Hong Kong has ‘strategic ambiguities’ to navigate US-China rivalry: Singapore’s Kishore Mahbubani

At a Hong Kong forum, the retired Singaporean diplomat addressed issues such as the prospect of ‘de-dollarisation’ of global trade to tensions in the Taiwan Strait
Hong Kong ‘enjoys the status’ of ‘one country, two systems’, but has to ‘work very hard’ to convince the US that it remains autonomous, Mahbubani says

Hong Kong

Bhavan Jaipragas

Published: 8:22pm, 25 Apr, 2023

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Hong Kong’s special status grants it “strategic ambiguities” to navigate the US-China rivalry, but it needs to do more to convince Washington’s power brokers that it retains autonomy in critical areas, the prominent China watcher Kishore Mahbubani has said.

Speaking at a forum in Hong Kong, the retired Singaporean top diplomat addressed a wide range of issues, from the prospect of “de-dollarisation” of global trade to the tensions in the Taiwan Strait.

Asked on how Hong Kong could best navigate the escalating rivalry between Beijing and Washington, Kishore noted during the question-and-answer session that the city – as part of China – was obliged to abide by national security “red lines”.

“Yet at the same time, you also enjoy the status of ‘one country, two systems’, [and] you have a lot of autonomy in some areas. How you exercise your autonomy requires a lot of political judgments,” Kishore said at the event organised by the Hong Kong Policy Research Institute. “And I would say equally importantly, you have to work very hard at convincing [the US] that you remain autonomous.”

Kishore Mahbubani said during the event that Hong Kong has to “work very hard” at convincing the US that it remains autonomous. File photo: Handout

Kishore, the founding dean of Singapore’s Lee Kuan Yew School of Public Policy, said he discovered during a recent visit to the US that many in the country believed that Hong Kong had “lost all its autonomy [and] it’s no different from China”.

“One of your priorities must be to convince the world that you still retain a lot of autonomy in critical areas, and that you are able to effectively carry on with one country, two systems,” he said.

Noting that this conundrum was largely down to “perceptions”, the ex-diplomat said one solution was to “invite as many US congressmen as possible to come to Hong Kong so they can see, maybe, this place is somewhat different from what they perceive it to be”.

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On growing talk of de-dollarisation – or the development of financial infrastructure that is not underpinned by the US dollar – Kishore said it was yet to be seen whether countries were concertedly moving in such a direction.

He noted that there had been some developments, such as work under way for Saudi Arabia to sell oil to China in exchange for renminbi. The second phase would require financial transactions and trading to be done in an alternative currency. In these aspects, the US dollar is still number one, he said.

The US dollar accounted for 58.36 per cent of global foreign exchange reserves in the fourth quarter of 2022, according to International Monetary Fund data. In contrast, China accounted for 2.69 per cent of global foreign exchange reserves.

China currently holds some US$849 billion of US Treasurys as of February, according to US Treasury Department data. That figure is at a 12-year-low and the decline coincides with deteriorating bilateral ties.

Kishore said he believed it was important for China to reduce its dependence on the US dollar to “ensure it’s not vulnerable”, citing US sanctions on Moscow and the freezing of half of its foreign reserves following its invasion of Ukraine last year. If China’s reserves were seized in a similar manner, “that will be a big problem”, Kishore said.

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On the prospect of a direct US-China hot war, Kishore said while he did not believe that such an outcome was likely, he had a “small exception” to that view due to tensions in the Taiwan Strait.

Saying that it was a “certainty” that China would declare war in the event of Taiwan declaring independence and a permanent secession from the mainland, Kishore said his “big worry” was that Taiwanese people “are not being well educated by their leaders on how dangerous the situation can be”.

Geopolitics was like a game of chess where pawns are easily sacrificed, Kishore said. “The people of Taiwan must get to know this, because if they don’t, they will be sacrificed,” he said.

04:17

China’s military simulates precision strikes on Taiwan after island’s leader returns from US visit

Beijing regards self-ruled Taiwan as a breakaway province to be brought under mainland control – by force, if necessary. Many countries, including the US, do not officially recognise Taiwan as an independent state but oppose the use of force to change the status quo.

US-China tensions over Taiwan have flared following the former US House Speaker Nancy Pelosi’s visit to the island last year, and the US has signalled it would militarily defend Taiwan if it were attacked by the mainland.

The US had previously adopted a policy of strategic ambiguity that allowed it to keep ties with Beijing and deter attacks on the island. In the West, Beijing is seen as the main driver of tensions through its stepped up diplomatic and military pressure to get Taipei to accept Chinese sovereignty.