The Roots of Geopolitical Risk: Greater China

Setting the stage

Modern Hong Kong has humble origins, a home to fishing villages and rice and salt farms managed by a few clans which had been there for generations. Its excellent geographic location led it to being designated as one of a handful of ports where trade with Imperial China was permitted. Surrounding hills and deep water ports gave it additional advantages over neighboring trading cities such as Canton (now Guangzhou) and Macau. Today greater Hong Kong is home to over 6 million residents. In each phase of its evolution, laws and regulations set down by its rulers have reflected as well as set the tone for the lifestyle in the region.

International mercantilism

In the early years of European engagement in the region, Imperial China was in a period of transition from the Ming (Han) to Qing (Manchu) dynasties. In an effort to solidify and exhibit control, including over all-important trading ports, the Emperor had a formal system of trading centers established and regulated. The system evolved such that by the mid-18th century a Hong merchant had to assume full responsibility for vessels (including their crews and cargo) entering Canton along with the collection and payment of custom duties to the Emperor. Nine leading Hong merchants created a new body to coordinate trade between westerners and the Qing Empire. The Cohong was essentially a collective monopoly, which produced stability in commercial dealings but stifled competition, leading to complaints by western merchants.

Some European merchants risked breaching diplomatic protocol by complaining directly to the Qing court, which became alarmed about the corruption and risks associated with the previous laissez faire policy and growing power of the Cohong. James Flint of the East India Trading Company was one such proponent. He was rewarded for his efforts by being jailed in Macau for almost 3 years. The Emperor also cracked down on the expansion of Western trade including instituting new legal measures which are summarized in the Supplementary Materials section.

Another source of friction in the early China-European trade arose from the disparity between the demand for Chinese (huge and growing demand) vs. European (limited demand) manufactures. The British attempted to address the imbalance by importing opium produced elsewhere in the Empire (especially India) into the region. Concern over an opium epidemic led the Chinese Emperor to ban the import and trade of opium, though smuggling continued. Tensions came to a head with the Opium Wars, which resulted in the conclusion of the 1842 Treaty of Nanking and Britain’s acquisition of Hong Kong island “in perpetuity.” An annotated version of the Treaty is contained in the Supplementary Materials section. The events proved to be a true turning point for the region, with Britain increasingly calling the shots about the conduct of trade, and other trading nations following.

Learning objective: students will become familiar with the rules of trade as they evolved and were applied locally.

Hong Kong embedded in the British Empire

For roughly the next century, the legal and political situation in Hong Kong reflected that of the Great Britain, as Hong Kong grew into a key international trading and financial center and crossroads between East and West. There was considerable migration to the area, as thousands of Chinese from further inland sought their fortune in the growing hub. Some ended up seeking opportunities even further afield, in other parts of the growing British Empire as well as in the United States. Many laborers were contractually bound to situations of indentured servitude abroad. There is more information on this practice, which became known as the “coolie” (generally considered a derogatory term) trade in the Supplementary Information section.

While Macau declined in significance along with the gradual retraction of the Portuguese Empire, Hong Kong’s role expanded in parallel with growth of the British Empire. By the start of the 20th century, Great Britain had colonies in Asia, much of Africa, the Caribbean and South America. Hong Kong, despite its compact size, represented the primary gateway for foreign activities in and with China. To support that role, Hong Kong’s legal system developed to provide the necessary legal and administrative framework for economic and other cooperation in the region. In 1898 Britain leased a large area beyond Kowloon (designated the “New Territories”) for 99 years in order to provide room for further expansion to the bustling hub Hong Kong had become. An annotated version of the agreement is contained in the Supplementary Materials section. The territory which collectively had come under British control as a result of multiple treaties became the subject of the 1997 handover.

Learning objective: students will gain an understanding of the legal/diplomatic basis for European trade with and involvement in Imperial China, including learning about some historical consequences of global trade.

20th century evolution

This development of Hong Kong continued unabated until the British were ousted by Japanese forces during World War Two. The period only lasted four years and the Japanese occupiers essentially left most institutions continue to operate as they had been. But for many-inside and outside Hong Kong- the occupation period called into question the inevitability of continued British rule. The postwar period of European de-colonization witnessed a dramatic shift in the direction of more autonomy and, in many cases, outright independence. Several new countries emerged in Africa and Southeast Asia. Not to mention the independent nations of India and Pakistan. Though that did not happen for Hong Kong at this point time, events were in motion which would lead to the end of British control of Hong Kong within a few decades.

In the Resources section there is also a video dealing with one outgrowth of Hong Kong’s postwar economic boom, a large population of foreign workers.

Learning objective: students will become familiar with the turning points in Hong Kong's modern history that led to its eventual return to China. This includes coverage of Hong Kong's cosmopolitan and multicultural society.

The Cold War placed Hong Kong in a precarious situation given its geographic position and the (regained) rule by the British. The impact of the Korean War was felt throughout the region, and there were fears that Communist China might attempt to take back Hong Kong by force. Economic self-interest and strategic priorities prevented an outright military conflict between Britain and China, leaving Hong Kong on the trajectory laid down in the 19th century treaties. The period saw thousands of migrants leaving the PRoC and settling in an increasingly overcrowded Hong Kong. These and other arrivals helped fuel the prosperity which Hong Kong enjoyed since has enjoyed since.

To get a feel for this period please enjoy the archival material ("Hong Kong Island") on the situation on both sides of the "Bamboo Curtain" which separated Hong Kong from the rest of mainland China.

Late 20th century

The course of the Cold War left its mark on the future direction of Hong Kong. As the term of the lease of “Extended” Hong Kong approached its end, the world looked quite different from at the start of the century. Many Western nations had recognized the People’s Republic of China at the expense of the Republic of China (Taiwan). Former European Empires had given way to a multitude of independent nations.

In the 1980s the British Government under Margaret Thatcher began negotiations for the return of Hong Kong to China. Though a portion of Hong Kong had been ceded to Britain “in perpetuity”, given the circumstances of this “cession”, this had always been a bone of contention between the UK and both Imperial and post-Imperial China. The 1984 Joint Declaration between the Chinese and British governments thus aimed to regulate the return of the entirety of Hong Kong to China. It also aimed to preserve certain unique aspects of modern Hong Kong. At midnight on June 30th, 1997, Hong Kong became a so-called Special Administrative Region (SAR) of the People’s Republic of China.

Learning objective: students will learn about the international agreements which aimed to chart a course for the people of Hong Kong after its return to China.

Basic Law Basics

The details of the administration of the Hong Kong SAR are set out in the Basic Law. The Basic Law is a form of Constitution for Hong Kong and sets out a roadmap for the administration and operation of governmental institutions and policies for a 50-year period which began on July 1, 1997. The objective was to preserve the special status of Hong Kong within China, including a high degree of autonomy. How the provisions of the Basic Law are lived in practice has defined the relations between Hong Kong and the central government in Beijing since the Handover.

Learning objective: students will learn the main tenets of the international agreements and have an opportunity to explore specific issues in independent self-study.

Realities and challenges of transition and integration

It is impossible to anticipate every issue in regulating legal relations between groups. By necessity a level of generality is necessary in wording if agreement is ever to be reached. That was true for the early treaties which led to the development of Hong Kong as a British colony. It was also true for the drafting of the Joint Declaration and resulting Basic law.

The Basic Law had to grapple with a number of practical issues, ranging from political authority (e.g. appointment vs. election) to economic affairs to the language of administration. The contents of the Basic Law had to reflect the legacy of a century and a half of British rule in Hong Kong. It also had to lay the groundwork for the ensuing half century of integration into the People’s Republic of China. Hardly an easy task.

Learning objective: by this point in the course students should be in a position to form a view on the essential question: how does the Basic Law seem to be faring?

Half way through

We are approaching the halfway point of the 50-year transition period for Hong Kong. From the beginning it was unclear exactly what would or should happen in 2047. Hopes were that things would work themselves out without much friction. Yet the reality on the ground has painted a different picture in the past few years. The application of the Basic Law and administration of Hong Kong as an SAR have triggered widespread protests in specific instances, including the so-called Umbrella Revolution. Many Hong Kong residents feel the central government in Beijing is trying to fast forward 2047 to the present. On the other hand, is a “Big Bang” approach at the end of the transition period realistic, or even desirable? Is autonomy in the eye of the beholder? What role should the existing laws and agreements have in all of this?

Learning objective: With the completion of this course, and a review of additional resources, students should be in a better position to address some of the questions above.

Setting the stage

The island of Taiwan has seen wave after wave of settlors over the centuries, from Polynesians (from whom the aboriginal Taiwanese are believed to have descended), to Europeans (Portuguese and Dutch traders), and waves of arrivals from China, mainly from the coastal areas. These groups shaped the culture and lifestyle in their particular areas. Imperial China considered Taiwan as part of its Empire, though the geographic distance of the island resulted in considerable autonomy. Any autonomy came to an end in 1895 when, as a result of the Sino-Japanese War, China lost the island to the Empire of Japan. The Japanese administration exerted considerable control over the population, even attempting forced cultural assimilation, which extended to language. It took World War II and the surrender of Japan to bring these integration efforts to a halt.

Early 20th Century Reverberations from the Mainland

Taiwan has always felt the impact of political developments on the mainland. The 1911 Revolution which brought an end to Imperial China had afterschocks in Taiwan as well. It also sowed the seeds for the Chinese civil war which would have dramatic repercussions for the island.

Learning objective: students will learn about the developments leading up to the end of Imperial China, and what that meant for the island of Taiwan.

A Uniform Starting Point

The 1911 Revolution marked a turning point in Chinese society. The Hubei Constitution introduced a form of civil rights unknown in Imperial times. The philosophical leader of the Nationalists, Dr. Sun Yat-Sen, created the legal and political underpinnings for a new Chinese state. His “Three Principles of the People” chartered a new course for the relations between the governed and their political leaders. It also served as the basis for a Constitution in 1912, and a later one in 1947.

Learning Objective: students will become familiar with the philosophical underpinnings of "newly Republican" China, as set out by Dr. Sun Yat-Sen, a figure revered on both sides of the Taiwan Straits.

Crisis Period: World and Civil War

By the time the Second World War was starting, two main camps had emerged from Revolutionary China: the Nationalists and the Communists. The Japanese already held Taiwan, but the war led to invasions of the mainland, the capture of Manchuria, and a horrible massacre at Nanjing. The war united the Nationalists and Communists in a common cause against the Imperial Japanese forces. Following the defeat of the Japanese, the underlying rivalries re-emerged, leading China back into civil war. The Communists ended up driving the Nationalist forces off the mainland and to the island of Taiwan. In 1949 Chairman Mao declared the People’s Republic of China. There were now two versions and visions of China, a Communist one on the mainland, and a Nationalist one on Taiwan, each claiming the political legitimacy over all of the Chinese people.

Learning Objective: students will become familiar with the dynamics of the Chinese civil war which, after the interruption of World War II, led to the Nationalists leaving for Taiwan and the Communists controlling the mainland.

The Cold War

The increasing polarization of the world into Communist/socialist and democratic camps directly impacted the Chinese political split. When the Korean War broke out, Taiwan became all the more important to the United Nations coalition fighting North Korean and Chinese forces on the Korean peninsula. Nationalist Taiwan landed in the Western orbit, permitting Chiang Kai-Shek and his followers to solidify their control of the people on Taiwan. The United States even committed itself to the military defense of Taiwan. A visit to the former front lines, some islands off the coast of mainland China, gives us a feeling for the intensity of the conflict, which more than once led to heavy fighting and later even the threat of nuclear war.

Learning Objective: after review of the materials, students will appreciate the extent of the United States involvement in Taiwan during the Cold War.

The nature and extent of the US involvement in Taiwan, especially military assistance, was at its height during this period. This assistance, considerably curtailed after the recognition of the PRoC by the US (covered in the next Lecture), has continued to present. It is also receiving a new look following heightened tensions in the wake of the visit by several high-ranking US Congressional leaders in the summer of 2022.

The Cold War II

The islands of Taiwan essentially became military camps during the height of the inner-Chinese tensions. They were off limits to all except the military and those that already inhabited them. The Nationalist military trained under a mantra of someday recapturing the mainland. The existential threat posed by Communist China allowed Chiang Kai-Shek to run what many considered a military dictatorship. Massive foreign investment and assistance fueled an economic miracle, leading to Taiwan becoming one of the Asian Tiger (aka Dragon) economies. But the 1970’s rapproachment between the US Nixon administration and Mao’s People’s Republic began a dramatic shift in relations between the East and West, with Taiwan directly feeling the results.

Learning Objective: students will gain a feel for the intensity of the hostilities between mainland China and Taiwan during the early years of the Cold War, as well as the significance of the United States' shift of attention to and formal recognition of the People's Republic of China.

Détente, De-Escalation, and Cross-Straits Dialogue

The recognition of the People’s Republic of China by the United States had dramatic consequences for the course of the Cold War, as well as for Taiwan. The US Congress attempted to preserve the special status and relationship with Taiwan by passing the Taiwan Relations Act. The Act committed the United States to the continuing support of Taiwan, but was vague on any notions of Taiwanese sovereignty. The other major event in this period was the death of Chiang Kai-Shek in 1975. The Nationalists remained firmly in control, with Chiang’s son Ching-kuo later assuming the role of President. There was a gradual relaxation of the measures from the long period of martial law, but it would take a while before the Nationalist leaders budged on one-party rule. There was also a relaxation of relations with the People’s Republic, with several rounds of talks leading to a number of agreements on trade and cultural exchange. This was not well-received by all Taiwanese, with widespread protests and even a student movement which briefly occupied the Parliament.

Learning Objective: students will learn how Taiwan emerged from martial law and one-party rule to became a democracy and leading economy in Asia. They will also become familiar with the rollercoaster ride of inner-Chinese relations in the early 21st century.

Where do they go from here?

There has been considerable progress in de-escalation made in the early 21st century. The bilateral relations seem to fluctuate depending on who is leading the respective political parties controlling the People’s Republic and the Republic of China. The former’s 2005 Anti-Secession Law seemed to mark a low point in the thawing, with China emphasizing that unification would take place, if necessary, by non-peaceful means. Such rhetoric cast some doubt on just how the heralded "one country, two systems" approach would work. Relations improved over the next few years, exemplified by a series of bilateral agreements and cooperative activities. The parallel developments in Hong Kong, now almost halfway through a transition period foreseen in the 1997 Handover arrangements, are closely watched by the Taiwanese.

Learning Objective: having completed the course, students should be in a better position to understand the frequent headlines covering developments on Taiwan and across the Taiwan Straits.