BEIJING — Hong Kong's glittering lights and free markets have long been a sanctuary from the political realities of mainland China. Even after the 1997 handover, when Great Britain released its colonial jewel to Beijing's leaders, Hong Kong has successfully run on a "one country, two systems" principal.
Yet with the second economic downturn in as many years, last week brought the most radical change of government in decades. Hong Kong chief executive Tung Chee-hwa sprang a plan to create a set of cabinet ministers that only his office can appoint or fire.
The plan gives Mr. Tung, Beijing's hand-picked leader, stronger authority while it further removes the Hong Kong legislature from the day-to-day running of the city.
Critics argue the move, set to go into effect on July 1 when the unpopular Tung starts a new five-year appointment, puts the city-state further from the kind of direct elections system that poll after poll suggest its citizens want. "This means the government is accountable only to Tung, and further removes a voice for the people of Hong Kong," says a Hong Kong business consultant.
The change comes on the heels of a move by Tung not to allow "abode seekers" mainland Chinese who have lived in Hong Kong without papers the right to permanent residence. Hong Kong's highest court had granted the several-thousand seekers resident status. But Tung, not happy with the ruling, cited a Beijing high-court decision not to grant residency. That set off a wave of highly emotional protests by abode seekers that has still not ended.
Yet after the initial shock of Tung's plan to revamp government, many local observers and academics say the move is not unreasonable. They point out that Hong Kong's governance, which relies on a system of 180,000 civil servants set up by the British, is cumbersome and inefficient. It's operated by 13 different policy bureaus only three of which report to Tung. Most Western leaders, by contrast, appoint their closest cabinet advisers.
"Lord knows this system needed some change," says David Zweig, a political scientist at Hong Kong University. "The problem is that under Hong Kong's odd system, nothing gets done. The president had no leadership over his ministers.... So Tung decided to do something about it. This seems rational."
Yet coming just after Harry Wu, the high-profile whistleblower on Chinese human rights, was denied access to Hong Kong, some critics saw Tung's move as another instance of Beijing's hand. Mr. Wu was not allowed to pass Hong Kong customs since he planned to meet Frank Lu, of the Hong Kong Center for Human Rights and Democracy, to discuss cooperation in rights monitoring in China.
Insiders feel, however, that while Beijing likely agreed with Tung's plan, and Chinese Premier Zhu Rongji had directly asked Tung to improve the city's operations, there was likely no direct pressure for the new structure.
Since World War II, Hong Kong has been an oasis in the Orient. The city became a vibrant multicultural center of banking. Even today, five years after the handover, China's press and universities engage in debates that could never take place on the mainland. Bookshops sell "The Tiananmen Papers," banned in China. Falun Gong members hold morning exercises in city parks, and evangelical Christians conduct Sunday services both illegal across the border. Under the handover agreement, Hong Kong has 50 years of political autonomy.
Yet Hong Kong is being slowly eclipsed by Shanghai as an Asian financial pearl. Unemployment is at an all-time high.
US officials, however, say Hong Kong is well positioned to become a "hedge city" a safe place for corporations to put their money, and to wait and see how China develops its business rules and markets.
Others are less sanguine. "Beijing is not going to let Hong Kong develop any alternative political model," says one Beijing-based European scholar. "In time, Hong Kong will be less special just another southern Chinese city."