 (8.04%) 16 (7.21%) 6 (4.38%) 42 (8.60%) D 2 (4.88%) 4 (1.79%) 10 (4.50%) 1 (0.73%) 8 (1.60%) E 0 (0.0%) 3 (1.34%) 1 (0.45%) 0 (0.0%) 4 (1.40%) (48.6%) 203 (42.3%) 220 (59.0%) 111 (62.7%) 61 (5.39%) 2 35 (31.5%) 42 (8.75%) 53 (14.2%) 12 (6.78%) 131 (11.6%) 3 19 (17.1%) 153 (31.9%) 77 (20.6%) 33 (18.6%) 695 (61.4%) 4 3 (2.7%) 82 (17.1%) 23 (6.17%) 21 (11.9%) 245 (21.6%) A 75 (67.6%) 285 (58.0%) 261 (69.8%) 124 (69.3%) 798 (69.6%) B 26 (23.4%) 184 (37.5%) 77 (20.6%) 40 (22.3%) 275 (24.0%) C 10 (9.01%) 8 (1.63%) 24 (6.42%) 8 (4.47%) 41 (3.57%) D 0 (0.0%) 7 (1.43%) 7 (1.87%) 3 (1.68%) 14 (1.22%) E 0 (0.0%) 7 (1.43%) 5 (1.34%) 4 (2.23%) 19 (1.66%) (47.8%) 370 (46.7%) 408 (61.0%) 235 (62.5%) 76 (4.23%) 2 45 (22.4%) 85 (10.7%) 116 (17.3%) 35 (9.31%) 216 (12.0%) 3 56 (26.9%) 243 (30.7%) 119 (17.8%) 72 (19.1%) 1049 (58.3%) 4 4 (1.99%) 94 (11.9%) 26 (3.89%) 34 (9.04%) 457 (25.4%) A 122 (59.2%) 492 (61.3%) 440 (66.7%) 239 (63.6%) 1199 (65.8%) B 59 (28.6%) 242 (30.2%) 152 (23.0%) 112 (29.8%) 481 (26.4%) C 21 (10.2%) 39 (4.86%) 43 (6.52%) 17 (4.52%) 86 (4.72%) D 4 (1.94%) 21 (2.62%) 17 (2.58%) 4 (1.06%) 28 (1.54%) E 0 (0.0%) 8 (1%) 8 (1.21%) 4 (1.06%) 27 (1.48%) Notes: Key: Beneficiary Codes : 1. Sectoral constituents (for FC) or geographical constituents (GC) as major beneficiary; 2. Business community as major beneficiary; 3. General public as major beneficiary; 4. Underprivileged class as the major beneficiary; Finance Codes : A. Financially neutral: no significant increase or reduction in government expenditure or revenue; B. Increase in government expenditure; C. Reduction in government revenue; D. Reduction in government expenditure; E. Increase in government revenue. GC

12 258 MA NGOK and 3.9% (Budget Debate) having the under-privileged as major beneficiaries. The ratios were close to that of the GC legislators. Representatives of the designated organisations were the least sector-oriented (see Table 3). The above figures suggest that with FCs taking up half of the legislature, the high percentage of sectoral demands could drive the government towards more sectoral intervention. This could also divert more state resources towards the selected sectors, at the expense of the general public and the under-privileged. The business leaders and sectoral representatives did put some pressure on the government to reduce revenue to maintain a low-tax structure, but this was mostly geared towards cost reduction for the business; it does not necessarily bring a diminished state role or size. Chief executive elections and sectoral demands Another venue by which the sectoral elites could exert influence on the government is through the corporatist EC that has elected the Chief Executive since As aforementioned, representatives from the 28 FC sectors took up more than threequarters of the 1,200 EC seats in The Chief Executive election is not an election in the genuine sense, as only the few hundred EC members vote. Most of the business and professional elites represented in the EC do not openly defy Beijing s wishes and usually vote for Beijing s Chief Executive designate. Nevertheless, general support from this elite stratum was an important consideration for a certain Chief Executive candidate to be deemed acceptable to Beijing. The designated Chief Executive also has the incentive to get wide support from different sectors, as a high vote-count in the Beijing-controlled EC would bestow more legitimacy to his/her selection as Chief Executive, or at least show that s/he had strong elite support. This means the sector representatives could use their EC votes in exchange for policy favours from the prospective Chief Executive. A study of the campaign experience of the Chief Executive elections in 2005, and 2012 showed that the Chief Executive candidate(s) would meet EC members from various sectors to solicit their support during the campaign period. According to press reports, the EC members would invariably put forward demands in representation of their sectors. In return they would get pledges from the prospective Chief Executive that at least some of their demands would be answered after he took office. It was common for the representatives to demand policy initiatives to promote the growth of their sectors, and more resources or actions to enhance business or job opportunities. They would also lobby the future Chief Executive to appoint more people from their sectors into advisory or statutory bodies. Table 4 shows the exchanges between the Chief Executive candidate and the sectoral representatives in the 2005, 2007 and 2012 elections. 12 The reported responses of the prospective Chief Executives fell into several patterns. It was common for them to promise to speed up government projects to provide more jobs or business opportunities. They invariably verbally agreed to appoint more sectoral representatives (or professionals ) into future decision-making or consultative bodies. In some cases the Chief Executive designate would commit to demands of promoting sectoral growth, or setting up new institutions (a bureau or a committee) to study specific policies or promote certain sectors. All in all, most of these demands pointed towards a more

13 JOURNAL OF CONTEMPORARY ASIA 259 Table 4. Sectoral demands during Chief Executive campaigns, 2005, 2007 and 2012 Chief Executive election Meeting sub-sector Architectural, Surveying and Planning No report Sub-sector request Social welfare concerns with the publishing copyright of blind people Disabled people under-represented in advisory bodies Chief Executive candidate s response/promise Speed up construction of the new government headquarters Start small-scale construction work as soon as possible Speed up the construction of the cruise terminal and Southeast Kowloon Development Social workers can work in mainland China in the future Increase representation of people with disabilities in advisory bodies Accountancy No report Will include more professionals in Executive Council and Commission on Strategic Development Tax reduction if the economy rebounds Labour Engineering Chief Executive Election 2007 Heung Yee Kuk Industrial Implement minimum wage and maximum working hours Insufficient representation of engineering sector in Executive Council and advisory bodies No report Improve transportation, environment No report and planning in rural areas Do not let industries share all the financial burden if medical expenses increase in the future Include more young professionals in Executive Council, maybe including the engineering sector Speed up medium to small-scale construction work Help the engineering and architectural professions to get Guangzhou Asian Games construction contracts Suggest tax reduction Speed up infrastructure construction Promised not to cut education expenditure if medical expenses increase Tourism No report Implement construction of cruise terminal Transport No report Adjust public transportation fees in remote areas Accountancy Tax reform Tax reform Lower the threshold for accountants to practice in mainland China No prejudice against certified public accountants when appointing public officers Hong Kong Federation of Trade Unions (Labour) Engineering No report Environmental preservation needs had slowed down construction work Problems with selection by lowest bid in public projects Implement minimum wage legislation in the coming year Set up Development Bureau to coordinate infrastructure construction, Create more job opportunities Convene business-labour summit meetings Encourage the setup of social enterprises Set up Development Bureau to promote the infrastructure in Hong Kong (Continued)

14 260 MA NGOK Table 4. (Continued). Meeting sub-sector Sub-sector request Chief Executive candidate s response/promise Wholesale and Retail No report Promised to improve business environment Reduce profit tax rate from 17.5% to 15% in 5 years Agriculture and fisheries Chief Executive Election 2012 Religious (Taoism) Chinese Medicine Propose to rebuild vacant pig and poultry farm into greenhouses for developing organic farming Taoist Festival on a Sunday every year Equal political right of Chinese and Western medical doctors Set up a Chinese medicine hospital Policy for promotion of Chinese medicine Promised to study on the proposal Suggest a commemorative day to honour Taoism Suggest to set up a Chinese medicine development committee to propose strategy for developing Chinese medicine Inclusion of representatives from Chinese medicine sector in advisory committees. Study the possibility of enhancing the role of Chinese medicine in public health care, including hiring more practitioners, encouraging integration of Chinese and Western medicine in clinical treatment and research Feasibility study on setting up a Chinese medicine hospital Provide continual education to Chinese medicine professionals Religious (Islam) No report Will look at the distribution of Islamic schools in different districts and the provision of venues for Islamic activities Social Welfare Agriculture and fisheries Democratic Alliance for the Betterment and Progress of Hong Kong (a pro-beijing party that holds more than 100 EC votes) Social Workers Registration Board should have training functions The government should have a total and long-term plan for the sector 14 suggestions, including establish the Deputy Chief Secretary, enhance economic cooperation with mainland, etc. Agree there should be no conflict in roles if Social Workers Registration Board has training functions Would regularly meet with social welfare sector and review the Lump Sum Grant System The importance of the agriculture and fisheries sector has been under-estimated. Comprehensive long-term planning is needed. Set up a fund for loans for fisheries development Set up agriculture and fisheries research centre Promote restructuring of fisheries sector Agree to set up the post of Deputy Chief Secretary Culture No report Promised to consider setting up a Cultural Bureau and to speed up the construction of West Kowloon Cultural District Representatives from Accountancy, Social welfare, and Legal sectors (Meet with about 30 ethnic minority youths) Concerns about social welfare for ethnic minorities Include an ethnic policy section in his platforms on population policy, education, religious policy, cultural and art policy (Continued)

15 JOURNAL OF CONTEMPORARY ASIA 261 Table 4. (Continued). Meeting sub-sector The Hong Kong Federation of Trade Unions Hotel Education and Social Welfare Sub-sector request Legislate for standard working hours Collective bargaining rights Insufficient land supply for hotels Set up a Tourism Bureau to promote tourism 15 years of free education and fullday pre-school education Chief Executive candidate s response/promise Propose to set up a tripartite committee to study the setup of standard working hours Promised to study introducing collective bargaining rights Review the regulations on the rights of the self-employed in labour law Increase land supply for the hotel industry, especially rural land for resort hotels, or change industrial premises for hotel development Better coordination of various bodies involved with tourism; will consider setting up a Tourism Bureau Support 15-year free education Try his best to push full-day preschool education Information Technology No report Propose to set up Information Technology Bureau, a strategic development fund to improve government services by information technology active role of the state, more state resources into the sectors, more state actions and/or structures to promote growth in these sectors, which means a more sector-oriented and interventionist government strategy. Policy outputs: more sector-oriented? To what extent are the policy demands of the legislators and EC members turned into actual policies of the government? Table 5 summarises the distribution of beneficiary codes and finance codes of the policy outputs in the Budget Debates and Policy Addresses in the period. About 30% of the policy outputs were sectoral in nature, including new resource allocations for sectoral growth, new structures to study or promote sector development, and new sector-oriented policy initiatives. Even if I take away the counts for the four sectors that are related to social services (education, social welfare, medical services), 13 the count is still 127 or 19.6% of the total output counts. This is still double the count of outputs favouring the business class as a whole. The sector-oriented initiatives included those aimed at promoting, subsidising or protecting tourism, logistics, the movie industry, the use of informational technology and fisheries. There were also measures aimed at reducing costs for selected sectors (trade, catering, and the like). This shows that a considerable portion of public resources or policies were directed to selected sectors with clear designated beneficiaries, instead of benefitting the business class in general. As far as the finance codes are concerned, a number of the initiatives led to increased government expenditure (45.8%), since about 60% of the output counts came from the annual budgets. It is noteworthy that while a majority of the expenditure items served

16 262 MA NGOK Table 5. Distribution of policy outputs in Budget + Policy Address A B C D E Sum % % % % Sum % 45.8% 13.56% 0.9% 6.5% the general public or the underprivileged, the sector-oriented expenditure outputs far outnumbered expenditure for the general business class. This also shows that public resource allocation has become much more sector-oriented. A most striking result was the proliferation of new structural appendages. In the period , a total of 68 new structures were proposed in the Policy Addresses and Budget speeches. The form of structure varies, including new bureaus, departments or offices, work groups or units under departments, inter-department task forces or coordination units, commissions to carry out specific tasks, and advisory bodies. The functions, significance and scale of these bodies varied. There were high-level committees, chaired by the Chief Executive or the Financial Secretary, responsible for proposing measures to tackle the economic crisis or attract foreign investment. There were new bodies to co-ordinate or promote information technology, tourism, logistics development, the movie industry, infrastructural development, the creative economy, and the like. New offices were set up to facilitate economic co-operation with Taiwan, Shenzhen and Guangdong, and to supervise or regulate the insurance industry or listed companies. It would be difficult to prove that all these sectoral policy outputs were the direct results of the demands of the FC legislators or EC members, but the implication of the data is obvious. The post-1997 corporatist state had diverted a lot of resources and policy actions to selected sectors. It was also a more activist state, intent on using more policy actions and various new structures to promote sectoral development. The proliferation of new structures inevitably would mean the state growing in size, scope and reach, and was not the lean and small administrative state commonly assumed by neoliberals. The corporatist power of the sectoral elites is self-perpetuating, as they will demand more inclusion of their peers into the decision-making structure. Enhanced sectoral resources and representation helped these sectors to expand, in turn further augmenting their political influence in Hong Kong. Sectors or groups that are not included in this corporatist framework will be increasingly under-represented, in the long term losing out in the power and resources game. 14 Conclusion: corporatism and the changing role of the state The results of this research point towards a rethink or overhaul of past perspectives on the role of the state in Hong Kong. Early studies largely assumed that the Hong Kong state was autonomous and insulated from society, with mutual non-interventionism the norm. The corporatist features of colonial rule were overlooked, partly because of their