Commentary on Political Economy

Thursday, 2 July 2020

The end of one country, two systems in Hong Kong 
Outside powers and foreign companies must react to a profound change 

 The national security law China has imposed on Hong Kong gives Beijing the means to destroy the freedom and autonomy the territory has enjoyed since the 1997 handover from Britain. The law targets crimes defined as subversion, sedition, terrorism, and collusion with foreign powers. These offences could be punishable with life imprisonment. They are defined so vaguely that, potentially, they could cover many forms of political speech and organisation. The Hong Kong government and its overlords in Beijing defend the law as a necessary response to a year of demonstrations and civil unrest — sparked, ironically enough, by fears that Beijing intended to end Hong Kong’s autonomy. Many of the city’s business leaders are eager to believe that the law will be narrowly applied. Sadly, however, there is little reason to believe that Beijing will apply it with restraint. The government of Xi Jinping has already demonstrated, on multiple fronts, its contempt for liberal freedoms. The past week has also seen the publication of disturbing and credible reports about the use of sterilisation and forced birth-control on the Uighur population in the region of Xinjiang in northwestern China. More than a million Uighurs have already been imprisoned in “re-education” camps, in a chilling demonstration of the lengths to which Beijing is willing to go to suppress challenges to the authority and prestige of the Communist Party. Hong Kong is a great world city, not a remote area like Xinjiang. But the government of Xi Jinping is now clearly determined to bring it into line. The formula of “one country, two systems” applied to Hong Kong since 1997 and sanctified in international agreements seems in effect to be over — a point underlined by the way the national security legislation was written and imposed from Beijing, without any participation by the Hong Kong government or legislature. Beijing is keen to portray the legislation as aimed at an anarchic and extreme minority. So it is important to remember that the evidence suggests that the pro-democracy movement commands the support of a majority of Hong Kong’s citizens. Millions took to the streets in last year’s demonstrations and pro-democracy parties won a landslide victory in last November’s local elections. The undermining of Hong Kong’s freedoms poses profound questions for foreign countries and businesses about their future relations with Hong Kong and with China. The UK, which has a special legal and historical responsibility towards Hong Kong, is right to take the dramatic step of opening a pathway for citizenship for up to 3m residents of the territory. Other countries with close ties with Hong Kong, such as Canada, may want to take similar steps. The Trump administration is also correct to conclude that Hong Kong’s autonomy is effectively over, and that this has clear implications for the city’s trading privileges under US law. EU officials’ statements on Hong Kong have been inconsistent and sometimes weak. But Brussels, too, will have to take a tougher line. Events in Hong Kong should colour the EU’s approach, as it considers its future stance on trade and investment from China. Foreign companies that operate in Hong Kong will inevitably be reconsidering their presence there. On business grounds alone, all foreign multinationals will have to be wary of a city where freedom of expression and the rule of law can no longer be guaranteed. The security law places foreign corporations on notice that, in the Hong Kong of the future, both their businesses and their employees could be at risk.

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