33 Analysis by Drew Kratochvil

Hong Kong has a unique institution in its political system the functional constituency. A functional constituency is the seat or seats assigned to a business or labor organization in the Legislative Council of Hong Kong. Each organization sets the rules for how the seat(s) is filled. This institution is not a relic of formal governmental systems long ago. This feature was created by the British government in 1985. How is it possible for a vibrant western democracy, Britain,  to enfranchise businesses like citizens? The functional constituencies are a formalization of an agreement that the British rulers of Hong Kong created with Chinese elites to co-opt them to support the British rule of Hong Kong. But why continue this undemocratic deal when creating the foundations for Hong Kong democracy. The British government, Chinese officials, and Hong Kong elite argue that Hong Kong’s unique history, economy, and geography melded together to create a system that was better than full democracy. This is wrong, the system is more destabilizing than either a full democracy or non-democratic rule. This is because of the contradictions within Hong Kong politics.

First, we must examine how Functional Constituencies came to exist. Hong Kong was a rural fishing are before the British annexed the island from China in 1842. Hong Kong was built from scratch importing its political, legal, and economic institutions from Britain. Hong Kong was established as a Crown Colony, meaning the colony was overseen by Parliament in London directly. Being a Crown Colony the Governor General was the only authority in the colony and could only be replaced by Parliament in London. This period is known as the executive led era of Hong Kong Politics. It is marked as total rule by the Governor General of the colony being in power with minimal input from anyone in Hong Kong, responding only to directives from London (Carrol 20-25).

This issue of no local representation came to a head in 1894 when a group of British bankers, traders, and landlords, based in Hong Kong, petitioned Parliament in London. They demanded a Colonial Assembly. They would manage more of their own affairs and control government expenditures. This proposal would enfranchise around 800 men out of a population of 221 thousand, of whom 211 thousand were ethnic Chinese. This was unacceptable to the Government in London stating that a representative council would be incompatible with the decisiveness necessary to manage the colony (Loh 23-24). They made a deal with the merchants they would not give them official positions in the Colonial government but several unofficial advisory positions in an Executive Council. They would have access and influence in the government but no formal power or authority. 2 of the 6 initial members were given to ethnic Chinese merchants. This action began the absorption of Hong Kong elites into the government (Li 22-23). This relationship between consulting the ‘expertise’ of the businessmen by the political establishment is the foundations functional constituencies would later be built on.

The influence of these business elites would push back against any economic or political reforms that did not benefit them. Even to the detriment of Hong Kong’s long term prosperity or stability. Hong Kong governance changed forever after the British reassumed control of Hong Kong after World War 2. The myth and prestige of the British Empire was shattered and Britain did not have the will or ability to reimpose total control over all its colonies and had to select which ones it was going to make the effort to keep. Hong Kong was one of these colonies. Britain wanted to retain diplomatic, economic, and military influence in China and East Asia. Many colonial officials believed the status quo before World War 2 would be sufficient to retain control of Hong Kong. However there were reformers in the government who believed democratic reforms would be essential to keep on Hong Kong in Britain’s sphere of influence (Carrol 225-230).

These democratic reforms were attempted by Governor General Mark Young, the first Governor General since Japanese occupation ended. He proposed a municipal council that would manage the municipal affairs of the city that would be elected by the people. This reform was strenuously resisted by those in London and in Hong Kong who benefited from the current system. Young had to retire in 1947 for health, and was replaced by Governor General Alexander Grantham. He was an ardent opponent of democratic reforms believing they would undermine the control Britain had over the ethnic Chinese majority in Hong Kong (Loh 35). This retreat from reform would haunt the Hong Kong government as the situation in China changed greatly in the coming years.

The events occurring in China during the 1950s, 1960s, and 1970s spilled over into Hong Kong. The gradual rise of China as a power that could stand up to Western countries gave hope to Hong Kongers who demanded political changes. This rise in nationalism meant that a movement for Hong Kong independence and alignment with Taiwan which was ruled by the Kuomintang, anti-communist opponents of the CCP in Beijing, party at that time. In 1956 Kuomintang rhetoric from Taiwan  and long standing social and economic strain erupted into riots in Hong Kong calling for independence (Li 26). These riots were put down by police force and gradually the situation calmed down. Several government officials proposed social reforms years before that would have lessened the upheaval, perhaps even avoid it altogether. But the business members who had sway in the Legislative Council vehemently opposed these reforms arguing that they would damage businesses and the economy(Loh 48-49). The reforms never passed. The economy improved in Hong Kong the per capita GDP increasing from HK$3,588 to HK$4,775 from 1962 to 1965 but much of this wealth remained in the hands of the business elite (Loh 30). This wealth inequality created a duality to Hong Kong wealthy business elites, and the workers living in Dickensian squalor. Without reforms in 1966 riots again occurred across the city calling for reforms

The conditions for the poor people in the colony were not addressed after 1956 and continued to cause anger erupting into riots again when the economy went into rescission in 1965. Again the police ended the riots through a violent crackdown that lasted a few short months. Inspired by the Cultural Revolution occurring in Mainland China riots erupted again in 1966 that slowly morphed into a long anti-government bombing campaign (Li 26-27). The height of the violence occurred during 1967 when there was a devastating bombing campaign. The police report responding to over 1,100 bombs, found or detonated, during that year and explosions killed 52 police officers and civilians (Carroll 146-155). Finally the government established several commissions to investigate the causes of the riots and implement reforms. Better labor regulations, increasing the number of advisory bodies for the government, and giving opportunities for public opinion to be expressed to the government. These reforms were structural and not fundamental but they prevented future major upheavals through the 1970s (Loh 30). The political an business elites being ardently opposed to reform caused this violence to occur. Only relenting to reform prevent a full revolution from the lower classes of Hong Kong.

As mainland China developed Britain became increasingly concerned with maintain influence within Hong Kong but found the structure they created now worked against them. With the end of the 99 year lease of the New Territories the British Government were anxious about Hong Kong’s future. Meeting with Chinese leader Deng Xiaoping it was obvious that Hong Kong would be reunited with the mainland when the lease ended, even if Britain refused. Therefore the British opted to voluntarily and peacefully transfer the territory as to retain influence and increase goodwill with the rapidly developing Chinese state (Li 40-42). Both London and Beijing began a campaign to woo Hong Kong elites as they held the greatest influence in the territory. What became a key piece of rhetoric in this transfer was how the lack of democracy became key to Hong Kong’s success. Hong Kong was portrayed by Britain as a barren rock turned into a prosperous capitalistic paradise. That Hong Kong should continue this close relationship after the handover in 1997. Beijing argued they had the most to lose if instability rocked Hong Kong so they had a vested interest in working with Beijing. The rapidly expanding Chinese economy was also a strong pull for the Business elites in Hong Kong as reunification meant easier access to the Chinese market. Beijing also emphasized the 50 years of Hong Kong Autonomy that was part of the Joint Declaration meaning the Business elites had little to worry about the Chinese government nationalizing their businesses (Li 42-46). This campaign won many of the Business elites in Hong Kong to support Beijing over the British during the handover. Britain wanting to maintain influence in the territory after the handover had to instead look at a new source of support they had previously ignored, the common people of Hong Kong.

Britain had 12 years, 1984-1996, to implement reforms that would weaken the influence of the Chinese government in Hong Kong without angering the current power structure in Hong Kong that could change it the moment the handover occurred. A compromise had to be made. They released a Green Paper on how Britain would prepare Hong Kong for the handover. In the paper the British government restated that Hong Kong would be a business focused city, but that it was time to begin introducing democracy to Hong Kong. This would begin with local elections to a municipal council to help run the city of Hong Kong. Then elections would be held to fill seats in a newly created legislature and elect a Chief Executive, ending the position of Governor General. These elections would not be based on Universal Suffrage but a complex electoral system, that would maintain elite power. One half of the legislature would be based on geographical districts, voting districts of equal population that would elect a representative by first past the post. Second would the Functional Constituencies electing ½ of the Legislative Council, consisting of business, industrial, and labor organizations. Third and finally was the electoral college which was 400 members, ¼ of members coming from leaders in the business, commercial, and financial sectors. A ¼ consisting of professionals, lawyers, doctors, engineers, professors etc. A ¼ from labor, grassroots, religious and other sectors. Finally the last ¼ from political figures in Hong Kong, member of the LegCo and District Councils. This was done to appease the elites who were wary of the introduction of democratically elected representatives. They feared the democratically elected representative were a threat to the status quo. The Legislative Council (LegCo) was made up of 60 members, 10 elected by the electoral college, 30 by the functional constituencies, and 20 directly elected(Loh 32-34). The plan was over time to expand the membership of the Elecoral Colege and the LegCo by gradually increasing the number of directly elected members and legislative seats (Li 48). Beijing was furious at the introduction of democracy to Hong Kong and rejected the results of the first election in 1997 causing several elections to be redone (Li 52).

Colonial Hong Kong’s budget was the responsibility of the British Treasury Ministry in London. As Hong Kong had no natural resources to extract to fund the colony nor could it raise taxes or tariffs for fear of losing business it was perpetually short of money. This caused the government to have a laissez-faire attitude toward business and social conditions. Situated next to the Chinese mainland Hong Kong witnessed the collapse and chaos of the Qing Dynasty and the Warlord period. Stability was the aim of the government, as stability would foster economic growth improving people’s lives and generating more stability. This was the governing philosophy of Hong Kong since its founding. Low taxes and low regulation would attract businesses and grow the territory’s economy. This aligns well with the elites view of what makes Hong Kong a prosperous city (Loh 67). This fitting well with Beijing and the Communist Party base their legitimacy to govern on the simple principle of stability and economic prosperity (Li 51).

This government nonintervention had a flip side as well when companies facing financial difficulties called on the government for subsidies or bailouts the government said no. Often pointing to the lack of funds available as a convenient reason. But it was the flipside of free market the government would not intervene to tax your profits nor would it support you if those profits vanished. Though the most pain would be felt by the workers who lost their jobs if a business had to shrink or go bankrupt. This changed after the handover and the businesses had authority and power in the legislature, as functional constituencies (Loh 31-32).

In a 2004 session of the LegCo Chief Executive Tung Chee-Hwa resigned citing health reasons, but a series of scandals involving government and business corruption caused a crisis of legitimacy in the government. These involved cooperation between the government and business for land development of public land and reclaiming land for development from the sea(Loh 36). This represented the breaking of a key source of legitimacy, the free market and government nonintervention in business. Now the government was supporting businesses at the cost of public interests and investments. This event showcases that formally brining in business elites into government ensures the government will favor business interests over the public good. A business tycoon stated “Even if some local businesses are curing favor from Beijing, benefits received are private to those individual and are economic in nature. It is no one’s business”(Loh 36). This statement ignores the power business have in the formal political process and favor from Beijing could be used to influence domestic Hong Kong policies.

Another avenue for reform is taxation, here the business elites show their steadfast refusal for reforms. Only the top 33% of income earners pay an income tax in Hong Kong. Those who pay this tax believe they should have a greater say in government than those who do not earn enough to pay income tax. The rich believe that without their guiding hand in politics that the poor would bleed them dry to fund welfare programs. They view these programs as a cause of laziness and welfarism in the working classes (Loh 35, Li 168-170). Business elites also called for no representation without taxation model where only those paying taxes would have a vote. Another sated that moving towards universal suffrage against the wishes of Beijing would create “chaos”(Loh 36).

The Chinese government also want to prevent any increase in democracy in Hong Kong. The Chinese Communist Party view Hong Kong as a hot bed of disruptive people and forces. Many journalists and artists fled arrest in China for the safety of Hong Kong. The CCP has for years sought to incorporate Hong Kong into the Chinese political system ending its autonomy. It was hesitant to do so right away because Hong Kong provided enormous amounts of capital and expertise to develop the Chinese economy. In recent years the Chinese economy is no longer reliant to Hong Kong capitol or expertise. This caused a crisis with the Business elites as they were no longer indispensable to the Chinese government. They had to acquiesce to Chinese government demands or risk losing their business, wealth, or even freedom. The functional constituencies having so much power in the legislature ensures that with support of any popularly elected legislature they can pass a bill. This gives the policies and changes to the constitution the veneer of a democratically supported action.

The Chinese is now able to flex its power more forcefully over Hong Kong to end its autonomy. This took its greatest form in 2019 with the introduction of the National Security Law. This law would require the extradition of those under arrest to courts in mainland China for trial for breaches of national security. Among the thing categorized were anti-government expressions in public. This would end the freedom of the press and cause several political parties to be disbanded (Hong Kong One Year after…). This lack of ability for the public to have any significant influence on politics in Hong Kong and the government’s new policies caused massive protests that lasted for months and condemnation of the national Security bill from foreign nations. Only ending when the Covid-19 pandemic struck in 2020 (Bradsher and Ramsey).

The Functional Constituencies in Hong Kong have been used since the 1990s as a tool for the elite to maintain power in Hong Kong. Hong Kong has had its political ideology focused on efficiency and economic growth. This is used to justify the suppression of the majority of the population in Hong Kong to being politically ineffective at best and apathetic at worst. This focus on business leaves those of the lower classes working for little pay to increase profits as high as possible for business. What little freedoms the lower classes had under English rule have been dismantled by the Chinese government to end a political thorn in their side. Functional Constituencies are a false hood of expertise and meritocracy. Instead they place their interests above all others even if it will cause crises further down the line.

Works Cited

Bradsher, Keith, and Austin Ramzy. “Demanding Loyalty, China Moves to Overhaul Hong Kong Elections.” New York Times, 4 Mar. 2021, https://www.nytimes.com/2021/03/04/world/asia/china-hong-kong-election-law.html. Accessed 12 Nov. 2022.

Carroll, John M. (John Mark). A Concise History of Hong Kong. Rowman & Littlefield, 2007

Li, Pang-kwong. Hong Kong from Britain to China : Political Cleavages, Electoral Dynamics and Institutional Changes. Ashgate, 2000.

Loh, Christine. Functional Constituencies : a Unique Feature of the Hong Kong Legislative Council. Hong Kong University Press, 2006.

“Hong Kong One Year after the National Secuity Law.” Human Rights Watch, 25 Jun. 2021, www.hrw.org/feature/2021/06/25/dismantling-free-society/hong-kong-one-year-after-national-security-law.