January 1, 2005｜China
Researcher, China Center for Economy, Mitsui Global Strategic Studies Institute
2004 has been the year of elections in Greater China, with a general election taking place in Taiwan in March, the election to select the chief executive in Macau in August, the Legislative Council election in Hong Kong in September, and the election for Taiwan’s Legislative Yuan in December. Increasingly close economic links between these regions and mainland China are influencing election results.
On 29th August, the election to choose Macau’s chief executive was held, with the incumbent Edmund Ho Hau-wah being reelected; on 20th December, he was officially appointed for his second term as chief executive of Macau.
Following its handover to China in 1999, Macau has enjoyed sustained economic growth, which reached 10.0% in 2002, 15.6% in 2003 and more than 20% in 2004. As in the case of Hong Kong, China has concluded a Closer Economic Partnership Arrangement (CEPA) with Macau and is making progress in lifting the ban on visits there by private travelers. Consequently, 57% of all visitors between January and September 2004 were from China. The share of tertiary industry has risen to 93% and Macau, where there is a high proportion of hotels, catering establishments, amusement and gambling businesses and other service industries, is really being supported by Chinese tourists. Moreover, the administration was highly praised last year (2003) for managing to prevent the spread of SARS to the area, as a result of which, the pro-China Chief Executive Ho was naturally reelected.
As a result of the Legislative Council election on 12th September, although the pro-democracy parties increased their seats by just three, pro-China parties secured the majority of seats in the council, with the seats being split 35:25. The administrative ability of Pro-China Chief Executive Tung Chee Hwa has been criticized, due to his handling of the SARS crisis, Hong Kong’s economic stagnation and his promotion of the Hong Kong Basic Law Article 23 legislation (the National Security Bill), and large-scale demonstrations took place in 2003. In 2004, China declared its opposition to the implementation of direct elections for all Legislative Council seats, as well as the chief executive, from 2007; accordingly, the backlash against the Chinese government strengthened. On the other hand, the economy began to recover in the latter half of 2003 and this trend increased in 2004. The catalyst for this was the conclusion of a CEPA with China and the lifting of the ban on visits to Hong Kong by private travelers from China, driving home to the citizens of Hong Kong the fact that the construction of a stable relationship with China is essential to the Hong Kong economy. A pro-democracy activist was also elected in the recent poll, demonstrating that the people of Hong Kong have made a finely balanced choice that seeks the development of a stable relationship with China for the sake of the economy, while not abandoning their calls for democratization.
On 20th March 2004, President Chen Shui-bian was reelected and the ruling party increased its share of the vote, expanding its reach into the northern part of the region, which had traditionally been the power base of the opposition party. However, in the 11th December election for the Legislative Yuan, in which the ruling party had been predicted to do well, it did not gain a majority.
After President Chen was appointed in 2000, economic relations between China and Taiwan became closer, becoming inextricably linked to the extent that China is Taiwan’s number one trading partner, while half of all Taiwan’s foreign investment is directed to China; however, there is still political deadlock between the two countries. In addition, there was a series of comments ahead of the December election that irritated China, such as moves to change the country’s official name and efforts to amend the constitution by 2006, with the aim of bringing the amendments into force in 2008.
Following the presidential election, there has been heightened sensitivity in Taiwanese business circles regarding the prospects for political relations between China and Taiwan, with fears spreading that so-called “green companies” (companies sympathetic to the Taiwanese ruling party) that have expanded into China might suffer discriminatory treatment. With regard to the reasons why the ruling party was unable to achieve a majority in the recent election, one issue was the failure of its campaign strategy, but the public desire for stability in political relations between China and Taiwan was also a major factor. The results of the Legislative Yuan election may act as a brake on the deterioration in relations between China and Taiwan to some extent, but there is little potential for political relations to undergo a vast improvement under President Chen, so the deadlock seems likely to continue for some time to come.
The question of how to incorporate the benefits of China’s high economic growth is a crucial issue for Hong Kong, Macau and Taiwan. All three have little domestic demand and structures in which their reliance on the external economy is developing, so the economies of these three areas and China are steadily becoming closer. At the same time, although their political stances may differ, the political situations in Hong Kong, Macau and Taiwan are being influenced by the Chinese mainland in the form of the closeness of their economic relations, to a greater or lesser extent.