WikiLeaks: Hong Kong’s Chief Executive claims it would be “unstable democracy”

Donald Tsang fears the poor would “dictate” to the wealthy under universal suffrage

Dikang, Socialist Action (CWI in Hong Kong)

The latest leaked diplomatic cables from WikiLeaks expose the anti-democratic mindset of the governments in both Hong Kong and China. The cables also reveal the US government’s approach to universal suffrage in Hong Kong, of proposing slightly more rapid steps, but not an immediate shift to a democratic election system.

According to the confidential cable leaked on 30 August, Chief Executive Donald Tsang Yam-kuen told then-US consul general James Cunningham over lunch in October 2005, that the one-party dictatorship in China would not agree to a faster pace of democratic reform. Discussing the government’s 2005 reform proposals, Cunningham suggested Tsang drop appointed district council seats from the proposals to enlarge the election committee (the elite 1200-strong body that chooses the Chief Executive). This, he argued, would get wider support including from some pan-democratic lawmakers.

 

“He [Tsang] agreed, but said flatly there is no more flexibility from Beijing,” writes Cunningham in the leaked cable. Exclusion of the appointed district councilors would “kill the deal”, as far as Beijing was concerned, Tsang told him.

Confirming what socialists and chinaworker.info have long argued, the leaked cable shows that resistance to universal suffrage in Hong Kong, and in China, comes not just from China’s dictators, but also from the capitalist elite in Hong Kong itself. Whereas historically, parliamentary democracy has been one of the political tasks of emerging capitalism, along with unifying national territory and abolishing feudalism, this task remains unfulfilled in Hong Kong, with the capitalists themselves firmly opposed to universal suffrage, which they associate with higher welfare demands and costs.

Tsang, according to the cable, told the US consul general that direct elections would create “huge problems, which aren’t even being discussed, such as Hong Kong’s extremely narrow tax base.”

Cunningham said Tsang told him “this is an unstable basis for democracy” and “the great fear in Hong Kong is not taxation without representation, but ‘representation without taxation’ in which the non-taxpaying majority would dictate [terms] to the taxpayers.”

The ‘non-taxpaying majority’ refers to the vast majority of Hong Kong’s working population. The “extremely narrow tax base” of which Tsang speaks is a deliberate choice by government to restrict welfare spending and encourage the so-called “big market, small government”. The tax system is so designed that only around 18 percent of the population pay salary tax, with four-fifths earning too little to be taxed. The very low median salary of 10,500 Hong Kong dollars has been virtually unchanged for more than ten years, while a small super-rich coterie have enjoyed huge increases in personal wealth in recent years. The number of Hong Kong millionaires increased by 42 percent in 2010 according to Citibank.

Despite first appearances, today’s tax system favours the rich and big companies who pay among the lowest corporate tax in the world (just 16.5 percent). In Hong Kong’s special form of crony capitalism, with the property market comprising its rotten heart, the mass of ordinary citizens including the 1.2 million who live below the poverty line, are levied a disguised ‘tax’ in the form of excessive property prices. The government owns all the land and operates a tight-knit land auction system that has enriched what are now some of the wealthiest property companies in the world. Land sale revenue is more important to government coffers than salary taxes, but the population is forced to pay for this with the world’s most unaffordable property prices. This ‘hidden taxation’ is a huge burden on small businesses – rents for shops and restaurants have risen by 20-50 percent this year. And even for those in abject poverty, rents of around HK$2,000 (US$256) per month are charged for a ‘cage home’ large enough for only one person!

Tsang’s comments in 2005, confirm the anti-democratic bent of his government and the bureaucrats that run Hong Kong. They try to give the impression that Beijing alone is the stumbling block to universal suffrage. But as socialists have explained, the local capitalist class also fear mass pressure for greater equality and wish to preserve the elite-controlled ‘safety switches’ (narrow circle elections and business-dominated ‘functional constituencies’) built into the current undemocratic system bequeathed by British colonialism.

The WikiLeaks report gives welcome new ammunition to socialists and other democracy activists fighting for full democratic rights and an end to Hong Kong’s tax haven status. We stand for a socialist progressive taxation system – make the rich pay! Tsang’s leaked comments show that capitalism and the Chinese dictatorship represent an alliance resisting democratic change in Hong Kong and China.