NATHAN FENBY DEALING WITH THE DRAGON A YEAR IN THE NEW HONG KONG Also by Jonathan Fenby ON THE BRINK: THE TROUBLE WITH FRANCE THE INTERNATIONAL NEWS SERVICES PIRACY AND THE PUBLIC THE FALL OF THE HOUSE OF BEAVERBROOK DEALING WITH THE DRAGON A Year in the New Hong Kong JONATHAN FENBY -Ho Spadina 1 Crescent, Rm. Ill* Ibronto, Canada • M5S 1A1 LlTTLE, Brown and Company A Little, Brown Book First published in Great Britain in 2000 by Little, Brown & Company Copyright © 2000 by Jonathan Fenby PICTURE CREDITS 1: Ming/ South China Morning Post; 2, 6, 7, 8, 9, 12, 14, 15: Popperfoto/Reuters; 3, 4, 5, 10, 11, 16: AFP; 17: SCMP The moral right of the author has been asserted. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of the publisher, nor be otherwise circulated in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser. A CIP catalogue record for this book is available from the British Library. ISBN: 316 85415 8 Maps by Neil Hyslop Typeset in Bembo by M Rules Printed and bound in Great Britain by Clays Ltd, St Ives pic Little, Brown & Company (UK) Brettenham House Lancaster Place London WC2E 7EN To Renee Digitized by the Internet Archive in 2010 with funding from Multicultural Canada; University of Toronto Libraries http://www.archive.org/details/dealingwithdragoOOfenb GuewqzJiou Hoh Kom 'Macau S 9 South China Sea Note At the time of writing, currency conversion rates were as follows: £i = HK$i2.50 US$i = HK$7.78 Hong Kong a unique place, long known his is the story of a year in the life of but now also the scene of an unparal- T for its material superlatives the last year of a leled political experiment. It also happens to be unconsidered century in which Hong Kong grew from being a small, house fragment of the predominant empire on the planet to a treasure whose wealth was proportionately greater than that of the colonial it has undergone master on the other side of the globe. More recently, possession of a liberal a unique passage from being the final major power ruled by democracy to becoming the freest city in the last major East and West at the crossroads a Communist party. A meeting place of thousand square of the twenty-first century, this territory of only a product of kilometres and 6.8 million people has a gross domestic exchange reserves. US$175 billion and the world's fourth largest foreign theatre for An accident of history and geography, it has become a major questions of our times, not in theory but in everyday life. the Hong Since British rule ceased at midnight on 30 June 1997, Peoples Republic of Kong Special Administrative Region (SAR) of the biggest devel- China has been the most advanced and richest city in the 1980s and 1990s on the oping nation on earth. As it boomed in the once been dis- back of the opening-up of mainland China, what had Victorian empire-builders missed as a rocky outcrop of little interest to to make it one of attracted international companies in their thousands 2 Dealing Wiih the Dragon the great cosmopolitan metropolises. Apart from its 95 per cent Chinese population and its own dealings with the mainland, it has long been the unofficial capital of the diaspora of 100 million overseas Chinese, who see Hong Kong as a safe haven for their money and as a gateway to the mother country. Going in the other direction, it has been the main conduit for funds coming out of China, legally or illegally, some destined for licit investment, others moving through clandestine chan- nels; and for spectacular criminals moving to and from the mainland. Coming out of a long and deep slump, the SAR still has more bil- lionaires than its former sovereign. Even in the depths of recession, the best-known tycoon, Li Ka-shing, whose empire stretches from property and container ports to supermarkets and mobile telephones, took tenth place in the listing of the world's mega-rich by Forbes magazine. Income tax is a flat 15 per cent, and only a quarter of the population pays it. The wealthy are further comforted by the absence of tax on dividends or capital gains. 'Here, the money we make, we keep,' as the owner of a big Chinese herbal pill business puts it. When it changed sovereign powers in 1997, Hong Kong made up 20 per cent of China's wealth, with 0.5 per cent of the mainland's pop- ulation. The head of its government earns HK$287,i4i (-£23,000) a month - more than his counterparts in the US, Britain or Japan. His number two, the Chief Secretary for Administration, who heads the civil service, is paid HK$229,7i3 a month, and the Financial Secretary, the equivalent of the Chancellor of the Exchequer, HK$2i7,i49. Dwarfing their pay, the golf-champion boss of the cen- tral bank gets eight times as much as the chairman of the US Federal Reserve Board. Leading barristers can pull in 45 per cent more than their London counterparts. In the 1997 bull market, the stock exchange was the sixth biggest in the world, and membership deben- tures at the main golf club cost £1 million. Despite a poor construction safety record, pollution, and bureau- cratic blunders such as paying China the equivalent of £130 million a year for water which overflows into the sea, Hong Kong is generally a model of urban development. It has a superb infrastructure and a spectacular new airport, reached over the world's longest two-level suspension bridge to the mountainous island of Lantau. The harbour, Hong Kong . 3 which has ranked as the world's most used container terminal in all but three of the last twelve years, is a constantly shifting pattern of slow ferries and fast ferries, jet foils, tugs and container barges, cargo ships, rusting liners that ply up the China coast, sampans, powerboats and yachts, cruise liners, corporate entertainment launches, visiting warships, a big brightly-lit blue and white gambling craft which takes punters on trips out of Hong Kong waters, and the emblematic green and white Star Ferry shuttling endlessly between Hong Kong Island and the Kowloon peninsula. The local anthem is the sound of the pneumatic drill; the national bird should be the crane. Sheer walls of apartment blocks perch on the edge of steep slopes. Plans for new buildings rise a hundred floors up into the sky. Though too many developments are unimaginative con- crete, glass and steel towers designed to make the most money from the allotted plot ratio, there is no finer office building in the world than the triangular masterpiece designed by I. M. Pei for the Bank of China which dominates the Hong Kong skyline. If road traffic is increasingly caught in gridlock in busy areas, the territory's transport network encompasses an underground system to put most others to shame, along with surface trains, trams, minibuses, double-deckers, shuttles, ferries, taxis, three cross-harbour tunnels, three tunnels through the mountains, plus the funicular railway up the Peak tower- ing over Hong Kong Island. Carrying half the territory's population each day, the underground Mass Transit Railway (MTR) is the world's most heavily used people-carrier, and probably the most efficient. As for other means of getting around, taxis are cheap, the flat fare on the tram is 16 pence, and you can cross the harbour on the upper deck of the ferry for only a penny more. Above ground is an amazing array of road bridges, overhead pedestrian walkways and an 800-metre-long escalator system up the slopes above the main business district. The sprawling squatter camps without electricity or running water that once housed refugees and were the scene of massive fires and landslip disasters have long gone. But there are still indigent 'street sleepers' and 'cage homes' occupied by unmarried, unemployed, unskilled men who live in railed-off bunk spaces. The early housing estates with their shared toilets and 4 Dealing With the Dragon communal cooking facilities belong to history. Still, space is often woefully inadequate, with an average of under 500 square feet per home. More than 100,000 people live in temporary accommodation. But the vast blocks of public flats built on what were once rice pad- dies or virgin land have made Hong Kong - for its size - the site of one of the world's major urban housing developments. Though the potential for fast or long driving is severely limited by the small size and steep geography of the place, there are more luxury limousines per head of population here than anywhere else on earth. The owners of the flat on top of the apartment block my wife and I lived in kept a black stretch limousine waiting permanently downstairs but never seemed to use it. The son of the house switched between Porsches and Ferraris with the occasional Maserati thrown in. The last time we visited the home of the leader of one major political group, he had a large Mercedes, a Porsche and a Ferrari in the driveway, and a Rolls inside the garage. Real-estate and textile barons rendezvous in secluded coves in the South China Sea on Sunday afternoons aboard huge, personally designed luxury boats made in Italy, with resident chefs and dining rooms as big as the average flat: one can seat eighteen.