Crossroads (Toward Philippine economic and social progress)
Philippine Star, 27 November 2019


This week, through the ballot and a local election that appears to resemble the mid-year local elections in our country, Hong Kong made a powerful statement to its central government.

This provides an interesting topic of discussion of politics, development, economic freedom in historical perspective.

Under different systems. Hong Kong was returned to China by the United Kingdom after a century and a half of British rule. It grew under a different system of development, but the people now live in the reality of belonging to its original fold of being part of China, politically and economically.

The recent instability in Hong Kong is an expression of a demand for greater political freedom, for more self-government, and for standing more strongly against complete political control from China’s central government. Hong Kong wants to be separate from the single system of China’s larger government. They want to be governed according to the declared Chinese maxim, “One China, two systems.”

When Hong Kong grew in the past, it was simply as a beehive of work for the people under foreign colonial rule. Though they enjoyed little political freedom under British rule, its residents prospered under a stable colonial regime in which economic freedom thrived. Under that capitalist system, Hong Kong became one of the most prosperous economies in East Asia.

Once referred to until 1997 as a “city state,” Hong Kong was one of the original East Asian four “tiger” economies, the first group of emergent economies of Asia (after the economic recovery of Japan) to join the group of highly developed, progressive high-income economies.

The Philippine-Hong Kong historical connection. There is a long historical connection between Hong Kong and the Philippines. Being neighbors geographically, one can not ignore the other. At least Filipinos cannot.

For a long period, the Philippines and Hong Kong both shared a colonially dependent history. We were under Spain for four centuries.

The British political control of Hong Kong began in 1842 when Hong Kong island was ceded to the United Kingdom after the Opium War. A little more land (New Territories) was secured under a 99 year lease to expand the Hong Kong territories as further outcome of the continuing Opium War of that period.

As early as 1890, Jose Rizal, our hero, referred to Hong Kong as a bastion of development. He admired the British policy of giving it more freedom than Spanish policy allowed the Philippines. In fact, in 1892, as he contemplated return to the country before his final imprisonment by Spanish authorities, it was in Hong Kong that provided Rizal a place of practice as an eye doctor.

The British government helped Spain, a fellow colonial power, by accepting the exile of Filipino revolutionary leaders headed by Emilio Aguinaldo in 1897 (after the pact of Biaknabato) to keep internal peace in the Philippines. Thus, it was also from Hong Kong that these leaders launched the continuation of their revolutionary struggle.

With Hong Kong’s role as an entrepot trading outpost and coaling station for ships plying the Chinese shores, it also became, from the viewpoint of the Philippines, a window for commerce with the rest of the world and with China during the Spanish rule.

After the United States politically displaced Spain in 1898, Philippine economic progress proceeded even faster than that of Hong Kong. The Philippines experienced rapid economic progress, benefiting from free trade with the United States.

The growth of Hong Kong under British rule. When Britain returned Hong Kong to China in October 1997, it was the most prosperous single region of China. It became a symbol of the eminent success of China as a consolidating power.

After the triumph of the Communist Revolution in the mainland in 1949, the United Kingdom gave the new government of China quick political recognition. This move provided political security to Hong Kong as a British outpost in East Asia.

British political rule gave all residents economic freedom: the freedom to work and to set up business, to trade, to undertake economic activities as freely as commerce would allow. That was the British mantra of economic governance for its territories.

Under these rules, Hong Kong became, incrementally, over the decades, one of the most progressive economic spots in the world. As the world recovered from the destruction of the Second World War, Hong Kong established its position as a place for manufacturing. It also attracted a strong in-migration of Chinese manpower despite British efforts to contain it.

Hong Kong became a busy factory for many labor-intensive products needed by the more advanced world. The rapid expansion of industry was helped further by massive influx of capital and advanced technology that improved the economic drive further.

Over time, Hong Kong was transformed from a manufacturing center to become an important logistics center for trade and finance in the region and into China. Hong Kong became the home of refugee capital from China and normal foreign investments from other countries.

Hong Kong also became the laboratory of learning for mainland Chinese reformers. Deng Hsiao-peng, the successor to Mao Tse-tung as leader of China, copied Hong Kong’s experience and transplanted other mini-Hong Kong experiments to different regions of China.

By October 1997 when Britain returned Hong Kong to China as its long lease of Hong Kong ended, a more pragmatic China, through its leaders, was talking about developing China as “One China, two systems,” that could accommodate the Hong Kong that has developed within the concept of a larger China.

Philippine development after the war diverged from the Hong Kong experience. When we became an independent nation after 1946, our experience as an economy diverged very differently from that of Hong Kong.

Hong Kong continued to remain a free trade port. We became a bastion of regulated industrial developments, with barriers of exchange controls and import controls protecting all domestic developments.

So, with great proximity and Hong Kong almost along the travel routes, Hong Kong became, for rich and well-traveled Filipinos, the place of shopping choice.

(To be continued.)