Issue 209 of SOCIALIST REVIEW Published June 1997 Copyright Socialist Review

Feature article: The last post

Charlie Hore

On 30 June our television screens will be dominated by probably the last example of a great British tradition the handover of a colony. But likely to be missing from all the celebrations is any explanation of why Britain first acquired Hong Kong to further the lucrative opium trade with China.

The opium trade grew out of Britain's takeover of Bengal in the early 18th century. From Bengal traders began sailing into Chinese waters, and the China trade quickly mushroomed as tea, first brought to Britain as a mere curiosity, quickly became a staple part of workers' diets. But this very success posed a major problem for the East India Company. Chinese imperial officials were willing to trade with British merchants, but under strict regulation. The traders were only allowed to trade in Guangzhou (Canton), the capital of Guangdong province, and only with named Chinese merchants. Worst of all, the officials refused to allow any British goods into China. This left the company facing a massive cash deficit. It turned to opium for a solution, which proved to be immensely profitable. At the turn of the century just 4,000 chests of opium were being shipped to China a year; by 1838 the number had grown to 40,000.

The growth of the opium trade seriously worried Chinese imperial officials, both because it drained silver out of China, and because it undermined their controls over British merchants. From the 1820s onwards they tried to seriously enforce the anti-opium laws, but they were outgunned both by British merchants and the Chinese pirates and merchants who were trading with the British.

Tensions rose steadily until in 1839 the first Opium War broke out. The war in reality a series of one sided engagements, in which Chinese troops simply fled from vastly superior fire power ended with the signing of the first 'unequal treaty' in 1842, after British warships threatened to bombard the city of Nanjing. The Chinese government was forced to concede unrestricted trading rights in four ports in central China, and to give up Hong Kong Island to the British. Further wars in 1860 and 1898 added the Kowloon peninsula and the New Territories on the Chinese mainland. The Opium War opened up all of southern China to British imperialism, and fundamentally destabilised the old Chinese Empire. As the opium trading networks spread ever deeper into China, followed by all manner of cheap British imports, the old society went into turmoil. The combination of impoverishment and fears of rapid and uncertain change provided a mass base for the secret society rebellions that rocked the old order from the 1840s onwards, the greatest of which was the Taiping rebellion of 1850 to 1864.

As the new treaty ports opened up, most traders moved north to take advantage of the much richer pickings in Shanghai and the Yangzi valley. Hong Kong became something of a backwater, still reliant on the opium trade. By the 1890s, however, Hong Kong came to be seen as increasingly important by British governments, as other Western powers expanded deep into China.

In 1898 Britain took control of the 'New Territories' which make up 90 percent of present day Hong Kong. Like all previous treaties, this one was signed by the Chinese emperor at gunpoint, but there was one fundamental difference. The new territories were not annexed, but taken on a 99 year lease, to discourage other Western powers from annexing parts of China. It was this treaty that returned to haunt Margaret Thatcher in 1982, and made the handover of Hong Kong inevitable.

The revolution of 1911 destroyed the old empire, but could not impose a new government with any real authority. China became divided into territories ruled by competing warlords, but in Guangdong province the Nationalist Party came to power. From 1920 onwards urban China was gripped by a powerful nationalist movement against foreign domination, which was to blossom into the workers' and peasants' revolution of 1925-27. Hong Kong was deeply affected by this movement: an engineering workers' strike in 1920 won wage rises of over 30 percent, and in 1922 a seafarers' strike turned into a near general strike.

The biggest battle of all came in 1925, when a 17 month general strike paralysed Hong Kong and enabled the nationalists to extend their power to the provinces around Guangdong. On 23 June British and French troops fired shots into a demonstration in Guangzhou, in which thousands of Hong Kong workers were marching, killing 52 people and wounding hundreds. A general strike was called in Hong Kong, and within a month 250,000 strikers and their families had left the colony, and imposed a complete blockade on all shipping in and out of the port. The running of the strike showed the extent to which workers' organisation had developed:

'Central control was maintained not only by a strike committee consisting of thirteen persons, but also by a "Strikers' Delegate Congress" comprising over 800 delegates (one for every 50 strikers) which was a kind of workers' parliament... The responsibilities of the strike committee went far beyond the normal field of activities dealing with a work stoppage. During the summer of 1925 the committee became, in fact, a kind of workers' government... The committee had at its disposal an armed force of several thousand men' (Jean Chesneaux, The Chinese Labour Movement 1919-1927).

The Chinese Communist Party (CCP) which had the allegiance of many workers, accepted that only a nationalist revolution was possible in China. But the workers' and peasants' struggles threatened all capitalists, Chinese and foreign alike, and this pushed the nationalists into an accommodation with with the imperialist powers. In 1926 the nationalists staged a coup in Guangdong, arrested the Hong Kong strike committee and ended the blockade. Just over a year later, they massacred workers who had risen up in Shanghai, unleashing a bloody repression across China that destroyed the revolution. The remnants of the CCP fled to the countryside and ceased to have any connection with the working class.

When the CCP finally returned to the cities in 1949, it was as a nationalist peasant army. The 1949 Chinese revolution was a fundamental turning point for Hong Kong. Between 1948 and 1952 its population quadrupled as refugees fled the Red Army, and as the Cold War set in Hong Kong became one of its most important frontlines.

Hong Kong's economy expanded out of all recognition during the 1950s and 1960s. Not only did it have a near monopoly on trade with China, but the refugees included large numbers of Shanghai capitalists who had managed to take much of their capital with them. By the early 1960s Hong Kong was a major producer of cheap textiles, electronics and plastic goods. The majority of the population remained desperately poor. The refugees were herded into squatter camps on their arrival, and it wasn't until two large camps were destroyed by fire that the authorities began to build the cheapest possible housing. In 1961 over half the population was still living in 'acute poverty', and as late as 1971 over half a million people were living in the shanty towns. Yet until 1971 the departments of health, social welfare and education consistently underspent their already meagre budgets. At a time when tuberculosis was still rife, less than 1 a head was being spent on healthcare.

Hong Kong's workers did not always take this lying down. In 1956 widespread rioting broke out after pro-Taiwan demonstrations, which were brutally repressed. The police were ordered to fire 'without hesitation' 59 people were killed and hundreds injured. In 1966 and 1967, far more widespread riots and protests broke out, inspired by the Cultural Revolution going on in China at the time. This time the government didn't dare to crack down, and could only sit and watch as thousands of bombs went off across the colony and ten policemen were killed.

The 1967 riots forced a fundamental change of direction on the government. Right wing politicians used to be fond of pointing to Hong Kong as the last bastion of the absolute free market. In reality Hong Kong's prosperity from the 1970s onwards derived almost entirely from government spending, and from the fact that the labour market was completely closed. One historian of the colony contrasted the 1960s, 'a period of stern abandonment of the economy to the free play of market forces' with the 1970s, 'when central planning was accompanied by rapidly increasing public expenditure'.

A new governor who took office in 1971 began the transformation. Public expenditure increased by over 50 percent between 1970 and 1972, and carried on rising rapidly thereafter. Living standards rose just as sharply. Even in the 1960s, real wages rose by 50 percent over the decade, as economic growth pushed down unemployment. By the late 1960s the flow of refugees had almost completely dried up, and employers were forced to raise wages or see increasingly skilled workers move jobs. The same governor also attempted to clear corruption out of the police and civil service, with considerably less success. After mass arrests 59 sergeants from one division alone led to a police riot against the corruption investigators, the campaign was quietly dropped. Corruption remains endemic, though more discreet than previously.

Hong Kong's spectacular growth continued during the 1970s and 1980s, and again from 1992 onwards, due above all to the economic changes in China pioneered by Deng Xiaoping from 1978. Throughout the 1980s, the Chinese economy grew by over 10 percent a year, and Hong Kong was uniquely placed to profit from this. Half of China's exports and over a third of China's imports go through Hong Kong, and until the early 1990s around 80 percent of foreign investment in China came from Hong Kong.

Overshadowing the development, however, was the question of what would happen in 1997 when the lease on the New Territories expired. In 1982 Thatcher breezed into Beijing, fresh from her triumph in the Falklands, to begin negotiations, determined to insist on Britain's continued rights in Hong Kong. She left with her tail between her legs. The Sino-British Joint Declaration on Hong Kong, which was signed the following year, simply stated that China 'has decided to resume the exercise of sovereignty over Hong Kong with effect from 1 July 1997.'

In reality there was never any doubt that China would take over after 1997, or that Britain could do anything to stop it. From 1963 onwards Hong Kong relied on China for its water supplies the Chinese government could have taken it back in a matter of hours had it ever wanted. Chinese nationalism demanded the reunification of the country, but the need to reassure foreign investors and Hong Kong capitalists dictated that the handover should stick to the timetable set by the treaties.

Despite their nationalist talk, China's rulers wanted Hong Kong not for its 5 million people, but for its wealth. The key people to win over were Hong Kong's capitalists, by now overwhelmingly Chinese. In this they were quickly successful. As one Hong Kong socialist explained:

'It soon became clear that the CCP was genuinely going to retain Hong Kong's capitalist system and was willing to cooperate with the local bourgeoisie, as a result of which a deal was soon struck between the two parties, in which the local bourgeoisie would be allowed to become a senior partner in Hong Kong's economics and politics in the transition as well as after it.'

That deal has been greatly strengthened by the economic integration of Hong Kong and Guangdong that began in the late 1980s. Hong Kong capitalists began moving their operations across the border on a massive scale, and by 1992 they were employing some 3 million workers inside Guangdong. As one recent survey put it, 'Since the late 1980s a single area of economic activity has come into being. The degree of interpenetration is such that there is now only limited value in describing the activities of Guangdong and Hong Kong separately' (David S G Goodman and Gerald Segal (eds), China Deconstructs). By 1992 it was estimated than some 30 percent of Hong Kong banknotes were circulating inside Guangdong.

While this economic integration has undoubtedly helped to reassure Hong Kong's capitalists and middle classes, it does have its drawbacks for the Chinese ruling class. The biggest division inside the Chinese ruling class is between the centre and the provincial authorities, who are increasingly asserting their economic independence from Beijing. Guangdong's rulers are already among the least obedient, and the handover of Hong Kong will only strengthen their ability to assert their own priorities against those of the centre.

What do workers think? In the early 1980s most of Hong Kong's population, given the choice, would probably have preferred to keep the link with Britain, but the British and Chinese governments, and Hong Kong's capitalists, were unanimous that they weren't going to get the choice. The reality is that Hong Kong was never democratic. The Executive Council was never elected, and a minority only of the Legislative Council was ever elected. In the 1960s seats were introduced for 'interest groups' which gave the vote to some 100,000 people. Direct elections were only introduced after Chris Patten took over as governor, and ony to embarrass China in the run up to the handover. Today, although few workers are enthusiastic about the handover, probably even fewer actively oppose it, as they have no strong attachment to the colonial government. A recent opinion poll bears this out. Chris Patten polled lower than Tung Chee-hwa, the head of the Special Administrative Region (SAR) while more people had confidence in the current government than in the CCP controlled SAR. This is largely because the SAR is expected to be even more corrupt than the colonial administration. Martin Lee's Democratic Party has received much media attention as opponents of reunification, but its support is extremely shallow. In 1995 the party swept the board when direct elections were held (for the first time ever) for a minority of places on the Legislative Council, but on a turnout of only 38 percent. More importantly, less than half those eligible had even registered to vote.

The best indication of workers' true feelings came during the 1989 Democracy Movement in China. The Hong Kong left called a march in support of the students in Tiananmen Square in late May, optimistically hoping for 100,000 people. Despite a raging typhoon, over 1 million people one in six of the entire population took to the streets in the largest protest Hong Kong had ever seen. Just as in 1925-27, Hong Kong's workers clearly felt themselves part of a nationwide Chinese movement of protest.

Socialists should neither mourn nor celebrate the handover of Hong Kong. In the short term very little will change for the majority of the population Hong Kong will be as undemocratic and exploitative a society as it has ever been. In the longer term, the prospects for Hong Kong's workers will be decided by the struggles of the masses of Chinese workers and peasants.

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