Hong Kong set the bar for charter cities. But it's not a blueprint that can be transported

Under property developer Ivan Ko’s original plans, the charter city “Nextpolis” would be wedged between two of Ireland’s largest towns and filled with half a million Hong Kongers taking refuge from political pressures in their home city.

But while charter cities are fairly common, international charter cities are another matter. The idea, proposed in the late 2000s, was that new cities could be established in developing nations and operated by outside governments or organizations, with a completely different economic and social model to the rest of the country, as a way to supercharge development.

If “Nextpolis” goes ahead, it’ll be the first bid to establish an international charter city — albeit one with some tweaks — in almost a decade, and the first to go beyond the planning stages.

Previous attempts were derailed by corruption and instability, while the model itself has been denounced by some as neocolonial and unworkable.

Ko, founder of the international charter city investment company, Victoria Harbour Group (VHG), says his plan for a “new Hong Kong” in Ireland is still on track, despite an apparent lack of progress with Irish authorities.

Table Of Contents

1 What is a charter city?
2 New Hong Kong?
3 The original charter city
4 Supply and demand

What is a charter city?

International charter cities were first conceived by economist Paul Romer in the late 2000s.

Hong Kong was itself the original inspiration for many international charter city advocates, Romer included, who saw it as a proof of concept: a city that had operated for decades with a British framework in Asia, and then a unique political and economic system within China.

International charter cities work like this: a new city is created within a sovereign country but is free to experiment with its own political and economic system — usually one with low taxes and scant regulations. A foreign country could even act as the administrator of the city — the idea being that a spillover effect from this city will boost the economy of the developing-world country it is built within.

Romer, in a 2009 Ted Talk, gave the example of creating a “special administrative zone” in Guantanamo Bay, on the southeastern tip of Cuba, that would be administered by Canada, and “connect the modern economy and the modern world” to Cuba. This is similar to how China created a special economic zone in Shenzhen to connect the country to the capitalist world and afford urban pockets greater economic freedom to experiment without a wholesale change of the national economic system.

But Romer’s two attempts to establish international charter cities in Madagascar and Honduras, both ultimately failed.

The first project fell apart when Romer’s backer, Madagascan President Marc Ravalomanana, was forced from power in a coup in 2009. He then turned his attention to Honduras, which had just undergone its own coup, bringing President Porfirio Lobo to power. Concerns about corruption dogged the project, and Romer eventually resigned from a transparency commission that was supposed to be overseeing it, saying he had been blocked from key information.

For many critics of the charter city model, the instability and corruption seen in these developing countries pointed to a problem at the heart of the idea itself: that you can’t fix countries by parachuting in some neoliberal economists with grand ideas. Others also argued the idea itself was neocolonial.

Jason Hickel, an economic anthropologist and author of “The Divide: A Brief Guide to Global Inequality and its Solutions,” said that the closest model to charter cities in practice is free trade zones, which have been “roundly denounced in the literature on economic development because they do virtually nothing to improve actual development outcomes.”

“Wages tend to be lower than they are in the national territory, labor standards worse (and) environmental regulations non-existent,” he said. “This makes it ideal for patterns of accumulation by foreign capital, but not good for national development.”

New Hong Kong?

Ko, the “Nextpolis” founder, told CNN that he had been working on the idea for an Irish-Hong Kong “charter city” since last year, when anti-government unrest rocked Hong Kong, leading many to consider leaving. But while he is reportedly pressing on with his plan, the Irish government is less than keen.

In a statement, Ireland’s department of foreign affairs said that “following an initial approach in December 2019, the department had limited contact” with Ko, and it had taken “no further action” on this matter.

While initially happy to talk, Ko broke off communications in July. The same month several students suspected of committing “secession” were arrested under a new security law imposed on the city by Beijing. Ko’s plan had been held up by many as a potential solution to those wary of the law.

And if anything is ever realized, it’s likely to be a radically reduced version of Ko’s original vision. According to a version of the plan leaked to the Times of London, he’d originally proposed a settlement of half a million people. His latest plan is for a town of just 15,000, smaller than some Hong Kong housing estates. According to the Times, officials expressed concern at him acquiring the amount of land required for a city the size Ko initially suggested.

Ko is not the only charter city proponent to see this as a potential solution to Hong Kong’s current political crisis. But while these proposals nod to Romer’s ideas, in practice they would be very different beasts: Ireland is obviously not a developing country, nor is there any chance of the Hong Kong government getting involved to assist with the building of the new settlement.

Yet Hong Kong is such an attractive example to charter city proponents of a place that exists within a country but governs itself differently that many feel this model can be transferred to another continent, swapping China for Ireland or the UK, to enjoy the same economic success that Hong Kong has in past decades.

The original charter city

In a recent essay “Let’s build Hong Kong 2.0 here in the UK,” Sam Bowman, director of competition policy at the International Center for Law & Economics, wrote that “advocates of charter cities want to replicate the success of Hong Kong and Singapore.”

But charter city proponents are often guilty of cherry picking characteristics of the city they like and pointing to these as causes for its development, while ignoring other, less palatable issues. What Bowman and others also miss is that accidents of history made Hong Kong what it is today, and the resultant complex economic fabric would be hard to replicate.

Hong Kong sprang from colonial rule. The British administered a small piece of what was previously Chinese territory until 1997, giving it an established legal scaffolding and access to expertise in governing.

And while the libertarian economist Milton Friedman called Hong Kong under the Brits an “almost laboratory experiment in what happens when government is limited to its proper function and leaves people free to pursue their own objectives,” the reality isn’t quite so simple.

But by the time Friedman made those remarks in the 1980s, when he made a documentary on the city, Hong Kong was booming as a manufacturing center, thanks to sweatshops staffed in part by immigrants from China. The city was also increasingly emerging as a tax haven and financial center, both connected to and sufficiently apart from the global monetary system to avoid regulation.

And for all the talk of Hong Kong’s former freedoms, its Chinese residents did not have much political representation until near the end of the 20th century.

“It’s very easy to have a free market libertarian paradise if you don’t have democracy,” said Sam Wetherell, an expert on the history of cities at the University of York.

The legacy of that system can be seen in Hong Kong today, one of the most unequal societies on earth, with low wages and stratospheric rents that force many people to live in tiny apartments or even so-called “cage homes,” sharing a small, much-subdivided space with dozens of others. The city is also hugely dependent on a class of low-paid migrant workers, many of whom are forced to live with their employers and earn less than the already low minimum wage of $4.80 per hour.

John Mok, an academic at the University of California, Irvine, who studies Hong Kong, said that Western thinkers “always frame Hong Kong as an economically liberal city with good liberal values.”

“We Hong Kongers know very well that the gap between rich and poor is very, very wide,” he said.

Supply and demand

While Hong Kong may have some connection to the idea of an international charter city, building a “new Hong Kong” for migrants in another country is a marked departure from the original concept.

Instead of building a charter city inside a developing country, catering to an existing population in need of work and opportunities, the “new Hong Kong” model relies on Ireland or another government being willing to accept thousands, if not hundreds of thousands, of new migrants, on the basis that the proposed city will bring economic benefits.

To sell this idea, many proponents have framed the Hong Kong people as economic dynamos, often straying into racially tinged territory about “industrious Asians.”

Writing in the Telegraph, Daniel Hannan, a former Conservative politician and leading Brexiteer, called for a self-governing Hong Kong in Britain, on the grounds that emigrants “would bring their own wealth. And, once they arrived, they would generate economic activity for the surrounding region, just as they did in their home city.”

Elsewhere, Bloomberg’s editorial board and Australian government ministers have also talked up the potential benefits of migrants from Hong Kong.

However, Chinese-American scientist Yangyang Cheng said such “glistening phrases are not compliments. They are dehumanizing.”

“The dominant rhetoric from western countries goes beyond the humanitarian principle to emphasize economic self-interest,” she wrote. “They paint a caricature of a population where Hong Kong’s poor and disenfranchised are never part of the picture, where a life’s worth is defined by its productivity.”

Wealthy, highly educated migrants can be a boon to the countries they move to, these comments ignore the fact a huge proportion of Hong Kong’s population are suffering because of the wealth gap — and overlook the reality that a new city might not offer the same economic opportunity as their home.

“By portraying Hong Kongers as the ‘right’ kind of immigrant, distinct from migrants at the US-Mexico border or refugees across the Mediterranean, Western lawmakers see the Asian city as their own political theatre,” Cheng wrote. “They claim the mantle of human rights defenders by feigning solidarity, while espousing racist and xenophobic policies at home.”

Nor is it necessarily clear that many Hong Kongers would be on board with moving to northeastern Ireland, or an underpopulated part of the UK, as charter city proposals call for them to do.

Wetherell, the University of York academic, said that despite promises about somehow recreating the Hong Kong system in Ireland or the UK, a person’s ties to any given place “are much more profound than the similarity of physical buildings,” economic models or tax regimes.

“Ireland is not Hong Kong, it’s a different climate, it’s a different world,” he said. “(Even if you could) rebuild the skyline of Hong Kong in Ireland, it wouldn’t be the same.”

According to Mok, who along with colleagues surveyed Hong Kongers looking to move overseas, the self-governing island of Taiwan was overwhelmingly the first choice, pointing to the shared culture and history, and the island’s proximity to Hong Kong.

A 28-year-old lawyer who was planning to emigrate told CNN that he, too, was leaning towards Taiwan. He liked the idea of building a new Hong Kong, but said he had “never seriously thought” about Ireland.

“I have been there once, for two weeks. It is a lovely place, but I do not know a lot about it,” he added, speaking anonymously due to the sensitivity of this topic. “A lot of Hong Kong people are already living in Canada and US, or Taiwan and there are mini communities of Hong Kong people there already. I am not sure if that’s the same for Ireland.”

CNN’s Jadyn Sham contributed reporting.

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