The Rule of Law - and the Question of the Week: How Does Being an SAR of the PRC Affect Hong Kong's Ability to Conduct its International Relations?

By the time of our next class, I will have been to the mainland twice since our last meeting. I was in Beijing last week to give a lecture to about 60 executives and government officials from Africa on a mid-career program at the University of Pretoria in South Africa. They were at the beginning of a study tour of China. Tomorrow, I will be in Shanghai to give a similar talk to a group of MBA students from the same university. I find it fascinating to meet people who are seeing China and what it has achieved for the first time. They are usually amazed by what they experience, particularly if they visit the big cities such as Beijing or Shanghai.

I also find it curious that, for many of these first-time visitors, Hong Kong is of limited interest. They want to know about China. To be sure, whenever I travel to the mainland, I am well reminded that Hong Kong is but a sideshow to the really big spectacular. But sitting here in this bustling city (and certainly after listening to a rousing presentation by that investment evangelist Mike Rowse), it is easy to think of Hong Kong as the main attraction.

Hong Kong of course is still one of the best places in the world in which to do business and it remains China's premier international financial center. Take a look at the "Doing Business 2008" report recently released by the World Bank. The study includes a ranking of economies according to how easy it is to do business. Singapore comes in at No. 1, followed by New Zealand and the United States. Hong Kong is fourth, while China is No. 83. What I find interesting is that if you look at the different sub-categories, Hong Kong ranks first when it comes to "enforcing contracts". This suggests something that I have long believed - that the key to Hong Kong's success really is the rule of law. I would argue that there is no other economy in East Asia with as reliable, efficient and honest a legal system as Hong Kong.

Now what does the rule of law have to do with Hong Kong's international relations? A lot. Because investors have a great deal of confidence in our legal system, they are willing to put their money here, to sign contracts here, to settle disputes in our courts, and to live here. We have kept to a minimum the inefficiency and wastage that can result from corruption and poor public governance. The rule of law has allowed Hong Kong to build up the legal infrastructure necessary to support its role as an international financial center and hub for business.

Daniel Fung will be able to tell us more about the uniqueness of Hong Kong's legal system, which I think goes to the heart of the concept of "one country, two systems". It's not just about communism and capitalism co-existing; it's also about two very different legal systems co-existing in the same sovereign entity. It is also about two different, separated societies that nonetheless are part of the same culture and share traditions, language and common history.

This brings me to the Question of the Week: How does Hong Kong's being a special administrative region (SAR) of China affect its ability to conduct its international relations? I guess what I would like you to think about is how Hong Kong's constitution affects its position in the world and its ability to interact with the rest of the world.

Now, I'm not just talking about the simple fact that Hong Kong is not an independent nation and so we cannot be a member of the United Nations. That much is obvious. But as an SAR of China, Hong Kong has to be conscious of its relationship with the mainland - even as it fosters ties abroad. Are we hampered from being fully engaged with the world because we are part of China and not an independent country? Or is it in fact an advantage, particularly since Hong Kong enjoys a high degree of autonomy under Chinese sovereignty and China is a booming economy that is attracting investors from all over the world? What are the implications of closer integration with the mainland, particularly if the divisions between our two systems start to blur? Could the advantages we enjoy because of our separateness - the rule of law, for example - be compromised?

Those are quite a lot of questions. What I would like us to explore are the implications of Hong Kong's constitutional position - both the positive and the negative - for its relations with the rest of the world. Over the coming weeks, we will examine specific issues that will help us understand better the contours of Hong Kong's autonomy and the ways in which the SAR is connected to the international community: the rule of law, the business environment and economy, diplomatic relationships, the media, the political system, the financial system, and the role of corporations and civil society. Our discussions should help us better understand how our domestic situation affects our international relationships.

Any thoughts and comments are welcome. Take a look at this article by Prof. James Tang, which is a summary of remarks he made to the Hong Kong Democratic Foundation in 2000. It might stimulate some ideas for you to consider.

In framing your comments, you might consider the issues Prof. Tang raises, some of what we have already heard from Malik Peiris and Mike Rowse, as well as what you have read. But also bring your own ideas to the table. Don't hold back.