Bloomberg Businessweek USA – August 19, 2019

(Nancy Kaufman) #1


◼ REMARKS Bloomberg Businessweek August 19, 2019

government jailed pro-democracy activists and placed strict
limits on who could run for office. It also banned political par-
ties from advocating independence.
For the Communist Party, which came to power in 1949
determined to unify a nation that had been periodically carved
up by foreigners, the suggestion of a future for Hong Kong out-
side of China is among the ultimate red lines. And despite the
growing sophistication of mainland business, the city still has a
crucial place in China’s economy. With its open financial mar-
kets and international connections, Hong Kong “plays a central
role for capital formation,” says Albert Ho, a prominent law-
yer and former member of the territory’s Legislative Council.
“Hong Kong is important to China, all the more when China is
now facing pressure from America due to the trade conflict.”
What no one in Hong Kong can predict is where the rela-
tionship with the mainland—and the very nature of the city’s
governance—goes from here. There are three obvious scenar-
ios. The first is a broad accession to protesters’ aims, includ-
ing a pullback of aggressive policing and perhaps moves
toward greater democracy. It’s also the least likely. China
has rejected even the simplest of this summer’s demands:
an independent inquiry into the unrest. The Communists
are loath to back down in the face of popular pressure, espe-
cially in full view of the global media.
The second scenario, a violent intervention in Hong Kong
followed by the intense repression of its citizens, is the most
frightening. Elements within the Chinese government appear
willing to at least signal the possibility. In late July the Hong
Kong garrison of the People’s Liberation Army released a
video that included a fictional scene of soldiers marching
toward a crowd of protesters; more recently, state media pub-
lished a video of armored vehicles rolling through Shenzhen,
which directly borders Hong Kong.
The potential consequences of military action are too
numerous to list. But the best argument against such a move
is a practical one: It probably wouldn’t work. Beijing has sought
to portray the protesters as a small group of full-time agitators
supported by shadowy foreign backers, but one of the most
striking things about the demonstrations is their broad par-
ticipation. The huge crowds include teachers and students,
accountants and shopkeepers, and white- and blue-collar
workers of all ages. Short of a massacre, there’s almost cer-
tainly no way to force them back to their homes.
At this point a third scenario is the most likely. School will
be back in session in September, presumably giving students
less time to be in the streets. The business community, always
Hong Kong’s most important constituency, will eventually
lose patience with protests disrupting transport and scaring
off tourists. It’s entirely possible that the demonstrations will
fizzle out in favor of a return to the day-to-day hustle of one
of the world’s most energetic cities.
Any respite, though, will be temporary—and leave behind
a city where investors might be eyeing the exits, whether
for Singapore or another global hub. And even in the best
case, Hong Kong’s long-term status is uncertain. The legal

arrangements governing its relationship with China are silent
about what happens after 2047, when “one country, two sys-
tems” is due to expire. Barring unforeseen events, that will
be a decision for the Communist Party. The only public hint
of how Xi views the issue came in 2017, when he wrote in a
report to the party’s 19th Congress that “we should ensure
that the principle of ‘one country, two systems’ remains
unchanged.” Some observers interpreted his language as indi-
cating a willingness to extend the status, or something like it.
Even if that doesn’t occur, there are options for integration
Chinesecity.It’s conceivableitcouldformallyjoin the
enjoyed by some of China’s more dynamic regions, such as
the special economic zone that encompasses Shenzhen. That
outcome would be viewed by many in Hong Kong as a disas-
ter. The privileges of SEZs relate, as the name suggests, to
business and trade rather than democracy or civil rights.
Some critics of the protesters warn that unless unrest sub-
sides, it’s not even certain the existing setup will reach its
50th anniversary without major change. “If today’s situation
persists, maybe we won’t even make it to 2047,” says Ronny
Tong, a lawyer and member of the Executive Council, which
advises the Hong Kong government. If the local authorities
can’t bring the situation under control, “one country, two
systems could really be at risk,” he says.
While the confrontation has turned entirely on political
issues, it’s important to remember the frustrations of Hong
Kong’s young people are broader. They live in one of the most
unequal places on earth, with an astonishing proportion of the
economy controlled by a few billionaires who dominate real
tries.MeasuredbytheGiniindex,a commontoolforsum-
Africa than East Asia, with an income distribution significantly
more skewed than those of Nigeria or Mozambique. Housing is
imumwageis equivalenttoabout$4.75anhour.
period is that, viewed strictly from the perspective of busi-
ness, its capitalist values may now find their clearest expres-
sion across the border, in Shenzhen, Guangzhou, and
Shanghai. Billionaires are a very poor guide to ordinary cit-
peopleis about55; in Hong Kong, it’s almost 87.
What made Hong Kong special under the British, and
gave it the uniqueness its citizens fear losing, was more than
Western-style liberties. It was opportunity—and the belief
that for those willing to work hard, there was nowhere bet-
ter to dream big. It’s hard to make that case now. China’s
leaders and Hong Kong’s protesters are never going to
agreeonpolitics.Butif Beijingwantstofind a way to drain
theiranger,it mightstartthere.<BW>�With Blake Schmidt,
NatalieLung, and Sheryl Tian Tong Lee
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