Has China’s ‘One Country, Two Systems’ Experiment Failed?

Hong Kong was returned to Chinese rule in 1997. It’s been 18 years. If Deng Xiaoping’s “one country, two systems” initially was considered a landmark political experiment by Beijing, the Chinese government has had enough time to try to make it work. Unfortunately, what is happening today in Hong Kong—a much more divided society than in 1997 or even in its colonial times—only proves that the experiment has too many problems to be called a success.

The reasons why “one country, two systems” has failed as a policy experiment are quite mixed. First, there have been a lot of learning moments that Beijing should have picked up on over the past 18 years, especially since 2003, a year that in my view marked a turning point in Beijing’s policy towards Hong Kong after a massive demonstration against Article 23, the anti-subversion part of Hong Kong’s Basic Law. The Chinese government lost face in Hong Kong in 2003 and those who study Chinese politics will agree that face means almost everything to Beijing.

Since 2003, Beijing has chosen a harder tack on Hong Kong affairs. The government’s propaganda machine has tried very hard to depict Hong Kong as a spoiled and naughty kid that doesn’t listen to its good parents. Such propaganda work has had significant influence on Mainland Chinese public opinion about Hong Kong, following debates over Hong Kong’s ban of Mainlanders’ bulk purchase of Hong Kong baby formula and the flood of pregnant Mainland women checking into Hong Kong maternity wards, among many other politically sensitive social issues. Mainland-Hong Kong relations worsened and Hong Kong society grew more divided on how to deal with Mainland relations.

In recent years, Beijing has put more emphasis on “one country” than “two systems”—quite understandable from Beijing’s point of view. The central government increasingly has been concerned about anti-China sentiment, especially among the younger generations of Hong Kong people, who were born and grew up under British colonial rule, unlike their parents or grandparents, many of whom were raised in Mainland China and didn’t move to Hong Kong until the 1940s-50s.

As Beijing emphasizes the importance of “one country” over “two systems,” it indicates the Chinese government’s insecurity about the whole experiment. A growing number of people in Hong Kong are doubtful about Beijing’s sincere intent to continue the experiment initiated by late paramount leader Deng Xiaoping—doubtful that Beijing will allow Hong Kong to continue in the direction Deng set out for Hong Kong when it was returned to Chinese rule in 1997. The more doubts, the more disagreements, there more signs of a “one country, two systems” failure.

This week, as Hong Kong legislators from the pan-democracy camp vow to vote against the electoral reform package endorsed by Beijing for Hong Kong universal suffrage in 2017, various polls indicate nearly half of Hong Kong society believes the package, if passed, would result in “fake universal suffrage.” Beijing will again feel a loss of face in front of the Hong Kong people and the rest of the world, too—yet another sign of the failure of the “one country, two systems” experiment.

But how to get it right? What does “two systems” really mean in the context of “one country”? Did we disappoint Deng, the policy’s architect? If 18 years were not enough time for Beijing to get “one country, two systems” right, then whose problem is it now? Senior officials in Beijing, the “one country” capital, are left with a lot of problems to study and fix.

George has written about Beijing’s changing attitudes towards Hong Kong. I will focus on the systemic factors that made “one country, two systems” precarious from the start. These factors relate respectively to the international law framework for post-1997 Hong Kong, and to the domestic constitutional framework.

The international law starting point for “one country, two systems” in Hong Kong is the Sino-British Joint Declaration of 1984. The treaty sets out, in Article 3 and Annex 1, extensive guarantees of Hong Kong’s “high degree of autonomy,” except in foreign and defense affairs. Yet no provision was made for dispute resolution. As China does not accept the compulsory jurisdiction of the International Court of Justice (ICJ), this leaves the United Kingdom—which, as the counterparty to this treaty, can logically hold China to its commitments—with little real recourse. As early as 1996 the Chinese official response to a British invitation to refer a dispute over the Joint Declaration to the ICJ was that it was “futile” to “play the international card.” More recently, Chinese and Hong Kong officials have argued that the Joint Declaration lapsed with the transfer of sovereignty in 1997—notwithstanding the plain wording of the treaty, which contains commitments that remain in place until 2047. These attitudes do not engender confidence in Beijing’s willingness to uphold its commitments in Article 3 and Annex 1.

Turning now to the domestic constitutional framework, “one country, two systems” is an instance of devolved government: power vests in the central government in Beijing, with specific powers devolved to local institutions to be used in specific contexts. As all political power ultimately flows from Beijing, the risk exists that Beijing will unilaterally redefine and circumscribe delegated powers. Many of the major crises of confidence in “one country, two systems” in Hong Kong are attributable to unilateral attempts to redefine the scope of Hong Kong’s autonomy. For instance, the so-called “five-step” process by which changes to how the chief executive is elected was imposed by the National People’s Congress Standing Committee in 2004, under its powers to interpret the Basic Law. Yet, in 1993, Lu Ping, then-director of the Hong Kong and Macau Affairs Office, pledged that Hong Kong’s democratic development was entirely within the city’s autonomy. To give another example: Ten years after Beijing unilaterally defined democratization out of Hong Kong’s autonomy, it issued a white paper on “one country, two systems”—which caused uproar by referring to judges as “administrators” of whom political loyalty was expected.

But perhaps the most striking example of the tensions within “one country, two systems” is the office of chief executive. The office has powers based on those of British colonial governors—a model of government that ultimately depends on restraint by the central authorities, and one which is vulnerable to calls for greater regional autonomy. Unfortunately, Beijing’s track record on allowing local cadres a measure of autonomy in their exercise of power is far from reassuring. Hong Kong’s system of devolution, which relies so heavily on Beijing’s exercise of restraint, was therefore always at the mercy of the changes in attitude that George has documented.

Contrary to popular misconceptions, “one country, two systems” originally referred to capitalism and socialism. Article 5 of the Hong Kong Basic Law states: “The socialist system and policies shall not be practiced in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.” Basic liberties and the rule of law, including independence of the judiciary, are guaranteed in Hong Kong as part and parcel of capitalism and its “way of life,” not as an alternative political arrangement. This is one of the reasons why Hong Kong politicians and officials take their oath on the Basic Law (rather than on the P.R.C. constitution, which sanctifies the socialist system, although it also refers to a united front that includes “all patriots who stand for the reunification of the motherland”). In this sense, of course, the arrangement has been a success. Capitalism has prospered unfettered in Hong Kong and the colonial business elite lost no time in establishing close ties to the Chinese leadership. Indeed, with the rise of crony capitalism in China, some question the usefulness of the distinction.

There is little proof today, apart from isolated informal declarations by junior leaders such as Lu Ping, that Deng Xiaoping ever intended the arrangement to lead to anything else. Beijing never has hesitated to intervene proactively, by changing key formulations of the Basic Law. The NPC interpretation of Annex 1, article 7 of the Basic Law in 2004 shifted the balance of power in giving the NPC a veto over initiating political reform of the Chief Executive election where, previously, any proposed changes simply were to be “reported to the NPC for approval.” More fundamentally, since it gives the NPC, a non-elected organ of a Leninist Party-state, the role of a constitutional court and ultimate right of interpretation of the Basic Law, the constitutional arrangement itself ultimately rests upon Beijing's self-restraint.

However, this led to a different type of political equilibrium. Very few people in Hong Kong dispute Beijing’s prerogative to safeguard its sovereignty over the territory. However, when sovereignty is defined by the interests of the Party rather than those of a Chinese state that can be defined separately from the CCP, Hong Kong civil society has increasingly taken to the streets to protest. This changed the overall balance of power: previously Beijing only needed to govern with the tycoons to preserve the “capitalist system and way of life.” Since 2003, the Hong Kong government also has had to reckon with the mobilizing power of civil society to safeguard what it perceives as its fundamental interests. The validity of the Basic Law does not end in 2047. If Beijing wants to change the mode of governance in Hong Kong after 2047, the government still will need to go through the constitutional reform process, and overcome the pan-democrats’ veto in the LegCo. The Umbrella Movement has shown what this might lead to. It galvanized the pan-democrats to vote down the government bill on electoral reform. In this sense, despite its imperfections, the Basic Law, buttressed by an awakened civil society, remains the best guarantee of Hong Kong's fundamental freedoms.

China’s “one country, two systems” experiment in Hong Kong has failed spectacularly, even if we assume that China never meant to give Hong Kong real autonomy.

Some cynics long have argued that when Beijing proposed the “one country, two systems” solution to the Hong Kong question in the 1980s, it was little more than the good old trick of luring the enemies (the British and the Hong Kong people reluctant to accept Communist rule in this case) to accept a deal and then tearing up the contract when it is too late for the enemies to turn back. In the 1940s, the CCP promised constitutional democracy in the New China to obtain the support of the many democratic parties frustrated by Chiang Kai-shek’s dictatorship. In 1951, the CCP promised the autonomy of the Dalai Lama government to attract a large fraction of the Tibetan elite to accept the Seventeen-Points Agreement and China’s sovereignty over Tibet. These all ended up in broken promises and complete domination of the CCP. It seems reasonable to view the CCP promise of “one country, two systems” some 30 years ago and its destruction of Hong Kong autonomy in recent years as just a repetition of such past developments. Viewed in this light, the “one country, two systems” might not be a failure from the standpoint of Beijing. This “failure” is indeed part of the CCP script.

But Hong Kong is different from 1950s Tibet and China’s democratic parties in the 1940s. Beijing promised autonomy to post-handover Hong Kong not only because it needed to warrant Hong Kong people’s and Britain’s acceptance of China’s sovereignty over Hong Kong, but also because the autonomy of Hong Kong under China’s rule has real value and use to Beijing. Even though Beijing has been trying hard to erode the substantive autonomy of Hong Kong through buying off politicians, businessmen, media owners, etc., it is still shy of destroying the formally autonomous institutions of Hong Kong such as its independent judicial system. Hong Kong’s internationally recognized autonomy, regularly verified by the U.S. State Department under the Hong Kong Policy Act, is so useful to China that Beijing still is struggling to maintain the façade of Hong Kong’s autonomy from China. One way Beijing maintains this façade is to tolerate frequent port calls by U.S. navy ships in Hong Kong. U.S. soldiers have been doing high-profile social work (such as visiting elderly homes and orphanages) while stopping over Hong Kong nowadays. This is something that can embarrass Beijing if its fellow nationalist compatriots find out.

The crux of the issue is that Beijing still desperately needs Hong Kong as a front man to do lots of things. It uses Hong-Kong-registered entities to conduct sensitive deals such as the purchase of former Soviet carriers, the digging up of a canal in Nicaragua, and the hiring of a former Blackwater CEO to assemble team of mercenaries to protect China’s investment in Africa. It offers Hong Kong as a safe haven for its notorious friends like Mugabe to store their private wealth (Mugabe’s daughter graduated recently from the City University of Hong Kong, his wife is spotted regularly in the most luxurious shopping malls in Hong Kong, and the family owned a villa in the Jackie Chan Castle in Hong Kong). Hong Kong is also an important channel through which the princelings move their assets to the U.S. (After Bo Xilai’s downfall, it was disclosed that he maintained vast property in Hong Kong and his wife, Gu Kailai, has a Hong Kong identity card). And above all, Beijing needs Hong Kong’s autonomous status for developing a RMB offshore market, internationalizing the currency without liberalizing China’s capital account. All these require foreign countries, most importantly the U.S., to treat Hong Kong as a de facto independent entity and treat the migrants, goods, and capital from Hong Kong as different from those coming from mainland China.

The ideal scenario for Beijing is that it could establish full, total control of Hong Kong while maintaining the façade of its autonomy. But the Occupy movement and the ever more militant and local nationalist resistance is making this façade difficult to uphold. After the Occupy movement, the government attempted to penalize its participants by mass arrest, but the judges released most of them. Beijing can never fully control Hong Kong without wiping out internet freedom and the judges there. If Beijing really tries to do so, they will destroy the façade altogether and Hong Kong’s value to them will be lost.

As such, Beijing now is confronted with a serious dilemma: either to continue putting up with its current façade of autonomy that offers space for the opposition to grow and radicalize, or to dissolve Hong Kong into the social and political fabrics of mainland China completely at the cost of losing Hong Kong’s current value to China and triggering more intense resistance. Beijing is going to pay a high price either way. It is not an easy choice to make.