Global capitalist system, not China, explains Hong Kong's rough political times

I was lucky to live in Hong Kong in the heyday of the late 1980s and 1990s, when its freewheeling economy was in full bloom. The financial sector was hiring at record pace; peddlers of electronics, athletic gear and copy watches spilled onto the streets; nearly no one spoke Putonghua; and a ride on the Star Ferry lasted about 15 minutes, with clear blue skies and smooth waters along the way.

How things have changed. This "Pearl of the Orient" - in fact, the "pearl" of British mercantilism - has lost some of its lustre in the years since the handover. And it's not due to China's efforts to keep a lid on liberal democracy in the city.

Of course, China has the money and the manpower to do what it likes in Hong Kong. But it is the global capitalist system on which Hong Kong's economy has thrived for the past 200 years, and not China, that explains the rough political undercurrents in the city.

As China's selective adoption of market-driven capitalism infiltrates Hong Kong, it has been splintering the city's traditional power structures. Hong Kong's corporate elite - once a mix of international constituents strictly aligned with the West - has slowly shifted its allegiance towards Beijing. Meanwhile, the city's large but fragmented petty capitalist class grows increasingly displaced by mainland-owned or mainland-oriented corporate interests.

Hong Kong's economic engine has always depended on proximity to China, even though its people tried hard to maintain at least a figurative distance. The modern Hong Kong conglomerates that trace their origins to British mercantilism, such as Jardine Matheson, HSBC and The Wharf Holdings, ran the city according to the interests of their capitalist operations.

Other Hongkongers, meanwhile, made money as petty capitalists - small-scale producers and retailers producing for the hongs, which paid tribute to the British mercantile state (and some to China).