The protests In Hong Kong on Sunday will really tell us how the future will unfold. If millions participate, then it means Beijing is not going to find things easy.
The Chinese government is moving a new law aimed at tightening its control over Hong Kong at the annual meeting of the National People’s Congress that began on Friday. The law will “prevent, frustrate and punish” acts in Hong Kong that threaten national security according to a top official. In essence, it will enable Beijing to deploy its own forces to Hong Kong to crack down on the anti-government protests which have rocked the island territory over the past year which Beijing believes are ultimately a means to “infiltrate and sabotage the mainland.”
The inevitable protests In Hong Kong on Sunday will really tell us how the future will unfold. If millions participate, then it means Beijing is not going to find things easy. If they don’t, it means they have given up hope and are resigned to the state of affairs.
Recently, the authorities had begun a new crackdown in the city, arresting leading activists like Martin Lee and media owner Jimmy Lai. These moves have been criticised by the US, which under its Human Rights and Democracy Act of 2019, has till the end of May to certify that Hong Kong is an autonomous unit that can benefit from preferential US trading and investment privileges. On Friday, Secretary of State Mike Pompeo denounced the plan saying it would be a “death knell” for the relative autonomy promised to the territory in 1997. Given the bipartisan mood against China, the chances are that the US will not take any abrogation of Hong Kong’s autonomy lying down.
Mainland China has had a succession of national security laws, the latest passed in 2015, which have been used to target dissidents, Uighur activists, journalists, lawyers and religious leaders on vague charges of subverting state authority. Beijing had long hoped that the Hong Kong’s Legislative Council (Legco) would pass the law as a local legislation under Article 23 of the Basic Law that governs the city, but that has not happened. The article had enjoined the Hong Kong Special Administrative Region (HKSAR) to “enact laws on its own to prohibit any act of treason, secession sedition, subversion against the Central People’s Government.”
In 2003, an effort to pass a National Security Law created uproar, leading to widespread protests and the bill could not be passed. In the past year, too, there have been calls for the passage of such a law to deal with the Hong Kong protests, but the Legco is too divided to permit passage to such a law.
So now the NPC is being asked to pass the law, which essentially means that the Hong Kong we have known will come to an end. The NPC will vote on the resolution at the end of the session, probably on 28 May. It will then be forwarded to the Standing Committee for implementation. Just how and in what stages it will be implemented is something Beijing will decide.
Highly developed Hong Kong is a major centre of commerce and finance and Beijing maintains a Liaison Office to maintain official relations with the city and also maintains a PLA garrison there. Hong Kong has long prided itself as being one of the world’s freest economies with the services sector accounting for 90 percent of the GDP. 57 percent of its re-exports are from the mainland, while 55 percent directed to the mainland. It is the largest source of overseas direct investment in mainland China. By 2018, 46.3 percent of ODI approved by the mainland had Hong Kong interests. It is also the leading destination for mainland China’s FDI outflow. By 2017, the stock of FDI going to Hong Kong was some $981.3 billion (54.2 percent of the total).
Hong Kong is also the key offshore capital-raising centre for Chinese enterprises. By the end of 2018, 1,146 mainland companies were listed in the Hong Kong exchange, the fifth largest in the world with a total market capitalisation of $2.62 trillion. Since 1993, mainland companies have raised $800 billion via stock offerings. The mainland is also the leading investor in Hong Kong accounting for some 25 percent of the market value.
The island territory is also one of the most important banking and financial centres of the world. It is the second largest foreign exchange market in Asia and the fourth largest in the world. It is also the world’s largest centre for clearing RMB payments.
Last year’s unrest had already affected Hong Kong’s economy and had signaled to the multinational companies, that the city may not be the best option for them for long. The COVID-19 experience and the rising tide of Sino-US tensions seem to have only confirmed this.
Political turmoil erupted last year in response to a bill in the Legco that would have allowed extraditions to mainland China. They had grown into a movement against Beijing’s encroachment into the city’s constitutional rights and freedoms and had led to the emergence of a new generation of activists. At the time Beijing had clearly signaled that it was not ready to accept the demonstrators’ demands for greater democratic freedoms and police accountability.
Last November, Carrie Lam, the Chief Executive of Hong Kong, was summoned to Beijing and told to impose national security measures, presumably the law and its accompanying actions. But there were doubts then as to whether the Hong Kong authorities had the stomach to push through such measures that would intensify protests.
Lam met Xi Jinping days after the Fourth Plenum of the Central Committee closed on 31 October by issuing a communique that had reiterated the importance of the “one country, two systems” approach towards the “peaceful reunification” of the country. Additionally, it had called for the need to “govern Hong Kong special administrative region and the Macau special administrative region in strict accordance of the constitution and the Basic Law, and safeguard the long-term prosperity and stability of Hong Kong and Macau.” In line with this, the statement went on to say that there was a need to “establish a sound legal system and enforcement mechanism for safeguarding security in the special administrative regions.”
Macau has its own national security law for the past 10 years, but proposals for similar legislation in Hong Kong are being resisted. Beijing’s immediate focus then was to somehow stop the violence in Hong Kong and then take steps to push the national security legislation to blunt the possibilities of future uprisings. It also had a larger task of ensuring that the youth of the city is immunised from the “virus” of western style democratic ideas. The COVID-19 pandemic helped bring down the intensity of protest in Hong Kong, however, there were indications that the protestors intended to take to the streets again.
The situation arose from Beijing’s misreading of the political mood in Hong Kong by pushing the extradition bill. The protests enjoy considerable support within Hong Kong as was evident from the fact that opposition candidates who support the movement succeeded in taking control of 17 out of 18 district councils in elections last November. This had indicated that the Legislative Council elections due in September could have led to a setback to Lam and her associates. A 35 plus membership of the 70 member Legislative Council would have blocked all the bills put forwards by the government.
This time they have taken a much more momentous step which could lead towards more turmoil and also erode Hong Kong’s status as a financial centre. Such an eventuality, at the end of the day, will hurt China. There has already been an exodus of money and talent to Singapore in the past year, which could now become a torrent. The rapidly deteriorating Sino-US relations are a factor in whatever decision Beijing takes. Earlier the calculations related to blocking the protests, but now there seem to be a worry that protests in Hong Kong may be used as a base for protests in the mainland itself.
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Manoj Joshi is a Distinguished Fellow at the ORF. He has been a journalist specialising on national and international politics and is a commentator and ...
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