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One country, two systems under pressure

By Willy Wo-Lap Lam, CNN Senior China Analyst

Wen said Beijing
Wen said Beijing "supports the SAR administration led by Tung Chee-hwa."

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Under the proposed legislation, anyone found guilty of acts of treason, sedition, secession or subversion against mainland China could be jailed for life. Treason: instigation of foreign invasion, assisting a public enemy at war with the People's Republic of China (PRC), or joining foreign armed forces at war with the PRC.
Secession: use of war, force or serious criminal means to split the country.
Subversion: use of war, force or serious criminal means to overthrow or intimidate the Central People's Government, or to disestablish the basic system of the state
Sedition: inciting others to commit treason, subversion or seccession, or inciting others to engage in violent public disorder that would seriously endanger the stability of the PRC.

HONG KONG, China (CNN) -- Contrary to popular perception, Beijing is well aware of the failings of Hong Kong Chief Executive Tung Chee-hwa, against whom an estimated 500,000 residents took part in protests Tuesday.

That the administration of President Hu Jintao and Premier Wen Jiabao is unwilling -- or unable -- to address Hong Kong people's grievances, however, will further damage the one country, two systems framework.

And merely propping up the economy through the just-signed "closer economic partnership arrangement" (CEPA) cannot allay local and international fears about the erosion of Hong Kong's unique identity and civil liberties.

Wen, who arrived Hong Kong last Sunday for the sixth anniversary of the establishment of the Special Administration Region (SAR), is probably miffed that Tung's unpopularity has jeopardized his hard-won reputation as a "people's premier."

The cadre who won world admiration for seeing the students shortly before the Tiananmen Square massacre had to leave Hong Kong a couple of hours before the largest protest to have been held in the SAR since 1989.

The demonstrators -- who included religious and journalistic groups as well as lawyers, doctors and civil servants -- were protesting against the imminent enactment of what they say is a draconian national security bill.

Human rights watchdogs, together with the U.S. and British governments, have expressed worries the bill will jeopardize civil, religious and press freedoms.

Equally significantly, the protestors wanted Tung to step down, accusing him of mismanaging the economy, conniving at the foibles of his crony colleagues, and mishandling the recent pneumonia crisis.

That the Hu-Wen team is aware of Tung's shortcomings is evident from the fact that they have refused to give him an explicit endorsement.

Former President Jiang Zemin, who handpicked Tung in 1995, used to repeatedly laud the chief executive's "high-level performance."

Hu and Wen, however, would only say -- as Wen did last Sunday in Hong Kong -- that Beijing supports the "SAR administration led by Tung Chee-hwa."

Wen has inherited predecessor Zhu Rongji's largely negative assessment of Tung's leadership abilities.

A few years ago, Zhu caused a stir when he indirectly criticized Tung for "discussing problems but unable to make a decision -- and failing in implementation even after decisions have been made."

Yet because Fourth Generation leaders such as Hu have yet to consolidate their power, they are reluctant to remove a Jiang appointee.

And given that the Hu-Wen team's priority is preserving national stability, it is loathe to take the drastic steps regarding Hong Kong such as firing Tung, whose term runs into 2007.

Big gift

Political sources in Beijing also said while Hu and Wen might deplore aspects of Tung's handling of the national security bill -- including SAR officials' refusal to listen to the views of sectors other than business lobby groups -- there was little doubt they supported its enactment next week.

The sources said after all, the SAR government was carrying out secret instructions from the Jiang leadership that an anti-subversion law be readied by the end of this year.

And the Chinese Foreign Ministry has slammed foreign governments for "inappropriately" interfering in China's internal affairs.

When asked by reporters on Monday about the negative fallout of the national security bill, Wen only indicated that "Hong Kong should create beneficial conditions for foreign investors to come here."

It seems obvious the Hu-Wen team's Hong Kong strategy is to concentrate on buttressing the economy while ensuring that the next chief executive they pick will be more capable and popular than Tung.

"Wen is aware that the SAR is saddled with three main problems: a weak economy, the crisis of governance because of Tung, and people's lack of confidence in the future," said a source close to Beijing's Hong Kong policy-making establishment.

"Wen and his advisers have decided to focus on the economy. They hope once Beijing has helped Hong Kong improve the economy, other political contradictions will be defused."

During his 48-hour Hong Kong tour, Wen dwelled at length on Beijing's so-called "big gift" to the SAR, the CEPA, which will lift tariffs on 273 types of products and facilitate the services sector's entry to the mainland market.

Free market concerns

Beijing has expedited the negotiations and agreement over CEPA in an effort to bolster faltering economic and political confidence.

Thanks to the free-trade deal, Hong Kong manufacturers are expected to make savings of HK$750 million next year -- and 60,000 jobs may be created.

However, analysts see further economic integration between the SAR and the mainland -- especially one anchored on a politically motivated "gift" -- as hurting the one country, two systems formula.

Wen has called on Hong Kong to "further develop its superiority by maintaining its characteristics" as an international hub, which include a "perfect market system and a relatively perfect legal system."

While CEPA might render Hong Kong into what Wen dubs an "ever-more resplendent star of the motherland," the SAR can become even more dependent on Beijing's economic largesse and political goodwill.

The recent scandal over the loans that the former head of the Hong Kong Branch of the Bank of China, Liu Jinbao, made to "Shanghai tycoon" Zhou Zhengyi has raised alarms about mainland business practices "infiltrating" the SAR's free-market mechanisms.

And the anti-subversion legislation will undermine Hong Kong's British-style legal system and Western-style civil liberties, without which its unique attractiveness for foreign businessmen and top-notch talent will be dimmed.

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