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Demonstrators spray paint a security camera at a Mong Kok branch of the Bank of China. Photo: Bloomberg
Opinion
Opinion
by Shirley Ze Yu
Opinion
by Shirley Ze Yu

China would rather see Hong Kong lose its role as a financial gateway than ever cede political control

  • Under China’s control, Hong Kong’s DNA is changing and there’s no going back. Beijing may be looking to replace the city with London as a offshore financial hub
  • In China’s long history, the Hong Kong unrest will be but a minor blip in the country’s progress; the question is whether Beijing needs to wield soft or hard power
China’s ambassador to Britain, Liu Xiaoming, faced off with BBC Newsnight a few hours after the face-mask ban was declared in Hong Kong. He repeated that Hong Kong’s situation is “under control”. And, contrary to the anarchy and chaos the rest of the world observes, he is correct. 
Hong Kong has been under China’s control, territorially and administratively. In fact, Hong Kong has also increasingly fallen into China’s economic orbit. It is only a matter of time before Hong Kong’s political system follows.
The transitory promise to Hong Kong of “one country, two systems” is good for 50 years only, a blink of an eye in historical terms. To take a fatalistic view, all the liberal rights Hong Kong protesters are fighting for were handed over when Hong Kong was handed back to China in 1997.

Hong Kong is under China’s full control. It is virtually impossible to conceive of an alternative future for the city, come 2047, or even 2097, other than a collective future.

In 100 years, mainland China and Hong Kong will both have fundamentally transformed themselves. Given that China has transformed at a speed and on a scale beyond the world’s imagination, there is no telling where it will be in a century’s time. But one thing is certain: Hong Kong’s destiny lies with China.

The late Chinese leader Deng Xiaoping was one of the 20th century’s most skilled statesmen. He employed pragmatic remedies in every policy domain in China for the deep wounds left by the Cultural Revolution.

He was the chief architect of China’s economic reform and opening up, and the maxim associated with his approach is “crossing the river by feeling the stones”. The framework for Hong Kong’s return was another of Deng’s ingenuous experiments.

The beginning of the end for China’s Communist Party rule?

In signing the Sino-British Joint Declaration in 1984, British prime minister Margaret Thatcher prophesied that economic change in China would eventually lead to political change.
Events have proved her to be right in prediction, but wrong about the direction. Ominously, the “Iron Lady” tumbled down the steps of the Great Hall of the People during her visit to Beijing for talks with Deng. He might have been the wiser of the two.
A pragmatist and an authoritarian, Deng delivered market reform under communist rule; he fiercely put an end to the Tiananmen pro-democracy protests in 1989. Were he still alive, he would not have brooked the unrest in Hong Kong.

He believed that “development is the only hard truth”. Forty years ago, he knew Hong Kong’s open market and liberal economy would be good for China’s development. Without Hong Kong, there would not have been a prototype for China’s market reform in the 1980s.

China’s first capitalist gateway was Hong Kong. The first few mainland Chinese to strike it rich, or become “10,000 yuan people”, were all connected to trade in Hong Kong.

But, in the years to come, Hong Kong is more likely to resemble a modern Chinese metropolis than a Western city.

Back in 1997, Hong Kong’s gross domestic product was 18 per cent of China’s. Today, the figure is a mere 3 per cent. In the development plan unveiled for China’s Greater Bay Area, Hong Kong is not the centre, but one of four metropolitan centres. Not only is the Greater Bay Area envisioned as a competitor to Silicon Valley, it also integrates Hong Kong into China’s economic network.

Tragically, the painful choice of jeopardising Hong Kong’s status as the most open and liberal financial market in Asia seems to be the last and only option left to Beijing, because the alternative of losing political control of Hong Kong is simply inconceivable.

My People, My Country: jingoistic vignettes of China

China is not likely to grant Hong Kong liberal democracy under its model of universal suffrage. Nor will China allow Hong Kong to break free, not under Xi Jinping’s leadership nor anyone else’s. To Xi, Hong Kong is indubitably under China’s control; it is only a question of wielding hard power or soft power.

Chinese state-owned enterprises have been asked to play a bigger role in Hong Kong since September. The message is clear: only state-owned companies can be fully trusted. To secure control of Hong Kong’s political future, the business sector must follow the Communist Party – all businesses, domestic or foreign.

Slowly, Hong Kong’s DNA will start to change. Beijing’s soft power will firmly implant itself into Hong Kong. Xi’s Chinese dream is the narrative of a strong China, predicated on a unified national identity and the collective memory of a century of humiliation. Hong Kong is a quintessential part of this narrative, and of the Chinese dream.

It’s not only the Chinese ambassador to Britain who has assured the world the Hong Kong situation is under control; Beijing has also started exploring strategic alternatives beyond Hong Kong.

Why China will wait until 2030 to retake Taiwan

Hong Kong’s shoes could perhaps be filled by London. The recent takeover bid for the London Stock Exchange Group was clearly an attempt to turn London into another financial hub for China.
If Hong Kong were to lose its special status in its trade with the United States, neither Tokyo, nor Singapore nor Sydney could replace it as a premiere financial marketplace. Only London could meet China’s growing demand for a deep and wide offshore financial centre, as China continues to amass economic influence in Europe and the rest of the world.

Increasingly, all signs point to more bloodshed in Hong Kong, deeper distrust between Hong Kong and mainland China, and Beijing’s tighter political grip. Whether Beijing decides to end the protests with boots on the ground has become a secondary determinant of the city’s future.

For all societies and civilisations, history has always moved towards progress, though not always in a linear fashion. In China’s long history, the unrest in Hong Kong will be only a minor scar. The outcome will be against the wishes of many hoping for a free and democratic fragrant harbour. Hong Kong will no longer be the same.

Dr Shirley Ze Yu is senior visiting fellow at the London School of Economics, a fellow at Harvard Kennedy School and a former Chinese national television (CCTV) news anchor

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