Hong Kong in the WOrld

Hong Kong in the WOrld Implications to Geopolitics and Competitiveness

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Hong Kong in the WOrld Implications to Geopolitics and Competitiveness Simon Shen The Chinese University of Hong Kong, Hong Kong ICP Imperial College Press

Published by Imperial College Press 57 Shelton Street Covent Garden London WC2H 9HE Distributed by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore 596224 USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Names: Shen, Simon. Title: Hong Kong in the world : implications to geopolitics and competitiveness / Xu Hui Simon Shen, the Chinese University of Hong Kong, Hong Kong. Description: New Jersey : Imperial College Press, [2016] Includes bibliographical references and index. Identifiers: LCCN 2016023407 ISBN 9781783269372 (hardcover : alk. paper) Subjects: LCSH: Hong Kong (China)--Politics and government. Geopolitics--China-- Hong Kong. Hong Kong (China)--Foreign relations. Hong Kong (China)-- Foreign relations--china. China--Foreign relations--china--hong Kong. Classification: LCC JQ1539.5.A91 S42 2016 DDC 327.5125--dc23 LC record available at https://lccn.loc.gov/2016023407 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Copyright 2016 by Imperial College Press All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher. For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher. Editors: Siwei Huang, Kalvin Fung, Judy Lee and Carol Dyer Printed in Singapore

Preface A Dimming Pearl of the Orient or the Revival of Port City Diplomacy? For a long time, Hong Kong has been at the centre of the international political economy, from the early treaty port system to the recent Panama Papers scandal. However, the relative importance of Hong Kong in international relations does not match with the lack of related studies in academia. While literature exists which relates to Hong Kong s potential role in Chinese foreign policy under the one country, two systems framework, there has been little interest among international and local academia in the external relations of Hong Kong over the last ten years. 1 Indeed, if not for the Umbrella Movement in 2014 and the Fishball Revolution in 2016, the international world, the author argues, might no longer be interested in Hong Kong studies, especially those related to its external relations. 1 See for example, [1] Ting, W. The external relations and international status of Hong Kong, Occasional Papers/Reprints Series in Contemporary Asian Studies, No. 2 (Baltimore: School of Law, University of Maryland, 1997); [2] Cummings, L. M. and Tang, J. The external challenge of Hong Kong s governance: global responsibility for a world city, in Politics and Government in Hong Kong: Crisis under Chinese Sovereignty, Sing, M. (ed.) (London: Routledge, 1998), pp. 176 197; [3] Weng, B. S. J. Mainland China, Taiwan and Hong Kong as international actors, in Hong Kong Reunion with China: the Global Dimensions, Postiglione, G. A. and Tang, J. T. H. (eds.) (New York: M. E. Sharpe, 1997) pp. 42 78; [4] Hook, B. and Santos Neves, M. The Role of Hong Kong and Macau in China s relations with Europe, The China Quarterly, 169: (2002), 108 135; [5] Lee, J. and Chan, G. Hong Kong s changing international relations strategy, in Hong Kong SAR: In Pursuit of Domestic and International Order, Cheng, J. and Leung, B. (eds.) (Hong Kong: Chinese University Press, 1997) pp. 177 200. v

vi Preface The lack of studies in recent years, however, should not be allowed to diminish the importance of the subject. This short preface will, therefore, deconstruct the academic importance of Hong Kong external relations into three component parts: the global, the national and the local; discuss the relative importance of the subject; and explain the structure of the book. The Three Important Dimensions to Hong Kong External Relations Global: Paradiplomacy and Its Constraints While the classical definition of paradiplomacy always refers to the highest level of personal and parallel diplomacy, complementing or competing with the regular foreign policy of the minister concerned, 2 recent discussion on the subject by Ivo Duchacek and John Kincaid concerns the external activities of a constituent unit parallel to state-tostate diplomacy. 3 The growing number of partially independent territories (PITs) since the Second World War reflects the fact that the world system does not simply comprise nation states as the only unit but also PITs, especially in the field of political economy and cultural interactions. 4 2 Butler, R. Paradiplomacy, in Studies in Diplomatic History and Historiography, Sarkissian, A. (ed.) (London: Longman, 1961), pp. 12 25. Cited by Kuznetsov, A. S. Theory and Practice of Paradiplomacy: Subnational Governments in International Politics (London: Routledge, 2015) p. 26. 3 [1] Duchacek, I. Perforated sovereignties: towards a typology of a new actor in international relations, in Federalism and International Relations: The Role of Subnational Units, Michelmann, H. and Soldatos, P. (eds.) (Oxford: Oxford University Press, 1990) pp. 1 33. [2] Kincaid, J. Constituent diplomacy in federal polities and the nation-state: conflict and co-operation, in Federalism and International Relations: The Role of Subnational Units, Michelmann, H. and Soldatos, P. (eds.) (Oxford: Oxford University Press, 1990) pp. 54 75. 4 [1] Rezvani, D. A. Surpassing the Sovereign State: The Wealth, Self-Rule, and Security Advantages of Partially Independent Territories (Oxford: Oxford University Press, 2014).

Preface vii While the domestic status of Hong Kong is not recognized by Beijing as a federal unit like a federal state in the United States or Länders in Germany, one country, two systems preserves the international status of Hong Kong and gives it independence of action in the global arena, which sometimes extends to sensitive issues such as security and foreign policy. For instance, Hong Kong has joined the anti-terrorism financing and anti-money laundering task force, the Financial Action Task Force on Money Laundering, as an independent financial unit alongside China; and Hong Kong was also the first port on Chinese soil, in 2003, to have joined the US-initiated Container Security Initiative: its praise by the United States as exemplary, hints that the subsequent joining of Shenzhen and Shanghai in 2005 may partially have been influenced by Hong Kong s performance. 5 Given the enduring contribution of Hong Kong from the Cold War to the New Cold War, a term used to describe Sino-American relations, a study of international politics therefore sheds light on paradiplomacy in practice. Especially from the well-perceived realist orientation of China under Western scholarship, Chinese foreign policy is assumed to be holistic under the leadership of the Communist Party. However, the monolithic assumption of Chinese foreign policy is challenged if we take Hong Kong external relations into account. The special political and institutional status of Hong Kong in the context of greater China and the world shows what potential sub-national entities can achieve, while the quasi-federal nature of one country, two systems also sheds light on the limitations of PITs under an authoritarian regime, a situation which current Western scholarship has not reviewed. [2]. Gipouloux, F. Asian Mediterranean: Port Cities and Trading Networks in China, Japan and South Asia, 13th-21st Century (Cheltenham, UK: Edward Elgar 2011). 5 U.S Department of State, U.S.-Hong Kong Policy Act Report, 1 April 2005. [http://2001-2009.state.gov/p/eap/rls/rpt/44543.htm, accessed on 3 May 2015].

viii Preface National: Multi-layered Chinese Foreign Policy in Practice From the Chinese scholar s perspective, however, the term paradiplomacy may not be the best to conceptualize the innovation of Chinese foreign policy in recent years. Instead, they borrow the multi-layered perspective from the public policy school in describing the dynamics of provincial government and central government in the foreign-policymaking process. 6 The slight difference between paradiplomacy and a multi-layered foreign policy system is that while the former treats the subnational regime as an independent actor in international politics, the latter suggests that the sub-national regime is a part of the multi-level policy process needed to be gone through in policy making, but is not an independent actor working in parallel with the nation state. This perspective sees the involvement of sub-national regimes in foreign policy making and practices as a natural evolution and expansion of foreign policy. 7 For instance, recent studies from Chen Zhimin and his colleagues show that Chinese provinces started to participate in China s external relations in the 1980s, when China gradually opened up under Deng Xiaoping s leadership. 8 Based on their studies on the role of Yunnan in the Greater Mekong Sub-region and that of coastal provinces in Sino- African relations, Chen et al. conclude that the internal development of the modern state structure in China and the force of globalization allow Beijing to balance the unity of national authority, and that the desire for proactive provincial external relations strengthens China s international position in various ways. 9 Under one country, two systems, Hong Kong is perceived to have more autonomy than traditional coastal provinces or cities like Guangdong 6 Hocking, B. Localizing Foreign Policy: Non-Central Governments and Multi-layered Diplomacy (London: Macmillan, 1993). 7 Ibid. p. 26. 8 [1] Chen, Z., Jian, J. and Chen, D. The provinces and China s multi-layered diplomacy: The cases of GMS and Africa, The Hague Journal of Diplomacy, No. 5 (2010), pp. 331 356. [2] Chen, Z. and Jian, J. Chinese provinces as foreign policy actors in Africa, SAIIA s Occasional Papers, No. 22 (South African Institute of International Affairs, 2009). 9 Chen, Z., Jian, J. and Chen, D. The provinces and China s multi-layered diplomacy: the cases of GMS and Africa, The Hague Journal of Diplomacy, No. 5 (2010), pp. 355.

Preface ix and Shanghai. The internationally recognized economic and financial status of Hong Kong as a free port and market gives Hong Kong unlimited exposure and links to external parties and cultures. This being so, Hong Kong could be the flagship for Chinese multi-layered diplomacy and should be granted greater opportunities. Unfortunately, as the following chapters will reveal, the dynamics of Hong Kong external relations are constrained by China s grand strategy in the conduct of foreign relations. This gradual change in Chinese foreign policy, to be more assertive and more ready to project her power to neighbouring regions, is reflected by certain incidents discussed in the later chapters. 10 The changing role of Hong Kong can therefore be seen as a point of reference when analysing the current foreign policy shift in China and in the years to come. Local: Revealing the True Identity of Hong Kong Last but not least, bringing Hong Kong s potential regarding its external relations back into the limelight is essential for Hong Kong studies to flourish. In evaluating the sincerity of the promises stipulated by Beijing under one country, two systems, local and overseas scholars tend to evaluate the situation from the increasing presence of Beijing in domestic politics and the decline in freedoms and rights enjoyed by civil society, 11 10 [1] Walt, S.M. China s new strategy, Foreign Policy, 26 April 2010. [2] Sharma, R. China foreign policy shift? The Diplomat, 16 December 2010. [3] Taylor, B. China s foreign policy assertiveness, in China Story Yearbook 2012: Red Rising, Red Eclipse, Barmé, G. R. and Goldkorn, J. (eds.) (Canberra: Australian Centre on China in the World, Australian National University, 2012) pp. 2 25. 11 [1] Fong, B. The partnership between Chinese government and Hong Kong capitalist class: implications for HKSAR governance, 1997-2012, The China Quarterly, 217: (2014), pp. 195 220. [2] Lam, W. and Lam, K. C. China s united front work in civil society: the case of Hong Kong, International Journal of China Studies, 4:3 (2013), 301 325. [3] Hong Kong Journalists Association, Press Freedom under Siege: Grave Threats to Freedom of Expression in Hong Kong, 2014 Annual Report Report of the Hong Kong Journalists Association (July 2014). [http://www.hkja.org.hk/site/host/hkja/userfiles/file/annual_report_2014_final.pdf, accessed on 4 May 2015]. [4] Hong Kong Transparency Report 2014 (Hong Kong: Journalism and Media Studies Centre, the University of Hong Kong, 2014).

x Preface little evaluation is made from the perspective of external autonomy. Yet under one country, two systems, while Article 13 of the Basic Law has laid down Beijing s responsibility in handling foreign affairs related to Hong Kong, Chapter VII of the Basic Law further defines the power and autonomy enjoyed by the Hong Kong Special Administrative Region Government, and its officials, its relations with external parties, its ability to develop relations with other international entities, conclude international agreements and participate in international organizations in appropriate fields, under the name Hong Kong, China. This external dimension of Hong Kong is the fundamental part of its identity that both China and the world wish to maintain. The only question that remains is what kind of identity does Hong Kong now have since colonial rule ended and sovereignty was handed over in 1997? By studying a number of bilateral and multi-lateral cases involving Hong Kong, it is hoped to shed light on this question with the introduction of the concept of port city and port identity. Organization of the Book This book is structured in two parts. In Part 1, thematic issues are addressed to show the multi-dimensional potential of Hong Kong s external relations. Chapter 1 focuses on the Basic Law that lays the constitutional foundation for Hong Kong s external dealings; Chapter 2 reviews the conduct of Hong Kong s general external relations since 1997; Chapter 3 analyses the Asia s World City self-branding strategy constructed by Hong Kong; Chapter 4 traces the global Hong Kong diaspora; Chapter 5 features the contribution of Hong Kong people to China s foreign policy, using the case of Margaret Chan; and Chapter 6 examines Hong Kong s competitiveness in the world today. In Part 2 of the book, a series of bilateral relationships are analysed to reveal Hong Kong s connection with the world. Chapter 7 focuses on counter-terrorism cooperation between Hong Kong and the US; Chapter 8 analyses Hong Kong US relations in the context of the Sino-US [http://transparency.jmsc.hku.hk/wpcontent/uploads/2014/09/hktr2014_201410171.pdf, accessed on 4 May 2015].

Preface xi relationship; Chapter 9 looks at Hong Kong Japan relations, especially how anti-japanese emotions among the youth of Hong Kong compare with those of their counterparts in mainland China; Chapter 10 deals with Hong Kong s special connection with the Middle East; Chapter 11 describes the integration between Hong Kong and South Asia; Chapter 12 focuses on the role Hong Kong tycoons have played in Latin America; while Chapter 13 concludes the book with a vision of Hong Kong s future and its external relations potential as a Port City.

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Acknowledgement As a product of the authors academic journey researching Hong Kong external relations, some of the chapters which appear here have been published in part or whole in other academic books and journals. Chapter 1 originates from a book chapter in Per Sevastik s edited work Aspects of Sovereignty: Sino-Swedish Reflections; 1 Chapter 2 originates from a contribution to Joseph Cheng s edited book Hong Kong under Tsang Administration; 2 Chapter 8 originates from the edited book by Jean-Marc Blanchard and the author in Conflict and Cooperation in Sino-US Relations: Change and Continuity, Causes and Cures; 3 Chapters 3, 5, 6, 7, 9, 10, 11 and 12 originate from early contributions to Pacific Review, Pacific Affairs, Chinese Education and Society, The Journal of Comparative Asian Development, Intercultural Communication Studies, Israel Journal of Foreign Affairs, Policy Research Center Journal, Estudios de Asia y Africa, respectively; 4 Chapter 13 is an extended version 1 Shen, S. Hong Kong s sub-sovereign status and its external relations, in Aspects of Sovereignty: Sino-Swedish Reflections, Sevastik, P. (ed.) (Stockholm: Raoul Wallenberg Institute, 2013) p. 101 119. 2 Shen, S. Achievements and limitations in the grey area: external relations of Hong Kong in the Tsang administration, in Hong Kong under Tsang Administration, Cheng, J. (ed.) (Hong Kong: City University of Hong Kong Press, 2013). 3 Shen, S. and Kaminski, R. From the EP-3 incident to the USS Kitty Hawk-Song class submarine encounter: the evolution of Sino-US crisis management communication mechanism, in Conflict and Cooperation in Sino-US Relations: Change and Continuity, Causes and Cures, Blanchard, J-M. and Shen, S. (eds.) (New York: Routledge, 2015). 4 [1] Shen, S. Re-branding without re-developing: constraints of Hong Kong s Asia s World City brand (1997-2007), Pacific Review, April 2010. [2] Shen, S. Borrowing the Hong Kong identity for Chinese diplomacy: implications of Margaret Chan's World Health Organization campaign, Pacific Affairs, 81:3 (2008), 361 382. [3] Shen, S. Future xiii

xiv Acknowledgement of a presentation made at the Association for Asian Studies Annual Conference 2016. 5 While the early contributions have been revised to fit with the thematic framework of the book, the author would also like to take this opportunity to express his sincere gratitude to those who have actively supported publication in such a marginalized field. Mr. Ryan Kaminski and Mr. Osmond Kin-ming Kwong, who co-authored Chapters 8 and 13 respectively, should be acknowledged for their friendship and hard work. The author would also like to express his thanks to the Global Political Economy and Global Studies courses at the Chinese University of Hong Kong. The support from Lord Wilson Trust is also highly appreciated. Last but not least, I would like to express my sincere thanks, in alphabetical order, to Mr. Wilson Chan, Ms. Carol Dyer, Mr. Siwei Huang, Mr. Osmond Kin-ming Kwong, Ms. Judy Lee and Ms. Shanshan Lian, for their assistance in finalizing the manuscript. I am also indebted to Mr. Qi Xiao, the editor from World Scientific Publishing, for his kind editorship and coordination. I would also like to thank Imperial College Press for publishing the book. Without their support, Hong Kong in the World might never have become a reality. comparative competitiveness under the same Chinese roof: a survey of self-evaluation from local and mainland students in Hong Kong, Chinese Education and Society, 45:2 (2012), 38 59. [4] Shen, S. and Fung, J. Affect of regime changes on non-state actors in Taiwan- Hong Kong relations (1997-2010): publicly and privately affiliated think tanks as casestudies, Asian Politics & Policy, 2:4 (2010). [5] Shen, S. Hong Kong-US relations and the response to counter-terrorism, The Journal of Comparative Asian Development, 6:2 (2007), 311 336. [6] Shen, S. Alternative online Chinese nationalism: response to the anti- Japanese campaign in China on Hong Kong's internet, Intercultural Communication Studies, XVII:3 (2008), 172 186. [7] Shen, S. Hong Kong-Middle East relations: Chinese diplomacy and urban development, Israel Journal of Foreign Affairs, 9:2 (2015), 253 266. [8] Shen, S. Integration of Chinese and South Asians: education of South Asian ethnic minorities in Hong Kong as a case study, Policy Research Center Journal, 2:1 (2013), 186 198. [9] Shen, S. The role of Hong Kong enterprises in Sino-Latin American relations: Lee Ka-shing s port diplomacy as an example, Estudios de Asia y Africa, 2015. 5 Shen, S. and Kwong, K. Future of Hong Kong s External Relations: Comparative Port- Cities Development in India and China, presented at the Association for Asian Studies Annual Conference, Seattle, WA, in 2016.

Contents Preface... v Acknowledgement... xiii Part 1 Thematic Issues... 1 Chapter 1: Hong Kong s External Relations under the Basic Law... 3 1.1 The Concept of Paradiplomacy... 4 1.2 Instances of Paradiplomacy in the World... 8 1.3 Is China Showing Flexibility in Sovereignty Absolutism?... 11 1.4 Using Hong Kong s External Relations in Chinese Diplomacy... 15 Chapter 2: Navigating the Grey Area: Hong Kong s External Relations since the Tsang Administration... 17 2.1 Background... 17 2.2 Cases... 18 2.3 Conclusion: Lack of Vision, or Lack of Coordination?... 36 Chapter 3: Re-branding without Re-developing: Constraints of Hong Kong s Asia s World City Brand (1997 2012)... 41 3.1 Theoretical Assumptions Leading to the Asia s World City Experiment... 43 3.2 Evolution of the Asia s World City Exercise in Hong Kong... 51 3.3 Limitations of the Theoretical Assumptions: Factors Hindering the AWC Re-branding s Success... 58 3.4 Additional Implications for the HKSARG... 64 Chapter 4: White Gloves for the Authoritarian Diplomats? Public Diplomacy of Hong Kong Chinese for China... 69 4.1 Hong Kong Diaspora in Chinese Diplomacy: Theoretical Review... 70 4.2 ETOs: Hong Kong s External Branches and Their Limitations... 75 4.3 Public Diplomacy and Hong Kong Chinese: Prominent Cases... 77 4.4 Merits of Hong Kong Public Diplomacy for China in the Realist- Liberal Model... 82 4.5 Summary... 89 xv

xvi Contents Chapter 5: Borrowing the Hong Kong Identity for Chinese Diplomacy: Impli -cations of Margaret Chan s World Health Organization Election Campaign... 91 5.1 Introduction and Methodology... 92 5.2 Incorporation of Chan s Hong Kong Identity into Chinese Diplomacy... 101 5.3 Discrepancy between Receptions from Beijing and Hong Kong: Implications of One Country, Two Systems for the Future... 110 5.4 Chan s Directorship in the World Health Organization and Criticisms... 118 5.5 Conclusion... 121 Chapter 6: Comparative Competitiveness under the Same Chinese Roof: What Chance for Hong Kong s Next Generation?... 123 6.1 Literature Review... 124 6.2 Perceived Comparative Competitiveness of Hong Kong Youths... 129 6.3 Conclusion and Implications: How Special will the SAR be in the Future?... 146 Part 2 Bilateral Relations... 153 Chapter 7: US Hong Kong Relations: Interaction with Domestic and International Security and Terrorism... 155 7.1 Theoretical Framework of John Ikenberry... 157 7.2 The United States Hong Kong Policy Act and Beyond: Documenting the Liberal Grand Strategy and its Imperial Development since 9/11... 163 7.3 Getting Closer to China: Can the Liberal Grand Strategy Be Sustained?... 177 7.4 Hong Kong US Relations after 2010... 181 7.5 Conclusion... 187 Chapter 8: From the EP-3 Incident to the USS Kitty Hawk Song Class Submarine Encounter: The Evolution of a Sino-US Crisis Management Communication Mechanism... 189 8.1 Literature Review and Background... 191 8.2 Reconstructing the Sino-US Crisis Management Communication Mechanism... 194 8.3 Contrasts in Initial Communication... 196 8.4 Contrasts in Crisis Resolution... 202 8.5 Contrasts in the Aftermath in Mechanism Building... 204 8.6 Reasons for the Changes: Evolution of Sino-US Crisis Management Communication... 206 8.7 Final Words... 212 Chapter 9: Alternative Online Chinese Nationalism: Response to the Anti-Japanese Campaign in China on Hong Kong s Internet... 215 9.1 Anti-Japanese Nationalism Online... 217 9.2 Localization vs. Nationalization: Absence of Criticism of Beijing... 222 9.3 Reaction towards Patriotic Education after the Handover... 227 9.4 The Role of Japanese Culture in the Hong Kong Identity... 228 9.5 Multiple Identities of Anti-Japanese Organizations in a Free Society... 230

Contents xvii 9.6 Hong Kong Japan Relations after 2010... 232 9.7 Conclusion: Previewing Chinese Online Nationalism after Democracy... 235 Appendix A: Dual Identity in Online Reactions to the Beijing Olympics: The Hong Kong Golden Forum as a Case Study... 238 A.1 Internet Community in Hong Kong: Literature Review... 239 A.2 Criticism of the Chinese Government during the Beijing Olympics... 240 A.3 Relatively Warmer Response towards the Chinese Medallists... 242 A.4 Short Conclusion: Dual Identity Revealed?... 243 Chapter 10: Hong Kong Middle East Relations: Theorizing its Contribution to Chinese Diplomacy and Hong Kong Society... 245 10.1 Hong Kong Middle East Relations and Chinese Diplomacy... 246 10.2 Impact of the Middle East on Hong Kong s Domestic Society... 256 10.3 Short Summary... 263 Chapter 11: Integration of Chinese and South Asians: Education of South Asian Ethnic Minorities in Hong Kong as a Case Study... 265 11.1 Challenges South Asian Students Face in Hong Kong... 267 11.2 Methodology and Polling Findings... 270 11.3 Suggestions and Further Discussion... 273 Chapter 12: The Role of Hong Kong Enterprises in Sino-Latin American Relations: Lee Ka-shing s Port Diplomacy as an Example... 277 12.1 Li Ka-shing, Hong Kong and China... 278 12.2 Case Studies in Latin America... 281 12.3 Conclusion: Intentional Diplomacy or Business Activities?... 287 Chapter 13: Future of Hong Kong s External Relations: Comparative Port Cities Development in India and China... 293 13.1 Political Context of Port Cities: Empire, Nation States and Sovereignty... 294 13.2 Two Integration Paths: Goa and Hong Kong... 305 13.3 Conclusion... 313 Index... 315