U.S. and Hong Kong (2004)

Democracy in Hong Kong

Statement Before the
Congressional-Executive Commission on China

by

Randall G. Schriver
Deputy Assistant Secretary of State
East Asian and Pacific Affairs
Department of State

September 23, 2004

(As prepared for delivery)

Mr. Chairman, thank you. I appreciate the opportunity to testify before the Committee today on a subject that engages Americans and America's interests directly: the prospects for democratic development in Hong Kong.

We meet just eleven days after the Legislative Council elections in Hong Kong. I have seen a lot of analysis about who won, who lost, and what these scorecards portend for the future. While there may be a variety of views on the election, we can cite some important outcomes that are indisputable. Perhaps of greatest significance, is the fact that the people of Hong Kong turned out to vote in record numbers, a clear message to the governments in Hong Kong and Beijing that they want - and value - democracy. They want it sooner rather than later. This has been a consistent message for some time, including the most prominent expression of this desire on July 1, 2003, when a half-million people marched in the streets of Hong Kong protesting the attempt by the Hong Kong government to rush through passage of national security legislation.

The voter turnout was impressive and owes much, in my opinion, to the desire of the people in Hong Kong to exercise their rights - and I think perhaps to respond in a positive way to China's regrettable decision last April to cut short the public debate about establishing universal suffrage for the election of the Chief Executive in 2007 and the fourth Legislative Council in 2008. Over 55 percent or 1.78 million of those eligible to vote in the direct elections went to the polls. Those who voted in the 30 functional constituencies - where there are human voters as well as corporate ones for seats representing a variety of professions, from educators and accountants to in industry and finance - similarly turned out in record numbers, though the numbers were much smaller, just 135,000 or about 70 percent of those eligible.

Some notable results include:

-- The democratic coalition came away with a total of 25 seats, though the Democratic Party itself found its number reduced from eleven to nine. A couple of very high profile government critics - radio personality Albert Cheng, who believes that he lost his job because of intimidation by Beijing, and Leung Kwok-hung, nicknamed "Longhair" - both won, and they will bring perspectives that likely will give the Legislative Council a more colorful cast.

-- The pro-business Liberal Party, which leans toward Beijing, but which had opposed national security legislation in 2003, won ten seats, including, for the first time in Liberal Party history, two that were directly contested.

-- The pro-Beijing Democratic Alliance for the Betterment of Hong Kong won twelve seats, becoming the largest single bloc in Legco, despite some predictions that it might be tainted by backing Beijing on the decision to delay the introduction of direct elections and universal suffrage for the 2007 Chief Executive and the 2008 Legislative Council elections.

In our view, the Legco elections, for the most part, appear to have been fairly and transparently conducted and contested, and I personally believe that the results point toward positive movement, away from the polarization that characterized the last year in Hong Kong.

The election did highlight some shortcomings. We are well aware of allegations that there were a number of technical and procedural problems in some locations. We understand that the Electoral Affairs Commission is looking into them and will review the entire operation to correct any irregularities in time for the next election. In fact, the Electoral Affairs Commission has ordered the examination of voting in four functional constituencies where the number of ballot papers counted exceeded those issued to registered voters.

But more fundamentally, there have been consistent charges of voter intimidation in the run-up to the election. The campaign period was, at times, marred by scandal mongering and allegations of not-too-subtle pressure from the central authorities. Here too, the Hong Kong government has promised to investigate any lead and to defend vigorously the integrity of its elections. That is appropriate, and the government's deeds should match its words. Our hope is that this election can be the foundation for a steady reversal of some of the negative trends in Hong Kong over the past year. The Hong Kong people have earned no less.

The elections also showed that no group can stand pat and assume that the people will follow their lead. The government of Hong Kong may not have to face a democratic majority, but it certainly will need to continue to find ways to win Legco - and thus popular - support for its actions; it cannot govern through administrative fiat.

Although Beijing issued a statement that the elections showed that the people of Hong Kong were masters of their house, a more accurate assessment would make note of the significant influence that Beijing will continue to wield on important matters related to Hong Kong's future. Meanwhile, it is becoming increasingly clear that Beijing too needs to find a way to mobilize genuine popular support for its vision of a Hong Kong united with the mainland in a "one-country, two systems" framework, forging a prosperous future together. After all, more than half of the votes cast in this election were for supporters of the democratic coalition. I am not suggesting that some members of the Democratic Alliance for the Betterment of Hong Kong and the Liberal Party are not also interested in promoting and supporting the expansion of democracy in Hong Kong. But I do firmly believe that Beijing's vision of Hong Kong can best be realized by moving more rapidly toward the goal of a genuine representative government - one which would meet the aspirations of the vast majority of the people of Hong Kong. One important element of the Basic Law, Hong Kong's mini-constitution, was realized in 2004 with the expansion of directly elected seats from 24 to 30. It is important that this trend be continued, if the intent of the Basic Law - a Hong Kong governed by Hong Kong people - is to be realized.

We have a great deal of important work to do with this new Legislative Council in Hong Kong and with the Administration there, but let me note that nothing that happened in this election changes America's underlying policy toward Hong Kong, a policy which also promotes important American interests. Both before and after the 1997 reversion, our goal remains - to the best of our ability - to help the people of Hong Kong preserve their prosperity and way of life. Elections do just that. The people's representatives will now have an opportunity to justify their selection, doing the sorts of things that legislatures normally do - enact laws, approve budgets, hold the government accountable for its actions, and openly debate issues that are in the public interest. We wish the Hong Kong government, the Hong Kong legislature, and the Hong Kong people well in this task and are prepared to assist to the best of our ability in helping them.

I believe that the U.S. Congress has the same view of the situation and that this is behind the spirit of the recent Congressional resolutions on Hong Kong, which support the people of Hong Kong in freely determining the pace and the scope of constitutional developments.

Let me offer some general comments about Hong Kong and about America's view of it. The 1984 Joint Declaration of the UK and the PRC, the subsequent promulgation of the Basic Law, and Hong Kong's sustained, autonomous management of its day-to-day affairs laid a foundation for Hong Kong's continued economic success, as well as its political development. The United States embraces and supports Hong Kong's uniqueness through passage and implementation of the Hong Kong Policy Act of 1992 which established the legal authority to treat Hong Kong as an entity distinct from the People's Republic of China.

America has a profound interest in - and commitment to - the success of Hong Kong as a vibrant democracy. Some 45,000 Americans live and work there. Hong Kong hosts more than 1,100 American firms, 600 of which have regional operational responsibilities and employ a quarter of a million people. Cumulative American foreign direct investment in Hong Kong, a region with nearly seven million residents, totaled over $44 billion at the end of 2003. We also have considerable trade interests in Hong Kong. Total exports of goods and services to Hong Kong amounted to $13.5 billion in 2003, while imports of the same reached approximately $8.9 billion, making Hong Kong our 14^th largest trading partner.

With global trade in goods at $455 billion, Hong Kong has a vital interest in liberalizing trade internationally. We have counted Hong Kong among the most vocal and effective supporters of open market principles, and, more generally, Hong Kong has been at the forefront of efforts in the Doha Round to reduce barriers to trade. Hong Kong hosted an important APEC Telecommunications conference in May and will host the next WTO ministerial meeting next year.

Beyond the trade and investment statistics, there exists the evolving but vital bilateral cooperation with Hong Kong authorities which greatly enhances America's security. Hong Kong, the single largest source of U.S.-bound sea containers, joined the Container Security Initiative in September 2002 and made its program operational eight months later in May 2003. In joining the CSI, the Hong Kong Government underscored our common interest in protecting the smooth functioning of the global trading system in the face of terrorist threats. In addition to CSI, Hong Kong, the second largest financial market in Asia, has worked closely with us and through the premier global institution for attacking money laundering, the Financial Action Task Force, which Hong Kong chaired in 2002, to find ways to cut off terrorist access to financial sources. Law enforcement cooperation, across-the-board, has been excellent and targeted at protecting the safety and well-being of the people of Hong Kong and America alike. And Hong Kong has been a welcoming port-of-call for visits by American ships.

I would also note that Hong Kong has an effective, autonomous, and transparent export control regime that is strengthened through pre-license checks and post-shipment verification of Hong Kong companies by U.S. Department of Commerce representatives. Hong Kong government officials are working with us to strengthen our already close cooperation. They told Deputy Under Secretary of Commerce Mark Foulon earlier this month that these kinds of controls are important to ensure that our trade rests on a solid security foundation and that they would address proactively all areas of concern as soon they arose. Our exports of high technology commodities to Hong Kong depend on the integrity of Hong Kong's separateness and on the effective and vigorous enforcement of Hong Kong's export control rules and regulations.

Hong Kong's openness, its international status, its welcoming attitude to businesspeople throughout the world, its active participation in economic organizations, including the World Trade Organization - these are elements of Hong Kong's comparative advantage. The Cato Institute once again recognized just how open and free Hong Kong's economy is by naming it - for the 8^th consecutive year - the freest economy according to the findings in its annual report on Economic Freedom of the World.

The people of mainland China benefit from Hong Kong's openness as well. Hong Kong has played a key role in helping alter the landscape in China, especially in South China, where ten million workers or more in at least 65,000 Hong Kong-run factories are gainfully employed and learning how to do business with an international focus, and according to free market principles. Hong Kong provides access to capital markets and listings on the Hong Kong stock exchange for PRC companies that are also becoming more international in their orientation everyday.

Democracy is predicated on the assumption that there will be disagreements, and disagreements are settled in democracies by the ballot box. Today's disagreements in Hong Kong are over how best to govern and, for the most part, there is a legislature that is balanced with a lot of different views, but with general agreement that Hong Kong's future is best served by better communication between government and the governed. An unproductive debate on whether some in Hong Kong are being influenced by outsiders is the last thing that men and women of goodwill should engage in. What will work best is for all parties, across the political spectrum in Hong Kong, to forge responsible positions that contribute to the resolution of Hong Kong's governing structure and its prosperity.

Our role is clear. We want to see the Hong Kong people succeed. They deserve a stable and prosperous home. The best means to that end, in our view, is the steady evolution of Hong Kong toward its democratic future. That future should rightfully be in their hands, for them to decide. We don't seek to usurp their decisions, nor do we intend to interfere with the Hong Kong people's relationship with their central government in Beijing. But the United States will always stand for the fundamental principles of democracy, and we will not shrink from declaring our core principles. We certainly won't agree with those who argue that democracy is a luxury to be offered to a people only at some distant point in the future when they are somehow more prepared for it. The most telling point that can be made about Hong Kong's legislative election is this: the Hong Kong people proved again that they have the wisdom and maturity to be trusted with universal suffrage. They are a proud, smart, capable, and industrious people who deserve the best possible chance to succeed in the 21^st century.

With that Mr. Chairman, I will be pleased to take your questions.

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