How did Hong Kong Rebuild its Prosperity after the Communist Victory in 1949 - Essay Example

How did Hong Kong rebuild its Prosperity after the Communist Victory in 1949? IntroductionEven though U.S. President Roosevelt endorsed the idea that Hong Kong should be handed over to China, Britain had no intentions of doing so even after the end of World War II. Recovering from the destruction of war was difficult for Hong Kong but gradually it limped back to prosperity. The struggle had only begun when the war ended and Hong Kong faced many problems that needed immediate attentions, one of the most prominent of which was the inflow of immigrants from China. The aim of this paper is to explore how Hong Kong rebuilt its prosperity after the Communist Victory of 1949. The time period explored is from 1950s to early 1980s. Important political and economic milestones from each decade are also taken in to consideration. Beginning of Industrialization – 1950s When the People’s Republic of China was established in 1949, people in Hong Kong had mixed feelings regarding the news. While most of the Chinese population was relieved that the civil war was finally over, others were anxious about the future of Hong Kong (Carroll)1. However, it was soon revealed that the communist regime had no interest in regaining Hong Kong and showed a willingness to let Britain rule the territory as long as there was no mistreatment of the Chinese people living there (Carroll)2. By the end of 1949, the population of Hong Kong had gone up to 2 million. Once PRC was developed, mainland mostly remained isolated from the global economy because of ideological differences and embargos on trade, which had been imposed by the United Nations in 1951 (Schenk)3. Due to its lack of interest in Hong Kong, the communist government expressed its wish to improve the Sino-British relations and assured that it would not interfere in matters of Hong Kong. CCP even allowed the British government to take in Nationalist leaders as refugees in Hong Kong (Carroll)4. Even though PRC had no intentions of regaining control of Hong Kong, it soon realized the importance of the region in reaching its goal of becoming an industrialized economy (Carroll)5. The 50s was an important time period for Hong Kong for its economic and political development. After the embargos on trade imposed by the United Nations, China became increasingly dependent on Hong Kong for imports from the mainland. In turn, Hong Kong was able to control the cost of living even during the years of industrialization (Cameron)6. The inflow of Chinese war refugees, entrepreneurs, and capital in Hong Kong from 1945 onwards did not only create a strong workforce but also brought in resources, making it an ideal location for industrialization. For instance, immigrants from Shanghai fleeting the terrors of civil war in China ended up creating the cotton spinning industry in Hong Kong (Schenk)7. Labor in Hong Kong became increasingly cheap as more people began seeking refuge from the communist mainland. This was a period of economic revolution for Hong Kong and the working conditions were intensive going up to 16 hours a day on minimum wage. Moreover, child labor found its way in to the industry as more families became dependent on the young members of their families to earn due to increasing inflation. However, these inhumane working conditions improved as Hong Kong gradually became an industrialized nation and the international pressure to introduce labor laws increased (Cameron)8. These new legal standards for working conditions significantly improved the situation and living conditions of laborers. The textile sector was the very first industry to sprout in Hong Kong during the 50s which later paved way for other industries to establish their roots as well. This increasing industrialization of Hong Kong also brought to surface many small and medium size enterprises (Schenk)9. Even though during the 50s the economic development of Hong Kong was on the rise given rapid industrialization, the social discomfort was also increasing. This discomfort was due to the poor working conditions and low wages, which remained meager even after the introduction of labor laws. These poor working conditions became the main cause of constant feuding between the supporters of CCP and Nationalists in Hong Kong and later became the basis for 1956 riots, which alerted the government about how bad the conditions really was (Wiltshire)10. The 50s was also an important period in terms of changing demographics. By the mid-50s, Hong Kong became one of the most densely populated areas of the world with the population of 2.2 million (Schenk)11. Another important development of the era was the introduction of multi-story buildings which was the result of precautionary measure taken by the then Governor of Hong Kong, Sir Alexander Grantham, after the Shek Kip Mei fire which left more than 53,000 people homeless (Wiltshire)12. These multi-story buildings introduced the idea of building skyscrapers in the region which housed a large number of people without taking too much ground space. Educational and Political Reforms – 1960s By the end of the 50s, the foundation for a highly industrialized state had already been laid. The businessmen and entrepreneurs that had migrated from communist China to Hong Kong brought with them not only their wealth but also their expertise to start businesses in Hong Kong, creating many job opportunities. During the 60s, the industries further developed, improving the economy. However, this time period is marked by not the development of the manufacturing industry, but social discontent and resulting riots. The 1960s was as a significant era for Hong Kong because industrialization flourished. Even though the per capita GDP did not increase, the living conditions improved compared to the 50s, while the number small businesses and factories more than tripled (Dorn)13. Even though, there was a rapid increase in industrialization as more than half of the exports of Hong Kong was accounted for by the garment and textile industries, the government did not take interest in the sector until the very end of the 60s. This lack of interest in industrial planning on the part of the government was mainly because in the 50s the government was focused on housing the large number of immigrants fleeting from the communist China and its ideological belief in the free market forces (Schenk)14. This ideological belief of free market forces separated Hong Kong from its other Asian counterparts like Japan, South Korea, Taiwan, etc. Hong Kong provided an ideal environment for small and medium business to establish as the government had lax employment laws, free trading opportunities, and lax taxes on business. Moreover, the government of Hong Kong was free from foreign debt, which was a great contributing factor in the economic development of that era (Chi-Kwan)15. Another important factor that enabled economic development and industrialization to flourish was the housing facilities provided by the government. This public housing strategy of government had and indirect effect on industrialization as it curbed the cost of living, which could have become a big problem in the years to come given the low wages which were already causing social unrest (Schenk)16. Another important development that took place during the 60s was the educational reforms. A public education program was introduced by the government as a result of which over 300,000 new primary schools were established. By the mid-60s almost all the children of school going age were attending school even though they were not free (Schenk)17. This was a big step towards development as education became accessible and affordable for people of all backgrounds. Aside from the economical, industrial, and educational development, the 60s are also marked by deteriorating law and order situation in Hong Kong. In 1966, first riot of the decade sprung in response to the increasing fare of the Star Ferry. The next round of riots began the following year due to the Cultural Revolution that had begun because of the increasing conflict within the communist part. At that point, the Red Guards were in control of China while rumors spread in Hong Kong that CCP was planning on taking over Hong Kong (Chi-Kwan)18. As a result, political tension sprung in Hong Kong and the stability of the region was again in danger. Hong Kong once again got affected by the riots as instances of bombings, looting, and arson became common. This also affected the economic stability of the region as the value of property decreased and trade and tourism came to a halt, which had a negative impact on the economy of China. The political unrest finally came to an end in 1967 when Zhou Enlai took charge as Chinese Premier (Chi-Kwan)19. By the end of 1960s the social unrest had finally ended and order was restored in both, China and Hong Kong. The living conditions in Hong Kong also improved. Economic Boom – 1970s Overall, the 1960s had been quite eventful in the history of Hong Kong as it saw many ups and downs in terms of its economic and social development. However, by the 70s, Hong Kong had become quite self-sufficient and economically strong. The economic development of the region during the 70s was rather smooth and marked the period of transition. One of the most important developments of this era was in the field of education as various educational programs were introduced by the government. By 1971, public education, which had been introduced in 60s, had become free of cost. An expansion in the secondary school system was also seen as more schools were established and education was made mandatory. In 1971, primary school education (6 years) was made available for the public free of cost which was expanded to 9 years by the end of 1978 (Chi-Kwan)20. Increasing industrialization in the region did not only require a large number of laborers, but also needed to carry out business projects, increasing the demand for highly educated employees. This demand in educated employees and creation new jobs attracted people who had moved from Hong Kong back earlier (Koo and Mark)21. The public housing programs offered by the government also improved with the completion of the New Town of Sha Tin in 1973, which set grounds for establishing other similar projects that currently provides housing to millions of people in Hong Kong. Due to the successful trading strategies of the country, there was a rapid increase in the exports, which went up from 54% in 1960s to 64% of GDP in 1970s. Moreover, the GDP was growing at the rate of 5.6% annually throughout the 70s (Schenk)22. Though Hong Kong received a shock in 1973 when the stock market collapsed, it was soon able to recover and continue its upward trend in the following years. The economy of Hong Kong in the 70s was doing so well that the neighboring countries made an effort to copy the strategies employed by Hong Kong. Another important development in Hong Kong in the 70s was of curbing corruption, which had become quite prevalent in almost all the governmental departments. Bribing had become a part of the political process as nothing would get done until the government official was given a bribe, even in performing legal duties. Finally, the Governor of Hong Kong, Lord MacLehose of Beoch, established the Independent Commission Against Corruption (ICAC). As a result, many officers who were known for taking bribes were taken in to custody and investigated (Lui)23. Due to an extreme reaction on the part of the police, the Governor issued pardon for officers who had committed crimes before 1977, but the high-level superintendents were put to trial and exiled to Taiwan. These active actions of ICAC against corruption became a lesson for all other government officials who soon changed their habits resulting in reformation of the entire population, later becoming one of the world’s least corrupt cities. A notable development of the 70s was that China was finally getting involved in the trade market and willing to conduct business with other countries (Morrison)24. After the death of Mao Zedong in 1976, Deng Xiaoping took charge of the CCP and the Open Door Policy was announced. As China began international trade, Hong Kong took its place as the commercial and financial services provider for the mainland. This did not only improve the political relationships between the two, but it also increased the economic dependency on each other as the trade increased by 28% each year (Morrison)25. With these improved economic conditions, Hong Kong began business ventures in the mainland where labor was relatively cheaper. Other than trade, industrialization, and educational reforms, Hong Kong saw rapid development in many other areas as well during the 70s. The infrastructure of the colony significantly improved as Mass Transit Railway was introduced in 1979. Given the improving economic condition, the quality of life of people also increased and so did their purchasing power (Lui)26. Many people became wealthy during the 70s and invested their money in local business further boosting the economy. Social Unrest and Anxiety – 1980s Hong Kong had seen much struggle in the past three decades and had risen from a refugee camp to one of the most thriving economies in Asia. It had mostly been influenced by industrialization, which was responsible for its economic boost as well as suffering. Many issues that faced Hong Kong three decades ago were now gone. The economy was doing great, its relations with China had improved and their co-dependence on each other for business had also increased. The internal situation of Hong Kong was also quite stable as the standard of living of the average citizen had significantly improved since the 50s. The educational reforms ensured that the future generation would be able to further improve their economy and the growing investments in the region promised a bright future. It can be said that by the 80s, Hong Kong had finally reached a state where it could call itself a “prosperous” nation. However, even with the promising outlook, the nation was in anxiety with regards to its future. Britain has the legal obligation to give the new territories back but Hong Kong was not a part of that territory. It became quite difficult for Britain to hold on the Hong Kong and Kowloon territory given that more than 50% of the population of Hong Kong was living in the New Territories (Morris)27. Though the CCP had shown little to no interest in taking control of Hong Kong in the past, Xiaoping had finally decided to take back the territory from Britain as it had now become an important part of its economic and political activities. Moreover, the resentment among the Hong Kong people towards the British rulers was increasing since they had been denied a full British passport, taking away from them the right to migrate to the United Kingdom. Throughout the 80s, all three governments i.e. British, Chinese, and Hong Kong, took part in talks and provided the Hong Kong population the assurance that there will be no political consequences of the handover (Schenk)28. However, these soothing words did little to bring down the anxiety of Hong Kong people as they were not prepared to cope with economic and political consequences that would result from the handover. Throughout the 80s and early 90s many Hong Kong citizens migrated to Canada, Australia, New Zealand, and the UK to avoid economic consequences of the transfer (Morris)29. Conclusion After the Communist Victory of 1949, Hong Kong was nothing more than a refugee camp for migrants fleeting China from the consequences of the civil war. Initially, the territory had little to thrive on as the local businesses were not developed, the housing condition was poor, and there was a significant increase in the population as over 2 million immigrants arrived there from China. However, gradually the colony facilitated industrialization of the region and focused on providing public housing for the increasing population. As the economy improved, more reforms were introduced with regard to education, business, trade, and infrastructure. The introduction of ICAC was a great milestone in improving the economy as it ended the widespread corruption at the government level. As China ended its isolation from trade in 70s, Hong Kong had yet another opportunity to improve its economy and living conditions. Throughout its progress, political situation played an important role in building prosperity while the main driving force remained the industrialization of the territory. Works Cited Cameron, Nigel. An illustrated history of Hong Kong. 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Economic History Encyclopedia. Ed. Robert Whaples. 2008. Print. Wiltshire, Trea. Old Hong Kong - Volume 3. Central, Hong Kong: Asia Books Ltd., 2003. Print. Read More