By Kumar David –

Prof. Kumar David

Beijing is moving towards a more flexible and nuanced approach to HK; Hong Kong people score a big victory

Chief Executive Carrie Lam Cheung Yuet-ngor was compelled by the biggest protest rally in the history of Hong Kong (HK) to suspend the reviled Extradition Bill. This is a victory for the reason that it changes the power balance between the community and the Hong Kong Government (HKG). The need to avoid a conflict at a time when it is tangled in a trade war with Trump compelled Beijing too to climb down as a showdown would have been politically and economically costly. If turmoil had got out of control the physical damage in death and injury may have exceeded Tiananmen June 4 1989 and the economic damage to HK and its reputation immeasurable. This time it was not a student movement; almost the entire population was deeply concerned about what was at issue, every citizen’s personal safety. 

The demonstration and rally on Sunday 9 June was one million strong, that is one in five adults, and very different from the Occupy Central Movement of 2014. Though youth were a majority it drew a cross-section of society; shop keepers, school teachers and company employees. The South China Morning Post of 14 June summed it up: “Mistrust of the mainland’s legal system and human rights record has triggered a public backlash from lawyers, politicians, local and overseas business groups, teachers, students, social workers and Western diplomats who fear political and religious dissidents could be targeted”. Religious groups, the Bar Association and the HK Council of Social Science demanded that that the Bill be shelved. 

The peril of the proposed legislation was that people could be extradited to stand trial in China (and elsewhere) for serious crimes, but HK people have no confidence in Chinese courts. And what is “serious”, who will define it? There is anxiety of extradition for criticising PRC leaders. If the young keep their cool (unlike last time when they made a hash of things) HKG can be forced to shelve the Bill entirely – it has only been suspended. If the working-class joins (it was quiescent since the big unions are aligned with the pro-China Democratic Alliance for Betterment party), it will bring the city to its knees. Imagine HK without the Mass Transit Railway, without buses, without electricity! The great majority live in skyscrapers – imagine no lifts; imagine malls, hospitals and airport closed. None of this will now happen since HKG will not resurrect the Bill. 

Mrs Lam postponed the Bill after intense behind the scene negotiations with Beijing. What fit of silliness drove HKG to table it in the first place? She says it a local HKG effort with no dictation from Beijing. This is difficult to judge though she would have cleared it with Beijing even if the initiative was hers. The problem for HKG in backing down was that quintessentially Chinese commodity called ‘loss of face’; the problem for the protest movement was to keep hotheads under control. Some allege that Mrs Lam was instructed by Beijing to table the Bill and accused her of learning from Trump to lie through her teeth and do it equally badly. I doubt this version.

Sitting here in Hong Kong in the heart of the lion’s den my task is to sum up the scene for Lankan readers and offer some thoughts on where HK is headed. Let’s start with good things. HK has benefitted greatly from China’s take-off into the economic stratosphere with double-digit growth for years. It is one of eight entrepots of the world’s largest (PPP) economy; the others Shanghai, Tianjin, Shenzhen, Guangzhou, Jiangsu, Zhejiang and Fujian. It is the best equipped for complex logistics and international intercourse; English is a great plus. While HK has served China well it too has thrived and prospered thanks to its intense economic and logistical connection to the giant. The strong China link also helped HK avert a post-2008 economic crunch. 

Beijing for its part cannot risk damaging HK’s financial clout. There are good reasons why it permitted or instructed Mrs Lam to climb down.  HK is the world’s third largest financial centre after New York and London, ahead of Singapore, Shanghai and Tokyo. Its banking assets are more than eight times its GDP. Three-quarters of China’s foreign currency transactions and three-fifths of its foreign investments (inward and outward) move through Hong Kong. As the trade war intensifies its importance as an alternative conduit will increase. HK’s attraction is predicated on its legal system, judicial independence and rule of law inherited from the British. Its currency is linked to the dollar and has been stable for 30 years. The American trade-war and potential sanctions do not include HK or its financial doings. Beijing cannot afford to kill the goose that lays the golden egg, even more so as a Trumpeting ogre bestrides the narrow world and defecates on everything Chinese. 

The Chinese economy is on a back foot for more reasons than the idiosyncrasies of Trump. The current account surplus has all but evaporated. The size and importance of companies moving out to South East Asia and South Asia due to lower labour costs is alarming. Samsung which used China has its manufacturing base to conquer the cell-phone world is shutting down its entire manufacturing operations and moving to India and Vietnam. The new plant near Delhi will eventually be the largest cell-phone manufacturing facility in the world. The State is pushing state-owned giants to invest and support employment and economy. Hence China’s very success, that is rising standards of living (larger incomes), is lowering its competitiveness as per the theory that if labour’s share rises faster than productivity does, capital loses out. China’s socio-economic progress therefore makes access to global liquidity that HK unlocks more important now than say five years ago.

Demonstrations continued on Sunday 16th three days after the Bill was suspended; organisers excitedly claimed two million (police say 340,000). There are two demands now: a) The Bill must be permanently withdrawn, not suspended, and b) Carrie Lam must step down. Both are understandable as expressions of anger but spurious. The Bill is as good as dead, it will fade away as happened to “Article 23” fifteen years ago; it was first put on the backburner due to similar public challenges. As for Carrie Lam’s future in my view it is better for Hong Kong if she stays in post and serves out her term. Although she blundered in proposing this Bill, (or she was pushed by Beijing), overall, she is a good Chief Executive. 

Mrs Lam’s personal integrity is above question, which is more than can be said of two of her three predecessors; there has never been any doubt of her financial probity. She is a competent leader according to those who work with her. Committed to what she, rightly or wrongly considers best for HK her flaw common in people of this calibre is that she is stubborn, stubborn to the point of bull-headedness in this instance. Overall, in my opinion she is the best of the four Chief Executive HK has had since the hand-over in 1997. Were she to step down, the process of finding a successor will kick in and be disruptive and cantankerous. Though it knows it is not in HK’s interests the opposition is now pushing a symbolic no-confidence vote and demanding her resignation for political advantage.

The Taiwan factor turned into a fiasco. Anti-unification politicians sized upon the Extradition Bill, mass protests and clashes with the police as proof that ‘One country two systems’ is an illusion that will not work. The effects on Taiwan have been significant. Presidential elections are due on 11 January 2020. Three months ago, the approval ratings of President Tsai Ing-wen were languishing at 25%; prospects were bad; there was rebellion in her Democratic Progressive Party (DPP) and the media wrote her off. Then Hong Kong erupted, police tear gassed and fired rubber bullets and the DPP spread false rumours that the PLA was about to intervene. Cleverly, Mrs Tsai fired her broadside with HK TV running in the background and asserted that a firm leader who could stand up to Beijing was the need of the hour. The tables turned and now she is favoured to win. Carrie Lam and/or Beijing have scored an own goal!

How do I sum up? It has ended well. First, the Extradition Bill is dead; HKG has burnt its fingers, learned its lessons and will not ride roughshod over the people again. Second, Beijing will be flexible and nuanced in how it relates to HK in the coming years. (However, mass incarceration and human rights violation of Muslim Uyghurs in Xinjiang and cultural oppression of Tibetans will not ease). Third, the youth of Hong Kong who behaved like asses in the 2014 Occupy Central fracas have matured though they persist with a vindictive personal vendetta against Mrs Lam. Finally and most important, political awareness has deepened. A friend’s 85 year old mother who previously had zero interest or awareness of politics now chats on the phone about the ongoing spectacle with her equally aged friends. “Even my Mom is talking politics” the astonished daughter exclaims!