Is the One Country, Two Systems promise to preserve the city’s autonomy waning?

China’s Hong Kong Dilemma

EghtesadOnline: On the sweltering night of Aug. 5, thousands of residents gathered near Hong Kong’s main government complex for an event billed as the city’s first pro-independence rally. Chan Ho-tin, a 25-year-old founder of the newly formed Hong Kong National Party and organizer of the event, spoke of a “quiet revolution” with independence supporters “infiltrating” government and the ranks of the police force.

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18 August 2016

According to Bloomberg, Edward Leung of the Hong Kong Indigenous Party drew cheers with a fiery declaration that “Hong Kong’s sovereignty doesn’t belong to Xi Jinping, the Communist Party, the Chinese, or local governments. … Sovereignty always belongs to the people.”

Only a few years ago, suggesting Hong Kong might secede from China would get you dismissed as a crackpot. More than 90 percent of this city’s 7 million residents are ethnic Chinese, and millions are either the children or grandchildren of mainland immigrants—if not mainland-born themselves. Hong Kong relies on China for 70 percent of its water, most of its food, and about half of its trade. The city’s finance, shipping, property, retail, and tourism sectors depend heavily on the mainland. And then there are those 6,000 People’s Liberation Army troops garrisoned throughout the city.

And yet, improbably, the notion that Hong Kong might someday break away from the rest of China and seek to establish itself as a separate sovereign entity has become a topic of serious discussion here. The prospect is remote. But that residents of this city, who already enjoy far more civil liberties than compatriots on the mainland, would even contemplate it is anathema to Hong Kong’s Communist Party overlords—and bedeviling their efforts to govern.

Hong Kong’s Basic Law, drafted by British and Chinese officials ahead of this city’s reversion to Chinese rule two decades ago, enshrines the rights of free speech, assembly, and demonstration. But as Hong Kong prepares for legislative elections in September, Chan, Leung, and other “localists,” as they’re called, are testing the limits of those freedoms.

To the city’s mainland rulers, calls for independence are tantamount to treason—a point they’ve made abundantly plain to Hong Kong’s government. In July, days after Beijing’s top liaison officer in Hong Kong declared keeping pro-independence activists out of the legislature to be a matter of principle, Hong Kong’s Electoral Affairs Commission announced new rules for registration and used them to disqualify Chan, Leung, and four other localist candidates from running. But that heavy-handed response served only to galvanize public support for other pro-independence candidates.

Two years ago, the central government’s refusal to allow Hong Kong citizens to vote directly for their city’s highest post, chief executive, unless they agreed to choose from a list of candidates preselected by Beijing, triggered the protests that became known as the Umbrella Revolution. Police used pepper spray on demonstrators, who used umbrellas as shields. The clash brought tens of thousands of Hong Kong residents to the streets and provoked a standoff that paralyzed major thoroughfares for 80 days. In the aftermath of that confrontation, Hong Kongers’ misgivings about their civil liberties under Beijing’s rule have festered and spread.

The Basic Law promises Hong Kong a “high degree of autonomy” until 2047, the 50th anniversary of its return to Chinese sovereignty, under a framework known as One Country, Two Systems. There had been some hope that the mainland might even come to resemble Hong Kong by then. But confidence in Beijing’s willingness to honor that framework reached a low late last year, following the disappearance of five Hong Kong booksellers whose companies specialized in books critical of the Communist Party. One of the sellers, who said he was allowed to return to Hong Kong to bring back a hard drive containing names of mainland book buyers, insists the five were seized to prevent the distribution of books that might embarrass China’s leaders.

A May visit to Hong Kong by Zhang Dejiang, chairman of China’s legislature, the National People’s Congress, and No. 3 in the Communist Party hierarchy, was meant to demonstrate Beijing’s support for the city. In many ways, however, it highlighted how far removed China’s senior leaders are from the lives of ordinary Hong Kong people. The visit was Zhang’s first to Hong Kong in 12 years and the first by a senior Chinese leader to the city in four years. His main purpose was to deliver a keynote speech at a conference to promote Xi’s One Belt, One Road initiative to revive the trade routes of Eurasia. He stressed that he came to listen as well as speak, and to that end, his itinerary included visits to a home for the elderly and a new public housing project.

But because Zhang had presided over the August 2014 decision to restrict candidates for the chief executive post, security officials worried he might be a target for protesters. To assure his safety, they locked down several blocks around his hotel and deployed almost 8,000 police officers. Wherever he traveled, streets were sealed off and traffic brought to a halt. Divers swept Victoria Harbour in search of explosives. City employees glued sidewalk bricks so protesters wouldn’t be able to rip them up and throw them at police. Zhang concluded his stay with a condemnation of the localists: “Any advocacy for self-determination, Hong Kong independence, and the like will not succeed,” he said.

In July, Supreme Court Justice Barnabas Fung Wah announced that new candidates for the legislature would be required to sign a form affirming their support for the Basic Law and loyalty to Hong Kong. The form singled out several clauses in the Basic Law specifying Chinese sovereignty. It was the first time the Electoral Affairs Commission had required candidates for the legislature to explicitly pledge that Hong Kong is an “inalienable” part of China. Many localist candidates were disqualified because they refused to sign the form. Leung signed it without hesitation, but an election officer invalidated his nomination anyway, declaring she didn’t believe he’d genuinely changed his position on independence.

The weakness of Hong Kong’s economy, arguably in its worst state in 20 years, only adds to locals’ frustrations with Beijing. Hong Kong’s gross domestic product expanded 1.7 percent in the three months to June, slightly better than expected. But retail sales plunged 10.5 percent in the first half of the year, the sharpest decline in 17 years. Financial services, shipping, property, and tourism have all taken a beating. The city’s container port, which was the world’s busiest in the 2000s, has fallen to fifth place, overtaken in China by Shanghai, Shenzhen, and Ningbo. Billionaire Li Ka-shing, Hong Kong’s richest man, has said the economic outlook for Hong Kong is worse than it was during the SARS epidemic in 2003.

For now, Hong Kong’s strained relationship with Beijing has done little to undermine its appeal as a global business hub. But that, too, could change. Mercer, a consulting firm, recently named Hong Kong the world’s most expensive city for expatriates. Many companies are abandoning lavish benefit packages for expat employees. Jones Lang LaSalle says only 7 percent of its expatriate clients are getting monthly housing allowances of more than HK$100,000 ($12,895), down from 31 percent in 2012.

For Hong Kong, the risk is that the status quo will be disrupted by a combination of a fear of Beijing and a strong electoral showing by localists, which would prompt an exodus of the city’s professional middle class. Almost 19,000 Hong Kong residents opted to leave the city this year. That’s a far cry from the hundreds of thousands who emigrated to the U.K., Canada, Australia, and the U.S. in the early 1990s before the handover. But an exodus could ramp up quickly. Many Hong Kong residents have hedged their bets by salting away money and property overseas and obtaining second passports. The city claims more than 300,000 citizens of Canada alone.