Hong Kong’s ‘one country, two systems’ status is gravely under threat.
Local dissatisfaction is so great that even last October, a survey by the Chinese University of Hong Kong found that 40pc of the city’s 7.5 million residents were interested in emigrating.
Now, the question mark over the future of the city’s democratic freedom is so ominous that the British Government has said it will offer visas to the nearly 3 million people in Hong Kong who either hold or are eligible to apply for a British National Overseas passport.
But one maverick Hong Kong property developer is taking the vision of mass migration of Hong Kongers much further. There are now bold, experimental plans to create a new Hong Kong elsewhere in the world – and it could be built in Britain.
The utopian promise of charter cities
Ivan Ko, a real estate tycoon, wants to build a new version of Hong Kong somewhere else, complete with its own regulations and entrepreneurial spirit.
He plans to do this in the form of an international charter city – or possibly three of them.
A charter city is a metropolitan area that has a special jurisdiction and can determine its own system of municipal governance over the general law of the country it sits in. Effectively, a charter city has its own constitution, independent of the country that it exists in.
Versions of the concept are common enough – there are more than 120 in California, including San Francisco and Los Angeles.
But an international charter city would be different. Ko, who is chairman of developer RECAS, has no template to work on because the idea is entirely radical; this would be a brand new city, built from the ground up.
The idea is that it would be integrated with its host country, but its founders would essentially have a blank slate to build a new socio-economic and political system. It could act as a more refined special economic zone, with different tax systems and commercial policies to stimulate wealth creation.
Building an international charter city designed for mass migration from one country to another would also turn real estate development to almost a business of nation-making.
It has never been done before. The idea for international charter cities began more than a decade ago with the Nobel prize-winning economist Paul Romer, who tried to set up charter cities in Madagascar and Honduras. But these attempts failed.
Now, it is a concept that is gaining new momentum. Paypal founder Peter Thiel is among the investors who last year put $9million into Pronomos, a venture capital fund for building a charter city. Former Uber executive Ryan Rzepecki, who sold his bike company Jump to the ride hailing app for $200million, is also considering funding a new city.
Still, few have considered building one in a developed country – it is hard to see how the promise of economic stimulus could outweigh the costs and risks.
Building a brand new city
To build a new charter city, you need land near a water source measuring 25,000 acres or more – an area a little bit smaller than Newcastle and a bit bigger than the Queen’s Sandringham Estate in Norfolk.
Ko has founded Victoria Harbour Group, which is currently scouting the world for locations, looking for land in developed, common law countries. He aims to source a location this year and to begin planning and building the project’s infrastructure in 2021.
The company is in discussions with four governments in the West, says Ko. Ireland is top of the list and Victoria Harbour Group was due to meet with the government in February, although travel restrictions have postponed the trip.
It is “reasonably realistic” that Britain could become a host country, particularly considering the offer of BNO visas, says Dr Mark Lutter, who runs the Charter Cities Institute, a non-profit that advises on building charter cities in emerging markets, and who has been working with Victoria Harbour Group.
With Brexit, there is also the chance to do something bold and experimental. While the idea of free ports has been mooted, this would be a more extreme next step.
“If countries desire to generate economic activity, having a bunch of very smart people who can bring investment and jobs will generate a better future not just for them but for the host country,” adds Dr Lutter.
But in reality, how many nations will be open to building a new city when they are grappling with a global pandemic? In Britain, public debt has now exceeded the entirety of our GDP for the first time since 1963. And this project would be an undertaking that would make HS2 comparable to a toy train track.
Where would the money come from?
The aim is for the city to be populated half by Hong Kong emigrants and half by locals from the host country, says Dr Lutter. He thinks that around 25 to 33pc of the people who want to move will look to move to the new city, while most will want to move to already established places. Ko puts that number at about 2 million.
Victoria Harbour Group is currently trying to raise money from investors both in Hong Kong and Silicon Valley. Once planning is underway, they hope there will be several more rounds.
Rather than purchasing land, Ko hopes to enter into a public-private joint venture with a government. “In that case, our investment in land would be minimal and the government would have a stake in us, so we would be sure that the government would help us to make the city successful,” says Ko. Investors would get returns from rents.
But he also has an even more radical plan. After 10 or 12 years, he plans to float Victoria Harbour Group. Essentially, there would be an IPO for a city.
A new democracy, created by a company
Victoria Harbour Group will be 50pc owned by a non-profit foundation, says Ko. It would use dividends to fund public spending, support job training and education and to sponsor migration.
It plans to make this new city into more than just a place for the higher income Hong Kongers who could afford to emigrate anyway. “I believe the value of people comes in their network. If we’re able to partially transplant that network, then a lot of people’s relationships can be preserved,” says Dr Lutter.
The conditions of self governance will be dependent on the host country, says Ko. The plan is to have a city manager, the first of whom would be initially appointed by the company, but would then become accountable to a council of local residents.
Is there a diplomatic risk for the host country?
Building a new rival to Hong Kong would surely be a red flag to China, which is busy taking control of the government there.
But the team is quick to dismiss this idea that it would antagonise the Chinese government. “It’s for the people who don’t want to live in Hong Kong, maybe people who have been protesting,” says Dr Lutter. “If they leave, it might be off Beijing’s back.”
“In terms of the brain drain or outflow of capital, China has 1.4 billion people who can move to Kong Kong with their capital and their companies,” adds Ko. “No matter how many people leave Hong Kong, those vacancies will be filled up in no time.”
And perhaps, in a way this has been done before – albeit in a more organic way. “In the Fifties, Sixties and Seventies, our parents and our parents’ parents fled China to come to Hong Kong and they helped each other, gave jobs to each other, lent money to each other, that’s how we started our lives here,” says Ko.
“We want to provide an option for Hong Kong people to leave Hong Kong, but to carry on with their lifestyles and continue to develop their careers and build their families in countries that are democratic and free.”