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HONG KONG: During the summer months, the discussion about developments in Hong Kong has been dominated by the national security law, passed in Beijing and promulgated in Hong Kong on June 30.
This movement has created a feeling in the West that the much-predicted “end of Hong Kong” (as we know it) has finally arrived.
Washington quickly proclaimed that it would no longer treat Hong Kong as different from the rest of China.
The British government announced a citizenship package for almost half of Hong Kong’s population, the suspension of the bilateral extradition agreement and the extension to Hong Kong of the arms embargo in force for mainland China. The 1984 British-Sino Joint Declaration may still be legally binding, but politically it seems increasingly irrelevant.
Western governments argue that they are simply responding to a breach of Beijing’s commitments by enacting national security law.
Riot police in Hong Kong after protesters gathered in Yau Ma Tei for a protest on September 6, 2020 against the new national security law. (Photo: Hong Kong Police)
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But the drivers of the latest developments are more complicated and reflect local and global politics, as well as thinking in Beijing.
A WEAKENED HONG KONG
At the local level, Hong Kong politics has become increasingly radicalized and polarized for several years.
The Hong Kong government is weaker after a year of protests. Beijing has been moving to deal with the vacuum and its concerns that US involvement in Hong Kong politics has posed a threat to national security.
In fact, the global context of Hong Kong has changed significantly. It is no longer at an optimal point, capable of playing a facilitating role in an economic globalization encouraged by both the United States and China.
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Now the city is caught in the growing strategic hostility between Washington and Beijing, which was fueled and fueled by the unrest in Hong Kong last year.
Hong Kong’s political and economic future will be determined by the interplay of these local, national and global factors.
A FUTURE MORE LINKED TO THE REST OF CHINA
In both politics and economics, that future will be more than ever in the rest of China.
Economically, this is nothing new. Especially since the 1980s, the city’s economic fortunes have been closely tied to that of China as a whole.
Hong Kong companies were instrumental in opening the People’s Republic of China to foreign investment and global supply chains, and more recently have been key providers of commercial and financial services for overseas expansion and listing of Chinese companies. . Hong Kong is the immediate source of more than half of the foreign direct investment flows to and from mainland China.
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A general view shows Victoria Harbor alongside commercial and residential buildings in Hong Kong on September 20, 2020 (Photo: AFP / May James).
Over time, and particularly since the global financial crisis more than a decade ago, China’s growing economy has been the decisive factor in Hong Kong’s economic development, from the financial sector to tourism.
Dependence on the rest of China will grow in the future, especially if the United States, the United Kingdom and other former key partners sacrifice their relations with Hong Kong for the sake of shifting to tougher China policy.
Some Chinese company listings are moving from New York to Hong Kong, as recent IPOs and secondary listings from companies like Alibaba show.
The rapid growth of the Hong Kong hinterland in the Guangdong-Hong Kong-Macao Bay Metropolitan Area provides the city with new development opportunities, although it will need to adapt to make the most of them.
But geopolitics will continue to act as a drag on Hong Kong’s global economic ties.
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In July, US Secretary of State Pompeo said the United States “would love to preserve freedom in Hong Kong … But if we can’t, we will hold the Chinese Communist Party to account.” President Donald Trump has spoken of seeing Hong Kong as a competitor to the United States.
A CHANGING APPROACH IN ONE COUNTRY, TWO SYSTEMS
Where does this leave one country, two systems, the framework that is supposed to unite Hong Kong with China and outline a modus operandi to make this relationship work?
Beijing frequently reiterates its long-term commitment to the principle. But the practice is at a turning point.
Beijing’s more active focus this year heralds a greater emphasis on one country and less autonomy for Hong Kong in politically sensitive areas. What to do with this depends on how a country was interpreted, two systems in the first place.
Since the Occupy movement of 2014 it has become clear that there are very different perceptions, in Hong Kong and elsewhere, of what the framework meant and was intended to achieve.
Joshua Wong is released from prison after being jailed for his role in the “Umbrella Movement” protests on June 17, 2019 (Photo: Reuters / Tyrone Siu).
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For Beijing, “one country” was always the priority, while retaining the advantages of “two systems”.
The national security law has made it clear that defending Hong Kong futures, such as independence, that undermine “a country”, challenge Chinese rule, or are incompatible with Hong Kong’s mini constitution, the Basic Law, will not be tolerated.
However, more broadly, Hong Kong’s institutions, political culture and media environment will remain distinct and different from the rest of China.
Debates over the national security law and arrests under it have been openly reported and discussed in the city in recent months.
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In economics and finance, Hong Kong’s separate system is likely to be kept as it serves China’s interests in engaging with the global economy. This is the comparative advantage that Hong Kong brings to China’s national development.
REASONS FOR OPTIMISM
China certainly faces challenges over the next decade. But its economy is already recovering from COVID-19 and growing faster than global averages.
A well-educated and dynamic urban middle class provides a good foundation for growth in higher value-added and service sectors. Dynamic innovation is a characteristic of China’s business world, especially in the technology and new economy sectors.
Along with its economic development, China has become a more diverse and vibrant society. Those trends are well established, whatever the policy.
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This provides many reasons for optimism about Hong Kong’s economic future.
Despite the tendency among some in Hong Kong and many abroad to assume that anything to do with China is bad for Hong Kong, not everyone in Hong Kong agrees.
For Hong Kong, being part of China is not a choice: power, history, and geography guarantee it. As China’s development continues, it may also become more of an opportunity than a threat to Hong Kong’s future.
Dr. Tim Summers is a non-resident senior fellow in the Asia-Pacific program at Chatham House and an assistant professor at the China University of Hong Kong Center for China Studies.
