Similarities between Mandela's South Africa and post-1997 Hong Kong

Updated: 2014-02-19 06:59

By Li Kui-wai (HK Edition)

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Last December, the whole world mourned the death of former South African president Nelson Mandela, who is an iconic figure. Although the international community helped him in recognizing the importance of racial equality, freedom and non-discrimination, he preserved much of the old existing economic system when he became the first black president of South Africa.

He thus earned respect not only from the black community in South Africa, but from the whites as well. It was a test of his broad-mindedness, mutual respect, trust and leadership. One thing Mandela could have done when elected was to overturn key positions previously set up under the white regime, which included not only government posts, but positions in businesses and trade. In other words, he could have transformed all business ownership from whites to blacks. He could have let the blacks take charge in all economic areas - especially in managing businesses.

It would have been easy to think in revolutionary terms because he and the blacks had been subjected to racial discrimination and suffered tremendous hardship. With the emergence of a black regime, whites could have been removed from major businesses, marginalized, discriminated against, or even attacked physically.

A massive exodus of white people would have been expected, leading to chaos for the South African economy. Indeed, such revolutionary behavior has occurred elsewhere in Africa when countries gained political independence after being colonies.

Nothing so drastic occurred in South Africa. At worst the transition was tense, but calmness and stability were maintained. The magical transition was confined to racial equality, which is a human virtue. The economic welfare of all South African citizens was maintained, kept high and improved where possible. Since the business community had been dominated by whites, it would be easier to start employing blacks in the business community. Employment depends on ability, qualifications and individual abilities. During the era of white domination, the blacks were employed mainly as workers, and certainly their business skills, knowledge and level of human capital were much lower. Making them replace whites in key business and economic positions would have been disastrous. The business community would have lost all confidence. The South African economy would have crashed and everyone would have suffered. This must have been in the mind of the late president. To avoid unnecessary hardship and prolonged recession, he realized it would be best to let businesses to operate as usual. By preserving these ingredients, the economy could then grow without disruption.

Similarities between Mandela's South Africa and post-1997 Hong Kong

Nelson Mandela was a gentleman, but his broad-mindedness had made him a great man. He had been discriminated against, yet he did not, in turn, discriminate when he was in power. There are lessons from this one can draw for the benefit of the Hong Kong economy - in light of the change of sovereignty in Hong Kong in 1997. First, a change in sovereignty does not necessarily mean a change in the economic system. It was important to preserve the elements that brought economic success to Hong Kong's economy. It was vital for the economy to grow and has not been unnecessarily affected by the change in sovereignty.

Indeed, this was the late Deng Xiaoping's vision for the post-1997 Hong Kong. He wanted economic development in Hong Kong in the post-1997 era to be stronger than it was before the handover. This would then show that the return of sovereignty to China was the right decision. Hong Kong could do even better under the "One Country, Two Systems" principle. Therefore, the capitalist system in Hong Kong was preserved in its entirety. Although new economic policies of integration have occurred, the essence of the traditional Hong Kong economic system remains.

One thing common to both South Africa and the HKSAR is regime change through civilized negotiation. The broad-mindedness of Mandela produced stability and allowed progress to continue by keeping the main economic ingredients. Under the "Two Systems" principle, Hong Kong has a framework to work under. But respecting this framework will rely a lot on Hong Kong's post-1997 leaders. The Hong Kong economy is meant to aid development of the mainland economy. So SAR leaders must preserve Hong Kong's ability to continue being the "goose" which "lays the golden eggs".

The author is associate professor of the Department of Economics and Finance at City University of Hong Kong.

(HK Edition 02/19/2014 page1)