One Country Two Systems : 20 years of experience and way forward


    Speech delivered by Mr C H Tung at SAAIL 2017 Colloquium on International Law

    Ladies and Gentlemen,

    I am greatly honoured to be speaking before this distinguished audience on the subject of One Country Two Systems.  It was only several days ago, we celebrated the 20th anniversary of Hong Kong’s return to China.  It is therefore opportune to look back what happened since the handover, where are we today and what the future may bring.


    Before I do so, it will be of interest to trace what was the original intent China had in proposing the concepts of One Country Two Systems, with high degree of autonomy and Hong Kong people governing Hong Kong.  From China’s point of view, the return of Hong Kong on 1 July 1997 was not negotiable.  But China wished this could be done peacefully.  At the same time, China also recognized people of Hong Kong would want their lifestyle be maintained, rule of law upheld and market economy continued to thrive.

    With this in mind, Chinese leader Mr Deng Xiaoping created this unique concept of One Country Two Systems.  The people of Hong Kong are happy to be part of this effort and proud that together with the people on the Mainland, we have made this a great success.

    Even way before 1997, there were pundits who said this could never succeed.  This would be the end of Hong Kong.  We of course have proved that they were wrong.  By any standard, the implementation of One Country Two Systems in Hong Kong has been successful.  The fact is the rule of law, the free market economy, the international character of Hong Kong, as well as our way of life, have all been preserved.

    In this regard, I would like to quote for you some figures from Worldwide Governance Indicators, a report sponsored by the World Bank issued in October 2016.  This report rates individual governance indicators for 215 countries and territories.  Hong Kong’s ranking rose in many key areas in the twenty-year period from 1996 to 2015.  Under the category Rule of Law, Hong Kong improved from 60th to 12th.  In Government Effectiveness, Hong Kong improved from 28th to 3rd.  In Control of Corruption, Hong Kong rose from 20th to 17th.  Lastly, on Regulatory Quality, Hong Kong improved from 4th to 2nd.  The fact is, the successful implementation in Hong Kong of One Country Two Systems is for everyone to see.

    Economically, over the past 20 years, our GDP grew at an annual average rate of 3.3% while at the same time, our fiscal reserve together with the Exchange Funds today stand at HK$3.81 trillion which is equivalent to 153% of our GDP.  Taking into consideration the severe Asian financial crisis of 1997 and 1998, the SARS outbreak in 2003, and then again the global financial crisis of 2008, when in each incidence our economy suffered contraction, it is clear that we have done alright.

    But we must acknowledge that we still face challenges in the areas of economic and social development in Hong Kong.  Globalization and rapid development of new technologies have created a growing disparity between the rich and the poor.  This is a common experience of many developed countries with free market economies.  And Hong Kong has not been able to escape from this phenomenon.

    There are also challenges in the areas of housing, land supply and education which need urgent attention.  Housing is the first and foremost issue in every Hong Kong person’s mind.  The rapid rise in housing prices has further exacerbated the growing disparity between the rich and the poor.  We need to implement forward thinking housing policies that will provide adequate and affordable housing.  To do that, we need to overcome the shortage of land supply with urgency.

    In a rapidly changing world, and a rapidly developing mainland China, we need to better educate our next generation.  Unfortunately, our education policies have not been forward looking enough.  Under investment in education as a whole makes the challenge we face today even greater.  The lack of upward mobility of our young people, which we so often hear about in Hong Kong, finds its roots in the inadequate investment in education.  We have to recognize that expenditure in education is really an investment into our future.

    With regard to the development of democracy, we were given an opportunity to move ahead with universal suffrage in the first half of 2017, but unfortunately, this was vetoed by the opposition pan democrats in the legislature in 2016.  At present, the society is too divided to find a way forward.  Indeed, in my view, our energy should be focused on Hong Kong’s economic and social development.  Indeed, we have no time to lose.

    So much for the past and present, let us now turn our attention to the future.

    China’s rapid economic growth is set to continue.  Such growth for sure will help Hong Kong in diversifying and strengthening our economy further so long as we fully utilize our competitive advantages under One Country Two Systems.  Following are some examples.

    Hong Kong is a financial center, whose standing in Asia rivals that of New York in the US, and London in Europe.  As China’s economy continues to grow, and, for that matter, as Asia’s economy continues to grow, there will be expanded opportunities for Hong Kong in the financial services sector.  The upholding of One Country Two Systems has enabled us to maintain a very high standing in areas of the rule of law and the maintenance of strict regulatory regimes, which gave confidence to the international financial community.  As a strong financial center in Asia, Hong Kong can play an effective role not only for the prosperity on Mainland of China but also for common future of Asia which is the theme for this gathering.

    Another example: before 1997, Hong Kong was often referred to as the Hollywood of the East.  In those years, our market consisted of audience from Hong Kong, Taiwan and overseas Chinese all together numbering between 30-40 million people.  Since 1997, the Hong Kong film industry has been in hibernation.  But the good news is that, within one or two years, the Chinese box office market, with a population of 1.4 billion people, will become the largest in the world.  With the advantages of CEPA, under One Country Two Systems, the Hong Kong movie industry has a great opportunity for a renaissance.

    Moving on, the One Belt One Road initiative offers Hong Kong new opportunities that have not appeared before.  As an example, there is enormous capital requirement for infrastructure investment in many of the countries enroute.  The initial stage of financing will most likely be made by the policy banks.  But as the projects begin to mature, Hong Kong, as an international financial center of high standing, is well positioned to provide financing through IPOs or helping to raise long-term debt.

    The other great new initiative of China is the construction of the Guangdong-Hong Kong-Macau “Big Bay Area”.  This area, where technology and innovation thrive, where the consumer market grows rapidly because of rising middle class, is also a strong industrial base.  As this plan evolves, the opportunity for Hong Kong is enormous.

    The above-mentioned economic activities will accelerate our economic growth and will create new jobs, many of which will be high end jobs.  This will help address the disparity between the rich and the poor.

    The people of Hong Kong are tired with the negativity that exists within our society in the last few years.  However, I feel that change is in the air, and that finally there is reason to be optimistic.

    The most important reason why I am optimistic of Hong Kong future is that Mrs Carrie Lam has been chosen as our new Chief Executive.  She will be leading us forward.  I strongly believe that she is a wise, dedicated and visionary leader, who is competent, hardworking and have the trust of the people of Hong Kong and the Central Government of China.  She is very well equipped to take on our many challenges.  The next 20 years will be better.

    Of course, there will always be people spreading news about Hong Kong’s lack of certainties in her future and that One Country Two Systems could come to an end.  There was indeed similar doubt spread in 1997.  Do you remember? My response to such views is twofold. First, the fallacy of such views is demonstrated by the remarkable achievements of Hong Kong in the past 20 years set out above. Secondly, if one bears in mind the context and purpose of One Country Two Systems, one will appreciate that there is absolutely no reason why China will want to dislodge its fundamental national policy. Indeed, there is every reason for China to faithfully implement it. An opinion is based on facts. In 1997, there was no fact upon which to base, and hence the uncertainty may have some ground. Now there are facts showing Hong Kong’s achievement in the past 20 years and the successful implementation of One Country Two Systems. Any such speculation or so-called opinions cannot withstand scrutiny. After all we have a roomful of lawyers here who make judgments based on evidence.

    Indeed some people are asking today, even if One Country Two Systems is successful for the next 20 years or 30 years, what will happen after the full 50 years.  Here I shall quote what Mr Deng Xiaoping said on 16 April 1987 to a group of Hong Kong drafters of the Basic Law when being asked on this point.  He said “After Hong Kong’s return to China, the existing system in Hong Kong will not change.  If we do not change for 50 years, why should there be change in the next 50 years.”  The spirit applies not just to Hong Kong, but also to Macau and eventually to Taiwan.

    On 1 July 2017, President Xi Jinping said the following at the Inaugural Ceremony of the 5th Term Government of HKSAR. “One Country Two Systems in Hong Kong is part and parcel of the Chinese Dream.  A cause with public participation and public support is sure to achieve success.  We should ensure the success of development on the Mainland which practices the socialist system; we should also ensure the success of development in Hong Kong which practices the capitalist system.  We should have every confidence that we will succeed.”

    You can see from the above China has a long term view about the application of One Country Two Systems for Hong Kong, Macau and indeed Taiwan.  It is not just for the purpose of the convenience of the time, but for the long term objective for the peaceful unification and continued prosperity for the whole country.

    The One Country Two Systems concept not only exhibits China’s creativity and tolerance but also responsibility of a great country to solve what appears to be unsolvable problem.  Indeed, One Country Two Systems can make a huge contribution to the world at large and to the cause of common future in Asia.

    It only leaves me to wish the discussions in these two days fruitful and wishing the Colloquium every success.