Hong Kong 1, China 0 (extra time being played)
When Britain returned Hong Kong to China in 1997, after its 99-year lease expired and 156 years of British rule ended, the territory became a “special administrative region” in an agreement commonly referred to as “One Country, Two Systems.” That served both countries and Hong Kong well; the UK could hold its head high for having preserved a democracy of sorts, and the people of Hong Kong felt their civil rights were protected — a necessity for China, which needed the thriving business hub on its southern border to advance its own economic goals.
At first, all seemed to go well. In 1998 the territory held its first election under new rule and the first multiparty vote in the history of the People’s Republic. However, things went downhill from then. As China’s economic might grew, so did its regional and geopolitical ambitions. In 1995 China’s economy was the world’s eighth-largest. Now it is second, and its output accounts for about 20 percent of global GDP. China has become more assertive on the international stage, too. Its overtures in the South China Sea are met with skepticism by its neighbors. The Belt and Road Initiative, which aims to revive the trading routes of the ancient Silk Road, is a geopolitical power play of major proportions. Founding the Shanghai Cooperation Organisation in 2001 may be seen in the same light.
No wonder, then, that China has become more assertive toward its southern territory. The first inkling was in 2003 when Beijing inserted an anti-subversion article into Hong Kong’s Basic Law. Half a million took to the streets in protest, and demanded the removal of the territory’s chief executive. The demonstrations were peaceful, and achieved nothing.
Beijing attempted to pull the noose ever tighter as time went on. In 2014 China ordered a revision of the electoral law whereby candidates for the Hong Kong legislature had to be “registered” in Beijing. This influenced the selection of the territory’s chief executive, who has to be approved by the Hong Kong Legislative Council. Democracy and human rights activists saw this as a violation of universal suffrage and an attempt by Beijing to undermine Hong Kong’s status under “One Country, Two Systems.” The Umbrella movement occupied central Hong Kong between the end of September and mid- December. Again, neither the protests nor the umbrellas achieved the desired result.
In came Carrie Lam as chief executive. She is very much Beijing’s woman. Her draft law enabling Hong Kong to extradite criminals to the People’s Republic provoked a groundswell of opposition. This time one million took to the streets, one in every 7 inhabitants. The last demonstrations on such a scale in Hong Kong were in 1989, around the time of the uprisings in Tiananmen Square, when 1.5 million took to the streets. The size of last week’s protests were a surprise, given that several leaders of the umbrella movement were imprisoned this year.
All in all, the past two weeks have proved that “One Country, Two Systems” will always produce stress points. On the one hand we have an ascending global superpower, and on the other a small territory whose pro-democracy activists are supported by many NGOs. Overlaying the US-China trade tensions makes for heightened volatility.
Cornelia Meyer
So, what happened between 2014 and now?
The timing was significant, immediately after the 30th anniversary of the Tiananmen uprising. There are several demonstrations in China each year. They take place under wraps and the foreign press does not report them. Demonstrations on the scale seen in Hong Kong must cause unease among the leadership in Beijing.
Unlike in 2014, the demonstrators were joined by an increasing number of mainstream business leaders who feared the new law was bad for business, because it allowed anyone who had become cumbersome in the eyes of Beijing to be extradited. As many businesses have strong links to the mainland, it could leave their leaders vulnerable, which would in turn be bad for business. There seems to be some validity to that concern.
International reaction was interesting, too. When the protests turned violent on Wednesday, the speaker of the US House of Representatives, Nancy Pelosi, asked for Hong Kong to be treated like the People’s Republic and no longer exempted from trade sanctions
On Friday, Lam met her Chinese masters across the border in Shenzhen. As a result, she announced on Saturday that she would suspend the bill. This was probably too little, too late. The demonstrators had asked for the proposal to be scrapped, not postponed, and by Wednesday they had also asked for Lam’s resignation. There will be new protests on Sunday, although we can expect the numbers to be smaller.
All in all, the past two weeks have proved that “One Country, Two Systems” will always produce stress points. On the one hand we have an ascending global superpower, and on the other a small territory whose pro-democracy activists are supported by many NGOs. Overlaying the US-China trade tensions makes for heightened volatility.
Hong Kong will always be weaker than China, but the territory holds several strong cards: It is the fourth-largest trading partner of the People’s Republic, and Beijing needs the territory’s unfettered access to global capital markets and multinational corporations — for now at least.
• Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
