by John Furlan
The next few weeks will be critical. Hopefully cooler heads will prevail, HK will have seen the last of its recent violence, and Lam, a career civil servant, will somehow become a more effective political leader and address the legitimate concerns of the majority of HK's people. Before it really is too late.
There should be be an immediate renunciation of violence by all parties, which is made difficult by HK's "leaderless" protests, and a commitment to peacefully immediately address the legitimate grievances of the Hong Kong people, which may not necessarily be the five non-negotiable "demands" of some of the protestors (see "Goals" in box of Wikipedia article), even though the fifth, "universal suffrage," seems clearly a non-starter.
There is very little time to do this, perhaps even just a few days to the next demonstration, the photo above shows last Sunday's. If the cycle of HK violence escalates from here into a further deterioration of the U.S.-China relationship, it could not only deeply harm the city's economy, which is already only growing at 0.6%, and its future as a world-class financial center, but might also help plunge an already weakened global economy into a recession.
So if for no other reason than pure election self-interest, Trump must do what he can to try to help break this cycle of violence and keep HK unlinked from the trade/tech talks. To do so, perhaps Trump should give a clear signal that the U.S. would not support further actions by an extremely miniscule portion of protestors, such as occurred at the trashing of HK's Legislative Council, of China's national emblem and flag, and larger disruptions of daily life like at HK's airport.
Trump should also rein in Pence, Rubio and others in his GOP trying to link HK with the trade/tech talks and interfering in China's HK affairs. Pence said on Aug 20,
"as the President said yesterday, it would be much harder for us to make a deal if something violent happens in Hong Kong."
Rubio tweeted on Aug 16,
"if the Chinese government takes over the city we should move to repeal this law [U.S.-Hong Kong Policy Act of 1992] immediately."
Europe's leaders, already staring into another potential EU crisis in Italy, whose government just collapsed with the resignation of its Prime Minister, and Brexit, with a new Prime Minister, must try to prevent a further deterioration of the international situation. As must the leaders of Japan and S. Korea, which are currently engaged in a heated dispute, two countries closely tied to China's economy.
Both Lam and Xi should be offering a far more positive and concrete vision of Hong Kong's future under China.
Lam must go way beyond her so far unsuccessful attempts at political reconciliation, the latest of which was yesterday. In trying to address very legitimate issues, she must also try to split off the very tiny minority of violent protestors, who so far seem to have badly outmaneuvered her, from the overwhelming majority of non-violent ones.
Lam must prevent the upcoming news cycle this week from being dominated by the narrative of those engaging in provocations that they tried a peaceful protest on Sunday but she still didn't address their five non-negotiable "demands," which the mainstream media usually presents as sacrosanct.
Both Lam and Xi should be offering a far more positive and concrete vision of Hong Kong's future under China. In particular, Lam must offer a far more accelerated effort to address HK's notorious and unacceptable housing crisis than has been the case so far.
Xi should strongly emphasize the benefits to HK of being the financial hub of his Greater Bay Area and Belt and Road plans. And China certainly knows how to build housing and infrastructure, if anything, it has been criticized for building too much, unlike HK, which has far too little affordable housing.
Btw, for those who believe the China Communist Party (CCP) is responsible for all of HK's problems, under China's "one country, two systems" policy, Hong Kong's monetary policy is actually officially set by the unelected U.S. Federal Reserve through the HK dollar currency peg to the U.S. dollar, with its impact on Hong Kong's astronomical real estate prices, more on this below.
[Update: South China Morning Post (SCMP) has a good Aug 22 article titled "Hong Kong's US dollar peg could be a weak link if protests drag on, China scholar warns," which gives the pros and cons of the peg, something rarely if ever talked about in all the coverage of the protests that I have seen.--jf]
If Lam can not do a better job at defusing what often seems like her self-inflicted crisis, then perhaps ultimately she should consider honorably re-signing, for the good of Hong Kong, admitting that her extradition bill was a huge mistake from the beginning.
Xi should strongly emphasize the benefits to HK of being the financial hub of his Greater Bay Area and Belt and Road plans.
The ensuing months of HK turmoil has been the last thing Xi and China needed right now during Trump's economic war. So perhaps Xi should be ready to nudge Lam out the door if necessary, maybe saying for China's domestic audience that HK has proven the flaws of western-style "democracy."
If/when doing so, perhaps Xi should publicly rule out any armed intervention in HK. Surely he knows that to cross that rubicon will irrevocably change the course of 21st century history.
In the upcoming HK demonstrations, there must be no attempt to provoke more police violence to draw an armed intervention from China, which may be the unstated agenda of at least a very few of the most extreme protestors, and it only takes a very few instigators to capture the mainstream news narrative.
Those HK protest sympathizers in the public eye, such as Joshua Wong, a very young leader of HK's 2014 Umbrella Movement, Nathan Law, and Jimmy Lai, who look to the U.S. for support, Wong tweeted on Aug 19,
"The @WhiteHouse must put HK's human rights front and center in this new round of trade talks with Chinese representatives,"
must see from Trump that there will no U.S. support if there is any further violence.
In Rubio's embrace of Wong, whom he nominated for a Nobel peace prize, he seems to overlook that Demosisto, the organization led by Wong and Law, says on its home page:
"we push for the city's [HK] political and economic autonomy from the oppression of the Communist Party of China (CPC) and capitalist hegemony."
That's obviously a non-starter, from the viewpoint of both D.C. and Beijing.
Beijing and its propaganda arms might tone down their rhetoric about shadowy U.S. operatives in an attempted "color revolution." There may be American officials and NGO links to some of the HK protest sympathizers, but if China is seeking evidence of U.S. meddling in its internal affairs, it's fully out in the open on the Internet in public comments by Pence, Rubio, etc. and in tweets by Wong and others which I have cited.
Nor does such meddling explain the size and power of HK's protests. In both the HK situation and the initial phase of Trump's trade/tech war, Beijing has relied heavily on its long-standing contacts with the big financial interests that underlie many of the economic/social problems that have led to "populist" nationalist unrest in HK and the U.S. Perhaps the CCP should remember its idealistic youth revolutionary roots nearly 100 years ago when dealing with the younger generations today.
Part of the reason for Beijing's reactions is that most of what it sees from the U.S. is Trump's China hawks. It is imperative for leading Democratic candidates to step up and show that they are presidential material. There has been a rapid shift of U.S. public opinion away from China. Rather than trying to ride that shift and outflank Trump from the right, as Schumer does, Warren, Sanders and other so-called "progressives" must become true peace candidates and statespeople by rejecting attempts to link HK with the trade talks.
Perhaps the CCP should remember its idealistic youth revolutionary roots nearly 100 years ago when dealing with the younger generations today.
Pelosi may be key, once again, at trying to keep things from escalating out of control, especially with the extremely volatile Trump at the wheel. Dems might also tone down their rhetoric on Xinjiang, unless they are willing to hold the U.S. to the same standards elsewhere, e.g. Saudi Arabia and Kashmir. They may also more frequently acknowledge that HK is a part of China, since long before the British stole it in the immoral Opium Wars 177 years ago.
Hopefully the nearly 200 experts who signed an Open Letter in the Washington Post on July 3 trying to cool down the heated U.S. non-debate on China can also try to do whatever they can to try to help things in and around the HK situation from spinning out of control, before it's too late. Very few American business leaders have joined the non-debate about China, it is well past time for them, especially in tech, to have their voices heard on China. Apple's CEO Cook just met with Trump, evidently to positive effect on the tariffs.
My article title refers to the opening of Dickens' "A Tale of Cities" about Paris, London, and the French Revolution, from Wikipedia:
"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only."
Perhaps substitute Hong Kong and Shenzhen for London and Paris, and the passage might sort of feel like today. Hong Kong is an extremely difficult, convoluted situation, where east meets west, and the two dominant world systems, Anglo-American financial neoliberalism and China's "socialism with Chinese characteristics" exist right next to each other in those two cities.
Most Americans have probably never heard of Shenzhen, let alone being able to find it on a map, literally right across the border of Hong Kong's New Territories. Yet Shenzhen is the greatest economic development story anywhere at any time, see photo below.
It has gone from a tiny fishing village of around 20,000 when Deng started China's "reform and opening up" in 1978 to a huge city of at least 12 million people. Shenzhen's GDP surpassed that of HK last year. It is the home of Huawei, Tencent, ZTE, DJI, BYD, etc, the first being the key China tech company that Trump's China hawks are trying to destroy, the second one of its top three Internet firms.
Shenzhen is the greatest economic development story anywhere at any time
Hong Kongers are acutely aware of Shenzhen's enormous success. China just this past weekend further solidified the role of Shenzhen as a special innovation hub in its Greater Bay Area plans. Unlike the U.S., China actually gets such things done, which is one of the reasons Trump's China hawks are desperately trying to slow it down. If HK descends into chaos, then Shenzhen, Shanghai, Singapore will pick up the pieces.
Hong Kong was a British colony for 155 years, during which it developed a much different system, culture and identity than China. When it took over Hong Kong, China gave it fifty years, from 1997 to 2047, to adjust to the new facts on the ground, over two generations. In the first 22 years, China has become far more successful than most experts expected when it joined the WTO in 2001, in the last seven the CCP under Xi has tightened its internal control over China.
Source: ejinsight.com
All this has made HK's adjustment more difficult. But it is not just Xi and the CCP which has been impacting HK. To show just how convoluted is HK's situation, its monetary policy is essentially run by unelected officials at the U.S. Federal Reserve, by the deliberate design of pegging its HK dollar to the U.S. dollar since 1983.
HK's monetary policy is most definitely not controlled by China under its official "one country, two systems" policy. Under that policy, as codified in HK's Basic Law and subsequent laws, Beijing exercises significant control over HK's government, but not directly over its economy.
That is exemplified by the fact that HK has been ranked the most free economy in the world for 25 consecutive years by the Heritage Foundation, a well-known conservative American think tank, which currently ranks China at 100. HK's economic "freedom" may have worked out great for its real estate "developers" and its financial "services" industry, both too often misnomers for speculators, but not for significant parts of its population.
HK has been ranked the most free economy in the world for 25 consecutive years
The Fed's deliberately ultra-easy money policies the past decade since the 2007-09 Great Financial Crisis (GFC) have helped make HK's real estate markets outrageously expensive, HK's cramped housing makes San Francisco and Vancouver look very cheap (where prices are high in part due to middle-class NIMBY homeowners who have the vote) , contributing to its extreme wealth inequality, both among the highest in the world. E.g., according to the IMF's January 2019 Hong Kong Article IV consultation:
"as of Q2 2018, house prices exceeded those suggested by fundamentals by around 20-35 percent. Housing affordability deteriorated further: since 2009, house prices increased more than 260 percent and rents doubled, while average wages grew less than 50 percent. The average mortgage payment-to-income ratio for owners of small and medium-sized units stood at 74 percent in Q2 2018 (based on government estimates). As a result, Hong Kong SAR remains one of the least affordable housing market in the world."
These cold statistics do not give a true feel for the living situation of many in HK, where it takes about 20 years of income to buy a small apartment, and many live in as little as 100-200 square feet, or even less, see this July 22 NYT article on HK housing and living standards, and this July 22 SCMP article with short interviews from HK youth on their cramped living conditions.
The issues of democracy and housing in HK have been ongoing for many years, I won't recap them here, the South China Morning Post (SCMP), Hong Kong's "newspaper of record," has written many dozens of articles on them. (E.g. on proposals to develop more HK land for housing, from br