The beginning of the end of Hong Kong

The entire Hong Kong subway network — which carries some four million passengers a day — was suspended on Friday night, leaving protesters, locals, and tourists stranded. “Shopping malls were closed, supermarket chains said they would not open and many mainland Chinese banks, which were targeted in Friday night’s violence, stayed shuttered, their façades sprayed with graffiti. In some locations, long lines formed at supermarkets as residents stocked up, fearing further clashes,” Agence France Presse News (AFP) reported.

There have been four solid months of active street protests, first about the now-scrapped plan by Hong Kong Special Autonomous Region (SAR) authorities to allow extraditions to mainland China, which then burgeoned into fears of an erosion of liberties promised under the “one country, two systems” Central Government policy that rules Hong Kong.

But if the protesters were probing and pushing for their special rights and privileges under the “two systems” policy, Hong Kong Chief Executive Carrie Lam made quite a definitive move to clarify the limits of those entitlements. The night the subway was closed, Lam announced a ban on pro-democracy protesters wearing masks in protest rallies, with a one-year jail sentence plus fines. Angry protesters read this as allowing more drastic police action against them, and identifying protesters for possible punitive sanctions. The ban was imposed under emergency powers not used in more than half a century, AFP noted in its news report. Lam claimed it was not an authoritarian move, but necessary considering the alarming rise in violence in the massive rallies.

“This marks the beginning of the end of Hong Kong,” democracy activist Joshua Wong bemoaned on world news television and online media. Wong was 18 years old when he led students participating in the 2014 Umbrella Movement that clamored for truly free election reforms, particularly that candidates for the Hong Kong SAR local government include not only those in the short-list from Beijing. Wong and other pro-democracy activists were convicted and jailed for eight months in August 2017 for the 2014 Occupy Central protests, and three months in January 2018 for the Mong Kok protests in 2014.

Millions of people have been protesting (2 million on June 16 asking Carrie Lam to resign, and 1.7 million on Aug. 18 to push for electoral reforms), mostly young like Joshua. Misha Ketchell, Editor of The Conversation, says surveys showed that about 60% were under 30 years old and almost one-fifth were 45 or older.

Are the protestors not concerned about the effects of these 18+ weeks of slowed or stopped business activities on Hong Kong’s present and future as a SAR? The airport alone contributes about 5% to Hong Kong’s GDP, with the travel industry employing about 250,000 people, or about 7% percent of the total working population, Aljazeera reported on Aug. 10, when demonstrators stopped flights for two days.

National Public Radio (NPR) USA interviewed Daniel Ten Kate, Hong Kong-based editor for Bloomberg News, about the economic costs of the protests. “The biggest cost to Hong Kong is the undermining of its reputation for the rule of law and order and just being a safe, stable place to put your money if you’re a foreign company and you want to have a foothold in China but you don’t really trust the Chinese laws. Hong Kong is just known for its independent legal system, and that’s part of what sparked the protests to begin with,” Ten Kate said.

Hong Kong’s stock market is the fourth-largest in the world, bigger than London’s. Chinese companies and state-run Chinese companies look to the Hong Kong market to raise money. China’s own capital controls makes it difficult to move money in and out, while Hong Kong companies can easily set up shop and have access to a lot of the world’s investment market. But the stock market has gone down $500 billion in value in the first two months of protests, and shrinking some more, Ten Kate pointed out.

Indeed, Hong Kong, the conveniently capitalist SAR, has been very useful to communist mainland China since the 1997 Handover from Britain, for synchronizing the socialist economy of the PRC with the global economy. Bloomberg notes that 58% of China’s outbound investment, including for the “Belt and Road” initiative policy of President Xi Jinping, has been channelled through Hong Kong. Unhappily, there is the ongoing debilitating trade war between the US and China that has been weighing down China (and the US, and affecting the rest of the world). So the diminished economy into Hong Kong and GDP in the city itself fell by 0.3% in the second quarter.

China’s GDP growth was 6.2% year-on-year in the second quarter, the lowest rate in nearly three decades. Its trade surplus also dropped sharply in August to $34.83 billion, from $44.58 billion the previous month, with the 25% tariffs on $250 billion in imports, in the year-long US-China trade war. In September the US imposed new tariffs to force Beijing into a new trade deal. Does the PRC need the aggravation of the Hong Kong protests at this critical time?

“I never thought that a country with two different systems can really work for any length of the time, and sure enough this has happened,” Malaysian Prime Minister Mahathir Mohamad said in The Straits Times of Sept. 6. Hearing of Lam’s ban on masks announcement last Friday, Mahathir said she should resign because “her conscience says that the people of Hong Kong are right in rejecting the law. But on the other hand, she knows the consequence of rejecting the law.” The Straits Times of Oct. 4, further quoted Mahathir as saying that China will put an end to the protests with harsh action, like it did in the bloody 1989 Tiananmen Square crackdown in Beijing.

Maybe not at this critical time — China will not blink, nor focus elsewhere in the trade standoff with the US. The situation will just have to be “dribbled” by Carrie Lam for as long as it takes. The Hong Kong protesters will then just wear themselves out, as Joshua Wong so pathetically accepted when he said, “This is the beginning of the end of Hong Kong.”

But Mahathir is right that “a country with two different systems cannot really work for any length of the time.” Remember that Hong Kong was a British colony since 1842, ceded in perpetuity by China to the UK at the end of the First Opium War. With the expansion to include Kowloon in 1860 and the 99-year treaty lease of the New Territories in 1898, the British ruled Hong Kong for more than 150 years until after the World Wars. With the Sino-British Joint Declaration of 1984 it was mutually agreed that China will regain the expanded Hong Kong in a formal Handover in July 1997. And in the anticipated drastic shift of mindset and culture for Hong Kong, the so-called “one-country, two systems” principle was embedded in that handover — where China recognizes Hong Kong’s ability to administer its own governance, legal, economic and financial systems, as both sides have agreed that Hong Kong is part of one, re-unified China.

The Handover promised that Hong Kong’s previous capitalist system and its way of life would remain unchanged for a period of 50 years, until 2047. But even before that, the Hong Kong people would have to accept that they are Chinese under the one country system, and that there is no such thing as a workable two-system country.

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com