Uneasy Partners

Uneasy Partners: The Conflict Between Public Interest and Private Profit in Hong Kong

Leo F. Goodstadt
Copyright Date: 2009
Pages: 344
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    Uneasy Partners
    Book Description:

    The mixture of different interested parties, from the elite locals, made up mostly of businessmen, the British Hongs, the expatriate civil servants and their local counterparts, the British Government and its Foreign Office gurus, the mainland Chinese and last but not least the people of Hong Kong, makes for a drama that quickens the pace of this important and serious book and makes it immensely readable. It is nevertheless a sombre account of a rather sad story with endless missed opportunities to do the right thing." - Simon Murray, CBE, former Group Managing Director of Hutchison Whampoa and Asia-Pacific Executive Chairman of Deutsche Bank In Uneasy Partners, Leo Goodstadt draws on his vast experience of government and business in Hong Kong to put forward a provocative and challenging account, part praise, part indictment, of how government and business in Hong Kong transformed a poor refugee community into one of the world's great cities and created a hugely successful economy. The core of the book is a penetrating appraisal of the often paradoxical partnership between government and business and its considerable political and social costs. The principal actors in the story are the colonial rulers who were prepared to sacrifice Britain's diplomatic interests and the interests of British companies in order to ensure Hong Kong's survival, and their chosen allies from the Chinese business elite. British officials believed that economic growth and the survival of colonial rule depended on collaboration with Chinese capitalism and cooperation with China's communist rulers. The book identifies how the community set limits to these relationships, preventing the blatant sell-out of the public's wellbeing to British, Mainland or local business interests. It reviews how colonial officials defied London's proposals for political and social reform, fought for economic and financial autonomy and refused to protect the pound sterling. It identifies Beijing's financial gains from the colonial policies that provided China with a secure international business base throughout the Cold War. Other chapters assess the belated drive against wholesale corruption, the decline of British commercial conglomerates, the ascendancy of HSBC, and the contribution of businessmen from Shanghai. The story goes on beyond the British departure and explains how the Chinese Government's decision to retain the political system of the colonial era handicapped the new leadership in responding to the changing political and social expectations of the community.

    eISBN: 978-988-8053-02-5
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface Expectations of Excellence
    (pp. vii-xxx)
  4. Introduction Against Great Odds
    (pp. 1-18)

    Hong Kong occupies a unique place in the history of the British Empire. No other colonial territory has matched its economic achievements, and no other colonial community has been so deprived of access to democracy. It was the first society in Asia to escape from poverty after World War II, and by the end of the century its people had a standard of living unmatched anywhere else in the region except Japan and Singapore. “No other society in history,” it has been claimed, “has ever grown wealthy so fast.”¹ By 1997, Hong Kong had become the only crown colony in...

  5. I The Colonial Culture and Its Siege Mentality
    (pp. 19-30)

    At the heart of Hong Kong’s colonial system lay a strange paradox. The British rulers were an alien racial and cultural group installed at the summit of the social, economic, and political hierarchies.¹ They were agents of a foreign power whose presence was a reminder of China’s past humiliations at the hands of Western imperialists. Sovereignty over the territory was claimed by China, the nation to which the colonial population belonged in terms of race, culture, and patriotic sentiment. The United Kingdom’s power to demand the loyalty of Hong Kong’s Chinese population was limited even before World War II, when...

  6. II Colonial Rule and Its Political Constraints
    (pp. 31-48)

    The previous chapter described the colonial circumstances that shaped the outlook of Hong Kong’s expatriate rulers. It showed how they regarded their constituents with a mixture of unease and incomprehension and how they felt intimidated by the influxes of population from the Mainland, by the extraordinary population densities, and by the strangeness of the Chinese world. Their response was to isolate themselves from the Chinese community they governed. This chapter will analyse how these colonial responses handicapped the British rulers and weakened their ability to govern effectively. The analysis will focus on five main issues: the preference for the business...

  7. III The Struggle for Autonomy
    (pp. 49-70)

    A crucial question in Hong Kong’s colonial history is the extent to which the colonial administration was nothing more than the United Kingdom’s agent, with colonial officials simply implementing the instructions of their masters in London. Was the faithful preservation of the unreformed political institutions from the British Empire of the nineteenth century, together with co-option of the business elite and the commitment to laissez faire, part of a deliberate design to protect the interests of the United Kingdom? How was it that London acquiesced in the style of government described in the previous chapter, with all its obvious defects,...

  8. IV The Diplomatic Battles
    (pp. 71-96)

    While economic independence was vital to Hong Kong’s day-to-day survival, local control over diplomatic policies was no less essential to Hong Kong’s long-term future. Despite London’s constitutional responsibility for Hong Kong’s foreign relations, the colonial administration fought for room to expand its autonomy in handling its political relations with London and Beijing in much the same way as it had struggled to enlarge its freedom to manage its economic links with the outside world.

    The struggle with London for control over the relationship with the Chinese authorities was protracted. Well before World War II, there had been a running fight...

  9. V In Place of Democracy A Privileged Elite
    (pp. 97-116)

    Throughout the colonial history of Hong Kong, a refusal to permit any significant progress towards democracy was a major feature of British rule. London gave way to demands for political reforms in the rest of the British Empire, abandoning any pretence that colonial rule was superior to democratic government. Hong Kong was treated very differently. As the two previous chapters have described, colonial officials in Hong Kong responded to London’s initiatives with hostility, and British diplomats sympathized with the misgivings of the Chinese Communist Party about democratic reforms.

    While the Chinese government and the United Kingdom were starting their arduous...

  10. VI Government and Business A Rewarding Alliance
    (pp. 117-138)

    The foundations of British rule were built firmly and unashamedly on an alliance between colonialism and capitalism until almost the very end of the colonial era. The underlying British aim was “that political participation should be contained and controlled”.¹ In place of democratic elections, the colonial administration selected the community’s representatives almost exclusively from among the business and professional classes. As the previous chapter showed, the participation of the elite in the power structure did little to enhance the quality of administration. Its record was dismal even in overseeing the economy, an area in which business and professional expertise should...

  11. VII The Business of Corruption
    (pp. 139-158)

    During the first hundred and twenty years of British rule, corruption prevailed in almost every part of the colonial administration, and not until the last two decades of the colonial era, could the British provide the people of Hong Kong with honest government. Malpractices proliferated within the public service because of ignorance and indifference at the top, poor management throughout the system, and the unintended consequences of economic and political decisions. Overall, the traditional partnership between the British rulers and the business elite created an environment in which the dishonest and the venal found it easy to flourish in both...

  12. VIII The Triumph of Chinese Capitalism
    (pp. 159-180)

    In the middle of the twentieth century, Hong Kong’s largest business enterprises were still well-known companies whose ownership seemed securely British: Jardine Matheson, Butterfield and Swire, Hutchison Whampoa, Wheelock Marden, China Light and Power, and the Hongkong and Shanghai Banking Corporation (the Hongkong Bank). Here, it seemed, was the reality of British colonialism in Hong Kong: control of the commanding heights of the economy. Around 1973, “about half” the total value of Hong Kong’s publicly listed companies was accounted for by the Jardine and Swire Groups, together with Hutchison Whampoa and Wheelock Marden, and these firms also seemed to dominate...

  13. IX The Hongkong Bank The Ultimate Survivor
    (pp. 181-194)

    The Hongkong Bank proved the most durable of all Hong Kong’s expatriate institutions. Among the most famous British business names, a majority failed to match their Chinese rivals and were taken over, often ignominiously. The previous chapter has traced how the survivors were shorn of their historical lustre. The Hongkong Bank was different. It shrugged off the loss of its business base in Shanghai in 1949, and it adjusted to the shrinking of its market opportunities not only in China, but throughout the whole of the former British Empire. As socialism and nationalism replaced colonialism and capitalism almost everywhere else...

  14. X The Shanghainese Colonial Allies, Colonial Heirs
    (pp. 195-210)

    Within the business elite of Hong Kong, immigrants from Shanghai had a special status. They outnumbered the expatriate rulers of the colonial era but were nevertheless a small minority within the community, never accounting for more than 2.7 percent of the total population.¹ They could not match the Cantonese majority in terms of personal wealth or corporate power. Yet, during the second half of the twentieth century, they were selected first by the British as their preferred partners and subsequently, by China’s leaders as their trusted agents and allies. Thus, Shanghai and its immigrants to Hong Kong had a place...

  15. Conclusions The Ideal Constituents
    (pp. 211-228)

    Throughout the colonial era, sheer survival was an imperative even more compelling for Hong Kong’s colonial administration than for governments in most other political systems. Despite the glittering economic performance of Hong Kong during the final fifty years of colonial rule, and despite the remarkable political stability and social cohesion achieved during that period, the British never escaped from an awareness of how vulnerable their rule was to internal confrontation and external challenges. This sense of fragility intensified after Mao Zedong and the Chinese Communist Party came to power. If the British ever lost control, Hong Kong would simply revert...

  16. Statistical Appendix
    (pp. 229-236)
  17. Notes
    (pp. 237-300)
  18. Bibliography
    (pp. 301-330)
  19. Indexes
    (pp. 331-338)