A thinly veiled attempt from China to bend Hong Kong to its authoritative ways is threatening democracy and economic health the world over.
A few weeks ago, the Chinese company Alibaba had an initial public offering (IPO) on the New York Stock Exchange rather than in Hong Kong. Why was that?
I read up on the company and saw that it’s similar to Amazon and/or eBay. I was stumped about the avoidance of the Hong Kong stock exchange, so I dug a bit deeper. The company decided to list in New York because Hong Kong Stock Exchange rules prevented founder Jack Ma and senior management from retaining control over the board of directors. My next thought was “What’s going on in Hong Kong?”
Reading more, I learned about the unique relationship Hong Kong, China, Britain, and Japan have had over the last 130 years. Hong Kong has its own legal system, constitution, and guaranteed rights, including freedom of assembly and protected free speech. After Britain returned Hong Kong to Beijing in 1997, there was an agreement to expand democracy by letting voters pick their leaders in the 2017 election. But China reneged on that last year.
Organized and led by academic Benny Tai, Occupy Central was created and was the first unofficial referendum on political reform, held from the 20th to the 29th of June, this year. At that time the whole world was looking for a missing Malaysian plane. The demonstration took place on July 1, 2014, marking the day Hong Kong gained sovereignty in 1997. The protests drew thousands although riot police were seemingly unconcerned at first, sitting in the middle of it all, sipping water.
One officer said, when asked why there were so few police, “Actually, I don’t have a reason for you. But we are tired. We are all human beings so we need a rest.” That was new to me. I don’t think I’ve ever heard that one before.
Then last August, China’s top legislators ruled that Hong Kong’s voters will choose from a list of two or three candidates selected by a nominating committee formed in accordance with Beijing’s agenda. Any candidate would have to secure the support of more than 50% of that nominating committee before being able to run in the election. Democracy activists believe China will use this committee to screen out candidates it disapproves of.
The protesters want full democracy. They also want Hong Kong’s leader, the Chief Executive, to step down, since the announcement of the 2017 elections are only a few candidates, all loyal to Beijing. The Chinese government is caught between a rock and a hard place here. It’s clearly opposed to full democracy for its citizens, but Beijing needs to be very careful of Hong Kong’s financial power. Shaking confidence in a market-driven Hong Kong would be a dire mistake for China as a whole.
Adding to the chaos, pro-Beijing groups have emerged believing that protestors are endangering the city. Silent Majority for China and Caring Hong Kong Power are two groups who have organized several protests against Occupy Central. They believe that Beijing’s ideas are better than the current system in Hong Kong, regardless of the fact it abides by its own constitution.
This has led to the current hullabaloo in Hong Kong. There have been clouds of tear gas. Ferguson’s “Hands Up” rallying pose has made appearances. Some protesters resorted to wearing masks and holding umbrellas, which christened their movement as The Umbrella Revolution. Protests are ongoing. Wednesday October 1 is China’s National Day holiday, and the protests are expected to be very large. Beijing, naturally, is threatening to crack down.
China has a confused and lopsided understanding of the one country, two systems model. It has stressed that while Hong Kong has a high degree of autonomy, it is “not full autonomy” and that China still has “comprehensive jurisdiction.” In other words, this is a thinly veiled attempt by China to bend Hong Kong to its authoritative style of government.
And so the protests which started out relatively peacefully have gotten worse and worse. Flashbacks of Tiananmen Square flashed through my mind, not to mention Tibet. This is much more serious than the media has let on. Here in America the news, as usual, is staying in their loop of ”let’s-keep-everyone-afraid-of-terrorism.” They have largely avoided reporting about this until last weekend.
And meanwhile, what’s happening with Hong Kong’s financial district? Bloomberg’s was interviewed on the world’s eighth largest financial center;
“The benchmark Hang Seng Index sank 1.9 percent to 23,229.21 at the close in Hong Kong, its biggest loss since Sept. 10, as developers and retailers tumbled. A gauge of stock volatility jumped 24 percent, the steepest surge in three years. The city’s currency slid to a six-month low and one-year interest-rate swaps climbed the most in 15 months.”
Now I understand why Mr. Ho of Alibaba had his IPO on the NY exchange. It’s the safer bet after Beijing’s bait and switch with the voters in Hong Kong. It may also be a sign of what to expect from many more players of Hong Kong’s financial district. Repercussions of this could be very severe.
The voters in Hong Kong are having none of China’s power play. The globe’s financial health balances on the brink. We all need to watch how this plays out for not only democracy, but economic health the world over. Stay tuned, and follow the money.