Hong Kong: the stakes are high

The confrontation in Hong Kong between pro-democracy demonstrators and the Beijing-backed authorities has implications reaching beyond the protesters camped on the streets of the city’s business district or the administration in the official buildings beholden to the central government in Beijing. It epitomises the wider challenge facing China as it seeks economic modernisation while retaining monopolistic Communist Party political rule. Nothing could be more modern in China than the former British colony with its advanced financial system, its freedoms and its full integration into the global economy. Nor could anything be more threatening to the rulers in Beijing than the spiralling call for open direct elections, spearheaded by student protesters defying the police.

The clash between the authorities and those calling for uncontrolled democracy in their “umbrella revolution” has intensified this year, as a result of Beijing’s stronger assertion of its right to control developments in the former colony and the emergence of a new, younger pro-democracy movement, which has adopted a more radical approach than the campaigners for a liberal political system in the first decade after sovereignty passed from Britain to China in 1997. The offer of talks by the chief executive on Thursday night, a striking recognition of the power of street protest, would be impossible elsewhere in China.

The presence of tens of thousands of demonstrators in the city’s central business district this week, calling for the open election of the territory’s next chief executive in 2017, is a realisation of Beijing’s worst fears concerning popular protest—and it inevitably conjures up images of the demonstrations in Tiananmen Square in 1989. All the more so since the White Paper issued by the State Council in June had made it plain that Beijing did not consider that the “high degree of autonomy” enjoyed by the Special Administrative Region (SAR) under the 1997 handover guarantees meant “full autonomy nor decentralised power”. Instead it stressed the power of the central leadership to run local affairs.

Beijing further turned the screw on the pro-democratic camp by laying down conditions for the 2017 election, which, despite opening the poll to universal franchise, will enable the central government to determine who is eligible to run. It thus made plain that it prioritises the first two words over the last two in the “one country, two systems” formulation, which many in Hong Kong had believed would guarantee them freedom from mainland interference.

The government in Beijing insists that “Hong Kong is China’s Hong Kong” and a spokeswoman blamed “external forces supporting illegal activities”. The Communist Party newspaper, the People’s Daily, has expressed strong support for the chief executive, Leung Chun-ying, who assumed that post with Beijing’s approval in 2012 and whose resignation the protesters are demanding after police reacted to the initial demonstration with tear gas and baton charges.

Digging in

No mediating element is evident and the two sides are digging in for the long haul as the Xi Jinping administration makes the strengthening of the Chinese party-state its prime objective, regardless of the negative fallout. The two sides are like boxers in a ring without a referee. The open media system in the SAR means that what is happening is far more widely known and potentially entails a higher price than would be the case on the mainland.

With the 41m visits by mainland residents to the SAR accounting for an estimated 37% of retail and restaurant spending last year, the impact of visitors staying away would be a major negative factor, on top of the 1% decline in retail sales in the first eight months of this year. In the second quarter, with consumption falling, gross domestic product contracted by 0.1 per cent. Yet while the mainland is very important for Hong Kong, the growth of the economy of the People’s Republic of China means that the relative weight of the two has shifted significantly: the former colony’s economy now accounts for just 3% of China’s, compared with 12% three decades ago.

Beijing certainly still values Hong Kong, as shown by the opening of the “through train “ linking the Shanghai and SAR stock exchanges, scheduled for later this year, and by the use of Hong Kong for the internationalisation of the yuan. This would point to the Chinese authorities taking a more relaxed attitude, to avoid destabilising the city and frightening off investors. But that runs counter to the evident polarisation and would pose a dual danger for Xi and his colleagues—that they would be seen as weak and that the pro-democracy forces, having gained ground, would push their case further.

Flashpoints

There are further potential flashpoints ahead, notably when the Legislative Council meets to vote on Beijing’s proposals for the 2017 electoral arrangements. No date has been fixed for that meeting but it will probably take place in the coming two weeks. Preliminary soundings of legislators suggest the proposal will not get the necessary two-thirds majority. Beijing could then say it was dropping the idea of enlarging the franchise and would maintain the system of a 1,200-strong electoral college that picked C.Y. Leung. In addition, it could halt other moves towards democracy through opening up elections for the legislature. That would almost certainly set off fresh demonstrations. Even if the council did back Beijing’s proposal, Occupy Central and its allies would in all likelihood protest at what they would call the rubber-stamping of an anti-democratic process.

It is hard to see a positive outcome or even a reduction in the tension that has built up this year. And one effect of the recent events in Hong Kong will be to undermine Beijing’s attempts to cultivate closer relations with Taiwan. The prospect of the opposition Democratic Progressive Party (DPP) winning the presidency on the island in 2016 can only be helped by developments in the former colony. The irony is that the place for which Deng Xiaoping originally intended his “one country, two systems” is likely to move even further outside the “one country”, as the result of what is happening to the SAR’s “second system”.

Jonathan Fenby