Daniel R. Fung, whom we met in Hong Kong, can impress anybody with his inexhaustible energy. Having many responsibilities, he nevertheless accepted our offer to visit Kazakhstan. One should admit that our official establishment paid a great deal of interest in him. In general, judging by the various facts, they were both fond of each other.
Mr. Fung was the first person of Chinese origin to be appointed as Solicitor General of the Crown Colony of Hong Kong under the British administration (1994-97), continuing on after the handover of Hong Kong to China (1997-98). Currently, Mr. Fong is Senior Counsel of the Hong Kong Bar, specializing in commercial, corporate and public law. He is also chairman of the board of Dex Voeux, a well-regarded Asian law firm that was honored by other Hong Kong advocates in 1999, 2000, 2002, 2003, 2004 and 2005. At the same time, he acts as chairman of the Television and Radio Broadcast Department of the government, overseeing all programming both inside and outside of Hong Kong, thus playing a role in the center of Asian mass media communications. Mr. Fong is the founder and chairman of the East-West Committee on Strategic Development, a noncommercial organization for stimulating economic growth in developing markets, which has no political links, and was established for carrying out a dialogue between business circles and the government. Starting from 1999, this committee has been operating in such countries as India, Kazakhstan, the Czech Republic, Tonga, Inner Mongolia, and is currently focusing its activity on the Pearl River in the Peoples’ Republic of China (PRC).
As well, Mr. Fung is a member of the Consulting Council on Jurisprudence and Law of the World Bank, and is special counsel to the United Nations Development Program on Corporate Management in China, which also operates in the area of legal regulation in strengthening the potential of Cambodia and Laos. Additionally, he is a People’s Representative in the Chinese People’s Political Advisory Congress, founding President of the China Law Council, a non-profit organization devoted to judicial training for Supreme People’s Court in the PRC, president of the Hong Kong International Law Association, honorary president of the International Industry and Trade Association, deputy chairman of the Peace and Development Fund under the auspices of the UN, director of the Salzburg Seminar, vice president of the Experts Academy in Great Britain, a member of the International Advisory Council in Shanghai, and is a member of the Hong Kong government’s Committee on Strategic Development.
In addition, Mr. Fung remains a member of the board of the university in London where he received his Bachelor’s degree (1974) and Master’s degree (1978) in Law, as well as being a member of the English Bar in Middle Temple (1975) and of the Hong Kong Bar (1977). In 1990, he was appointed as Queen’s Counsel. From 1985 to 1990, he headed the Advisory Committee on Basic Law and Hong Kong’s constitutional development prior to the handover to China. From 1992 until 2004, he was a deputy justice on the [Hong Kong] Supreme Court. And, during 1993-2004 Mr. Fung was a member of the Central Political Coalition in the government of Hong Kong.
Following his last British appointment as Solicitor General of Hong Kong by Governor Chris Patten in 1994, Mr. Fung was transferred to the office of the head of the executive branch in 1997 as the first Solicitor General of the Hong Kong Special Autonomous Republic of the PRC.
After resigning from state service, Mr. Fung successfully took on appointments as an academician at Harvard Law School (1998-99) and as a visiting lecturer at Yale Law School (1999). In 2000, while in the USA, he received the title of distinguished academician of Hong Kong. He was as well a visiting lecturer at Sun Yat Sin, a Chinese university. He held the position of member of the board of directors of the administration of the Hong Kong Airport (1999-2005), and was on the organization’s Security Committee (1999-2004). Mr. Fung was awarded the Silver Bauhinia Star in 2003 for merits in the legal and constitutional development of Hong Kong, as well as for world justice in 2004.
First of all, I would like to say that we are all impressed with your résumé. You have so many responsibilities. Please tell us which ones are priorities for you. On what are you spending most of your time? And, how do you allocate that time?
The main sphere in which I am interested is the concept of transition of countries’ economies from state-run to market-driven. Obviously, the market economy is the most optimal mechanism for investment and trade. However, it can work only under the conditions of transparency and considered legislation. This is why these two constituents are the main focus of my interests. Asia is undergoing a very interesting stage in its development, which began after World War II first in Japan, spreading later to Hong Kong, then to Singapore, Thailand and Malaysia, and so forth. At present, Kazakhstan has the full right to be included into this list. The country became independent in 1992, and since then we have been watching it with increasing interest. We know that Kazakhstan is not only a great source of energy resources, but also has a number of important advantages, including a geographical location at the intersection of logistics systems for all of Asia, and now you are intending to turn Almaty into a financial center for all of Central Asia.
Our experience could be very useful to you, as over the past 50 years Hong Kong has gained experience in the logistics of trade in China. Moreover, since 1840 we have been a link between China and the rest of the world. At present, Hong Kong provides 40% of forex inflow to China. This index has remained unchanged since the 1950s. It is a major trade port, logistics center, and the Hong Kong Stock Exchange is the only major financial center in Asia. Despite the fact that our stock exchange is smaller than the Tokyo one, the Japanese exchange is focused on the domestic industry of Japan, while the Hong Kong’s is directed on external markets. With regards to the volume of the primary listings (on the stock exchange) we exceeded that of the London and Tokyo ones, and are now in second place following New York. We would like to cooperate with Almaty in order to help you promote the city as the major financial center in Central Asia. One of the factors in our success is transparency plus legal norms, which we inherited from Great Britain. Actually, Hong Kong is an international platform for communication, business and ideas.
We are very happy to see Kazakhstan moving in the same direction. The world has not paid attention to Central Asia for such a long time, instead focusing on such heavyweights as Russia, China and India. However, Central Asia has always played a strategic role for each of these three nations. We believe that now is its time, and we wish to be a part of this process. We are very interested in the Eurasian idea that you are developing. You have a chance to regenerate your role as regards transit between China and Europe by building a new concept of the Great Silk Road.
We also see the importance of cooperation in the Shanghai Cooperation Organization, as when India and Pakistan finally join it, the organization will associate two-thirds of humanity. For the first time in human history, Asia is becoming united. Obviously, no one now would agree to create a new empire, but here we are speaking about mutually beneficial cooperation between all countries on the continent in order to promote trade and investment without unnecessary predicaments or conflicts. And, this is to be one of the major achievements in history. We believe in the power of economic integration for improvement of the living standards of all people, and we consider that this concept will serve to decrease conflict potential between peoples and nations. As well, we want to see the 21st century as one of renaissance in Asia.
When several years ago I asked Japanese and Chinese investors why they have been very passive as regards Central Asia in comparison with Western investors, they replied that Asia is too engulfed in its own development. Do you think that period is over?
I think yes. The fact of the matter is that everybody is interested in your energy resources, including Japan and China. Aside from this, our investors are also attracted by your infrastructure projects, including roads, rail, hotels, as well as office and residential buildings. This is only the start. We can renew those links that are vital and necessary for us.
You are probably aware of our ambition to enter the list of the 50 most competitive countries in the world. However, my visits to China demonstrate that this not real. We cannot compete with Chinese exports, considering our weakly developed transportation structure, high labor costs, and the existing state of the business climate. What is your opinion on this?
You are correct, as all of these factors need to be taken into consideration. The main advantage of Kazakhstan over other countries with a similar level of development is its large quantity of natural resources as a basis for development. Your government is trying to wisely use this wealth for the benefit of your people. The focus on development of the non-subsoil sector is very important. Besides, we believe that you are not effectively utilizing the potential of the CIS as a prospective market. CIS countries should agree on the elimination of customs barriers among themselves. This is a market that includes 300 mln people. Like the USA, you have an advantage of the same language, history, and mentality, while the large quantities of natural resources should be sensibly used. I am very inspired by the age, education and energy of those government officials whom I met in Astana – Kelimbetov, Mamin, Isekeshev, Abchulakov… I was quite impressed with how hard they work, and by their vision of the country’s future. The CIS has the potential to become a major economic power, just like the European Union, the USA and China. And, you have all the prerequisites for becoming a key player.
Some experts believe that between Moscow and Beijing there has begun a secret competition for influence over Central Asia. Do you consider that this is really true, or is it limited to energy resources?
Historically, stronger nations have wanted [both] influence and to create state and economic satellites. Over its 2000-year history, China gained such state satellites as Nepal, Korea and Burma, among others. So, competition is quite logical. However, I believe that this can be corrected by certain factors, namely economic development and benefits. Competition should not necessarily be negative It can be transformed into something positive, something beneficial for both parties, or for all three parties. I am sure that you will manage to make your neighbors not break certain rules of the game. You will not be able to avoid some strain and disputes in this game, but you can handle them.
And, one of the mechanisms for achieving this is the WTO. The organization was created for this very purpose. The difference in the phenomenon of globalization in the 21st century and that of 200 years ago is that then no reasonable, considered mechanisms for resolving disputes existed, so everything ended in war. European expansion into Asia, Latin America and Africa caused many conflicts, and finally led to World War I. We do not wish a repeat of such a scenario. The world should establish various institutions for the resolution of conflicts and the development of nations. The WTO is such an organization, and I assess its experience as quite successful. Some believe that it is even better than the UN.
There will always be misunderstandings among us. The ascent of new powers, along with the fall of older ones, as a natural, historical occurrence for humanity is unavoidable. The powers [at the time] will always be afraid of the rise of new ones. New powers will always feel frustration when the existing ones would like to control their ascent. Problems of this kind can be limited. We have seen the example of the USA and China. The USA is cautious about the rapid growth and the influence of China. However, these antagonisms will not turn into war, judging by the latest visit of the Chinese leader to the USA. Certainly, this is not a 100% success, but nonetheless is a positive development and the continuation of a dialogue between nations. As well, the trade deficit will be solved by voluntary restrictions on the part of China, and its respect for the rules of the WTO.
We hope that a similar principle will be applied in the race for energy resources. We do not need a second Pearl Harbor. Yes, the USA does not regard the Chinese oil pipeline with enthusiasm, but your country has so far managed to balance the interest of the superpowers. I am a realist, but an optimist as well. I believe that common sense will save us all.
I have a childish question. You know that our companies and banks borrow money from abroad. However, those funds are cheaper and have longer terms in Hong Kong or Southeast Asia. Why do you think that our banks continue to borrow money from Europe instead of from Asia, as well as not going onto the Asian capital markets?
I suppose that your government should pay attention to this. You know that at present China has the largest turnover in capital, and its U.S. dollar reserves are more than Japan’s. After China and Japan, Taiwan, Hong Kong and Singapore follow. And, certainly China is the largest creditor after the USA. I think it is worth considering. Your remark is correct in that our money is cheaper than in the West. Nonetheless, we still know very little about each other. As usual, those who come first receive the best terms. Time will show what is right. By the way, a direct Hong Kong–Astana flight would be a good start.
Please tell us what has influenced your actions during the return of Hong Kong to China. Was it your personal views, or simply work?
Historically, Hong Kong was part of China, and only entered the jurisdiction of Great Britain in 1841 as a result of the first opium war. As you know, in 1997 the term of the 99-year lease of the port expired, and China saw no reason to prolong the agreement. In 1982, the parties began negotiations on the return of Hong Kong to China. After very difficult and long talks, a decision was made that all existing systems in Hong Kong, both political and economic, would remain the same. This became the major achievement for both parties. This is the concept that we call: one country – two systems. In the opposite case, we would be just another city in China, without bringing any benefit to the country. And, we would not have become its financial center. This is why I began working in this direction during 1994-97, together with the old government, and later on with the new one since 1998. I worked on constitutional law in order to make sure that our legislative system would not change. This was the wish of all three parties: Britain, China, and us. The history of Hong Kong is an example of peaceful coexistence for the whole world.