Why I am making ‘good trouble’ for Hong Kong, the city I love

Even with the city’s famed Phoenix-like ability to rise from setbacks, it may be beyond Hong Kong to overcome the triple whammy of a loss of its high degree of political autonomy, the protracted malaise of the mainland economy, and the US-China power struggle
This sobering view should serve as a wake-up call for Hong Kong

Stephen Roach

Published: 9:30am, 27 Feb 2024

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I love Hong Kong. Yet I now find myself in the uncomfortable position as a naysayer. My recent opinion piece in the Financial Times, “It pains me to say Hong Kong is over”, has stirred up considerable controversy in the city I used to call home. Unsurprisingly, Hong Kong politicians have been especially critical. But former colleagues, business associates and good friends have also raised concerns. A response is in order.

While no nation, economy or city is ever definitively “over”, the title of my piece was intended to be more of a wake-up call to a city that has long prided itself as Asia’s world city, the gateway to China, one of the elite Asian tiger economies and Milton Friedman’s favourite free market.

I cited three reasons for saying Hong Kong’s glory days may now be over: a distinct loss of its high degree of political autonomy in the aftermath of the massive demonstrations of 2019-20; a weakening of Hong Kong’s economic underpinnings as a result of a protracted malaise in the mainland Chinese economy; and a squeeze from US-centric friendshoring that has forced Hong Kong’s East Asian trading partners to choose sides in coping with the crossfire of the Sino-American conflict.

While the pushback has been fast and furious, few have taken serious issue with the three points raised above. Instead, many have rested their case on Hong Kong’s long-standing resilience, a seemingly innate capacity for the city to reinvent itself in the face of near existential threats.

After all, Hong Kong was written off repeatedly – in the aftermath of the 1967 riots under British occupation, the Asian financial crisis, the handover itself, and, of course, the outbreaks of severe acute respiratory syndrome and Covid-19. Louis Kraar’s scathing 1995 piece in Fortune magazine, “The Death of Hong Kong”, makes my recent missive look optimistic. Time and again, Hong Kong has defied those predicting its demise, with a series of Phoenix-like resurrections. Why shouldn’t we expect the same this time?

The three pillars of my argument noted above bear directly on this question. Resilience this time will require a new-found political and economic policy autonomy that seems highly unlikely.

An advertisement for the “Hello Hong Kong” tourism campaign is seen in Hong Kong on January 30. Time and again, the city has defied predictions of its demise. Why shouldn’t we expect the same now? Photo: Bloomberg

A sharp resurgence of the Chinese economy would certainly help, but I would assign a low probability to that outcome, considering the mainland’s lingering structural problems – notably demographic headwinds, weak productivity, a multi-year shakeout in the property sector, and a Japanese-like debt problem. Nor do I see a kumbaya moment for the US-China conflict that would alleviate the pressures of friendshoring in diverting trade away from Hong Kong.

The counter is that resilience often arises out of new developments. Hong Kong’s role as an anchor in the US$2 trillion Greater Bay Area is often cited as such a possibility. While there can be no mistaking its potential dynamism, this regional agglomeration finds Hong Kong as one piece of a puzzle that also includes much larger and equally dynamic cities such as Shenzhen and Guangzhou. From this perspective, Hong Kong risks becoming “just another big Chinese city”.

Old Hong Kong has no future? Good, merge it with Shenzhen

Others pushed back on my characterisation of Hong Kong’s new political constraints following the demonstrations of 2019-20.

With passage of Hong Kong’s own national security law likely and a court system that is taking aim at opposition politicians, might resilience arise from the enduring strength of Hong Kong’s rule of law? Fair point, but it seems to me that Beijing now has the last word on governance – and far more forcefully than before the demonstrations.

Hong Kong Chief Executive John Lee Ka-chiu (centre), Secretary for Justice Paul Lam Ting-kwok (left) and Secretary for Security Chris Tang Ping-keung hold a press conference at government headquarters on January 30, on Article 23 national security legislation. Photo: AFP

Finally, there were those, including Regina Ip Lau Suk-yee, convenor of Hong Kong’s Executive Council, who claimed my impressions were dated from the days I lived there (2007-12). The FT piece was, in fact, written with a very fresh impression of the current atmosphere in Hong Kong that I did see for myself.

Not only have I continued to be a regular visitor to the city since I moved back to the US full time in 2012, but I made three visits to Hong Kong last year that played an important role in shaping the impressions that motivated my op-ed.

In fact, it was what I saw that troubled me the most. Many of my friends have left Hong Kong in the past few years. Companies were starting to do the same and many of those that are staying were discussing contingency plans for diversifying their exposure to Hong Kong. The risk of a talent exodus is very real.

People pass by the HSBC headquarters in Hong Kong on February 21. Photo: AFP

Without talent, there can be no dynamism. Yes, the bulk of my circle of contacts remains in place. But an undercurrent of angst about the future of Hong Kong hung like a dark cloud over our recent discussions. The energy and unbridled optimism that was once Hong Kong’s most salient characteristic, its greatest asset, has been sapped.

There is a part of me that hopes I am wrong. I noted in my FT article that the Hang Seng Index, long emblematic of the city’s success, had returned to the level prevailing at the handover in July 1997. More than few have been quick to note that the index was up for six out of nine trading days since the piece was published on February 11. Dead-cat bounce, or was it all just a bad dream?

The late John Lewis, a legendary figure in the US civil rights movement, inspired a lifetime of protest in the name of “good trouble”. By raising serious questions about the future of Hong Kong, I am hoping my wake-up call can do the same.

Stephen Roach, a senior fellow at the Paul Tsai China Center of the Yale Law School and former Hong-Kong-based chairman of Morgan Stanley Asia, is the author of Accidental Conflict: America, China, and the Clash of False Narratives