Hong Kong’s future hangs by a thread

The chances of Mr Xi deciding to send in the People’s Liberation Army are already higher than 50 per cent

 Members of the medical profession gather to protest against Hong Kong police brutality at Queen Elizabeth Hospital on August 13, 2019 in Hong Kong, China. (Photo by Anthony Kwan/Getty Images) BESTPIX

Members of the medical profession gather to protest against Hong Kong police brutality at Queen Elizabeth Hospital on August 13, 2019 in Hong Kong, China. (Photo by Anthony Kwan/Getty Images) BESTPIX

 

A long hot summer, escalating violent street protests, meddling from mainland China and rumours of imminent invasion from the north. The events in Hong Kong today mimic to an extraordinary degree the riots that exploded on the streets of the then-British colony in 1967, at the height of the Cultural Revolution.

The fact that Beijing finds itself the colonial master and main target of unrest this time is a clear indictment of its approach to governing the territory. But it also reveals the fatal flaw in the arrangement that saw Britain hand back the jewel of its long-vanished empire in 1997.

To many in Hong Kong, the agreement reached in 1984 between British prime minister Margaret Thatcher and Chinese leader Deng Xiaoping seemed to guarantee their way of life would not change after 1997.

The “one country, two systems” formula promised no communist takeover, protection of basic freedoms and a largely symbolic, low-key transfer of sovereignty, for at least 50 years. Deng himself hinted that mainland China might eventually adopt a liberal capitalist system that would allow Hong Kong, and hopefully Taiwan, to blend seamlessly into the motherland.

In retrospect, 1984 was close to the historic peak of Chinese openness. The mid-1980s were a time of heady political experimentation that came to a brutal end with the Tiananmen Square protests in 1989. Economic reforms restarted a few years later but political liberalisation was indefinitely delayed. When Xi Jinping came to power in 2012, he quickly assumed a more authoritarian, even totalitarian, style of governance. That makes the position of Hong Kong incredibly tenuous. A small pimple of judicial independence, free capital flows and free speech on the posterior of the People’s Republic, the territory has become an obstacle to Mr Xi’s vision of a “great rejuvenation”.

As well as attempting to reconcile totally incompatible political systems, Beijing’s decision to leave the economic structure of Hong Kong intact now also looks like a miscalculation. Following the lead of colonial Britain, Beijing has effectively outsourced control of the city to a tiny group of oligarchs who dominate the local economy.

For the 25th consecutive year, Hong Kong was named the freest economy in the world in 2019 by the Heritage Foundation, the conservative American think-tank. But each year, this ranking elicits scorn from those who actually live and work in the city, especially from anyone who has ever tried to start a company that might encroach on the business of the tycoon families.

Today, the biggest fortunes in Hong Kong rely on control of land and property in what is the most expensive real estate market in the world. The average monthly salary in Hong Kong is around HK$17,500 ($2,230), while the average rent for a one-bedroom flat in the city centre is HK$16,500.

Extreme inequality, unaffordability of housing and a huge influx of residents and visitors from the mainland are all contributing factors to the eruption of anger on the streets in recent months. As many as 1m people out of a population of 7.4m are recent arrivals to Hong Kong from the mainland.

In the run-up to the 1997 handover, Beijing assiduously courted the big business families, buying their loyalty with generous access to land and investments in the mainland. In return, they were expected to keep the city’s elites and wider population quiescent.

One of the most striking things about the recent turmoil has been the almost complete public absence of Hong Kong’s normally loquacious tycoons. Wherever their sympathies lie, it is clear they cannot afford to offend either the hand that feeds them in Beijing or the masses they live off in Hong Kong.

Prior to the handover, the Chinese government also sought alliances with triad organised crime groups that flourished in the colony and were told they would be tolerated as long as they remained “patriotic”. This unsavoury history has fed public suspicion that gangs of triads attacking protesters in some districts in recent weeks were secretly encouraged by Beijing.

With no end in sight to Hong Kong’s summer of rage, the question is what happens next?

The chances of Mr Xi deciding to send in the People’s Liberation Army to quell the unrest are rising by the day and I suspect are already higher than 50 per cent. After an initial ban on any reports of the protests, the Communist party propaganda department has now ordered mainland media to flood the zone with reports emphasising the violence of protesters and the supposed role of “hostile foreign forces”. This portentous language is clearly setting the scene for an eventual intervention if the protests continue.

Back in 1967, the colonial authorities struggled for months to get the situation under control while China threatened full-scale invasion and radical red guards ransacked the British embassy in Beijing. Violent street protests evolved into a bombing campaign and, by the time the turmoil subsided, 51 people were dead and nearly 5,000 had been arrested. The violence only properly ended when then Chinese premier Zhou Enlai called a halt to communist agitation in the colony.

The problem for Hong Kong is there is nobody in Beijing today who remotely resembles that famous statesman.

Jamil Anderlini is Asia Editor of the Financial Times

Financial Times Service

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