We're getting to the root of Hong Kong's governance problems - Webb-site.com urges all investors and market professionals to join the 1-July march, the background to which is as much about the need for universal suffrage under Article 45 as it is about state security under Article 23.

March for your Rights on July 1
30 June 2003

For months now, it has been increasingly obvious to the population of Hong Kong that we have a Government that is neither by the people nor for the people. The train of Chief Executive Tung Chee Hwa has been ignoring all the stop signals as it heads down the track for a head-on collision with its own population.

Not since the mourning after the Tiananmen Square massacre in 1989 has an issue provoked such strong feelings among the people, and although some may argue that economic conditions are a contributing factor, there can be no doubt that a popularly-elected Government with an electoral mandate to govern would not be facing this situation. No system of accountability can exist without the right of the people to elect and remove their highest leader, and no true free market can exist without a free market in the policy-makers who govern that market through the ballot box.

Webb-site.com hereby urges all investors and financial sector employees to participate in the march from Victoria Park to Central starting at 3pm on 1-Jul. Sometimes, words are not enough, and we must be counted. And if you cannot make it, wear black on Tuesday anyway. Your editor has a black "Invest HK" T-shirt which we think strikes the perfect balance.


For readers outside HK, let us recap: Article 23 of the SAR's constitution, the Basic Law states:

"The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government, or theft of state secrets, to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies."

This obligation to legislate was something which the Tung administration had probably been deliberate in putting off for several years, knowing what controversy it would cause, and also knowing that much of this was already covered by legislation left behind by the British. Perhaps the HK Government would still be delaying were it not for the surprise actions of a previously little-known cult called Falun Gong, which on 25-Apr-99 surprised the Beijing leadership by turning up with thousands of peaceful members doing their deep breathing exercises outside the Zhongnanhai leadership compound.

This provoked intensified interest on the part of the mainland government in cracking down on dissent, including the internet as a means for its organisation. Meanwhile, HK's government dithered on how to deal with the local branch of the cult without raising fears in Hong Kong of a threat to civil liberties, with Mr Tung famously telling LegCo in Feb-01 that Falun Gong was "more or less bearing some characteristics of an evil cult". Thankfully for those who respect freedom of belief and speech, the cult has not been banned in HK, and nor has a much more successful and older cult known as the Roman Catholic Church.

But that Falun Gong episode, "more or less", was what set Tung's administration on the path of implementing Article 23 legislation, as it is widely believed that the mainland exerted pressure to ensure that Hong Kong had enacted sufficient laws to oppress, should the need arise, any hotbed of dissent that might threaten the communist party's stranglehold on mainland power from an "offshore" Hong Kong base.

Once they had embarked on the drafting, the Tung administration, fronted by Secretary for Security Regina Ip, proceeded with gusto. While some concessions have been made, the current draft still holds draconian powers that go far beyond what is necessary to comply with Article 23. They include:

Now unfortunately, there are in place in many countries around the world similar laws, and the HK Government has sought to draw justification from the existence of such laws. But In so doing, the HK Government fails to recognise the key difference: the UK, Australia, Canada and the US all have democratically elected governments, and any government which abuses such laws does so with the risk of being removed at the next election.

For example, although many criticise the Bush administration's enthusiasm for stripping civil rights from certain "non-citizens" by calling them "enemy combatants" (but not prisoners of war, which would give them Geneva Convention rights)  and implementing secret military tribunals without independent legal representation, or for locking people up indefinitely as "material witnesses" without trial, there can be no doubt that if it goes too far, it will lead to an eventual retribution at the ballot box or a reversal in the Supreme Court on constitutional grounds.

But in Hong Kong, we have a Chief Executive who is elected not by universal suffrage but by a small circle of 800 people dominated by business tycoons, a rigged legislature in which only 24 out of 60 are directly elected (next time it will be 30 out of 60), and a Court of Final Appeal which can be and has been overruled by the Standing Committee of the National People's Congress upon HK Government request.

The tycoons, eager not to offend the Beijing leadership for commercial reasons, have with a few exceptions been  silent on Article 23. One welcome exception is Bank of East Asia Chairman and Banking Constituency Legislator David Li Kwok-po, who earlier this year warned of the impact of the proposals on bank and investor confidence. The barristers' HK Bar Association has also been vociferous in their criticisms, as has the Solicitors' Law Society.

Universal Suffrage

None of this would have been quite as controversial, nor would the proposals have been so draconian, if the laws were being proposed by a democratically elected Government. Article 45 states in part:

"The method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures."

While Annex I of the Basic Law clearly states, as we explained to LegCo earlier this month, that the first opportunity under the Basic Law to elect a Chief Executive by universal suffrage, should Hong Kong so choose, is for the third term of the Chief Executive commencing on 1-Jul-07:

"If there is a need to amend the method for selecting the Chief Executives for the terms subsequent to the year 2007, such amendments must be made with the endorsement of a two-thirds majority of all the members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People's Congress for approval."

It is ironic that while the Tung administration seeks to ram Article 23 legislation through LegCo before the summer recess, the Government is at the same time dragging its feet on Article 45, and even wrongly suggesting that the law does not allow for universal suffrage to elect the Chief Executive until 2012.

What's in it for investors? Well, ultimately, so many of the regulatory reforms we have called for over the last five years would come much faster if we had a Government directly accountable to the investing public rather than to the vested interests of certain tycoons. And freedom of information, which is threatened by Article 23, is the cornerstone of free markets.

When hundreds of thousands demonstrate their objections to Article 23 in the march on 1st July, they will also be sending a clear message that even the deafest, most obstinate government would be stupid to ignore - give us universal suffrage, and we won't need to march, because your policies will be shaped by the ballot box.

Webb-site.com urges all investors and market professionals, in your personal capacities, to get to Causeway Bay by 3pm on Tuesday and join the march to Central. If you have never joined a march before (as we have not), then now is the time.

© Webb-site.com, 2003

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