Standoff in Hong Kong

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Date published

Standoff in Hong Kong: a domestic crisis affecting international actors

Key findings and recommendations

  • Five years after the umbrella movement, Hong Kong is experiencing demonstrations of unprecedented social mobilization with no end in sight. Protests against a proposed extradition law have developed into a wider anti-government movement and calls for electoral reform.
  • The protesters have said they are fighting a final battle for the future of Hong Kong, one that will decide if it maintains its freedoms (i.e. rule of law, freedom of the press etc.) or is placed firmly under Beijing’s authoritarian control.
  • China’s reaction to the protests has demonstrated Beijing’s failure to assess and incorporate the Hong Kong people’s sentiment towards the mainland.
  • Despite a few concessions and offers for dialogue, neither the Hong Kong nor the Beijing government have any intention of bowing to the substantive changes to the political system the protesters demand.
  • The continuing crisis challenges Europe politically and economically: China’s handling of the crisis has brought to light that the politicization of business is increasingly becoming a tool to enforce interests.
  • European governments need to actively work with companies to be prepared if this kind of undue Chinese pressure affects them.

1. Introduction: the political crisis in Hong Kong goes back to long-standing issues

Hong Kong is experiencing demonstrations of historic proportions: The protests that have rocked the city for the past months are the largest since its return to Chinese rule in 1997 and one of the biggest challenges China’s President Xi Jinping has faced. While the demonstrations were initially sparked by plans to amend legislation and allow suspects to be extradited to China – widely seen as dismantling the last firewall between Hong Kong and the mainland – the movement has expanded to also focus on political reform and allegations of police brutality.

With no end in sight to the protests despite the Hong Kong government’s pledge to withdraw the controversial extradition bill, the future of Hong Kong as an international center of business, finance and media is at stake. The Communist party is trying to quell the movement as soon as possible. But it is also keenly aware that its actions in the coming months will shape – and possibly tarnish – its image in the international community.

To understand the background of these demonstrations (see timeline) and the implications for European economic and political relations with China, it is crucial to get a better picture of what is at stake for the parties involved and of both the grievances of the protesters and Beijing’s view toward the movement.

2. The protesters: using the momentum of unprecedented social mobilization

The extradition law that sparked the current protests unified large swaths of Hong Kong society that normally have very few overlapping interests. It was seen by many as chipping away at the last firewall separating the city from the mainland’s Communist-controlled judicial system. Aside from the traditional pro-democracy camp, parts of Hong Kong’s influential business community voiced opposition, as well as international diplomats in the city. Business leaders have realized that the increasing reach of Chinese law into the territory could affect them personally as well as their employees doing business with the Mainland. The disappearance and detention without trial of foreign business people in China has underlined the defects of the Mainland's legal system vis-a-vis that of Hong Kong.

In July, the protesters issued five key demands (see exhibit 1) which have become the focus of the movement. In an unusual step, Hong Kong’s Chief Executive Carrie Lam, on September 4, responded to the first demand by announcing she would formally withdraw the bill. But few protesters are satisfied with that given the events of the past months, especially with widely held perceptions that the police have used excessive force and prosecutions of protesters are politically tainted.

Establishing an independent commission lead by a retired judge would likely help in deescalating the situation and multiple polls back this up, but Lam is worried about hurting police morale, since the force’s actions would be subject to intense scrutiny. Beijing also does not want to give the impression protests against its policies can actually yield results. The fifth and final demand – universal suffrage in Hong Kong – is a nonstarter for Lam and Beijing, but it is the political system and the lack of accountability to the Hong Kong people that have ultimately created the high level of dissatisfaction. The protesters feel they are fighting a final battle for the future of Hong Kong, one that will decide if the city is open and free as it traditionally has been, or one increasingly under the control of the authoritarian government in Beijing. Most of all, Hong Kong people would like to run their own city free from interference. But ultimately any resolution to the current crisis will need the approval of Beijing.

3. The Chinese government: struggling to regain control

The protests have clearly shown the Chinese Communist Party’s failure to understand the Hong Kong people’s sentiment towards the mainland. A poll in June 2019 showed only 11 percent identify as “Chinese”, down from a high of 39 percent back in 2008. This year also marked the highest percentage of people identifying solely as a “Hong Konger”. The divergence of identity strongly fuels the current protest movement and will continue to shape Hong Kong society.

Since the beginning of the protests, the Chinese government tried to steer the narrative via its propaganda machine. Beijing continuously stepped up its rhetoric.

Exhibit 1

Party-state media painted the protesters as violent, protests were frequently linked to terms like “terrorism” or “chaos”, while stirring nationalist sentiment within China. Chinese officials have repeatedly said all options are on the table to quell the unrest, and Chinese state media aired several videos suggesting threats of a military crackdown. But the Chinese government is also aware that such action would come at a heavy cost. Military intervention in Hong Kong would be an admission of the failure of the “one country, two systems” arrangement (see exhibit 2), which Beijing still hopes Taiwan will one day accept.

The Chinese government is likely aware that a violent crackdown mirroring the one on protesters in Tiananmen Square in 1989 would seriously destabilize Hong Kong as a financial hub crucial for capital transfers and investments from and into the Chinese mainland. A crackdown would also lead to significant international condemnation. It would feed into the international criticism of China as a rival and a threat and enable the US to quickly rally allies against China.

Beijing will also likely push the local government to increase forms of patriotic education, although such efforts in the past have failed. It is difficult to see how this will succeed given the deep distrust of China among the younger generation of Hong Kongers.

Exhibit 2

4. The Hong Kong government: trying to restore the status quo ante

The Hong Kong government’s current strategy is to try to return the city to the status quo that existed before the protests. Carrie Lam and other top officials have no intention of bowing to the substantive political demands of protestors. The best-case scenario for the Hong Kong authorities is to make a few token concessions and work to reduce inequality with economic programs only.

To counter the increasingly critical comments from governments abroad and near-constant critical media coverage, the administration recently published ads in foreign-language newspapers, emphasizing its commitment to the “one country, two systems” principle and to the rule of law. However, the administration’s – and China’s – vision of “one country, two systems” is one where Beijing still wields significant influence.

Lam’s career is also at stake: Her pulling the contested extradition law was widely criticized as “too little, too late”. Some observers stated she rushed ahead with it to increase her standing, also vis-à-vis Beijing. She has, so far, failed to deliver on promises of engaging into a dialog. If protests fail to calm down, then Beijing might push her to resign – and fill the position of chief executive with an even more loyal figure.

5. European actors: affected by China's politicization of business

If China erased Hong Kong’s special status, this would come at a significant economic cost. More than 8,000 foreign companies are located in Hong Kong, the metropolis remains an important gateway for trade with the mainland. China’s handling of the current crisis should serve as a warning sign for foreign entities doing business in and via Hong Kong. It shows how China seeks to maintain the appearance of autonomy while working to achieve maximum political control over and loyalty of businesses. The increasing politicization of business became apparent when companies like airline Cathay Pacific and retailer Zara were pressured due to employees’ alleged participation in the protests. Foreign businesses have to brace themselves for more pressure and interference from China.

In order to be prepared for China’s undue pressuring of European firms, governments need to actively work with companies to develop strategies on how to respond instead of letting themselves be put on the defensive.

In terms of support, European governments should explore legislative measures to protect their companies from political threats. Not standing up to China now will set a dangerous precedent. The Hong Kong crisis has shown that China will not hesitate to use economic pressure (on companies) to safeguard its political interests.

6. Recommendations: reminding China of its promises, acting to defend values

While China attempts to deflect criticism of how it handles Hong Kong by saying it is purely a domestic issue, this does not mean that external actors are completely powerless. They need to act proactively: the protests have arrived at a critical juncture; it remains imperative European governments contribute to seeking a peaceful resolution to the protests.

  • European governments need to reiterate their positions on Hong Kong publicly and often, while also highlighting the city’s own Basic law which clearly states the goal of universal suffrage, rule of law and political freedoms. EU officials should also reference the Sino-British Joint Declaration, an international treaty that is still valid in the eyes of alliances like the G7.
  • For European political actors, the erosion of Hong Kong’s autonomy also calls China’s self-declared role of a responsible global actor into question. If Beijing only respects legal frameworks when they serve its own interests, then Europe needs to become more strategic when committing to agreements with China and even consider sanctions, should the Chinese government move to unilaterally ignore international agreements like the Joint Declaration.
  • Governments in Europe should work to encourage an interpretation of “one country, two systems” where local affairs are completely free from Beijing’s influence and the central government is only responsible for foreign affairs and defense.
  • Restoring and maintaining Hong Kong’s independent judicial system should be a top priority for European actors as this also benefits their companies and individuals. EU governments should push to restore rule of law and make a stand for their values, represented by the protesters demanding more freedom and autonomy.
  • A regular review session established by, e.g., the European parliament could contribute to following developments in Hong Kong on a regular basis to ensure the “one country two systems” arrangement is upheld by the relevant actors at least until 2047, as stipulated in the Joint Declaration.
  • If the situation further deteriorates, European governments should move to impose appropriate export control mechanisms to deny China, and in particular Hong Kong, access to technologies used to violate basic rights.
  • European governments have the obligation to protect freedom of speech in their own countries, particularly on university campuses where recent incidents have shown pro-China protesters silencing those speaking up for Hong Kong.
  • Another step to take if conditions continue to worsen is for European governments to be open to receive Hong Kong activists seeking asylum. A crucial deterioration would be the Lam administration making use of the Emergency Powers Ordinance, which is de facto martial law, or intervention by Chinese military or security forces.
  • European governments that have treaties with Hong Kong – including extradition agreements, legal assistance pacts and customs assistance agreements – should review and consider amending or cancel these, if rule of law in Hong Kong deteriorates further.

* This Policy Brief is based on a workshop held at MERICS on July 22, 2019. The authors are greatly indebted to:

David Bandurski, China Media Project

Yuen Chan, School of Arts and Social Sciences, Department of Journalism, City University of London

Carol Jones, Birmingham Law School, University of Birmingham Sebastian Veg, School of Advanced Studies in Social Sciences (EHESS) Ray Toi-yeung Wong, Founder of Hong Kong Indigenous

Ray Kin-man Yep, Department of Public Policy, City University of Hong Kong

for their participation and input. Recommendations given in this paper are MERICS’ own.