July for China has been characterised by three major developments.
First, there appeared nothing dramatic about the change of Chief Executive for the Hong Kong Special Administrative Region Government on I July. There had for some time been no prize in guessing who would win the race to the top following the departure of the former unpopular though loyal and very hard-working CE.
No matter how popular the Democratic Party once became, their oft-perceived single agenda of democracy and weakness in demonstrating a balanced grasp of Hong Kong's economic and political realities did not serve them well. Their performance in the latest Legislative Council election was embarrassingly disappointing. Their political clout has been seeping away to the more pro-Beijing and pro-government Parties.
However, in spite of this more supportive climate, Beijing seized the moment to allow a change of leadership for Hong Kong before the normal term of the incumbent expired.
Donald Tsang, the Harvard-trained ex-Chief Secretary (and ex- Financial Secretary) has much more political savvy, administrative skill, and popularity. But most significant of all, this is the first time Hong Kong is ruled by a former Chinese administrator adept with the previous colonial system.
The change of horse in mid-stream seemed to signify a realisation that a business tycoon with little skills in the art of public administration, no matter how trusted he is by Beijing, may not the best choice in leading a pluralistic society and a government perceived to be weakened by political strife and vaccinating policies.
Under the One Country Two Systems formula, there is a lot going for Hong Kong riding on China's rise in the 21st Century. Mr Tsang's considerable skills will be put to the test in capturing people's hearts and minds as he steers Hong Kong between the sensitivities of the One Country and the magic of the Two Systems.
Second, as foreshadowed in my article on Lien Chan's recent Beijing visit (see under Publications), the Taiwan political landscape has taken on a new dimension as the photogenic, charismatic, and also Harvard-trained 53-year-old Ma Ying-jeou captured more than twice as many votes than his opponent to become the first elected Chairman of the KMT in 111 years.
Though Ma supports the 'One China' principle, he is an avowed defender of the June 4 movement and criticized Mainland China's Anti-Secession Law. A paragon of clean government, he stands a good chance of being able to rally the support of the so-called 'Pan-Blue' partner, the People First Party, towards a very strong bid for the Taiwan Presidency in 2008.
If Ma eventually became President, at least the secessionist forces of the Democratic Progressive Party under Chen Shui-bian would be more effectively held in check, though political unification will still remain to be a long way off.
Beijing, of course, will not want or be able to directly influence the Presidential Election. Indeed, any such influence will be counterproductive. Nor would any influence be needed if forecasts of political pundits are to be believed. As Ma's contender, Chen's successor, whoever he or she is, is unlikely to command comparable popularity.
But a more conciliatory stance towards Taiwan and continued efforts to improve the overall image of the People's Republic of China would probably help to capture more votes for Ma, if not the hearts and minds of the people of Taiwan for immediate unification.
Third, the current bid by CNOOC for Unocal has caused alarm bells to ring more and more loudly on Capitol Hill.
The fear is not so much energy per se. Unocal accounts for only a minuscule proportion of US oil. The worry is more a perception of 'Communist China' buying into a sensitive area of corporate America, amidst a chorus of China bashing over trade, intellectual property, Taiwan, and alleged military build-up.
Unocal may be glad that these feelings are pressuring CNOOC and Chevron to come up with higher bids in their rivalry. Even if CNOOC further enhances its bid and even if it is accepted by Unocal (by no means a foregone conclusion), the proposed Energy Bill and the Committee on Foreign Investments are set to give the deal the 'Third degree' over US's energy and overall security concerns.
CNOOC's lobbyists are likely to need all the help they could get to overcome these difficulties.
But numbers may not be sufficient for deep-rooted psychology. It is perhaps natural for the world's self-proclaimed Champion of Democracy to feel uneasy about a high profile take-over in a sensitive area of corporate America by what is perceived to be the world's largest 'Communist' country.
There is also the general issue of corporate governance, for which China's enterprises are not exactly the world's role models.
But China is fast becoming 'a communist country without communists'.
It has succeeded in lifting a sizeable proportion of its vast population out of poverty, equal to about 70% of Africa's, without the need for aid.
It has recently emphasized the need for 'Government for the People' in concrete measures to alleviate rural taxation and to improve infrastructure, welfare and education for poor farmers. (See my back number in this column on National and International Dynamics of the 11th Five Year Plan (2006-10).)
It is re-focussing on stimulating domestic consumption to avoid over-dependence on external trade.
It has volunteered to embrace international norms imposed by joining the WTO and is learning from the West to improve its legal and judicial system. Amongst other things, it is introducing an accredited system of jurors.
It is experimenting with a nascent form of open elections for its villages and urban neighbourhood committees.
There are now over quarter of a million NGOs in China championing a variety of social causes ranging from aids relief to environmental concerns. A more civil society is emerging.
Yet a fair proportion of American thinking is still preoccupied with the outdated nightmares of Tienanmen Square. China is set to have an uphill battle for winning hearts and minds.
Perhaps there is no better way to drive home the message that China wants to play by international norms than through mergers and acquisitions on both sides of the Atlantic, subject to the rigours of Western regulatory supervision. Notable enhancements in the corporate governance of China's budding global players are likely to speak louder than words for China's overall image. And more is at stake than winning over the investing public.
(You may wish to note that I have just accepted an invitation to appear on CNBC Europe for a live interview on the CNOOC story at 6.30 a.m. Monday 1 August, 2005, London Time. The interview is expected to be broadcast worldwide simultaneously.)
Andrew K P Leung, SBS, FRSA
www.andrewleunginternationalconsultants.com
Notices:
1. On my website under Publications, I have posted two recent articles. One is on 'Fighting Terrorism'. The other is entitled 'Is there a China lesson for Live8 and the EU Constitution?', which also featured as a Letter of the Month in the August issue of 'Director', the magazine of the Institute of Directors.
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