On 1st July, Tung Chee-hwa, a little known businessman with a marine engineering degree from Liverpool University, becomes Hong Kong's first chief executive. Philip Bowring considers what made Beijing choose Tung to manage the transition to Chinese sovereigntyby Philip Bowring / July 20, 1997 / Leave a comment
As first chief executive of the Hong Kong Special Administrative Region, Tung Chee-hwa has already secured himself a place in history. But the Chinese-appointed successor to Chris Patten would have seemed an improbable choice a decade ago, when he was struggling to resurrect his collapsing family business. Even a year ago most people would have asked: Tung who? Hong Kong people of 35 and over will remember his father Tung Chao-yung, the shipping magnate who when he died in 1982 was one of only two or three Hong Kong citizens who qualified for the ranks of the globally famous. But Tung Chee-hwa, the elder son? He was nowhere on the Hong Kong scale of achievement or notoriety. He was a second rate businessman, viewed by the local business community as something of an outsider-a Shanghainese with most of his assets outside Hong Kong.
The choice in late 1996 of this anonymous businessman was intended by Beijing to indicate that business would continue to get priority in the new Hong Kong of “one country, two systems.” (Curiously, on the day of his appointment, shares in Tung’s company rose by 7 per cent while the rest of the stockmarket slumped, which may be a depressing market verdict on how Hong Kong will be run.)
What is Tung’s business background? The family shipping group, of which publicly listed Orient Overseas Container Holdings was the most visible but not the largest part, got into financial difficulties in the mid-1980s. It was eventually rescued with a lot of help from mainland China through the mediation of Henry Fok, a Hong Kong/Macau property and gambling tycoon whose close ties to the mainland stretch back to Korean war sanctions-busting.
Tung’s public relations machine has rewritten history to suggest that Tung’s father was responsible for the shipping group’s debacle. Typical was a glowing cover story on Tung in Time magazine at the time of his appointment. It claimed that the father had been “brashly continuing to place new orders” when other owners were cutting back, and depicted Tung as “cautious and conservative,” crediting him with “hacking away at the company’s ballooning debt and in-troducing western management techniques.”
The reality is that the father built his empire by putting secondhand ships to good use and buying out troubled western lines like Britain’s Furness Withy. In the two years before his death, only five new ships were ordered by the group. But within two years of the son taking the helm, no fewer than 30 vessels were ordered. Default came in September 1985, three and a half years after Tung’s father died.
Complex debt negotiations between banks, shipyards and the Tung group took 18 months, despite China’s injection of $125m through Fok. The result left many lenders and outside shareholders feeling aggrieved. There was much arm twisting and some banks had to make huge write-offs while the family kept control and a substantial amount of stock, despite its failure to meet personal guarantees given on some loans.
Those (few) who recollect this episode of a decade ago view with amusement Tung’s current talk of the importance of Asian values, of the priority of collective over individual interests, of obligations over rights. Tung, now 60, is older and wiser than in 1983 and less desperate than in 1986. He is credited with having worked hard to bring the group back to profitability. But the rewriting of history is ominous.
More recently, Tung’s business interests have been a potential source of embarrassment. He has a minority stake in the huge Orient Plaza development in the heart of Beijing, which involves Li Ka-shing, Hong Kong’s best known property developer. Orient Plaza is believed to have been an issue in the corruption scandal which led to the ousting of Beijing party secretary and politburo member Chen Xitong in 1995, and the suicide of the city’s vice-mayor.
But why would Beijing choose as the first chief executive a businessman of modest achievements and with little prior claim to the respect of the Hong Kong people? The two other main contenders were better known figures. Most prominent was former chief justice Tian Liang Yang, who “patriotically” discarded his knighthood before declaring his candidacy. Yang was indeed the preferred candidate of Zhou Nan, the boss of Xinhua (the Chinese news agency and de facto embassy in Hong Kong), who has never been able to overcome his leftist distrust of big business. But Yang’s late conversion to patriotism made him suspect in Hong Kong as well as Beijing.
The second contender was another Shanghainese heir to a business empire built on shipping: Peter Woo, son-in-law of the late Sir Yue-kong Pao. But Woo was not popular with the local business community. He was seen as too young and, with his slicked back hair and American management jargon, he did not have the comfortable, patriarchal image that Chinese President Jiang Zemin seemed to want of the chief executive. To some, Tung has been a shoo-in ever since Jiang singled him out at a meeting in the Great Hall of the People in January 1996, and so it was to be, even though as late as August he ranked very low in Hong Kong opinion polls of possible candidates.
Tung’s strengths in Beijing’s eyes are many. He lacks any kind of personal local power base in Hong Kong; at least in the early days he is thus unlikely to be able to stake out specifically Hong Kong positions which might clash with Beijing’s interests. Likewise, being little known, few have anything against him.
Tung is not Cantonese and thus immune from the regionalist tendencies which are perhaps more evident among the Cantonese than the other Chinese. Beijing is concerned about the erosion of central power, particularly in a province which led the way in economic development. The last thing it wants is a strong local leader in the potentially awkward Hong Kong enclave who would be closer to Guangzhou than Beijing. None of the other leading contenders were of Cantonese origin either.
With most of his business interests outside the territory, Tung is perceived locally as “neutral,” not being associated with any particular big business faction. This is more important than it seems because so much wealth in Hong Kong is concentrated in a few family hands, notably those of the leading property developers.
Tung’s family has strong nationalist cred-entials. Before and after the Japanese war, Tung’s father had helped dev- elop China’s naval fleet. Although he fled to Hong Kong, and helped transport Chiang Kai-shek’s men (and treasures) to Taiwan, by the 1990s the family’s patriotic history became more important than its anti-communism.
As a Shanghainese from the old treaty port of Ningbo which spawned many leading Chinese commercial families, Tung fits in with the so-called “Shanghai gang” around President Jiang. The group’s members are viewed as modernising and opportunistic but politically conservative.
Tung also has excellent international connections, which will reassure foreigners that Hong Kong remains a good place for business. Before his appointment, he was as well known in Washington as among the Hong Kong elite. He lived in the US for several years in the 1960s and has been a frequent guest of the US Council on Foreign Relations. Barbara Bush even launched one of his ships.
Until a few months ago, Tung provided a direct link between Governor Patten’s executive council (Exco) and the new regime. He did not say much at council meetings other than advise against changes which might upset China. Some viewed him as China’s “spy” in the council. But Patten needed some businessmen on Exco and Tung, with his marine engineering degree from Liverpool University, was seen as articulate, uncontroversial and polite, with few commercial axes to grind in Hong Kong.
Before his appointment, Tung expressed few views in public. But he is evidently a conservative. Since his appointment, he has spoken frequently about the merits of traditional values, such as the need for good order and discipline, and Confucian virtues of family, education and obedience. He is a firm believer in old Chinese beliefs and practices, such as fung shui-the impact of physical environment on good fortune. He will not be taking up residence in Government House because of its “bad fung shui” as well as its colonial connotations. He even recorded his birth date according to the Chinese lunar calendar rather than the western one in official use in Hong Kong (and the mainland). Tung’s apparent sympathy with pre-1949 China led one democratic legislator to remark: “As a politician I view Tung as a very old man.” His traditionalist, patriarchal views may be out of tune with a younger middle class Hong Kong which has absorbed western liberal ways, but they are welcomed by Beijing, which fears liberalism and expects obedience.
An avuncular manner, easy but unobtrusive charm, and fluency in three languages make Tung a good ambassador. He might not have to face a real election, but he gives the impression of someone who could win one. Nor does he parade his wealth. Chubby features, undyed (a rarity among Chinese leaders) crew-cut hair and an unforced smile all give the impression of sincerity and intelligence.
So much for Tung the “candidate.” How will Tung the chief executive perform? The answer lies in Beijing. How much leeway will Tung be given to take decisions in the interests of Hong Kong? Beijing needs to give him rope if the autonomy of the Special Administrative Region is to be credible. Innumerable statements have asserted that autonomy, and the backing given him by President Jiang and foreign minister Qian Qichen (China’s man in charge of the handover), has bolstered his prestige.
Yet Tung shows scant signs of personal clout where it really matters-in the inner sanctums of the party. He may have the same rank as the mayor of Shanghai, but the lack of his own power base-precisely what makes him attractive to Beijing-makes him politically ineffective and suspect within Hong Kong itself.
After 1st July he will find three Beijing organisations in Hong Kong anxious to promote their influence. One has been there for years-Xinhua, whose boss has headed the party as well as the propaganda machine. The incumbent, Zhou Nan, is due to retire. The identity of his successor will be watched closely. The incoming Beijing organisations will be the foreign ministry, boasting a huge new building (patriotically paid for by Li Ka-shing) and likely to want to control the foreign press. Then there is the People’s Liberation Army. Its garrison will be small but the commander will be a lieutenant general, no mean rank in an army not prone to rank inflation.
If President Jiang continues to enlarge his own power base, Tung should be able to cling to his coat tails. But it is hard to see what central power configuration will emerge from the party congress due in the autumn. Coming so soon after Deng Xiaoping’s death, this congress will be unusually important.
From the point of view of safeguarding local autonomy, Tung got off to a bad start. He was required to go to Beijing in person to get his Exco list approved. “Couldn’t he have faxed it?” was the general view. As for the list itself, it was almost a caricature of today’s United Front at work. Heading it was Sze Yuen (formerly Sir Sze Yuen) Chung, chief of the very same body more than a decade ago. The old opportunists who had tugged their forelocks before Sir Murray MacLehose and Sir Edward Youde and exulted in their knighthoods were back again as Chinese patriots-proof that Beijing likes nothing better than ageing autocrats, regardless of their business reputations or compradore behaviour. The list also included various business and professional types, of varied reputation, who have joined the Beijing bandwagon over recent years and are now getting their reward. Then there is a small contingent of old time leftists and genuine patriots who had struggled against the colonialists for years.
Tung understood what China wanted to inherit: Hong Kong, circa 1970, when there were a tiny number of mega rich, hundreds of thousands of refugees thankful not to be in Mao’s paradise, overbearing colonial officials whose word was law, almost no political debate, an appointed rubber stamp legislature and corruption on a grand scale. If the clock could not be turned back that far, China would settle for the 1980 version. Tung soon set about doing what Beijing wanted or at least what he thought it wanted: to reverse the bourgeois liberal trend of the past decade. At the political level this trend was speeded up under Governor Patten, but it had been growing anyway as the western influenced middle classes sought a share of power.
Tung proposed reverting to old colonial laws, restricting freedom of assembly and political party funding. He said this was necessary to prevent the disorder he saw in the US in the 1960s. (He conveniently forgot that the only disorder in Hong Kong in recent years-the 1967 riots-had been fomented by the very Communist party which had just parachuted him into power.) He warned against the advocacy of independence for Tibet or Taiwan. Legislation was also introduced on “national security,” which many see as a catch-all for disallowing dissent.
Whether he believed in the need for these changes or not, he was clearly taken aback by the outcry against them. His own popularity plummeted. Many saw him as simply doing what he was told. But Tung the novice politician is learning. He has indicated a readiness to amend the proposed changes. In recent speeches he has emphasised Hong Kong’s freedoms, and his willingness to tolerate anti-government demonstrations. He has been at his most reassuringly avuncular with a critical foreign press. His appointment of Andrew Li as head of the appeal court was well received by the legal fraternity as more encouraging for judicial independence than other names which had been considered. However, some also note that while Li is an excellent lawyer, he comes from a very prominent local family known for its ability to make profitable accommodations with whomever is in power. One Li relative is head of the bankers’ association, another is head of the Chinese University in Hong Kong, while yet another made a rapid transition from high court judge under the British to fervent pro-Beijing patriot. Tung is doubtless comfortable with the Li clan as an expression of Chinese family values and the merits of dynasties, whether capitalist, compradore or communist by origin.
Beijing meanwhile seems to have decided that some things can wait until after the handover. The sceptics fear that this is a policy of smile sweetly now and keep the stick hidden until the battalions of foreign journalists coming for the handover have departed, and the IMF/World Bank annual meeting in September has passed off smoothly.
The experience of recent months has taught Tung the difficulty of representing Hong Kong’s interests while pursuing “patriotic” goals. He may also be becoming more aware that the eclectic group with which he surrounds himself owes little if any personal loyalty to him. They aim to influence him rather than follow him in the style of Lee Kuan Yew in the early days of Singapore’s independence.
Both Beijing and Tung look to Singapore as a model for Hong Kong, as though Hong Kong were not sui generis. Beijing likes Singapore’s social discipline and lack of political dissent, and its promotion of high-tech industries (albeit almost all foreign owned). Tung has echoed some Singaporean themes: the need for Hong Kong to halt the erosion of its industrial base and place more emphasis on education and housing. Hong Kong’s housing situation is indeed scandalous due to a conspiracy between the government and a small group of developers to keep land prices much higher than necessary. Property development profits and government land sales revenue together account for almost 10 per cent of GDP. High per capita incomes become an illusion when families spend 50 per cent of their income on mortgage interest on tiny flats. Many would pay some price in civil liberties for affordable housing.
So perhaps Tung can deliver a few things which will meet Hong Kong’s needs as well as those of Beijing. But the problem with the Singapore analogy is that Lee Kuan Yew made Singapore’s identity the focus of his agenda. Right or wrong, he did what he thought was best for Singapore. Tung has no such option. His brief is to manage a transition, not just from British to Chinese sovereignty, but to a situation where Hong Kong realises that in Beijing’s eyes one country is at least as important as two systems.n