Social Policy Reform in Hong Kong and Shanghai: A Tale of Two Cities

A Tale of Two Cities

Linda Wong, Lynn T. White, III, Gui Shixun

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315497990
• Edition: 1
• Topic: Mathematics
• Subtopic: Mathematics General
• Index: Mathematics

As the richest cities in the world's most populous nation, Hong Kong and Shanghai have recently experienced dynamic growth spurred by more and better-managed capital. These cities also have social problems whose solutions will cost money. Their urban populations are aging. Health finance at the level these "First World" cities demand threatens to consume a large portion of the municipal budgets. Eldercare and social security are now less well covered by traditional Chinese families. Education has become more complex and public tuition, where it occurs, brings with it official plans for schools. Immigrants have flocked to Shanghai from inland China, and Hong Kong's border has become a protector of the former colony's high productivity jobs. Housing problems also have deeply affected both cities, albeit in somewhat different ways. This book provides a comprehensive overview of the similarities and differences between social policies in the two cities. Each chapter covers a different issue: health finance, housing, education, labor, poverty and social security, eldercare, and migration and competitiveness. The contributors explore pertinent developments in each city and analyze the similarities and differences between the two cities' approaches to social policies. They focus on policy reform and the interface between social policy and its environment. One main theme throughout the book is the extent to which spending for capital accumulation is in conflict with spending for social policies.

1

Introduction

Linda Wong and Gui Shixun

Twin Sisters: Legacy and Transformation

Shanghai and Hong Kong are very much like blood sisters. Shanghai is called the Lustrous Pearl of the Orient; Hong Kong, the Pearl of the East. Like two stars on the China coast, the two cities have a lot in common, in terms of geography, history, and challenges. Strategically placed at the mouth of the Yangtze River and Pearl River estuaries, both cities command the physical and social capital of rich hinterlands. They also bear witness to the turbulent history of China as their destiny is linked to western forays into Qing China on her knees. The momentous stroke that rewrote their history is of course the Opium War and the Treaty of Nanking (1842). Foremost among the humiliations were territorial concessions. Hong Kong was ceded to Britain as a colony, a status that was to last until 1997. The same treaty also turned Shanghai into a treaty port and semicolony, when the principle of extra-territoriality took the physical form of the international settlements. However infamous the past may be, the insulation from the most vicious wars and turmoil that besieged the China heartland was the key to Shanghai and Hong Kong’s success. In the process, the twins evolved into the great hubs of trade and industry unmatched by any other Chinese city. Of equal importance has been the absorption of hundreds of thousands of immigrants, among them entrepreneurs, intellectuals, revolutionaries, artisans, and ordinary people. The mixing of the most adventurous and enterprising elements from within China and from all over the world underlaid the fantastic blending of cultures and practices. This not only turned them into great metropolises, but it also gave a big push to China’s modernization. At the same time, unbridled growth in the context of cultural bastardy sired many social problems—drugs, crime, prostitution, poverty, and exploitation—that bestowed both with an aura of exotic decadence.

Before the Second World War, Shanghai was undoubtedly the more developed of the two. By the 1930s, Shanghai had established herself as the most modern city in Asia, dubbed the Paris of the East. In the meantime, Hong Kong bloomed under British rule though never quite matching the glitter of her bigger sister. In the period between the two world wars, mutual fascination and friendly rivalry were key features of their relations, with economic and cultural exchange never slowing and both flourishing as oases from political turmoil.

The socialist revolution put a radical stop to the status quo. Not only this, communist success in 1949 spawned an exodus of Shanghai capital, skills, and people. What Shanghai lost became Hong Kong’s gain. This influx speeded up Hong Kong’s industrialization and maturation as a society. By the 1950s, Shanghai had been overtaken by Hong Kong in all aspects of social and economic development. On the other hand, transformation of Shanghai as a socialist city, along with communist aversion to cities as parasitic institutions, reversed Shanghai’s fortunes. What’s more, having the best-endowed economy, Shanghai was treated like the firstborn son in a patriarchal family. Given the burden of supporting parents and younger siblings, the bulk of local resources had to be surrendered. For example, between 1949 and 1983, Shanghai remitted 87 percent of her total revenue to the central government (Cheung, 1996, p. 55).¹ Such onus reduced Shanghai to a shadow of her former self. Politically and ideologically, the once freewheeling city came under the shackles of an authoritarian state. Civil society became suppressed, its much vaunted cosmopolitanism went under wraps to escape the wrath of deviance.²

Hong Kong, on the other hand, encountered a different fate. There may even be some truth to the saying that Hong Kong thrives on the woes of others. Examples of ironic gains are legion: influxes of money and talents from the Mainland, particularly Shanghai, after 1949 (Wong, 1988); big expansion in trade following China’s embargo at the wake of the Korean War; boosts to tourism including “rest and relaxation” stints during the Vietnam War; asset inflows from the Chinese Diaspora in South East Asia; and so on. More generally, cheap imports of foodstuff, water, and industrial raw materials from the Mainland lowered business and living costs. This hidden subsidy was instrumental to the city’s growth and prosperity. Politically Hong Kong carried on as a British colony. Despite its dependent status, the metropolitan country left the local administration pretty much alone. The government of Hong Kong also thought fit to intervene minimally in community life. In economic matters, the principle of laissez faire gave way to active nonintervention. This hands-off approach plus prudent financial stewardship enhanced Hong Kong’s reputation as a bastion of free trade and ideal place to do business. Under the circumstances, it took Hong Kong less than thirty years after World War II to change from entrepot to industrial center. Ideologically, both government and people are committed to the values of free market, small government, and individualism.³

By the 1980s Hong Kong was ready for another transformation. The big chance came from the opening of China and the lure of its cheap land and labor. When the decade ended, most of Hong Kong’s manufacturing industries had relocated north of the border. Deindustrialization gave way to a vast expansion of the financial, real estate, and tertiary sectors. This second rebirth propelled Hong Kong into an unprecedented period of growth and prosperity. By the middle of the 1990s, the per capita Gross Domestic Product (GDP) of Hong Kong had exceeded U.S.$22,000,⁴ second only to Japan in Asia and overtaking Britain and some Western countries. Paradoxically such stunning growth coincided with a time of high tension as the colony’s future came under negotiation by China and Britain. As a result public confidence took a battering in the time before the transfer of sovereignty.

In Shanghai, the onset of economic reforms in the late 1970s enthused but disappointed the city when it was bypassed for preferential treatment. In the ensuing decade, Shanghai enviously watched the emergence of Hong Kong as a global economic and financial center. It was not until 1990 when Beijing announced the opening of Pudong that Shanghai got the big break it was pining for. Thereafter, especially in the half decade before the new century, Shanghai’s economic recovery was so stunning that sisterly rivalry revived. Ordinary Shanghainese openly aired their dream to rebuild their city’s glory and to catch up with Hong Kong. Pride and optimism reached their zenith in October 2001 when Shanghai played host to the APEC Forum. International dignitaries in attendance were amazed at how fully it had shed its lackluster shell of a socialist city to become the most modern hub in China. Not surprisingly it was Hong Kong’s turn to get the jitters. Two years into the new millennium, Hong Kong is still suffering from the aftermath of the Asian financial crisis. The prolonged recession is enough to generate dismay. For local residents, what is more disheartening is the loss of future direction, which completely saps their confidence. In relation to Shanghai, the fear of being surpassed becomes a near obsession. Of course the official line is quite different: both Hong Kong and Shanghai have their unique advantages, and they complement each other.

Social Policy Comparison: Why and What

The intertwining of historical and developmental destinies is perhaps the first starting point of our tale of two cities. In many respects, this rich mix of popular musings and introspection to their fate is an interesting phenomenon in itself. Such explorations have found their outlet in literature, film, music, and journalism (see, e.g., Lee, 2001; Wei, 1987). In the social sciences field, economics and political science have made their contribution to the twin-city comparisons (Wong, 1996; Cheung, 1996; Yao, 1990). As social policy researchers, we are interested in the study of the twins for other reasons. First, there is a vacuum of truly comparative scholarship on social development and social policy issues in these two cities.⁵ It is our wish to plug this gap. We believe that the social chronicle of development is an important subject in its own right. Societies with abundant economic growth but little social development are lopsided societies. Their development may not be sustainable if the social fabric is allowed to fray, and worse, disintegrate through neglect and blind faith in trickle-down economics. We also believe that such a study is timely. We live in a restless, risk-prone, and even turbulent age. Globalization has quickened the pace of change and multiplied risks in a dramatic fashion. Both Hong Kong and Shanghai are undergoing rapid, wide-ranging, and deep transitions. A study on how the cities manage their developmental dilemmas, satisfy social needs, invest in human capital, and promote social integration is long overdue. The insight that derives from the comparison will promote self-reflection and mutual learning.

In their early beginning, Hong Kong and Shanghai were alike. When China turned communist, their trajectories diverged. The influence of their respective political, social, and economic systems continues to weigh heavily on state policies. This is as it should be. Notwithstanding such differences, both cities have to grapple with many common issues of the day. Indeed, these contemporary issues have universal salience to all big cities. How Hong Kong and Shanghai responded to these challenges is of immense interest to social scientists.

Before proceeding to the comparison, it is useful to mention some basic facts about the two cities. Table 1.1 summarizes the background information of the two cities in 2000. We have tried to include as much basic data across all social policy areas as possible, but some gaps are still unavoidable. To begin with, both have large populations. According to the 2000 census, Shanghai had a population of 16.7 million, and Hong Kong, 6.8 million. Such numbers make Shanghai one of the world’s largest metropolises while Hong Kong also falls into the big-city league. Big populations spawn substantial needs. Among their minions, the weight of new immigrants is heavy in numbers and social impact. In 2000, Shanghai’s floating population amounted to 3.9 million, a fivefold increase since the first sample survey on floaters was taken in 1984.⁶ This means that one in four persons is a new arrival. In Hong Kong, between 1977 and 1996, some 800,000 to 900,000 immigrants from the Mainland had settled in the city. In the years since, 55,000 persons each year have been admitted for family reunions (Wong, 2001).⁷ Thus within the last twenty-five years, Hong Kong has absorbed one million immigrants who comprise one in seven in the population. These demographic facts confirm their profiles as immigrant societies. The continuing inflow brings in valuable human capital, as well as demand for jobs, housing, education, income support, and social services.

Besides, both cities must try their best to cope with population aging as their populations are living much longer. In 2000, Shanghai’s male and female residents could expect to live to 76.4 years and 80.5 years; for Hong Kong, the corresponding figures are 77.0 and 82.2 years. Growing longevity and low birth rates push up the proportion of the old population. In 2000, people who were 60 and older comprised 14.8 percent in Hong Kong.⁸ In Shanghai, the aging trend arrived even earlier. Shanghai was the first Chinese city to attain the status of an aging society, defined as a society where 10 percent of the population was above 60 years of age or where 7 percent was aged 65 or above. In 1979, residents who were 60 and above reached 10 percent; in 2000, elders exceeded 18 percent (Shanghaishi 2000 Nian Laonian Renkou Xinxi, 2001; Gui, 2002). The challenge becomes graver due to such changing social and family structures as increased female labor participation, falling fertility, rising individualism, and shortage of urban housing.

On the economic front, Hong Kong and Shanghai have the largest economies among Chinese cities. In 2000, Hong Kong’s GDP is HK$ 1,223 billion. Shanghai’s economy is smaller: 455 billion yuan (HK$1 = 1.06 yuan) (China Statistical Year-book 2001, pp. 57, 808, 821). It is important to note that both cities have to contend with deep structural transformations. In the case of Hong Kong, deindustrialization leaves behind rising numbers of older workers whose skills are not wanted by the new economy which is dominated by services, finance, and trade. Economic turmoil in Asia and Hong Kong’s declining competitiveness worsened the problems of unemployment and poverty. Before 1997, unemployment was insignificant, at 2–3 percent. In the years following, the rate has risen sharply, to 6 percent in 1999, 4.4 percent in 2000, 6 percent in 2001, and 7.7 percent in April-June 2002 (Ming Pao, 17 July 2002, p. A2). Similarly, in Shanghai, market transition has thrown a lot of inefficient state enterprises and their employees into the gutters. Unemployment badly affects sunset industries such as textiles and machinery. Older workers, the unskilled, and the poorly educated become the casualties of the new mixed economy. Even though the official unemployment rate was only 3.5 percent in 2000, if redundant workers (xiagang zhigong) are also coun...