Why Beijing's Hong Kong Crackdown Will Invite No Consequences

Why Beijing's Hong Kong Crackdown Will Invite No Consequences

As it clamps down ever tighter on press freedoms and civil liberties, China claims to have made things better for people in Hong Kong. Ordinary residents might beg to differ. 

 

Just when it seemed things in Hong Kong could not get much worse for those who value civic and political freedoms, they have. New arrests and jailings continue for critics of the city’s tough new policies, with more restrictions on assembly, press, and academic freedom on the way. The rule of law has become a sometimes thing when politics are involved and the atmosphere is gloomy for those who care.

 

But not everyone cares all that deeply, and for them, Hong Kong life is getting better. The sometimes violent street demonstrations, mostly by students and other youths worried about the future, have been suppressed. Recovery from an economic slowdown—aggravated by the coronavirus—is not yet complete. Yet the Hong Kong economy is expected to grow 3.5% this year following a down 2020, and the stock market is up about 7% since the New Year.

This suggests that suppressing dissent, partly to prevent political infection of the Chinese mainland, is not Beijing’s only goal. It has stifled critics and curtailed civic life, regulating Hong Kong in ways similar to those in mainland cities. But it is also expanding the city’s role as a vital link to global finance, all to benefit China’s wealthiest individuals, its largest companies, and their political friends. How that will help ordinary citizens of Hong Kong itself is less clear.

On the political side, the Chinese Communist Party—whose locally-based security officials are Hong Kong’s de facto rulers—these days is targeting publisher Jimmy Lai in particular. His fiercely anti-communist views set the tone of his Apple Daily tabloid—Hong Kong’s most popular paper—and have angered party officials for years. It’s also been a money-loser since local advertisers began shunning it for fear of Beijing retaliation. (Not an idle worry; Lai had to sell his earlier clothing business when his political views caused Beijing to ban its casual wear from mainland shops.)

He is now serving twenty months in jail after being convicted twice for taking part in peaceful but unauthorized demonstrations (convicted along with many others) and faces much tougher charges under the harsh National Security Law that Beijing imposed last year. This includes alleged collusion with a foreign power against Chinese security when he lobbied American officials to pressure Beijing over its Hong Kong crackdown; another conviction could effectively jail the seventy-three-year-old publisher for life, perhaps in a mainland prison.

Hong Kong authorities seized his main assets—majority shares in his company plus three local bank accounts—in a clear effort to shutter the troublesome Apple Daily. More recently, they warned bankers at HSBC and Citigroup they too could be jailed for security violations if they dealt with his six offshore accounts. Officials claim all this has nothing to do with press freedom. Their pliable cheerleaders agree; for example, ambitious politician Regina Ip, who spent mid-career years at Stanford studying under a leading expert on democracy to little obvious effect, insists “I don’t see how press freedom…can be affected” by curtailing its access to funds.

The overall suppression campaign is more inclusive. Among other things, Beijing-friendly investors have bought local newspapers and banned critical stories. RTHK, the government-owned broadcaster modeled roughly on the BBC, has become a propaganda outlet under new managers; one forty-episode talk show has Chief Executive Carrie Lam interviewing her allies about how Beijing’s tough security law has improved Hong Kong life. A journalist who used the public record of auto registrations for reporting purposes was convicted of a traffic offense. Foreign Correspondents Club members have been warned to “know their place” and no longer “meddle with Hong Kong affairs and China’s internal affairs on the pretext of press freedom.” The Hong Kong Journalists Association has said local press freedom has hit a new low; its president, Chris Yeung, warns that “the worst is yet to come.”

A hint of that “worst” was announced last week. Beijing named two senior officials to head new offices charged with tightening control in Hong Kong and neighboring Macao. One will supervise propaganda, including official information, and will “manage the media scene” in both territories. The other will supervise security matters, including coordinating actions of the seven Hong Kong government offices with security duties. The vice president of a semi-official Hong Kong think tank said these new offices will coordinate “the ideological battle” against “anti-China forces.”

Meantime, education is being revised. Starting in kindergarten, students are being given “patriotic” education, such as learning to “love” China and the Communist Party. Last month all public schools held a “national security day” to “help safeguard our homeland.” Pupils are memorizing offenses under the new security law, such as subversion and succession, with teachers told to report any violations they see. Schools must report by August what they’ve done to implement these rules. The government’s grants committee has warned universities their funding could be cut if they don’t apply the security law firmly. A recent survey found that 40% of teachers polled said they want to leave the profession.

Even the arts are under attack. Curators of the stunning new M+ modern art museum—not yet open—have been warned against displaying “anti-China” pieces that “incite hatred”, such as works by world-famous artist Ai Weiwei. Whether a Swiss collector still plans to donate 1500 pieces of modern Chinese art to the museum remains unclear.

The political overhaul received final approval last week. The former seventy-member Legislative Council—half its members elected by popular vote, half by interest groups—is being replaced by a ninety-member body, with seventy chosen by authorities. The voting system makes it unlikely that more than ten of the others will be pro-democrats even if some do campaign; many have decided against joining a rigged system. The 1200-person committee that selects the Chief Executive is being replaced by a 1500 member group, nearly all representing party interests. One tally estimates that the voters who will choose this 1500 consist of a mere 3200 politically reliable residents —with many choosing themselves—compared to 239,000 voters under the prior system. There will no longer be an effective opposition able to oppose and sometimes amend or block administration measures.

Changes to finance likewise reflect Beijing’s wishes, making it easier for mainland companies to raise foreign funds and for mainland investors to take part. The Hong Kong Stock Exchange is now dominated by Chinese firms, with older Hong Kong businesses often ignored. Some 2,538 Chinese companies are now listed there, compared to only 248 on American exchanges. (Many others were delisted in the US due to dodgy accounting, while Hong Kong’s standards are lower and thus more appealing.) Chinese companies last year raised a record US$52 billion via Hong Kong. Meantime, finding facts has become more difficult for investigative reporters and cautious investors; the government is closing previously public records that give useful information about company ownership and other data—making it simpler for Chinese corporations to retain secrecy, including whether relatives of senior officials are involved. Hiding corruption may become easier.

A membership survey by the American Chamber of Commerce in Hong Kong found that 40% said they might leave due to the security law and a mishandled pandemic. But a major outflow is unlikely; the torrent of Chinese cash is too attractive. Reportedly, local offices of international financial firms such as Morgan Stanley, Goldman Sachs, and Credit Suisse plan major staff increases.

Many hires will come from China. Mainland specialists often have Western degrees, speak better Mandarin and sometimes better English than Cantonese-speaking Hong Kong competitors, and have useful links to important executives and officials back home. They’ll likely offset any brain drain of Hong Kong financial specialists who find the changing political and social scene uncomfortable and go abroad. Meantime, the China business keeps expanding. Two current examples: Baidu, the giant search engine, plans to raise US$3.6 billion by issuing new shares in Hong Kong, while JD Logistics, a delivery service, hopes to raise US$3.4 billion. After pondering possible commissions, most bankers will probably find ways to suppress any qualms about political suppression. 

Less pleased are some Hong Kong property giants, used to dominating the local exchange and shaping government policy. It’s widely believed these developers have hoarded property to keep home prices high (perhaps the world’s highest) rather than build more apartments. They’re now under growing pressure—including from the Communist Party—to release land and make housing more affordable, meeting one demand that fed popular protests. Beijing officials are said to view these tycoons with scorn for letting social problems fester and not forcing the government to pass security laws the mainland sought. One important business group—the Chiu Chow federation—already has complained about losing influence but Beijing doesn’t seem to care.

Where this leaves most of Hong Kong’s 7.5 million people is uncertain. Many hope to leave; Britain has said it will admit some three million residents born before 1997 when the city was still a British colony (whether Hong Kong will let them go remains unclear). Others are seeking new homes in Canada, Australia, Taiwan, and other places that seem welcoming; Hong Kongers have already spent billions on British and Canadian real estate. A recent poll found that 60% of youths aged fifteen to thirty want to emigrate. This could constitute a brain drain but in recent years more mainlanders have moved in than residents have moved out.