ADVERTISEMENT

Hong Kong Has Been Tested Before, But Never Like This

The rage felt by Hong Kong has only intensified.

Hong Kong Has Been Tested Before, But Never Like This
A demonstrator waves a flag reading “Free Hong Kong, Revolution Now” during a lunchtime protest at the International Finance Center shopping mall in Hong Kong, China, on Friday, May 29, 2020. (Photographer: Lam Yik/Bloomberg)

(Bloomberg Businessweek) -- One afternoon in early April, with the novel coronavirus racing around the world and China still more than a month away from imposing sweeping new security legislation on Hong Kong, Winnie Yu climbed into the cab of a battered white moving truck in Mong Kok, a working-class neighborhood in Kowloon. Wearing a khaki jacket over black pants and running shoes, she grabbed a seat crammed behind a rack that held a ladder, a toolbox, and several umbrellas.

A 32-year-old nurse and labor activist, Yu was overseeing the relocation of the Hospital Authority Employees Alliance, a new union of 20,000 medical workers, and I got in next to her for the ride. As the truck sped through one of the densest parts of one of the densest cities on Earth, it passed dilapidated apartment blocks, sidewalk fruit vendors, fluorescent-lit noodle shops, luxury watch stores, and HSBC branches. When it came to a stop beside a tower named, optimistically, Perfect Commercial Building, Yu and two friends jumped down and started unloading secondhand office furniture, maneuvering it into the tiny elevator.

Yu, who lives in a 300-square-foot apartment with her husband and three cats, founded the union during last year’s protests, one of a number of civil society groups that popped up, mushroom-like, after the pro-Beijing government that rules Hong Kong tried to pass a bill that would allow extradition to China. At the time she didn’t have many long-term plans for the organization. It seemed ambitious enough to give her fellow doctors and nurses a platform for opposing the extradition bill and for urging the city’s chief executive, Carrie Lam, to yield to calls for greater freedoms. But the arrival of Covid-19 put Yu in the middle of another once-in-a-lifetime event, and she helped organize a strike by health-care workers to demand the closure of the border. Now she was moving the union into permanent offices—and preparing for a long fight against Hong Kong’s government and its mainland backers. “We’re not just going to do the strike and that’s all,” Yu told me. “The extradition bill was just the triggering point for all of the issues over the years, a triggering point for all of the anger.”

Hong Kong Has Been Tested Before, But Never Like This

In the weeks since, the rage felt by much of Hong Kong has only intensified. In late May, with the U.S. and other Western powers distracted by the pandemic, President Xi Jinping’s government announced planned legislation to prevent “separatism, subversion of state power, or organizing or carrying out terrorist activities” in the territory—terms that will be defined, of course, by the Communist Party. The measure, which was quickly passed by China’s rubber-stamp parliament, followed a series of gradual but consistent moves to stamp out opposition in Hong Kong. While full details haven’t been released, it will likely allow China’s ferocious internal security agencies to operate openly in the city for the first time. It may also undermine the ability of Hong Kong’s judges, who preside over a court system treasured by local and foreign companies, to act independently of Beijing.

The reaction has been furious. Pro-democracy leader Joshua Wong called the plans “the final nail in the coffin for Hong Kong’s autonomy” and the de facto end of “one country, two systems,” the compromise arrangement that’s supposed to prevail until 2047. After heeding official instructions to stay indoors while the virus was spreading, activists have returned to the streets, met by police firing tear gas. Business groups have warned China that limiting Hong Kong’s freedoms could destroy its appeal as a financial hub. And in Washington, President Trump has said he will move to revoke the city’s special trading status, opening the door to options that could devastate its economy.

Xi’s move marks the end of a brief respite during which Hong Kong felt, improbably enough, like one of the most stable places in the world. After protesters prodded Lam to restrict inbound travel, the city’s response to Covid-19 was exemplary, with aggressive testing, contact tracing, and isolation of suspected cases keeping its total infections at little more than 1,000. (Singapore, the slightly smaller archrival to which Hong Kong is often compared, has more than 30 times the number of confirmed cases.) Just four people have died. Restaurants and stores never closed, and by late May most workplaces were back to normal—only to send new warnings to staff that, given transportation disruptions and the risk of being tear-gassed, it might be better not to come in.

The obituary of Hong Kong’s status as a global city has been written before, not least when the U.K. agreed in the 1980s to cede it to a Chinese government that could hardly have been more at odds with capitalist values. It emerged from the handover stronger, as it did after the Umbrella Movement unrest of 2014, which disrupted a large swath of the financial district for months. But there’s a strong case to be made that something more final is under way this time. Many of Hong Kong’s citizens, already ground down by extreme inequality and one of the world’s highest costs of living, fear the battle has been decided.

“Most of us think that ‘one country, two systems’ is dead,” Yu said, taking a break in a cafe near her union’s new office. “Young people can’t see a future in Hong Kong.”

Hong Kong Has Been Tested Before, But Never Like This

Hong Kong has never been a democracy. Under the British it was governed by appointees sent from London, with only lip service paid to local opinion. Postwar plans to move toward self-government were never implemented, and in 1967 the police put down pro-Communist protests with tear gas and, in some cases, live ammunition. Yet by the end of colonial rule 30 years later, the city had developed a successful hybrid model. While electoral participation was narrow, citizens had broad rights to free speech and free assembly, as well as access to a British-style legal framework. For the billionaire entrepreneurs and foreign banks that dominated the business landscape, the legal element was crucial, particularly as they sought to tap the explosive growth of China’s economy without exposing themselves to party-controlled courts. This, roughly, was what “one country, two systems” was supposed to preserve: a status quo that was hardly democratic by Western standards, but closer to that ideal than anything over the border. It also contained an implicit promise that Hong Kong would exist outside politics, its residents free to keep making money unmolested by Beijing or anyone else.

China didn’t commit to keeping everything as it was. The Basic Law, the constitution-like document that came into force in 1997, promised an eventual enactment of universal suffrage but set up an electoral system that gave an outsize voice to stability-minded business interests. A committee of 1,200 local notables, stacked heavily with Beijing loyalists, was set up to elect the chief executive, while half the seats in the new Legislative Council were allotted to industry groups. Another element of the Basic Law stipulated that Hong Kong “shall enact laws on its own to prohibit any act of treason, secession, sedition, [or] subversion against the Central People’s Government” and “prohibit foreign political organizations or bodies from conducting political activities.” Stopping Article 23, as the relevant passage is known, quickly became a rallying cry for activists. After huge street protests in 2003, the government abandoned plans to pass a corresponding law and never seriously tried again. While mainland officials occasionally called for its revival and grumbled about opposition in Hong Kong, they didn’t do much about it either. The risks of destabilizing a city that provided deep capital markets for Chinese companies, not to mention high-end real estate and ironclad property rights for the families of senior politicians, were simply too great.

After Xi became China’s leader in 2012, things began to change. The Communist Party reversed a pledge to move toward free elections in the territory, touching off the Umbrella Movement. Meanwhile, Xi was spearheading the widest crackdown on dissent since Mao Zedong, jailing thousands of critics. While those actions didn’t extend directly to Hong Kong, Beijing’s power increasingly did. In 2015, and again in 2017, Chinese agents carried out apparent abductions on Hong Kong soil, grabbing a seller of books critical of China in the first case and a billionaire who the South China Morning Post reported had been accused of financial improprieties in the second. Activists feared that the extradition proposal, which Lam introduced a little more than a year ago, would open the door to many more removals, with pro-democracy politicians and writers, and even businesspeople who crossed the wrong Chinese counterparty, potentially facing mainland trials. After protests brought the city to a near-halt, she pulled the bill.

While China’s foreign minister, Wang Yi, said the new security legislation will have “no impact” on “the rights and freedoms of Hong Kong residents,” it appears to be far wider than any previous measure. During last year’s protests, Beijing officials repeatedly likened activists’ actions to terrorism and claimed, without evidence, that foreign powers were behind the pro-democracy movement. To critics, that language suggests opposition could soon be criminalized.

Lam and her allies say there’s no choice but to impose tougher control. Over coffee at the Mandarin Oriental hotel in the heart of the financial district, conservative lawmaker Regina Ip argued that the protesters, not China, are to blame for destabilizing Hong Kong. With images of street battles deterring investment and scaring tourists, the government “must deal with the political turbulence before we can relaunch” the economy, Ip told me. It was mid-April, and the hotel’s cafe was busy, albeit with health questionnaires at the entrance and masks required until orders arrived. She complained that opposition politicians had made it impossible to pass economically crucial bills by filibustering the legislature—though her opponents say they’re trying to stall more controversial acts, such as a proposal to make it a crime to “insult” the Chinese national anthem. “Frankly, it’s hard to pursue reconciliation when you have hardcore protesters who are basically anti-China,” Ip said. “They only want two systems. They don’t want one country. That’s the essence. And that’s something unacceptable to Beijing.”

Hong Kong Has Been Tested Before, But Never Like This

Late on the night of July 1, 2019, after protesters opposed to the extradition bill ransacked the Legislative Council, James—a well-off financial professional in his 30s, who asked that only his first name be used because of fear of reprisal—saw messages online asking for drivers to pick up activists before they were arrested. He jumped into his Mercedes SUV and sped downtown, where he stopped to help three teenage girls who’d been demonstrating outside the council building. As he drove them back to the suburbs, one began coughing uncontrollably from all the tear gas she’d inhaled. They called the girl’s parents, asking them to meet James’s car as he pulled up. “One of the parents told me, ‘Thank you for bringing my daughter back. I appreciate it so much,’ ” James recalled. “At that moment, I burst into tears. I said, ‘A thank-you is the last thing I deserve. It ought to be me thanking your daughter.’ ”

Ever since, James says he’s found it impossible to stay on the sidelines. He makes a point of attending every protest he can, and I first met him at a lunch-hour rally that gathered bankers and lawyers in the financial district late last year. As fight-the-power moments go, it was an odd sight. James, like many of the men present, was wearing a nicely tailored suit, while some female participants had arrived in towering heels to shout and wave signs. One elderly woman had a bag from Harrods in one hand; she held the other high overhead, fingers outstretched—a gesture indicating support for the movement’s five official demands, which include amnesty for arrested activists and the introduction of universal suffrage. Most of the demonstrators wore masks, fearful that being identified by the police could get them fired or arrested.

Later, over tea at a nearby luxury mall, James predicted a bleak future for his hometown: a more or less permanent state of turmoil, with neither side willing to back down except for temporary truces. “There will always be people on the streets,” he said, along with “more tears and blood and death.” He continued: “It will be a chaotic place. We’ll proceed similarly to Thailand 10 or 20 years ago”—when supporters of dueling political parties paralyzed much of Bangkok, at one point shutting down the airport. Add the impact of the security legislation, and “I can fully understand if companies decide to leave Hong Kong,” James said.

While James’s interactions with the unrest may be unusually intimate for a financier, he’s an example of an important reality: that no one in Hong Kong’s business world can afford to ignore it. For one thing, consider the protests’ physical location. Activists have focused their attention on the Legislative Council building, which is a short walk from towers housing Goldman Sachs, HSBC, and other financial giants. Clashes have occurred directly outside their doors, and on some days last year just making it to the subway meant risking exposure to tear gas. Then there are the impacts on investor confidence. The MSCI Hong Kong Index, which tracks the largest companies based in the city, plunged almost 7% the day after Xi’s plans were unveiled. In late April, Fitch Ratings Inc. downgraded its assessment of the local government’s creditworthiness for the second time in less than a year.

More troubling still for executives would be the loss of Hong Kong’s status as a place both deeply connected to and distinct from the People’s Republic. Currently, Hong Kong has a unique position in U.S. law, based on a requirement that it remains an autonomous territory, which exempts it from tariffs, visa requirements, and export restrictions applied to the mainland. Curtailing those privileges, as Trump says he intends to, could significantly undermine its appeal as a hub for global companies.

Chinese officials have tried to reassure businesses that they intend to target only genuine security threats and that their new legal powers won’t affect “the legitimate rights and interests of foreign investors,” as Wang, the foreign minister, put it. But given the opacity of the mainland legal system, the vast power of state companies, and the Communist Party’s expansive view of what constitutes a security risk, the reassurances aren’t terribly convincing. “This doesn’t challenge Hong Kong directly as a business hub, except if it becomes that you can’t speak out about problems in the Chinese economy,” says David Zweig, a professor emeritus at the Hong Kong University of Science and Technology. “Or if there are companies trying to float an IPO and you say the company’s not good, and they say you’re engaging in treasonous activity.”

Hong Kong Has Been Tested Before, But Never Like This

There was a lot of blood on the ground by the time district councilor Andrew Chiu arrived at Cityplaza, a shopping mall in the east of Hong Kong island, last November. The anti-extradition protests were at their most intense, and Chiu’s assistant had alerted him to a fight at the mall. He’d rushed over to see if he could help mediate. The instigator of the confrontation, a man who spoke with a pronounced mainland accent, recognized Chiu and charged. “I was prepared that he might punch me, but I was never prepared for him to hold my head like a bowling ball and use his mouth to bite my ear,” Chiu told me afterward. The man ripped off most of Chiu’s left ear, leaving only a small flap of skin behind. His doctors tried, and failed, to reattach the rest. Video of the attack went viral, seized upon by activists as more evidence of the pro-government side’s brutality. But it also spoke to something more fundamental: the dramatic polarization of a city where, until recently, people seemed to more or less get along. “There will be more confrontations,” Chiu warned. The government “is trying to frighten democracy supporters in Hong Kong, that if you don’t support the Chinese Communist Party, more violence is coming.”

Xi’s government and its local backers are doing their best to heighten the contradictions, as a Marxist might put it. While the pandemic kept protesters off the streets, Beijing replaced the directors of the two central government agencies that oversee the city with party hardliners. One of them, Xia Baolong, is best known for a campaign to pull the crosses off Chinese churches. Earlier this year, Hong Kong police arrested Jimmy Lai, the owner of the pro-democracy Apple Daily newspaper, accusing him of participating in an “unauthorized assembly.” More recently they rounded up a large group of pro-democracy veterans, including an 81-year-old lawyer, Martin Lee, who helped write the Basic Law. In March, China’s government expelled reporters from the New York Times and other U.S. outlets, declaring they wouldn’t be allowed to work in Hong Kong either—an unprecedented restriction and an apparent violation of the city’s authority over immigration.

Rather than existing apart from political debates, much of life in Hong Kong is now suffused by them. I spoke to a 21-year-old law school graduate who’s finding this out firsthand. She asked to be identified only as Elaine. Like most of her peers, Elaine participated in the 2019 protests. But as she and her friends apply for jobs, they’ve found interviewers as interested in their politics as their qualifications, with some asking unsubtle questions about controversial court cases. She’s been trying to give blandly competent answers to conceal her support for the pro-democracy movement and even deleted two internships from her CV—one with a prominent politician, the other with a human-rights group.

This balancing act would be hard enough in normal times, but Elaine is graduating into the worst global recession in memory. She shares a 500-square-foot apartment with her parents and older sister, and her father, a construction worker, hasn’t had a job since the coronavirus took hold. Even if she manages to land a legal position, she doesn’t think she could ever afford a place of her own in the world’s most expensive housing market. “That’s impossible,” she says.

She’s experiencing none of the emotions that an educated young woman starting her professional life in a vibrant city ought to be feeling. “I’m really pessimistic,” Elaine says. “The tensions between the police, the protesters, and the government are actually getting worse. Citizens feel helpless.” —With Josie Wong
 
Read next: In Hong Kong, Xi Jinping Takes a Page From Vladimir Putin’s Playbook

©2020 Bloomberg L.P.