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Reckoning
The later 1980s were a period of erratic growth—rapid but unstable. Tigers and sea turtles spurred development throughout the decade: East Asia’s “tiger” economies—Taiwan, Hong Kong, Singapore, and South Korea—paved China’s way in state-led, export-intensive growth. China's “Sea turtles” were the many overseas Chinese who brought capital and knowledge acquired abroad back to their mother country. However, unresolved contradictions lurked in the new political economy of Deng’s China. Frustrations over stalled political reform—enflamed by widespread urban economic grievances over inflation and corruption—erupted in street demonstrations that paralyzed the PRC in the spring of 1989. The Tiananmen crisis would have lasting political repercussions on the cause of democracy—but also unintended economic aftereffects. |
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Hong Kong Provided China with CapitalPeriod: Reckoning (1985-89)
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Click to expand I think one of the reasons why we have seen such an economic miracle happen in China in the last 30 years is the open-mindedness of the Chinese government. The Chinese government, first of all, set up the stock exchange when it discovered that its domestic stock exchange not really work. They allowed all their companies to go international, to learn about the international experience and use international standards to upgrade their standards, to upgrade the management system, the corporate governance, and so on. I think, actually, that helped the reforms and the progress of the state-owned enterprises as well. And the overseas listings not only allowed Chinese companies to get access to international capital, I think the experience also helped the reform of the Chinese sector, the state-owned enterprises and many industries as well. I think that is important. And then, I think another reason why the Chinese economic reforms were successful compared to many, many other emerging markets was the role Hong Kong has played. I think that is very important in two aspects: Capital, human capital as well as monetary capital. Hong Kong helped Chinese companies raise billions and billions of dollars to help the economic reforms in China and bring the money back to China in many sectors. And human capital is very important as well. Like ourselves in the investment banking industry, we provide services to Chinese companies and help them to raise capital and help them improve their management system and teach them about the importance of corporate governance. I think this is very important to the development of the Chinese companies. And also, many Hong Kong entrepreneurs have moved their operations, their companies into China and they employ millions of workers in China. As I told you earlier, the first phase of the China experience, or the China concept, was the movement of Hong Kong companies into China. This Hong Kong money and expertise actually has helped, in particular, the development of the Pearl River Delta. I think overseas Chinese, in particular Hong Kong Chinese, have played a very important role in the modernization and in the reforms of China.
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