Perhaps global sentiment for Hong Kong is so low, that a top mainland official’s significant visit to Hong Kong got very little coverage.
Xia Baolong夏宝龙, Beijing’s “Hong Kong affairs czar”, one of the few such “czars” in history with a deputy-national-leader rank, and very importantly, a Xi confidante - visited Hong Kong last week for a 7-day, 26-meeting “fact-finding” tour and left on this Wednesday.
During the visit, Xia reassured that the central government would continue to support the city, with more preferential policies on the way. Importantly, Xia confirmed that Hong Kong’s “one country, two systems” would remain a “permanent feature”, as opposed to the much fabled “2047 deadline”.
Coincidentally (or not), on the same day of his departure, Hong Kong announced in the annual budget session to axe all the hefty extra stamp duties in a bid to save the falling local property market.
Xia’s visit came at a time of a big clash of narratives about Hong Kong at the moment, which culminated in Stephen Roach’s big “Hong Kong is over” article in the Financial Times. This debate is such a serious one, to the point that I don’t think many people actually care that much about whether “one country, two systems” is permanent or not, but they think that system is already dead.
I have a personal stake in this debate.
A few years ago I became a Hong Kong permanent resident after studying and working there for some years. I now carry a Hong Kong passport and mostly live in Shanghai as a Hong Konger.
And I am not just anyone who calls Hong Kong my home. I am proudly so. Like many global citizens of this century, my life so far has been much of a nomad, alternating among different cities. Of all the cities that I have lived in, Hong Kong, with its unique vibe, city landscape, and way of life, feels most like home to me.
Hong Kong is built on sea rocks, at the periphery of a mammoth country, a freak of a creation built through a confluence of unique historical serendipities. Adventurous, globally minded, seafaring, Hong Kong is a combination of many impossible things.
On a personal life side, it’s also the only major global metropolis as far as I know where there are only a few minute’s distance between your home or office and hiking trails or fantastic beaches. Despite its very capitalistic nature, I am surprised by the excellent public services as well. My favorite is the state-of-art yet cheap public swimming pools and the tasty yet cheap “cooked food centers”. Hong Kongers are at the same time civilized yet edgy. Cantonese language is great fun, lyrical, and can be very dirty. The only quibble I have is the small living space. But the view from the window almost always relieves some of that stress. I can safely say, I love Hong Kong. I always plan to go back to live in Hong Kong at some point in my life.
So it does pains me a lot to hear people like Stephen says Hong Kong is over. So today, let me, as a Hong Konger, join this debate as well.
What does Beijing want for Hong Kong?
Sadly, at the core of this debate about the fate of Hong Kong is not Hong Kong, but Beijing. For outsiders, there is a myth that Beijing just wants Hong Kong to be just like any other Chinese city. To settle this debate, we need to tackle this core question spot on.
My take: Why? Does this really benefit Beijing?
Let’s call back to my “Duo-China” model. So far I have never talked about where is Hong Kong situated in this “Duo-China” spectrum. Without a doubt, if you put Hong Kong into this model, you can safely visualize it at the most liberalist end, with even some “dashed border lines” separating it from the rest of the liberalists.
If you remember my previous conclusion, it is in China’s interest to grow the liberalist section, not least because China’s future growth will depend on the success of capital markets. With Hong Kong, China has a natural “liberalist enclave” that can have all sorts of liberalist policies, without the fear of interrupting the national balance.
Just think about these:
In mainland China, everyone is subject to tight capital controls, while Hong Kong has none of it. Capital flows in and out of Hong Kong freely.
Hong Kong’s tax rate (max 15%) pales China’s tax rate for individuals (as high as 40%) and businesses (nominally at 25% but effectively at >40% if social security expenses are counted). Hong Kong also has zero capital gain tax.
Unlike other cities in China, Hong Kong does not need to hand over tax surplus to the central government for redistribution to poorer regions, in the name of common prosperity. Hong Kong is this particular liberalist part of China that is not required to care about its poorer counterpart.
Hong Kong has a common law system based on cases, mainland has a continental law system based on legal scriptures.
Hong Kong has its currency pegged to the US dollar, not to Chinese RMB.
Hong Kong encourages cryptocurrencies, while the mainland has a total ban on anything related to cryptos.
A majority of Hong Kongers can speak and read English, while only a small minority in China can.
Hong Kongers have unimpeded access to the internet, you know what mainlanders have.
These are stark differences that are meaningful for businesses. If you operate a business in the mainland vs. you operate a business in the HK, you would not for a single minute feel you are in the same system.
Yet, the best thing is, none of these features have caused any problems for wider China. Instead, they bring great benefits to China, in a way that’s insulated from the rest of the country. In Hong Kong, China has a place where it can trade freely with the world, where capital can flow in and out freely, and where innovations can take place unimpededly, acting as this kind of “super-connector” between China and the world - all without the fear of upsetting the country’s internal balance. It works like magic. It’s amazing.
Why would Beijing ever want to kill such a beautiful, amazing setup? Where else can Beijing find the luck to find such a wonderful “liberalist enclave”? It is in Beijing’s self-interest to make Hong Kong unique and to make this uniqueness permanently alive, and I believe the senior leadership is well aware of that.
“Okay. But Beijing has imposed this national security law on Hong Kong, hasn’t it?”
Yes, yes, and with that, a key source of concern is swept away.
Before the NSL, Hong Kong may be the only place on earth where you could advocate for secession from the state and do the bidding of foreign spies, legally, because there were no national security laws of any kind. Article 23 of the city’s mini-constitution basically left Hong Kong to set up national security legislation on its own. Yet, Hong Kong never managed to do that, for more than 2 decades after the Handover. The only exception was maybe in 2003 when the Hong Kong government tried to propose a bill to specify Article 23, but quickly chickened out after some protests. (“Chickening-out” is a typical thing of the HK government, which is ironically the real cause of many illnesses that I will talk about later.)
Let’s be honest with ourselves: It was absurd. It was not sustainable at all. It would be naive to think this type of arrangement could last. It’s also unwise to think China would allow unfiltered elections in Hong Kong if the basic guardrails to protect national security were not in place. This is because Beijing simply could not afford the political mess if the Hong Kong people elected an anti-China figure to become their leader.
So in some sense, the massive 2019 Hong Kong riots were a historical inevitability. Till then, there had never been a serious attempt at forging a consensus of what “one China” in the “one China, two systems” really meant, and where boundaries of the “two systems” were set.
Within this context, the NSL should be interpreted as an attempt to fix an existential bug in the system that should have been fixed a while ago, not the starting point of a larger trend toward further assimilation.
Today’s rules in Hong Kong are clear: Don’t call for Hong Kong independence, don’t call for overthrowing the government system in China, don’t be anti-China, and you will be fine. That’s the only major rule change of the last few years, as far as I can see. You don’t even have to be very patriotic, just don’t be treasonous or seditious. This is not really such a big of an ask, and logically there is nothing in it that can prevent Hong Kong from being successful. And again, success is what Beijing genuinely hopes for Hong Kong, even just out of self-interest.
The real concerns that we need to watch out for Hong Kong
With the core question answered above, Hong Kong’s future is far from rosy. Two big problems loom large. One is new, another is old.
Let me talk about the new problem first.
This new problem is, ironically, also related to the National Security Law. It’s not about the NSL itself. It’s about the interpretation of the NSL. This is actually what many of the business community are concerned about. Will the NSL just be something narrowly tailored for the most egregious cases of treason and sedition? Or will it be abused by “the power that be” to cover a wider range of minor infringements?
So far I have not seen major signs of this kind of abuse. But we need to be vigilant. Any misstep in this direction will destroy whatever little confidence that’s left there.
An even more worrying sign is the self-castration of Hong Kong’s political elite. Wang Xiangwei, ex-chief editor of SCMP, wrote a wonderful piece on this topic a while back onWang Xiangwei's Thought of the Day on China:
Over the past two years, however, there have been more signs that Hong Kong’s political elites are driving the increasing mainlandization of Hong Kong, chipping away its distinctive status and advantages.
One of the most jarring and blatant examples is that the city’s political elites are embracing the mainland-style practice of formality for formality’s sake, bureaucraticism, hedonism and extravagance in a big time even though the central government is cracking down on those practices on the mainland.
The reports of local and Chinese mainland officials feasting at lavish dinners complete with expensive Maotai liquor are frequently cited. Ironically, Chinese officials who are strictly regulated over wining and dining as well as attending public events on the mainland don’t appear to be bound by any rule when they are in Hong Kong.
All those activities of hedonism and extravagance have poisoned Hong Kong’s long-cherished system of clean governance and rule of law.
Eager to be seen as politically correct, elites and politicians have wasted no time copying the mainland-style practices of holding high-profile ceremonies and seminars to study the remarks given by the top Chinese leaders and pledging allegiance – a typical practice of formality for formality’s sake.
In another worrying example showing what former city leader Leung Chun-ying denounced as “ostentatious and extravagant” practices by the pro-Beijing establishment figures, a district councillor organized a bash in August last year for celebrating his departure to Beijing for a study tour. More than 500 people including senior officials, lawmakers and other pro-Beijing figures showed up at the send-off party. The embarrassed government had subsequently restricted the number of its senior officials showing up at such an extravagant party at the same time to no more than three.
This problem is very tragic. If we Hong Kongers are not serious about ourselves, nobody will be there to save us. Nobody will respect us. It appears that we run the risk of overdoing it, voluntarily losing our unique edges and thus becoming the cause of our own enslavement.
This problem is also tied up to the older problem, which I think must be resolved someday in order to avoid Hong Kong’s doom, and to help Hong Kong reach its real potential, for itself, for China, and for the whole world.
I will save this for Part 2. It has been an exhausting week for me.
Subscribe to me if you want to read Part 2!
[March 10 note: Part 2 can be read here]
“It’s also unwise to think China would allow unfiltered elections in Hong Kong if the basic guardrails to protect national security were not in place. This is because Beijing simply could not afford the political mess if the Hong Kong people elected an anti-China figure to become their leader.”
As an outsider watching the erosion of Hong Kong’s freedoms, this is the crux of the debate.
Two systems in name only.
The liberties within the capital markets are fine to exhibit as fundamental differences between Chinese systems, but they are basically one if you are comparing democracies.
I’m glad you are a proud Hong Konger.
You must admit though, many of your compatriots are not happy, and some are currently on trial for expressing their displeasure.
Hong Kong thrived with the political liberties you claim must be changed. You advocate the Mainland’s thumb on the scale of democracy. That is your choice. Unfortunately, those that would prefer to elect who they want, even in the face of The Mainland’s displeasure do not have that choice.
You have convinced yourself it’s acceptable for the Mainland to introduce the surveillance and suppression of dissent for the greater good, the numbers fleeing Hong Kong, and the capital too, tell a different tale.
I’d love to visit, the joys of Hong Kong’s diverse geography and culture you describe are an enticing picture, but not live there.
Sadly, I’d be joining those heading for the exit.
Thank you as always.
Fascinating read.
Appreciate this article. While I agree that Westerners mistakenly believe that HK has become like any other Chinese city (you list a number of real distinctions), I disagree that there was any threat of "secession or independence" that warranted the NSL and its smothering of HK's creative and business freedoms that was the foundation of the once cosmopolitan city.