Background

As a predominantly Chinese city under British rule, Hong Kong offered China a gateway through which to reach out to the world and obtain intelligence, capital and goods. The Chinese Communists first established agencies in British Hong Kong during the second Sino-Japanese War and the Chinese Civil War in order to collect overseas funding and materials to support their military activities.Footnote ¹¹ Shortly before the founding of the People's Republic, Mao Zedong decided to leave Hong Kong alone for pragmatic strategic and economic reasons, and referred to the colony as a useful geostrategic outpost in the South China Sea and beyond: “It is of no great significance to resolve the Hong Kong and Macau questions quickly. It is instead better to use the status quo of the two places, especially Hong Kong, to develop overseas relations and to promote import and export that benefits us more.”Footnote ¹²

During the Cold War, China used Hong Kong's geostrategic importance to counter US-led containment. According to Premier Zhou Enlai, Hong Kong was “part of the strategic arrangement of the general East-West struggle” beyond “the narrow principle of territorial sovereignty.” By maintaining “the status quo of Hong Kong including the British colonialist economy and capitalist system,” China could “grasp a pigtail” to hold Britain back from the United States and facilitate the PRC's political and economic outreach.Footnote ¹³ Thus, the newly-founded PRC's Hong Kong policy was not shaped by anti-colonialism and anti-capitalism but by its own security considerations. Zhou viewed the policy as a “long-term calculation and maximum utilization” (changqi dasuan, chongfen liyong 长期打算, 充分利用) of Hong Kong's “great strategic significance,” and warned government officials that “guaranteeing supplies to Hong Kong … should be taken as a political task” with a view to exercising control over the future survival of the colony.Footnote ¹⁴

Seen from this perspective, the supply of water and food from China to Hong Kong in the late 20th century must be understood not as a normal trade. It was a major building block of China's Hong Kong policy that involved intricate geopolitical actions at the local, national and global levels to advance China's overall strategic priorities in the wider Cold War rivalry.

The Politics of Water Supplies

Water security was a serious issue that shaped Sino-British negotiations for the retention of Hong Kong, and particularly so in 1949 as the Chinese Communists were about to take power of the whole of China. At that time, Britain claimed that their military defences in Hong Kong would be strong enough to repel any attack by the Chinese Communists.Footnote ¹⁵ However, the reality was that the colony's water supply depended upon the construction of more reservoirs to collect natural rainfall as local reservoirs were unable to provide all the colony's water needs. Recognizing the colony's vulnerability, the British government's Hong Kong policy realized the necessity of avoiding any military confrontation with China and the priority of “getting China's acquiescence.”Footnote ¹⁶

At the other end of the spectrum, the Chinese Communists tolerated the British colonial presence in Hong Kong. China equally realized that water shortages were a serious governance problem in Hong Kong and used the situation to advance its cross-border control. In 1959, Beijing built a reservoir in Shenzhen 深圳, then a small town across the Chinese border from Hong Kong, as part of the nationwide water resource strategy for improving local water supplies and integrating the colony into the Chinese water supply network. This project, known as the Dongshen–Hong Kong Water Supply Scheme, was designed to store fresh water from the Dongjiang 东江 (East river) for people in Shenzhen and Hong Kong. In 1960, Beijing presented this project to the British colonial authorities through the Guangdong provincial government.Footnote ¹⁷

The Dongshen–Hong Kong Water Supply Scheme was of great political significance to both governments. In 1963, Zhou Enlai, seeing the great geostrategic importance of the project, provided special funds of 38 million yuan (US$6.11 million) for its construction: “The project … should be viewed from a political perspective and taken as a special item for foreign aid.”Footnote ¹⁸ In the British assessment, the project was seen both as an effective way to gain additional water and as a PRC attempt to gain political influence. Despite the British government's final decision to accept the project, it was viewed as a supplementary water resource to begin with and they continued to pursue a policy of creating self-sufficiency in water for the colony.Footnote ¹⁹

The subsequent negotiations for finalizing an agreement for the Dongshen–Hong Kong Water Supply Scheme coincided with a serious drought. In 1963, Hong Kong's reservoirs held only 1.7 per cent of their total storage capacity. The colonial government put in place mandatory water rationing, initially limiting water supplies to three hours a day, but later restricting the supply to four hours every four days. To alleviate the water shortage problem, the colonial government implemented a number of other measures such as imposing fines for the misuse of water, conserving water through a series of water-saving campaigns, reopening abandoned water wells that had been closed owing to safety issues, making artificial rain by cloud seeding, and even allowing religious groups citywide to pray for rain.Footnote ²⁰

These efforts failed to solve the water shortage crisis. The colonial authorities considered the late Qing and early Republican practice of purchasing water from Guangdong province. However, this was an expensive operation requiring the use of tankers to transport the water and failed to provide enough water to service the needs of Hong Kong's fast-growing population. This prompted the British to sign a permanent agreement in 1964 with the Guangdong provincial authorities concerning the Dongshen–Hong Kong Water Supply Scheme. From 1965 onwards, fresh drinking water was channelled to Hong Kong on a routine basis.Footnote ²¹ At the time, the British and Chinese leaders had not entered into any diplomatic discussions over the future of the colony. This water supply arrangement completed a major strategic task for China as it not only distinguished the People's Republic as a more benevolent ruler than Britain but also marked the beginning of Hong Kong's integration into China proper.

In order to balance the PRC's gain in hydro-political power, the British colonizers did everything within their ability to ensure political autonomy and water security for the colony. Britain urged China to conduct negotiations through the respective local authorities in Hong Kong and Guangzhou so that the construction of water supply facilities would not become a diplomatic matter for both countries. During the negotiation process, the British rejected the initial proposal by China to provide free fresh water for Hong Kong. Their concern was to make the arrangement a business transaction instead of a political favour. The British also rejected China's attempt to disclose future plans for increasing the Dongjiang water supply to Hong Kong as they wished to forestall any possible objections from the local community when they built new reservoirs in Hong Kong.Footnote ²²

Meanwhile, the British proceeded with the Plover Cove reservoir project in Hong Kong as an immediate measure to cope with the city's growing demand for fresh water. In addition, they also invested in technology to convert sea water into fresh water (i.e. desalination) in the hope that it would act as an “insurance policy” for the colony in the long run.Footnote ²³ During the assessment process, plans to build a nuclear reactor for the desalination plant and as an additional electricity supply were considered before being rejected on safety grounds.Footnote ²⁴ Finally, in 1973, the colonial government established the world's largest desalination plant in Hong Kong, the Lok On Pai Desalter. However, the cost of producing desalinated water far exceeded the cost of purchasing more water from Dongjiang, and public objections to the continued use of desalination to provide water supplies eventually led to operations at the desalination plant being suspended in 1978 and it being shut down completely in 1982.Footnote ²⁵

The failure of the desalination project drove the colonial government to re-negotiate terms with Guangdong province to increase its supply of fresh water. As a result, the Dongshen–Hong Kong Water Supply Scheme was expanded with the construction of more water pumping stations, pipes, and mains in 1974, 1979 and 1989, respectively. Upon the completion of these extension projects, the amount of fresh water imported from Guangdong increased four times, from around 200 million cubic metres in the 1980s to 800 million cubic metres by 2000. Dongjiang water constituted 24 per cent of the city's total water consumption in 1970, and 68 per cent in 1990. Since 2000, over 70 per cent of Hong Kong's fresh water is imported from China (see Table 1).

Table 1: Hong Kong's Supply of Freshwater from Guangdong Province (million m³)

Source: Integrated data from official statistics found in Water Resources Board of Guangdong Province and Hong Kong Water Supplies Department 1998 and Hong Kong Census and Statistics Department 1995–2011.

By comparison, the actual rainfall yield from the reservoirs ranged between 100 and 300 million cubic metres from 1980 to 2000. With rapid urbanization and industrialization, local reservoirs have not been able to satisfy the city's water needs. Statistics indicate that Dongjiang fresh water has become vital to the social and economic development of Hong Kong.

Without its own independent source of water, Hong Kong was at the mercy of China. The Dongshen–Hong Kong Water Supply Scheme put in place an infrastructure mechanism for China to monopolize and profit from the supply of fresh water to the colony. With Hong Kong now subject to Chinese national hydro-hegemonic control, China was already in a stronger position than Britain as diplomatic negotiations over the colony's future began in 1982. Margaret Thatcher stated in her book, The Downing Street Years, that her original negotiation plan was to assert Britain's sovereignty claim to the part of the colony that was permanently ceded to the UK and use it to bargain with her Chinese counterparts for “the continued British administration of the entire Colony well into the future.”Footnote ²⁶ However, the entire colony was “dependent on the mainland for water and other supplies,” and “over 90 per cent of the land of the Colony” was on leasehold.Footnote ²⁷ Since Deng Xiaoping rejected her idea, she had to accept the one country, two systems formula proposed by Deng.Footnote ²⁸ The Dongshen–Hong Kong fresh water supply arrangement proved to be decisive and enabled China to forestall the British pursuit of their continued claim to territorial sovereignty of post-1997 Hong Kong. As Lee Ka-Kiu 李家翘 asserts, “Because of its heavy reliance on the supply of fresh water from China, Hong Kong has already returned to the Chinese motherland in practice.”Footnote ²⁹

Local reaction from Hong Kong residents to the Dongshen–Hong Kong Water Supply Scheme was mixed and changing. At first, the public worried about the political risks. A local anti-communist newspaper headline in 1960 read, “China definitely uses water supply as tool for political extortion against Hong Kong.”Footnote ³⁰ A similar warning was found in another news headline, “The import of Dongjiang fresh water is political in character. Water supply to Hong Kong can be suspended immediately when there is a change in Chinese politics.”Footnote ³¹ At the peak of the Cold War, many Hong Kong Chinese people expressed concerns over Hong Kong's reliance on the Maoist regime for its supply of fresh water as the wider East–West struggle escalated across East and South-East Asia. However, the United States voiced no such objections to the transport of water from the Communist mainland to the colony.Footnote ³²

On the whole, ordinary people in Hong Kong became indifferent to the politics of the cross-border water supply infrastructure. The continued freshwater supply from China meant that daily life was much improved and, according to Ho Pui-Yin, the Dongshen–Hong Kong Water Supply Scheme even invoked a “pro-China sentiment among the local working class.”Footnote ³³ Despite the public remaining indifferent, if not hostile, to the Communist state, there was an growing acceptance that China had a strong hold over the people of Hong Kong and a decisive influence over their lives. “Blood is thicker than water” (xuenong yushui血浓于水) is an old saying often used by China's Communist leaders to highlight the inseparable relationship between Hong Kong and China; however, the water politics running across the border has shown that in reality it is more the case that “water is thicker than blood.” The following analysis reveals how China deployed the same strategy to control Hong Kong's food security in the colonial era.

Food Supplies

Once they had completed their acquisition of Hong Kong from the Qing government, the British government's most immediate issue with the colony was that it was too small. The total land area only amounted to about 1,100 square kilometres and its physical ecology meant that it lacked the capacity to be self-sufficient in food. Although an exaggeration, Lord Palmerston's description in 1841 of Hong Kong being a “barren rock” is not without grounds. Most of the terrain, if not mountainous, was unsuitable for farming. By the mid-20th century, what limited arable land there was proved insufficient to provide for the daily needs of the local people (see Table 2). Hong Kong's post-war urbanization meant that it could not produce enough food locally to feed the fast-growing population. Agriculture was marginal to the local economy and in overall decline. From the 1950s to the 1960s, agriculture made up only 3 to 5 per cent of the colony's gross domestic product.Footnote ³⁴ The figure dropped further to 1 to 2 per cent throughout the 1970s and 1980s, and remained at 0.1 to 0.9 per cent after 1990 (see Table 3).

Table 2: Decline of Arable Land in Post-War Hong Kong (km²)

Source: Based on data from Hong Kong Government 1961–2001.

Table 3: Decline of the Agricultural Sector in Hong Kong's Economy

Source: Based on data from Hong Kong Government 1971–2001.

Statistics from the Hong Kong Agriculture and Fisheries Department reveal the insignificant contribution local agriculture made to the colony's food supply system. Rice is the main staple food among the Hong Kong Chinese, but by the 1980s Hong Kong no longer produced rice. Fresh vegetables are still grown in the New Territories, but the total proportion of local vegetables in the city's food consumption declined gradually, from 40 per cent in the 1960s to less than 10 per cent after 2000. Local livestock always accounted for less than 50 per cent of the city's total consumption. Since 1980, that share has dropped to as low as 20 to 30 per cent, and occasionally below 10 per cent.Footnote ³⁵

The production of local live poultry is an exception. It constituted 20 to 30 per cent of the city's total live poultry consumption in the 1980s, and the figure reached 40 to 50 per cent throughout the 1990s and early 2000s. However, everything changed following the outbreaks in 2003 of avian influenza (H5N1) and severe acute respiratory syndrome (SARS). The Hong Kong government decided to buy out the chicken farms in a measure to prevent any further outbreak of infection. Hong Kong's entire live poultry business was left teetering on the brink of collapse. The annual supply of local live poultry fell from 12,659 tons in 1999 to 6,417 tons in 2009.

With regards to the local seafood industry, Hong Kong's fishing fleets have consistently provided over 50 per cent of the city's marine fish for consumption. By comparison, freshwater fish farmed within the territory remains a marginal contribution, accounting for only 10 to 20 per cent of the total market share.Footnote ³⁶ Hong Kong has never been self-sufficient in aquatic food production and needs to import marine and freshwater fish.

As one of East Asia's leading ports, Hong Kong has been able to import a variety of food products from virtually anywhere. However, the colony has remained dependent on China for its fresh and processed food products owing to its close proximity to China and its predominantly Cantonese population. In 1951, Beijing designated Ng Fung Hong 五丰行 Limited — a trading house of the China Resource (Holdings) Company Limited under the supervision of the Ministry of Foreign Trade and Economic Cooperation — as the sole distributor of Chinese food products in Hong Kong. Through Ng Fung Hong, China increased its control over Hong Kong's food supply and found a profitable market for its agricultural products.Footnote ³⁷ Zhou Enlai issued orders that all provinces had to contribute some of their own produce for transport to Hong Kong.Footnote ³⁸ Three express trains from Wuhan, Shanghai and Henan were laid on to transport a daily delivery to Hong Kong of fresh food such as live pigs, cattle, poultry, fish, vegetables and fruit. When Hong Kong leftists staged a city-wide food strike against the colonial administration in 1967, Zhou intervened to put an end to the strike and maintain the delivery of fresh food products to Hong Kong.Footnote ³⁹

For Mao Zedong and Zhou Enlai, China's control of Hong Kong's food security and the need for outside capital took precedence over the struggle against colonialism. Intelligence assessments from Britain indicate that Hong Kong was China's major source of foreign currency.Footnote ⁴⁰ For Zhou Enlai, this proved to be a major factor behind China's flexibility with respect to the schedule and moves to reclaim Hong Kong: “To advance socialist construction, Hong Kong can be our base for … absorbing overseas capital and earning foreign currency.”Footnote ⁴¹ Rather than highlighting the security and economic considerations behind the strategy, CCP official literature tends to romanticize the importance of Chinese food supplies, calling Ng Fung Hong “the food basket of Hong Kong” (Xianggang de cailanzi 香港的菜篮子), and the Chinese food-delivery trains “the lifelines of Hong Kong” (Xianggang de shengmingxia 香港的生命线).Footnote ⁴²

The Chinese government never gained total control over Hong Kong's food security during the colonial era. For example, Chaozhou-speaking merchants had long dominated the rice trade and used their kinship to monopolize the rice trade between Siam (today's Thailand) and coastal China, and although these Chaozhou-speaking merchants lost out to the larger transnational supermarkets in the 1980s, the channels they established from Thailand continued to provide the lion's share of rice shipments to Hong Kong.Footnote ⁴³ In 1955, the colonial authorities formulated the Rice Control Scheme in an effort to increase daily supplies of rice and build up a stockpile. In 1968, China bypassed the scheme and exported additional rice to Hong Kong in the guise of charity. The colonial authorities objected to the practice, regarding it as a new move by China to “[gain] political capital and [put] pressure on the Hong Kong government” after the 1967 riots.Footnote ⁴⁴ Under the Rice Control Scheme, rice imported from the mainland was not permitted to dominate the overall market share. Even when, owing to poor harvests in the mid-1970s, there was a disruption to the supply of Thai rice, Chinese rice made up only 30 to 50 per cent of the total market share. Since then, the figure declined to below 50 per cent in the 1980s, and less than 10 per cent by 2000 (see Table 4).

Table 4: Rice Imports to Hong Kong from Thailand and China (1,000 tons)

Source: Based on data in Zheng and Wong Reference Zheng and Siu-Lun2005, 191–93.

The same can be said of imported staple food commodities from China. In the 1950s, Hong Kong imported 50 to 70 per cent of its vegetables from China,Footnote ⁴⁵ but that figure dropped to less than 50 per cent in the 1960s and 1970s, and fell further to 20 to 40 per cent throughout the 1980s and 1990s. The import of seafood and freshwater fish products from China has been in decline, too. Chinese seafood and freshwater fish products made up 40 to 60 per cent of the total market share in the 1960s, 30 per cent in the 1980s and 10 per cent after 2000. The only exception is the import of livestock and poultry, for which Hong Kong has relied heavily on China. Chinese imports accounted for over 60 per cent of the market share in the early 1960s and have frequently exceeded 80 per cent in subsequent decades (see Table 5).

Table 5: Staple Foodstuff Exported from China to Hong Kong (HK$ millions)

Source: Integrated data from Zhongguo zhengchan cujinhui Xianggang fenhu 1961–2001 and Gang'Ao jingji nianjian she 2001.

Statistical data indicate that throughout the 20th century China increased its control over the lives of the Hong Kong Chinese people. Although the degree of control was not consistently strong in the cases of rice, vegetables and fish, the bio-political control exerted by China proved to be decisive. Alexander Grantham was the first colonial governor to confront the threat of Communist China. Given that Hong Kong was dependent on China for the necessities of life, Grantham foresaw that “advancement to self-government and independence as is the case with most British colonies” would not occur in Hong Kong.Footnote ⁴⁶ In 1965, Grantham wrote, “Here I would throw in a statistic … that more hogs were slaughtered in Hong Kong than in any other city in the world except Chicago, and 90 per cent come from China.”Footnote ⁴⁷

When David Trench, the colonial governor from 1964 to 1971, assessed the impact of the 1967 riots on water and food security, he concluded that “our dependence on food from China is … substantial. Any sudden cessation of supplies from China would create chaos here.”Footnote ⁴⁸ The comments from Denis Bray, colonial cadet and later secretary for home affairs, highlighted the predicament for the colonial government: “For a couple of days, there was no delivery of pigs from China by train. This was serious as it was always possible for China to cut off the food and water supplies on which we depended. We searched the region for alternative supplies, but none could supply the volume of animals we needed.”Footnote ⁴⁹ Hong Kong was always viewed by the British as vulnerable to a Chinese embargo on water and food supplies.

The United States also recognized Hong Kong's vulnerability, which explains why the United States provided only “moral support” to Britain when the latter sought American assistance with the defence of Hong Kong in the 1950s.Footnote ⁵⁰ Britain resorted to launching a series of anti-communist propaganda campaigns to gain support for its colonial rule. The British branded many home-grown communist and leftist organizations as terrorists and condemned their anti-colonial protests.Footnote ⁵¹ The colonial government pointed to the economic gap between Hong Kong and mainland China as evidence that Hong Kong's capitalist system was a success.Footnote ⁵² Following China's military crackdown on the pro-democracy movement in Tiananmen Square in June 1989, the British attempted to reassure the Hong Kong Chinese population with the construction of several major infrastructure projects and a semi-democratic election system.Footnote ⁵³

All these British efforts succeeded in winning the hearts and minds of the Hong Kong Chinese but Britain was unable to stop Hong Kong's eventual retrocession to China.Footnote ⁵⁴ The last governor, Christopher Patten, remarked on the vulnerability of the crown colony: “Hong Kong Island and the Kowloon Peninsula – the land ceded outright by grant – depend on the hinterland to the New Territories and beyond for food and water.”Footnote ⁵⁵ In the late 20th century, China managed to install two powerful institutional mechanisms, the Dongshen–Hong Kong Water Supply Scheme and Ng Fung Hong Limited, in order to control the lives and bodies of the local population. The city's dependence on China for water and food led both colonial officials and the public to accept that the fate of Hong Kong rested in Chinese control.

The politics of controlling bodies and lives is manifest in Beijing's arrangement to supply food and water to the Hong Kong Chinese people. This is portrayed in official Chinese rhetoric as a laudable policy that demonstrates the traditional Confucian political ideal of “benevolent rule” (renzheng 仁政). Such an interpretation has become the standard view among several mainland intellectuals. For example, Gu Xinghui 古星辉 believes that Hong Kong owes its economic success to the support provided by China: “Hong Kong is such a peculiar city, where the socialist government on the mainland supports its prosperity. … The decades-long stability and prosperity of post-war Hong Kong has resulted from Beijing's policy.”Footnote ⁵⁶ Xiao Chen 晓晨 echoes the same patriotic sentiments, referring to the benevolence of the CCP: “Mainland China always provides Hong Kong with abundant foodstuffs and reliable material that protect the wellbeing of millions of compatriots at home and at work.”Footnote ⁵⁷ Qiang Shigong reiterates this propaganda: “Everything is based on China's affection for its people. … The selfless aid from the central government to Hong Kong involves a paterfamilias-like care and affection for children.”Footnote ⁵⁸ The mainland Chinese discourse is embedded in emotionally charged and moralistic language, and is a bizarre combination of patriotism, paternalism and altruism.

These representations of Hong Kong–China links situate previous and current Hong Kong policies in what Julia Strauss, in reference to Africa–China ties, calls “a distinguished lineage of principled relations.”Footnote ⁵⁹ China bases its justification of its engagement with Hong Kong on the principles of anti-colonialism, patriotism, traditional ideals, unconditional assistance and mutual benefit. However, in reality the PRC's strategy of controlling the lives and bodies of the Hong Kong population is based not so much on national sentiment but on pragmatic calculations: the successful implementation of this water and food security strategy has been crucial to gaining territorial unification and global outreach.

The Current Case

The establishment of the one country, two systems model means that China's current governance over Hong Kong recognizes the ideological differences of the Cold War. However, such a politics of recognition has failed to create the “harmonious society” required for peaceful coexistence as assumed in the rhetoric of China's state policy.Footnote ⁶⁰ Post-colonial Hong Kong has had to deal with many governance problems such as the Asian financial crisis and the first outbreak of H5N1 in 1997, the emergence of SARS and the huge opposition to the legislation of Article 23 of the Basic Law in 2003, and continuous demonstrations for universal suffrage and other civic rights. In an attempt to resolve a growing number of contentions, China introduced the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) to complement the one country, two systems formula and further consolidate its sovereignty power over Hong Kong.Footnote ⁶¹

Since the implementation of CEPA in 2003, Hong Kong has benefited from a range of preferential terms in its cross-border trade with China. In terms of political propaganda, officials on both sides have cited CEPA as being an essential tool for boosting Hong Kong's economy. However, evaluation reports issued by the post-colonial Hong Kong government show that the city's economic rebound during the early 2000s was not entirely down to CEPA. CEPA's impact was more of an “intangible benefit” that helped to “rebuild confidence” in Hong Kong's economy.Footnote ⁶² Of the annual export value of traded goods under CEPA from 2003 to 2007, the highest recorded share made up only 4.1 per cent of Hong Kong's overall domestic exports and 10.6 per cent of Hong Kong's domestic exports to the mainland. This implies that the majority of Hong Kong's domestic exports to the mainland did not need CEPA for their exchange (see Table 6). In the case of the trade in the service industry, the cumulative business receipts from 2007 to 2009 amounted to HK$198.5 billion; however, 98 per cent of the business receipts went to 4 out of a total of 38 service areas covered by CEPA. The contribution of the trade in services under CEPA was equally modest: a mere 3 to 4 per cent of Hong Kong's annual gross domestic products (see Table 7). CEPA's impact on China's cross-border control of the daily lives of the Hong Kong Chinese has proven to be more psychological and partial than substantial.

Table 6: Annual Export Value of Trade in Goods under CEPA

Source: Based on data from CB(1)1849/06-07(04).

Table 7: Business Receipts from Trade in Service under CEPA

Source: Based on data from CB(1)2065/09-10(01) 2010.

This has driven China to re-visit its old Hong Kong policy from the Maoist era in an effort to shore up its state power in the territory. In 2012, China announced that securing continuous water and food supplies for Hong Kong will be a new challenge. Government officials are required to “take into account political implications and consider the overall situation” (jiangzhengzhi, gudaju 讲政治, 顾大局) in maintaining the stability and quality of such supplies.Footnote ⁶³

China's rapid economic development has led to environmental pollution and food contamination scares. The water supply provided by the Dongjiang has come under growing pressure in terms of both its capacity and its quality owing to the drastic urbanization and industrialization developing alongside its drainage area.Footnote ⁶⁴ The country has weathered a series of food safety scandals which have culminated in political controversy.Footnote ⁶⁵ These problems have diminished the appeal of Chinese fresh water and food to the people of Hong Kong. The local media has voiced concerns over the safety of Dongjiang water and has publicized numerous cases of food poisoning in the mainland.Footnote ⁶⁶ Moreover, Hong Kong's economic rebound has led to rampant inflation of food prices since 2004. In 2008, at the peak of the inflation rise, the price of rice, pork, beef, poultry and vegetables increased by 44.9 per cent, 35.1 per cent, 37.6 per cent, 13.5 per cent and 16.7 per cent, respectively. The overall rate of inflation for food prices appeared to amount to 16.8 per cent. Despite a slowdown in the rate of increase in most cases from 2009 to 2011, food prices in Hong Kong remain generally high and are increasing (see Table 8).

Table 8: Food Price Inflation in Hong Kong SAR

Source: Based on data in the official statistics on composite consumer price indices in Hong Kong Census and Statistics Department 2000–2011.

The rising cost of living owing to the increases in food and water prices has led to public anger in Hong Kong. The Hong Kong Legislative Council has frequently voiced its concern over the territory's heavy reliance on fresh water supplies from the Dongjiang, the price of which has continued to rise despite its contamination from pollution.Footnote ⁶⁷ Ng Fung Hong's monopoly over the supply of pork livestock has provoked much discontent in the local food industry and has prompted the government to investigate that company's business practices.Footnote ⁶⁸ In 2011, several hundred demonstrators protested against the inflationary water and food prices and asked the Hong Kong government to intervene.Footnote ⁶⁹

Maintaining the security of water and food supplies has become a contentious issue between China and Hong Kong. However, supplying Hong Kong with water and food has turned into an extremely profitable operation for China. Since the implementation of the Dongshen–Hong Kong Water Supply Scheme in 1960, consistent increases in the unit price of Dongjiang fresh water have generated huge revenues for Guangdong province (see Table 9). Standard management reference material from the Dongshen–Hong Kong Water Supply Scheme describes the water Dongshen supplies to Hong Kong as “political water, economic water, and life water” (zhengzhi shui, jingji shui, shengming shi 政治水, 经济水, 生命水).Footnote ⁷⁰ Following Deng Xiaoping's economic reform of the 1980s, China now considers not just the original political task of controlling Hong Kong through the creation of a dependency on its water supply, but also market-driven calculations for profit.Footnote ⁷¹

Table 9: Unit Price for Dongjiang Freshwater

Source: Based on data in Ho Reference Ho2001, 222.

Consequently, the unit price of fresh water from Dongjiang is among the highest in the world. In 2000, the unit price paid by Singapore to Malaysia for fresh water amounted to HK$0.33 (US$0.043) per cubic metre, but Hong Kong paid ten times more than Singapore, about HK$3.08 (US$0.397) per cubic metre.Footnote ⁷² In 2005, there was a new agreement between Guangdong and Hong Kong over the city's freshwater supply which allowed Hong Kong to adjust the volume of Dongjiang water it purchased on a monthly basis. Under the new agreement, the total freshwater payment dropped slightly, from HK$2,530 million (US$325.90 million) in 2005 to HK$2,495 million (US$321.4 million) in 2006. However, the amount increased again to HK$2,959 million (US$381.17 million) in 2009 and HK$3,146 million (US$405.26 million) in 2010.Footnote ⁷³

Ng Fung Hong has also reaped enormous economic benefits. Before its privatization in 2000, the company enjoyed decent revenue growth. Its annual turnover increased from HK$4,636 million (US$597.20 million) in 1992 to HK$6,663 million (US$858.31 million) in 1999, and annual profits rose from HK$77 million (US$9.91 million) in 1992 to HK$597 million (US$76.90 million) in 1999 (see Table 10). The strong material and economic benefits gained by the mainland through its water and food supplies to Hong Kong is at odds with Beijing's ostensible moralistic and sentimental claims. If China fails to slow down the rising cost of fresh water and food, its image as a benevolent motherland will continue to diminish among the people of Hong Kong.

Table 10: Ng Fung Hong Limited's Annual Turnover and Profit (HK$1,000)

Source: Based on data in Ng Fung Hong Limited 1995–1999.