The Making of a Corporatist State in Hong Kong: The Road toSectoral InterventionMa Ngok
Department of Government and Public Administration, Chinese University of Hong Kong, Shatin, N.T.,Hong Kong
ABSTRACTExtant Hong Kong studies have under-stated the corporatistnature of the Hong Kong state. From the 1980s, as part of itspolitical strategy, the Chinese government had helped to build acorporatist state in Hong Kong that incorporated various sec-toral elites, leading to a change in the role of the state after1997. Through an empirical study of the behaviour of functionalconstituency legislators and policy outputs after 1997, this arti-cle shows that the functional constituencies as a corporatiststructure introduced many sector-oriented demands. These sec-toral representatives lobbied for favourable polices, increasedrepresentation for their sectors, and more state resources. Thisdrove the post-1997 Hong Kong state to sectoral intervention, asresources were diverted to selected sectors, creating new legiti-macy problems for the regime.
KEY WORDSCorporatism; Hong Kongpolitics; sectoralintervention; state;functional constituencies
For decades, it was common for studies on Hong Kong to consider it as having a largelynon-interventionist state, which pursued a free market or neo-liberal ideology andwhich was largely autonomous from social forces. This minimalist state was in turnseen as the major reason for Hong Kong’s economic success. This conception failed toaddress the corporatist features of colonial and post-colonial political arrangements,and paid insufficient attention to how political changes since the 1980s have institutio-nalised a corporatist political structure that drove the Hong Kong state to engage invarious sectoral interventions.
This article shows how the Chinese government, out of its political needs during thetransition era, helped to build a corporatist state for post-colonial Hong Kong. Alinchpin of this corporatist regime is the functional constituency (FC) system, anelectoral method returning half of the seats of the Hong Kong legislature since 1995,which guarantees the representation of major business and professional elites. By anempirical study of the behaviours of FC legislators and policy outputs, this article showsthat the introduction of functional representation and related political designs havedriven the state towards sectoral intervention since 1997. While the pre-1997 state hadlargely refrained from sectoral intervention, the post-1997 government was pushed tospend more resources on sectoral development and subsidies, and set up new
CONTACT: Ma Ngok [email protected] Department of Government and Public Administration, ChineseUniversity of Hong Kong, Shatin, N.T, Hong Kong.
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institutions to promote sectoral growth, which led to a more complicated state struc-ture. The political dominance of business and professional elites after 1997 brought amore activist state embedded in sectoral interests, driving the post-1997 state to adoptsectoral interventionist measures.
Autonomous versus corporatist state
The dominant image of the Hong Kong state has been of an autonomous state. Thecolonial state was seen as an “administrative state” or “bureaucratic polity,” with Britishcivil servants making major policy decisions autonomous from societal demands(Harris 1978; Lau 1984). Different from the “developmental state” perspective com-monly used to explain the rise of other East Asian tigers (Amsden 1985; Johnson 1982;Woo-Cummings 1999), Hong Kong’s economic miracle was usually attributed to itsfree market economic philosophy, partly resulting from an isolationist and autonomousstate (see Deyo 1987; Haggard 1990).
There were different and conflicting explanations for this assumed state autonomy.Lau’s (1984) famous “minimally-integrated socio-political system” formulationexplained state autonomy by the political culture of the Hong Kong Chinese in theearly post-war years. The Hong Kong Chinese were seen as harbouring “utilitarianisticfamilism,” stressing material values and solving their livelihood problems throughfamilial networks. This brought a low level of political participation and weak linkagesbetween social groups, putting little pressure on the colonial government. To Lau,colonial politics was marked by “boundary maintenance” between state and society,as the colonial masters and Chinese society had a value consensus on mutual non-intervention. The colonial regime refrained from intervening in society and the econ-omy, in exchange for the quiescence of the refugee Chinese who would prefer the stateto leave them alone. Chiu (1996) attributed the non-intervention strategy to the colonialprinciple of financial self-sufficiency and the political dominance of the British tradingfirms. The colonial government and the British trading firms were both adamant thatHong Kong’s prime value was to serve as a low-tax free entrepôt for trade with China.With the uncertain political future of the colony, a more developmentalist approachthat required more social and industrial investment was deemed too risky.
Quite a few scholars have contested this non-interventionist and autonomousstate narrative, pointing out that the colonial government intervened in societyand the economy from time to time. Studies in post-war rural politics have shownthat the colonial regime actively intervened to force the reformulation of Heung YeeKuk, the indigenous people’s organisation of the New Territories, for its owngovernance and developmental goals (Chiu and Hung 1999). Ngo (1999) showedthat business and industrial groups had lobbied the colonial state for subsidies, sothe latter was not as autonomous as commonly assumed. Schiffer and others assertedthat the colonial state had been using public housing to subsidise a “social wage” tolower costs for export industries and maintain the price stability of foodstuffs byintervention (Schiffer 1991; Chiu and Hung 1997; Castells, Goh, and Kwok 1990).Recent studies of the London archives show that post-war British governments, andusually Labour governments, exerted much pressure on the Hong Kong colonialadministration to improve social welfare, only to be fended off by an alliance of the
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colonial governors and the Hong Kong bourgeoisie (see Bickers and Yep 2009;Goodstadt 2005; Lui 2012; Ure 2012).
Ngo (1999) and Goodstadt (2005) concurred that the key economic and politicalstrategy of the colonial state was to stay away from sectoral intervention and directsubsidies to specific sectors or firms. As the colonial regime had weak legitimacy, non-interventionism was a good pretext to turn down competing interventionist demandsfrom Chinese industrialists and British merchants. In this light, the low level ofintervention by the colonial state did not originate from free market ideology or anautonomous state. Rather, it was a careful managing of state–society relations by thecolonial government out of legitimacy concerns.
Countering the autonomous state image, there were scholars who suggested that thecolonial state had consciously and actively engineered a contract with Chinese society,by using middlemen, intermediary organisations and the co-option of elites. In thisview, the colonial state co-opted influential groups and social leaders to enhancelegitimacy and defuse possible opposition from Chinese society. Scott (1989) claimedthat the colonial regime had faced repeated legitimacy crises since the 1840s, andresponded each time by incorporating more groups into an increasingly corporatistdecision-making structure. King’s famous “administrative absorption of politics” thesisposits that Hong Kong maintained stability amidst rapid industrialisation by co-optingChinese elites through appointment into councils and advisory committees or grantingcolonial honours (King 1975, 425–429). These co-opted Chinese elites bridged the gapbetween the British and the Chinese, creating a “synarchy” of colonial bureaucrats andChinese elites. Law (2009) and Sinn (2003) stressed the role played by Chinese colla-borators and intermediary bodies such as the Tung Wah Group of Hospitals inmanaging state–society relations for the British in colonial history.
From this perspective, colonial governance had a corporatist flavour, as the colonialstate actively incorporated social and business groups into the decision-making struc-ture to maintain legitimacy and stability. This corporatist practice, however, wasinformal, not well institutionalised and relatively restricted, but it did form an impor-tant part of a state–society contract, which served to bring about relative stability in thepost-war years.
Functional elections as corporatism
Corporatism as a principle of social and political organisation has a long history inEuropean political thought. The central idea was that human society as an organicwhole should be constituted by functional units. Societal groups that shouldered majorsocial functions, such as church organisations and guilds, should form the major basisof organising the polity. In the nineteenth century, corporatism was a social movementthat was seen as an alternative to socialism and free-wheeling capitalism (Wiarda 1997;Williamson 1989). Italian and Iberian Fascist states in the inter-war years designedcorporatism as a model of top-down, hierarchically-organised developmental dictator-ship (Gregor 1979). Fascist Italy and Portugal under Salazar tried to build a corporatestate and structure national assemblies along sectoral lines, controlled by the Fasciststate. Because of this, corporatism was long cast in a Fascist or authoritarian tint.
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Corporatism was reinvented in the 1970s to analyse European industrial democra-cies. Corporatism in Western Europe was marked by inclusion of key social groups informal institutions, most notably representatives of employers and employees in tri-partite policy-making structures, as a form of interest representation. Schmitter’sauthoritative definition had corporatism as:
a system of interest representation in which the constituent units are organised into alimited number of singular, compulsory, non-competitive, hierarchically ordered andfunctionally differentiated categories, recognised or licensed (if not created) by the stateand granted a deliberatively representational monopoly within their respective categoriesin exchange for observing certain controls on their selection of leaders and articulation ofdemands and supports (Schmitter 1974, 93–94).
Several features of European corporatism at the time were identified (seeSchmitter 1974; Cawson 1986; Wiarda 1997; Williamson 1989, Lehmbruch 1982).First, major interest groups were represented in formal decision-making structures todeliberate public policy. They were responsible for representing group interests andmediating between the state and the groups in the policy-making process. Second,not all interest groups were to be represented, meaning that selected groups couldmonopolise representation and marginalise other non-represented groups. Third, thestate was not politically neutral as assumed by pluralists, with major groups goingthrough a process of “state-licensing” as they entered into a contractual relationshipwith the state as interest regulators in exchange for their exclusive representationstatus.
In Hong Kong, the colonial regime co-opted local elites by a system of appointment.The most powerful British trading firms such as Jardines and Swire were more or lessguaranteed seats in the Executive Council (Exco), the colonial cabinet. Leaders of majorchambers of commerce and top professional elites were appointed into the Exco or theLegislative Council (Legco). Goodstadt (2006) saw this appointment system as an earlyform of “functional election” by which the colonial state co-opted major social andeconomic groups in an informal manner.
With decolonisation and democratisation imminent after the signing of the Sino-British Joint Declaration in 1984, a new formula for co-optation was necessary. Theintroduction of FCs was a corporatist formula that suited the needs of both the Chineseand British governments. Scott (1989, 269) claimed that decolonisation in the 1980sbrought the colonial government the fourth and final legitimacy crisis, to which itresponded again by enlarging the corporatist structure to incorporate more businessand professional elites. As a method of “election,” the franchise of which was limitedonly to members of major business and professional groups, the FCs sought to enlistthe support of these elites to the outgoing regime. The 1984 Green Paper whichinitiated political reform stated unequivocally that the goal of the FCs was to institu-tionalise the previously informal system of appointment by a form of election,1 because“full weight should be given to representation of economic and professional sectors ofHong Kong which are essential to future confidence and prosperity” (Hong KongGovernment 1984, Article 27). In 1985, 12 FC seats were introduced into the Legco,giving representation to nine economic or professional sectors: Industrial (two seats),
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Commercial (two seats), Legal, Medical, Engineering, Education, Social Services,Architectural and related professions, and Labour (two seats).
Since its inception in 1985, FCs gradually expanded to include more economic andprofessional sectors. From 1998 to 2012, 30 seats or half of the legislature was elected byFCs, including 28 sectors, with the other half popularly elected after 2004. These FCscould be divided into four categories:
Designated Organisations: some groups represented in colonial times were virtuallyguaranteed a Legco seat, as voter eligibility was defined by membership of these groups.This included two seats for the industries and two seats for commerce, and one for ruralindigenous representatives. For example, only members of the Hong Kong GeneralChamber of Commerce (HKGCC) can vote in the Commerce (I) constituency.Commercial corporations which are not HKGCC members are not eligible. Theseseats (five out of 30 FC seats in the 2008 Legco2) are thus effectively “reserved” forthese designated groups.
Professionals: nine professional sectors elect their respective representatives throughone-person-one-vote by registered professionals, taking up nine seats out of 30 in 2008.The sectors include lawyers, schoolteachers, medical doctors, health care professionals,information technology professionals, engineers, accountants, architects and relatedprofessionals, and social workers, each with one seat.
Corporate Sectoral Representatives: Corporations or associations in 11 different eco-nomic sectors elect their respective representatives by corporate voting. Employees in thesector or members of the associations do not have the vote; only the corporates hold thevote. For example, the voters in the Financial FC are licensed banks, while tens ofthousands of bank employees cannot vote. Fishermen’s associations can vote in theAgriculture and Fisheries FC, but fisherfolk cannot. These 11 sectors included tourism,insurance, catering, finance, financial services, import and export, wholesale and retail,transport, textile and garment, real estate and construction, and agriculture and fisheries.
Social Organisations: social organisations including labour unions (three seats),sports and cultural groups, and District Councils returned five seats in 2008. Most ofthem adopt corporate voting. For example, workers do not have a vote in the LabourFC, but each registered trade union has a vote (Ma 2009a).
Compared to European forms of corporatism, FCs have important corporatistfeatures, though not without significant differences. The FC system is an institutiona-lised system of interest representation and intermediation, with sectoral representativeschosen by election. As there are few objective criteria to determine which sectors orgroups should be represented, the granting of FC status is more or less a state licensingprocess, through which the state can choose to co-opt pro-state groups or sectors. Bygranting privileged and exclusive representation to selected groups, these groups haveattained some sort of monopoly and non-competitiveness in representing group inter-ests. There are also significant differences with the European forms. European corpora-tist structures are mostly appended to the administrative structure; there are few caseswhere legislatures are elected along functional or sectoral lines.3 European corporatism,as an alternative democratic form, rests on the assumption that the represented socialgroups are run and elected democratically. As most of the Hong Kong FC corporatevoters are commercial corporations which are seldom run democratically, it largelybecame a system representing sectoral leaders and corporation bosses (Ma 2013).
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The FC system befitted China’s strategy during the political transition. The topofficial of the Chinese government in Hong Kong from 1983 to 1990, Xu Jiatun, sawhis most important task in the transition era as rebuilding the “united front” in HongKong, and maintaining the capitalists’ confidence (Xu 1993, 59). Support from majorbusiness and professional groups was seen as vital for maintaining confidence, stabilityand prosperity before and after 1997. The FC system could ensure the business andprofessional elites continued representation after 1997, despite decolonisation anddemocratisation. In the face of the burgeoning democracy movement in Hong Kong,the politically conservative business class was a convenient ally for Beijing to help fendoff the democrats’ demand for full-fledged democratisation. The FCs guarantee thecontinued political dominance of the business and professional elites and serve as abulwark against full democratisation.
Driven by this political strategy, the Chinese government structured the pre-1997 co-optational organisations and post-1997 political design along sectoral lines. Since the1980s, various Beijing-appointed decision-making and advisory bodies, including theBasic Law Drafting Committee (23 Hong Kong members), Basic Law ConsultativeCommittee (180 members), three batches of Hong Kong Affair Advisers (total 143members), the Preliminary Preparatory Committee (94 Hong Kong members), and theSelection Committee (400 members) were all structured along sectoral lines (Ma 2007,42–44; Cheung 2000, 303). Members were selected from various business, professionaland social sectors, with the labour sector grossly under-represented (Goodstadt 2000;Wong 1997). This ensured that the voices and interests of these elitist and economicallyinfluential groups were adequately reflected during the transition.
The FC system and the Election Committee (EC) that elected the Chief Executiveafter 1997 perpetuated the interests of these entrenched groups, instituting a sectoral-oriented corporatist state after 1997. Documents related to the drafting of the Basic Lawcited the following reasons for electing the Chief Executive by the EC: (a) It allowsrepresentation and the Hong Kong people have had experience in FC elections; (b) Itensures the Chief Executive will not be controlled by the Legco or any of the socialstrata or organisations; and (c) The industrialists and businessmen will continue to stayin the establishment (Young and Cullen 2010, 14).
The goal of the EC was thus to guarantee continued representation and dominanceof “industrialists and businessmen” in the selection process of the Chief Executive. Thecomposition was largely sectoral, heavily weighted in favour of business and profes-sional elites.4 The 2012 EC was divided into four major sectors, each returning 300members. The four sectors include: industrial, commerce and financial sectors; profes-sionals; labour, social services, religious and other sectors; and the political sector. Mostof the EC members are elected from various sub-sectors that are already represented inthe FCs. The 28 FC sectors elected a total of 940 EC members (78.3%) in the 2012 ChiefExecutive election.
The research method: assessing FC sectoral demands
For years, research on the FC system has been focused on its undemocratic nature andits implications for democracy in Hong Kong (see Kwok and Chan 2001; Loh and CivicExchange 2006; Ma 2009a). There was little research on its impact on the role of the
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state. If we see the FC as a corporatist structure that has grown more inclusive since the1980s, its introduction and growth should have brought changes to the role of the state.The natural conjecture is that these sectoral groups’ privileged access to power willbring more sectoral demands, which could drive the state to be more interventionist.Latter (2006) analysed Legco’s deliberations on economic policy during the 2000–04term and found that most FC legislators focused on issues of their own sectors and didnot have holistic views on economic policy. They would pursue their own sectoralinterests and seldom opposed demands from other sectors, which drove the govern-ment to become more interventionist. This would imply a major departure from thecolonial governing strategy which refrained from sectoral intervention.
This research examines the impact of the FCs on the role of the state in Hong Kong.I start with the hypothesis that policy demands of the FC legislators will be differentfrom demands of those popularly elected from geographical constituencies (GCs). Theresearch method is to analyse and compare the patterns of policy demands put forwardby the FC and GC legislators in 1998–2008. I analysed all the policy demands made byindividual legislators in the annual Budget Debate (usually in March) and the PolicyAddress debate5 (usually in October), in the period 1998–2008. It is impossible to countall the policy demands made by a legislator during his/her term. Limiting the count tothe demands in these two annual debates has three merits. First, the Policy Address andBudget Debate cover government policies and public expenditure in most if not allpolicy areas. The debates on these two documents give legislators the opportunity toexpress their positions on the whole range of policy areas. Second, the legislators haveequal chance and equal time to speak in these two debates, regardless of their partystatus or electoral origins. Most legislators will choose to speak since these are the twomajor debates of the year. This allows the researcher to capture the legislators’ mostimportant policy positions, and the legislators can be judged on more or less an equalbasis. Third, the Hansard – as the proceedings of Legco – carries a word-by-wordrecord of all the speeches made by every legislator in both debates, which gives areliable basis on which to gauge the positions and demands of the legislators.6
A research assistant excerpted all the speeches of the FC and GC legislators in thesetwo debates from 1998–2008.7 All policy demands of the legislators were recorded,8 andthen classified according to (a) the (potential) major beneficiary of the demand (the“beneficiary code”); or (b) the (potential) impact on public revenue and expenditure(the “finance code”). In the end, every policy demand will be given a binary code (1A,2B, 3E, etc.) that describes the major beneficiaries and public finance impact of thedemand. The coding process was carried out by two coders, who would check with oneanother to ensure that the coding was consistent throughout all the years, for allmembers, in all the cases and in both debates.
The “beneficiary code” classifies the demands into four categories, according to themajor beneficiary of the demand:
(1) The code is “1” if the legislator’s own sectoral constituents (for FC) or geographicalconstituents (for GC) are the major beneficiaries. For example, if the medical FClegislator demands more resources for public hospitals, it will be coded “1.”
(2) The code is “2” if the business sector in general is the major beneficiary. Thisusually includes demands for cost reduction for business (for example, reductionof license fees, rates, corporate tax) or subsidies or promotion for businesses.
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(3) The code is “3” if most people or the general public can benefit. This usuallyincludes calls on the government to improve efficiency, demands to improve theenvironment, food safety, education, and other “public goods” demands.9
(4) The code is “4” if the major beneficiary is the lower class or under-privileged(including the elderly, ethnic minorities, the disabled, the poor, the unemployed,and the like).
The “finance code” classifies the demands into five categories, according to thepotential financial impact of the demand (if implemented).
(1) The code is “A” if the demand is “financially neutral,” which means it does notbring an ostensible increase or decrease in revenue or expenditure.10
(2) The code is “B” if it brings an increase in government expenditure. It includesdemands for more subsidies to sectors or businesses, demands that involve morespending on services, new structures, more staff or resources for a certain policy,or benefits to selected groups and/or communities, and so on.
(3) The code is “C” if it reduces government revenue. It usually includes demandsfor reduction of taxes and government fees, of public housing rents, and similardemands.
(4) The code is “D” if it reduces government expenditure. It includes demands forreduction in social benefits, pay-cuts for civil servants, slimming of governmentstructures or other specific cost-cutting suggestions.
(5) The code is “E” if it increases government revenue. It includes suggestions forraising new taxes or increases fines or fees to achieve a certain policy purpose.
After calculating the binary codes of all legislators in the 10-year period, thebehaviour of the FC legislators was compared with that of the GC legislators. Acomparison was made of the behaviours of the four types of FC legislators (that is,designated organisations, professionals, sector representatives, and other social sectors).The second part of the empirical work deals with the policy outputs. Legislators’demands may or may not lead to policy changes. It is almost impossible to tracewhether every policy demand has been answered by the government, so I analyse theannual Budget Debates and Policy Addresses since 1997 to examine the extent to whichgovernment polices became more sector-oriented after 1997. In the Budget Debates andPolicy Addresses in the 1998–2012 period, coders recorded the major policy initiativesof the government, including: (a) changed allocation of resources; (b) policy actions,such as new legislations or policy changes; and (c) setting up of new structures,including committees, advisory bodies or units. For every new policy initiative, codersdetermined the “finance code” and “beneficiary code” just as in the case of legislators’demands. The total count and distribution of codes provides a first glimpse of thenature of government policy output after 1997.
The following sections of this article examine the findings derived from the analysisof the data.
Legislators’ demands
Comparing the “beneficiary codes” and “finance codes” of FC and GC legislators, thereare two major observations. First, in terms of beneficiaries, in both the Budget andPolicy Address debates, the FC legislators had a high percentage of demands having
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their sectoral constituents as major beneficiaries. In the Policy Address debates in 1998–2008, 54.4% of the FC demands had their sectoral constituents as major beneficiaries. Inthe budget debates, 54.9% of the FC demands were sectoral in nature (see Table 1).
In contrast, only a small proportion of the GC demands were about their localconstituency interests – 5.3% for Policy Address debates and 5.5% in Budget Debates in1998–2008. Most GC demands were coded “3,” having the general public as the majorbeneficiary – 57.7% coded “3” in Policy Address debates and 65.5% in Budget Debates.The FC members only had 24.0% of their Policy Address demands and 29.6% of BudgetDemands having the general public as the major beneficiaries.
The GC members had a much stronger concern for the under-privileged. In 1998–2008, 25.1% of the GCs’ Policy Address demands and 17.9% of the Budget demands hadthe under-privileged as major beneficiaries (including ethnic minorities, the disabled,the poor, the unemployed, the elderly, etc.). In contrast, the FCs only had 7.8% (PolicyAddress) and 4.1% (Budget) of demands targeting the under-privileged. Surprisingly,comparing FCs and GCs, there was only a minimal difference in the proportion ofdemands benefitting the business class in general. The FCs had 13.8% (Policy Address)and 11.3% (Budget) of their demands benefitting the business class, not much differentfrom the GCs: 11.9% (Policy Address) and 11% (Budget).
Table 1. Distribution of “beneficiary codes,” FC compared with GC, 1998–2008.Period Sector FC GC
Notes: Key: 1. Sectoral constituents (for FC) or geographical constituents (GC) as major beneficiary; 2. Businesscommunity as major beneficiary; 3. General public as major beneficiary; 4. Underprivileged class as the majorbeneficiary.
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The second observation is about the financial impacts. Since democratisation startedin Hong Kong in the 1980s, business conservatives had claimed that popularly electedpoliticians would only placate lower-class voters who are usually in abundance, leadingto a massive increase in public spending. This will then create a “tax and spend” cyclethat would hurt the low-tax, low-welfare capitalist haven of Hong Kong. The FCs couldthus serve as a buffer to this trend (see, for example, Wenweipo, August 13, 2013).Following this assumption, we should expect the GC members to have more demandsfor increased public expenditure, and maybe also for more increases in taxes and fees tofinance increased expenditure.
Table 2 shows the frequency distribution of the “finance codes” of the two groups oflegislators. Most striking was the similarity of the two distributions. The GC and FClegislators shared a similar ratio of “financially neutral” demands, as more than half of
Table 2. Distribution of “finance codes,” FC compared with GC, 1998–2008.Period Demands FC GC
Notes: Key: A. Financially neutral: no significant increase or reduction in government expenditure or revenue; B.Increase in government expenditure; C. Reduction in government revenue; D. Reduction in government expenditure;E. Increase in government revenue.
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their demands would not entail ostensible change in government expenditure orrevenue. The two types of members also had similar proportions of demands thatwould lead to increased public expenditure. The FC members had more demands forreductions in government revenue (mostly reductions of government fees and taxesrelated to businesses), with 12.4% of demands in budget debates, compared to 7.9% forGC members. When it comes to the Policy Address debates, however, there was only a1.1% difference between the FC and GC demands.
Among the four types of FC members, the sectoral representatives had a dominantpercentage (more than 60%) of demands coded as sector-oriented (see Table 3). Theyalso had fewest demands benefitting the general public (17.8% for Policy Address and22.2% for Budget Debate). In comparison, professional FCs showed more concern forthe under-privileged and the general public, with 11.9% of demands (Policy Address)
Table 3. Comparison of distribution of beneficiary codes and finance codes, between four types ofFC legislators and GC members, 1998–2008.
Notes: Key: “Beneficiary Codes”: 1. Sectoral constituents (for FC) or geographical constituents (GC) as major beneficiary;2. Business community as major beneficiary; 3. General public as major beneficiary; 4. Underprivileged class as themajor beneficiary; “Finance Codes”: A. Financially neutral: no significant increase or reduction in governmentexpenditure or revenue; B. Increase in government expenditure; C. Reduction in government revenue;D. Reduction in government expenditure; E. Increase in government revenue.
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and 3.9% (Budget Debate) having the under-privileged as major beneficiaries. Theratios were close to that of the GC legislators. Representatives of the “designatedorganisations” were the least sector-oriented (see Table 3).
The above figures suggest that with FCs taking up half of the legislature, the highpercentage of sectoral demands could drive the government towards more sectoralintervention. This could also divert more state resources towards the selected sectors, atthe expense of the general public and the under-privileged. The business leaders andsectoral representatives did put some pressure on the government to reduce revenue tomaintain a low-tax structure, but this was mostly geared towards cost reduction for thebusiness; it does not necessarily bring a diminished state role or size.
Chief executive elections and sectoral demands
Another venue by which the sectoral elites could exert influence on the governmentis through the corporatist EC that has elected the Chief Executive since 1997. Asaforementioned, representatives from the 28 FC sectors took up more than three-quarters of the 1,200 EC seats in 2012. The Chief Executive election is not an“election” in the genuine sense, as only the few hundred EC members vote. Mostof the business and professional elites represented in the EC do not openly defyBeijing’s wishes and usually vote for Beijing’s Chief Executive designate.Nevertheless, general support from this elite stratum was an important considerationfor a certain Chief Executive candidate to be deemed acceptable to Beijing. Thedesignated Chief Executive also has the incentive to get wide support from differentsectors, as a high vote-count in the Beijing-controlled EC would bestow morelegitimacy to his/her selection as Chief Executive, or at least show that s/he hadstrong elite support. This means the sector representatives could use their EC votesin exchange for policy favours from the prospective Chief Executive.
A study of the “campaign” experience of the Chief Executive elections in 2005,11
2007 and 2012 showed that the Chief Executive candidate(s) would meet EC membersfrom various sectors to solicit their support during the “campaign period.” Accordingto press reports, the EC members would invariably put forward demands in representa-tion of their sectors. In return they would get pledges from the prospective ChiefExecutive that at least some of their demands would be answered after he took office.It was common for the representatives to demand policy initiatives to promote thegrowth of their sectors, and more resources or actions to enhance business or jobopportunities. They would also lobby the future Chief Executive to appoint more peoplefrom their sectors into advisory or statutory bodies.
Table 4 shows the exchanges between the Chief Executive candidate and the sectoralrepresentatives in the 2005, 2007 and 2012 elections.12 The reported responses of theprospective Chief Executives fell into several patterns. It was common for them topromise to speed up government projects to provide more jobs or business opportu-nities. They invariably verbally agreed to appoint more sectoral representatives (or“professionals”) into future decision-making or consultative bodies. In some cases theChief Executive designate would commit to demands of promoting sectoral growth, orsetting up new institutions (a bureau or a committee) to study specific policies orpromote certain sectors. All in all, most of these demands pointed towards a more
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Table 4. Sectoral demands during Chief Executive campaigns, 2005, 2007 and 2012 Chief Executiveelection 2005.
Wholesale and Retail No report ● Promised to improve businessenvironment
● Reduce profit tax rate from 17.5%to 15% in 5 years
Agriculture and fisheries ● Propose to rebuild vacant pig andpoultry farm into greenhouses fordeveloping organic farming
● Promised to study on the proposal
Chief Executive Election 2012Religious (Taoism) Taoist Festival on a Sunday every
yearSuggest a commemorative day tohonour Taoism
Chinese Medicine ● Equal political right of Chineseand Western medical doctors
● Set up a Chinese medicinehospital
● Policy for promotion of Chinesemedicine
● Suggest to set up a Chinese med-icine development committee topropose strategy for developingChinese medicine
● Inclusion of representatives fromChinese medicine sector in advisorycommittees.
● Study the possibility of enhancingthe role of Chinese medicine inpublic health care, including hiringmore practitioners, encouragingintegration of Chinese and Westernmedicine in clinical treatment andresearch
● Feasibility study on setting up aChinese medicine hospital
● Provide continual education toChinese medicine professionals
Religious (Islam) No report ● Will look at the distribution ofIslamic schools in different districtsand the provision of venues forIslamic activities
Social Welfare Social Workers’ Registration Boardshould have training functions
● Agree there should be no conflict inroles if Social Workers’ RegistrationBoard has training functions
● Would regularly meet with socialwelfare sector and review theLump Sum Grant System
Agriculture and fisheries The government should have a totaland long-term plan for the sector
● The importance of the agricultureand fisheries sector has beenunder-estimated. Comprehensivelong-term planning is needed.
● Set up a fund for loans for fisheriesdevelopment
● Set up agriculture and fisheriesresearch centre
● Promote restructuring of fisheriessector
Democratic Alliance for theBetterment and Progress of HongKong (a pro-Beijing party thatholds more than 100 EC votes)
14 suggestions, including establishthe Deputy Chief Secretary, enhanceeconomic cooperation withmainland, etc.
● Agree to set up the post of DeputyChief Secretary
Culture No report ● Promised to consider setting up aCultural Bureau and to speed upthe construction of West KowloonCultural District
Representatives from Accountancy,Social welfare, and Legal sectors(Meet with about 30 ethnicminority youths)
Concerns about social welfare forethnic minorities
● Include an “ethnic policy” sectionin his platforms on population pol-icy, education, religious policy, cul-tural and art policy
(Continued )
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active role of the state, more state resources into the sectors, more state actions and/orstructures to promote growth in these sectors, which means a more sector-oriented andinterventionist government strategy.
Policy outputs: more sector-oriented?
To what extent are the policy demands of the legislators and EC members turned intoactual policies of the government? Table 5 summarises the distribution of beneficiarycodes and finance codes of the policy outputs in the Budget Debates and PolicyAddresses in the 1998–2012 period. About 30% of the policy outputs were sectoral innature, including new resource allocations for sectoral growth, new structures to studyor promote sector development, and new sector-oriented policy initiatives. Even if Itake away the counts for the four sectors that are related to social services (education,social welfare, medical services),13 the count is still 127 or 19.6% of the total outputcounts. This is still double the count of outputs favouring the business class as a whole.The sector-oriented initiatives included those aimed at promoting, subsidising orprotecting tourism, logistics, the movie industry, the use of informational technologyand fisheries. There were also measures aimed at reducing costs for selected sectors(trade, catering, and the like). This shows that a considerable portion of publicresources or policies were directed to selected sectors with clear designated benefici-aries, instead of benefitting the business class in general.
As far as the finance codes are concerned, a number of the initiatives led to increasedgovernment expenditure (45.8%), since about 60% of the output counts came from theannual budgets. It is noteworthy that while a majority of the expenditure items served
● Propose to set up a tripartite com-mittee to study the setup of stan-dard working hours
● Promised to study introducing col-lective bargaining rights
● Review the regulations on the rightsof the self-employed in labour law
Hotel ● Insufficient land supply for hotels● Set up a Tourism Bureau to pro-
mote tourism
● Increase land supply for the hotelindustry, especially rural land forresort hotels, or change industrialpremises for hotel development
● Better coordination of variousbodies involved with tourism; willconsider setting up a TourismBureau
Education and Social Welfare 15 years of free education and full-day pre-school education
● Support 15-year free education● Try his best to push full-day pre-
school educationInformation Technology No report ● Propose to set up Information
Technology Bureau, a strategicdevelopment fund to improvegovernment services by informa-tion technology
JOURNAL OF CONTEMPORARY ASIA 261
the general public or the underprivileged, the sector-oriented expenditure outputs faroutnumbered expenditure for the general business class. This also shows that publicresource allocation has become much more sector-oriented.
A most striking result was the proliferation of new structural appendages. In theperiod 1998–2012, a total of 68 new structures were proposed in the Policy Addressesand Budget speeches. The form of structure varies, including new bureaus, departmentsor offices, work groups or units under departments, inter-department task forces or co-ordination units, commissions to carry out specific tasks, and advisory bodies. Thefunctions, significance and scale of these bodies varied. There were high-level commit-tees, chaired by the Chief Executive or the Financial Secretary, responsible for propos-ing measures to tackle the economic crisis or attract foreign investment. There werenew bodies to co-ordinate or promote information technology, tourism, logisticsdevelopment, the movie industry, infrastructural development, the “creative economy,”and the like. New offices were set up to facilitate economic co-operation with Taiwan,Shenzhen and Guangdong, and to supervise or regulate the insurance industry or listedcompanies.
It would be difficult to prove that all these sectoral policy outputs were the directresults of the demands of the FC legislators or EC members, but the implication of thedata is obvious. The post-1997 corporatist state had diverted a lot of resources andpolicy actions to selected sectors. It was also a more activist state, intent on using morepolicy actions and various new structures to promote sectoral development. The pro-liferation of new structures inevitably would mean the state growing in size, scope andreach, and was not the lean and small administrative state commonly assumed by neo-liberals. The corporatist power of the sectoral elites is self-perpetuating, as they willdemand more inclusion of their peers into the decision-making structure. Enhancedsectoral resources and representation helped these sectors to expand, in turn furtheraugmenting their political influence in Hong Kong. Sectors or groups that are notincluded in this corporatist framework will be increasingly under-represented, in thelong term losing out in the power and resources game.14
Conclusion: corporatism and the changing role of the state
The results of this research point towards a rethink or overhaul of past perspectives onthe role of the state in Hong Kong. Early studies largely assumed that the Hong Kongstate was autonomous and insulated from society, with mutual non-interventionism thenorm. The corporatist features of colonial rule were overlooked, partly because of their
Table 5. Distribution of policy outputs in 1998–2012.Budget + Policy Address
informal nature, and partly because the clandestine and informal politics of the colonialera were under-studied (Faure 2003). The co-optation strategy of Beijing led to aformalisation and institutionalisation of the corporatist state beyond 1997. The FCsand the EC are two bedrocks of this corporatist state. Formal representation of sectoralgroups allowed them privileged access to power, leading to more representation fortheir fellow elites in the decision-making structure. Their sectoral demands, put forwardin the legislature or through lobbying the Chief Executive, led to more policy actionsand allocation of public resources in their favour. Exchanging policy or resourcefavours for political support, the state entered into a contractual political relationshipwith the sectoral elites, pushing the state towards more sectoral intervention after 1997(see Ma 2009b).
The results also show that much of the resource allocation, policy initiatives and newstructures are sector-oriented. It was not a simple “business capture” model as many inHong Kong believed. The sectoral elites may share vague common interests such as lowtax or low costs, but have no consensus when it comes to development strategy or stateresource distribution. Many of their demands are particularistic and sector-specific, andthe responses of the state are fragmented and piecemeal. The data show that much ofthe post-1997 resource allocation and institutional innovation was particularistic andtargeted for selected sectors. There was no overarching business coalition capable ofcontrolling the post-1997 Hong Kong state to embark on a unified strategy of devel-opment. Instead state resources would be diverted into various sectors, rendering itdifficult for the state to have a coherent development strategy after 1997.
The post-1997 sectoral intervention brought a new legitimacy problem for the HongKong government. Goodstadt (2005) claims that the colonial regime stayed abovesectoral intervention for the sake of legitimacy, making the Hong Kong people believethat the colonial state could draw a clear line between public interest and private profit,that rent-seeking was not excessive even if the government was not democraticallyelected. It follows that when this sectoral neutrality was violated after 1997, thegovernment’s rationale for intervention would quickly be called into question. Somecriticised the government for steering away from its self-proclaimed free marketprinciples. Some accused the government of favouritism, of offering particularisticbenefits and subsidies to selected enterprises or sectors. The government invariablyresponded by giving out new subsidies or policy actions to the complaining sectors orgroups to pacify them, which naturally led to even more demands from others. Thepro-democracy opposition easily attributed the economic plight of the lower class andincreasing income disparity in Hong Kong to the political dominance of the businessclass, and the FCs have become an icon of business hegemony in local politicaldiscourse since 1997.
The vetoing of the 2017 Chief Executive election proposal in June 2015 means thatthe move towards full democracy will be further delayed in Hong Kong. The functionalconstituency system will continue to make up at least half the legislature in the periodfrom 2020 to 2024, and maybe for many years after. With the self-perpetuating capacityof this corporatist structure, the entrenched sectoral elites would continue to fightagainst full democracy, and drive Hong Kong further onto the road of sectoralintervention.
JOURNAL OF CONTEMPORARY ASIA 263
Notes
1. The Sino-British Joint Declaration of 1984, which promised to return Hong Kongsovereignty to China in 1997, stipulated that the post-1997 Legco “is borne by elections.”Though the Joint Declaration did not specify the form of election, it was impossible tocontinue a system of appointment after 1997.
2. Since the empirical analysis of the policy demands of the legislative councilors in thisstudy covers the period 1998–2008, the analysis of the FC system would use the 2008–12Legco as reference.
3. Ireland and Slovenia are two countries that have legislators elected along sectoral orfunctional lines, both in the Upper House which is not the major decision-makingchamber.
4. The Selection Committee that elected the Chief Executive in 1997 had 400 members, theEC that elected the Chief Executive in 2002 and 2007 had 800 members, while theElection Committee in 2012 was expanded to 1,200 members. Despite the difference insize, these ECs all had their membership divided into the same four broad sectors, and theproportion taken up by each economic or professional sector and sub-sector was more orless the same.
5. The Policy Address, made annually by the Chief Executive (and by the governor before1997), usually laid out the policy directions and major policy initiatives of the governmentin the coming year. Two weeks after the Chief Executive gives the Policy Address in theLegco, there will be a debate on it. The debate is usually an occasion for legislators tocomment on the overall policy direction and specific policy areas in the Policy Address.
6. This is unlike the minutes of panel meetings and bill committee meetings, wherelegislators may also put forward policy demands. These minutes are summaries of thediscussions and not word-by-word records, which may not show precise positions ofindividual legislators.
7. Ten and six members were elected by the EC in the terms 1998–2000 and 2000–04respectively. Since the performance of the EC is not within the purview of this study, theirspeeches have not been included in the comparison.
8. A demand must be specific to be classified as a “policy demand.” It has to call for a specialaction by the government, enactment of a law or a policy, or involve policy actions. Vaguedemands such as calls for “improve business environment” which have no suggestedconcrete actions will not be classified as a policy demand.
9. Of course, if it is the Education FC legislator who is demanding more investments ineducation, it will be coded “1.”
10. This also includes cases where legislators specifically demand that the government shouldcut a certain expenditure item and use the saved resources on another policy item.
11. In March 2005, Chief Executive Tung Chee-hwa resigned amidst a governing crisis, citinghealth reasons. A by-election was held in July, with Donald Tsang elected as ChiefExecutive, uncontested.
12. The data only include the campaign meeting(s) between the sectoral representatives andthe Chief Executive candidate who was eventually elected, leaving out the “losers” in theelection. In other words, only the record of meetings between EC members and DonaldTsang (2005 and 2007) and C.Y. Leung (2012) were included.
13. It is sometimes difficult to define only one “major beneficiary” for some social serviceinitiatives. For example, a new social welfare programme can benefit the underprivileged,but also provide more jobs for social workers, which benefits the sector professionals.Similarly, more resources on education can benefit both the general public and theteachers’ profession. Here the counting method is to first include these social servicemeasures, which can also benefit sector professionals, in the “sector-oriented” codes, andthen do a separate count later which excludes these four sectors.
264 MA NGOK
14. For example, sectors like telecommunications, the media industry and Chinese medicine,are currently not represented. As far as the working population is concerned, of coursemost employees are not included in the FC franchise.
Acknowledgements
This research is supported by the Research Grant Council of Hong Kong (Project No. 448207).The author thanks the council for their generous support.
Disclosure statement
No potential conflict of interest was reported by the author.
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