Understanding Hong Kong’s Predicament

I always thought that the most complex geopolitical issue is the world was either Palestine or Kashmir. That is until I stepped into Hong Kong as a tourist and absorbed the liberal environment of the city-state that functions under the “one country, two systems” norm since 1997. I had never really endeavored to understand the so called ‘umbrella movement’ or the complex system and the agreement under which Hong Kong continues to function after 1997 when it was handed back to China on completion of the lease under which it had earlier remained under the British.

While in Hong Kong, from Ocean Park to Stanley Market and the delightful Kowloon diners, it was wonderful to feel the environment; pubs everywhere, great fine dining, a very efficient transport system and an air of material satisfaction among the people. I enquired from my hosts how liberal practices seemed to be the norm in the city state under China, and was told that till 2047 Hong Kong would remain under an agreement registered with the United Nations, that came into effect when the lease held by Britain for its former colony ended in 1997.

To the credit of the British, negotiations for the ultimate transfer had begun as far back as 1984; that is when China was just beginning to emerge from its dark period and Chairman Deng’s reforms were beginning to take shape. How long would China remain committed to the UN agreement and how would future generations of the Hong Kong people respond to their eventual transfer to the Chinese communist system remain an unanswered question.

Why China agreed to Hong Kong’s ‘one country two systems’ arrangement

Why did China agree to Hong Kong remaining under ‘one country two systems’? Quite obviously it was the commercial status of Hong Kong which dictated the decision. The city-state’s foreign exchange reserves then were approximately US $85 billion and the economic norms and trade systems that existed would only add substantially to China’s economy. Meddling with it and attempting to give it a wholly Chinese colour may have proved economically disastrous for the entire region. As per The Economist, many firms today choose Hong Kong because not only is it well connected with China’s huge market but it also upholds the same transparent rules that govern western economies — a freedom that comes from the 50-year agreement.

Hong Kong has got the world’s fourth-largest stock market and it exports manufactured goods from mainland China, making it the world’s eighth-largest exporter. It has its own currency, the Hong Kong Dollar (HK$) that is pegged to the US dollar. There are 1300 big-ticket companies with their regional headquarters in Hong Kong. Rolling back everything and making Hong Kong just another Chinese city without the special dispensation attached to the island as it exists today would have made many suffer, perhaps China the most.

While it is economics that has worked wonders, social dynamics invariably contributes its bit. If freedom is available and relative happiness prevails sans authoritarianism, economics always receives a boost. Even today Hong Kong is not a functioning democracy; its chief executive is appointed by the local Communist party representatives, who answer to the party in Beijing.

However, despite this the system safeguards freedom from prosecution under the Chinese law, which is what has made Hong Kong a haven for fugitives who are the dissenting voices in the Chinese system. The British had negotiated provisions, including the freedom of expression, guarantee of human rights, and rule of law — it was agreed that these would be unchanged for 50 years, until 2047, under the principle of “one country, two systems”.

Many left Hong Kong before the new arrangement could come into effect; most of them were those who had risked their lives escaping from China. There was a flawed Western understanding that the liberal norms in place in Hong Kong would help influence dissent inside China. However, those who had witnessed the events at Tiananmen Square in 1989 knew well enough that this could hardly come to pass now.

How far is ‘one country two systems’ being implemented?

The implementation of the agreement between Britain and China has not been as per the written word and Hong Kong citizens have been protesting against this from the outset.

The prominent strategic affairs magazine, Foreign Policy writes,

That makes the 50-year agreement a nonstarter since it is this young generation that will eventually undergo the turbulence of the final transition to China’s system. Already 34 per cent of the population of Hong Kong wishes to emigrate and as 2047 approaches nearer this will become a near universal desire.

There have been numerous attempts by the Chinese government to compromise the 50-year agreement and resistance to them has been rife. In 2014, the resistance was called the ‘umbrella movement’, so called because protestors used umbrellas to passively resist the use of pepper spray by the police forces. And now the proposed new law of extradition is drawing new resistance along the same lines.

The Washington Post writes,

With the new law the relative freedom enjoyed by the people of Hong Kong would be compromised. The Hong Kong government justifies the resistance with the understanding that the territory is becoming a haven for criminals and fugitives as exemplified by a young Hong Konger who killed his girlfriend in Taiwan and sought refuge back in the city-state so as to be tried by its existing system that is still considered to be humane and rational.

The protest against the new extradition bill has seen almost a million people turn out at the city center. While the US has taken note of the attempts to compromise Hong Kong’s relative freedom there is little it can do, considering the manner in which the Chinese system works. There has been no official statement from the Chinese foreign ministry.

Considering the fact that the US is already deeply embroiled in a trade war with China, it is unknown how it would respond in economic terms to re-orientate its policy on special trading rights that Hong Kong enjoys. China, already reeling under the impact of the trade war, may not wish to push for the full course on the extradition law if it eventually affects Hong Kong’s financial stability.

The economic status of Hong Kong continues to give China tremendous clout and it would not want this undone in a hurry to lay down social strictures that affect the life of Hong Kongers. China is also worried about the potential of the Hong Kong protest virus spreading to its own cities.

There could thus be a realization leading China towards willingness to put curbs on its own ambitions of prematurely extending its social norms to Hong Kong lest the economics of the territory collapses before its very eyes. Whatever it may be, planting the seeds of an earlier-than-legislated movement towards full and firm merger of Hong Kong will remain an enduring Chinese aim.