Erosion of cherished values will speed Hong Kong’s downfall
Business leaders should do more than just plan their own exits as city’s legal foundations are tested
If and when the history comes to be written allocating blame for Hong Kong’s decline as an international business centre, local business leaders will figure prominently.
Their share of the blame will be enhanced by the realisation that they were better placed than others to have prevented the slow but steady slippage but chose to either remain silent or, worse, contributed to the downfall.
Big business is powerful in most societies but in Hong Kong, devoid of representative government, its power is accentuated, not least because business leaders often have better access to the real source of power in Beijing than members of the Hong Kong government who spend more time second guessing what they are expected to do than providing objective advice to their bosses.
For these reasons it is amazing to see Hong Kong’s business leaders standing by while the SAR’s major competitive advantage is being undermined by concerns over the rule of law. And, they are also silent on another major competitive advantage: the free flow of information, otherwise known as freedom of speech.
These are the pillars around which Hong Kong’s status as an international business centre has been built. And the benefits of these solid foundations are reflected in the number of major global companies who locate regional headquarters here, in Hong Kong’s financial market which is quite disproportionate to a place with a modest population of some seven million people and there is more: the SAR is a regional arbitration centre and the go to place for all manner of compliance and regulatory matters
All of this is extremely well known and so it is staggering to witness the unwillingness of the business community to speak out over the use of the courts and the police force for blatantly political purposes, to say nothing about the snatching of citizens from Hong Kong soil and their removal to the Mainland on account of politics and the growing pressures to suppress the free flow of information.
Their silence stands in stark contradiction to what business people are actually thinking, a case in point being HSBC’s prolonged deliberations over whether to re-base its headquarters in Hong Kong. It remains uncertain whether the bank was ever serious about moving but only those with serious myopia will have missed what the bank itself said about its decision to remain in London, despite the current considerable uncertainty over Britain’s continuing status in Europe. That uncertainty appears to have worried the bank less than concerns over Hong Kong’s future. Explaining its decision HSBC emphasised London’s “internationally respected regulatory framework and legal system”.
Although this is pretty clear the usual suspects have popped up to suggest that HSBC’s decision was prompted by the Lunar New Year violence in Mong Kok. Not only is this plain stupid because the bank’s decision was taken well ahead of these events but more fundamentally flawed because a single day of street fighting, something that is even more commonplace in Britain and the United States than it is here, clearly does not undermine the legal system even though Hong Kong’s Chief Executive did his best to achieve this end by characterising the events as a “riot” before the law had even begun to take its course.
The reality is that business circles are awash with talk about the durability of Hong Kong’s legal foundations. There is alarm over what is seen as official indifference to the undermining of the legal system and the growing pressure for further integration into a system across the border where the rule of law is clearly not paramount.
Yet Hong Kong’s business leaders insist on talking about integration, regardless of reality on the ground. This was embarrassingly seen following the turmoil in Mainland stock markets and the cack-handed attempts of China’s regulators to stop the rout. Instead of stressing the far more capable manner in which Hong Kong handled these events, the leaders of the stock exchange chose this moment to issue yet another call for further integration with Mainland markets.
While business leaders are busy talking the integration talk, they are equally busy taking precautionary measures to shield themselves from the consequences of Hong Kong’s decline.
To see what this entails requires following the money trail, which shows assets and corporate domicile moving to democratic countries with robust legal systems. Then there are the insurance policies taken out by practically every important business leader in the shape of foreign passports held by themselves and or family members. There is more than a hint of hypocrisy between what business leaders say and what they do.
What they don’t do is use their ability to get the attention of government officials in ways that ordinary citizens cannot dream of. They have the power to do speak up for Hong Kong but will they accept the responsibility?