Donald Tsang - best and the brightest?

South China Morning Post  |  Mar 8, 2005

By Sin-ming Shaw

Chief Secretary Donald Tsang Yam-kuen is now Beijing's "blue-eyed" boy. The choice may also be based on the central government's assumptions that a person with business connections is unsuitable to become a public leader.

Many people suggest that leaders in the capital shun anyone from Shanghai, a city associated with the faction of former president Jiang Zemin and ex-premier Zhu Rongji , which picked Tung Chee-hwa to be Hong Kong's chief executive. Financial Secretary Henry Tang Ying-yen is also from Shanghai.

If any of this is true, it would be a classic case of throwing out the baby with the bath water.

There are reasons to be wary of Mr Tsang's "qualifications" for the role, other than his intimate knowledge of the bureaucracy. In 1997, anything British was suspect. Now, Mr Tsang's colonial past has become an asset. How the pendulum has swung.

Beijing is ignorant of how Hong Kong worked and has forgotten that people like Mr Tsang were never in the policymaking driving seat. Instead, he and his fellow civil servants were merely implementing policies drawn up by the British.

In other words, he has no experience of conceptualising policies prior to 1997. After the handover, it is different: in the late 1990s, he famously urged people to buy property when the bubble was about to burst, as if it was the government's duty to call the shots in the market.

As financial secretary, he approved the massive intervention in the stock market on the erroneous assumption that the collapse was the work of speculators.

Well before the Asian financial crisis, a number of academics warned Mr Tsang and Joseph Yam Chi-kwong, head of the Monetary Authority, of structural problems in the Currency Board that regulates capital flows and exchange rates. Unless these loopholes were plugged, they said, Hong Kong would be vulnerable to "attacks".

Those asked to present their case recall that their argument was met with condescension, and rebutted, point by point, in the Monetary Authority's April bulletin in 1998. In the autumn, the crisis struck.

The subsequent calming of the market was not, as claimed, due to the stock market intervention. It was because of the famous "seven measures" announced after the intervention - the same ones suggested by the academics and dismissed by Mr Tsang. Without these, Hong Kong's exchange reserves would have been exhausted within one more week.

Now, there is the West Kowloon hub. Mr Tsang insisted on an ostentatious canopy as an "icon" for a city that had "arrived". He insisted on a single-developer approach, and went from a design concept by Lord Foster to actual development, all because he obviously thought he knew best.

All that is most alarming. When Lyndon B. Johnson inherited the US presidency after John F. Kennedy's assassination, he waxed lyrical about inheriting the "best and the brightest". They were urging him to escalate the war in Vietnam.

The "best" included Robert McNamara, a "whiz kid" who, as the president of Ford, took the legendary but near bankrupt car company to renewed glory. With him was national security adviser McGeorge Bundy, a former dean of Harvard, and first in his class at Yale. Johnson's mentor in Congress, Sam Rayburn, a legendary legislator from Texas, famously said: "Well, Lyndon, you may be right, and they may be every bit as intelligent as you say, but I'd feel a whole lot better about them if just one had run for sheriff once."

Johnson did not take the words seriously and led the country into perhaps its worst military and foreign-policy disaster.

There is every indication that Mr Tsang thinks very highly of himself and is not a good listener. Hong Kong may once again have to pay a price for that kind of leader.

Sin-ming Shaw is a visiting scholar at Columbia University. This is the fourth of a five-part weekly series on Hong Kong's economy and leadership

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