Hong Kong’s Future: In Beijing’s Hands

With hundreds of police – sans helmets and tear gas – having moved in to clear Occupy demonstrators in the crowded Mongkok district of Hong Kong, the protest may be reaching a temporary denouement, from fatigue on both sides if nothing else. But despite hundreds of police clearing traffic in the Mongkok district, and an agreement to meet between the government and the students, it appears there will be additional friction.

It also leaves the question of where China’s recalcitrant stepchild will go from here. While the demonstrators have sought the answers on the streets of the territory, the answers lie in Beijing. For Hong Kong, that may be difficult to accept. But with a huge standing army, a massive police force and an overwhelming government apparatus, that is the unappetizing truth. China is going to win, at least partly because dictatorships do not back away from their decisions

The fact is that the territory is losing its importance to the mainland. In 1997, Hong Kong controlled as much as 15 percent of China’s gross domestic product. But in the ensuing years, China has got vastly richer very fast. Today Hong Kong controls less than 3 percent of China’s GDP as Shanghai has increasingly usurped Hong Kong’s role as a financial center and cities like Tianjin and others have taken over its role as an entrepot.

What the weeks of protest have proved, along with Beijing’s recalcitrant attitude towards universal suffrage and some inadvised police actions including beating protesters – one on international television – is that a huge percentage of Hong Kong residents hate China. The territory, small as it is, has slipped out of Beijing’s emotional grasp and moved a long way toward what amounts to de facto separatism.

Beijing now has several options. With the city’s importance waning, it could double down with the severity. There has been no Chinese military or police interference, but there are plenty of ways for China to put the screws to it, as China has occasionally done to other areas or countries, using its massive trade and economic clout.

Its other option is to try to figure out what has gone wrong in what has been a golden goose, since long before it took the territory back in 1997. The fact is that a confluence of grievances took hundreds of thousands into the streets that had little to do with China’s refusal on universal suffrage, although that obviously was a major factor.

The first is Hong Kong’s incompetent and sometimes venal leadership. Leung Chun-ying, Beijing’s anointed candidate for the farce of an election that made him chief executive, has badly mishandled the whole affair, telling audiences prior to his elevation to office that he supported universal suffrage, only to reverse himself, clearly on Beijing’s orders. Now he is caught in the coils of a questionable secret bonus when he stepped down as director of a company with links to the government-owned MTR system.

But other grievances include a property market that has exploded to heights so astronomical that even two working college graduates can’t afford flats – with some new ones just 200 square feet in size. The Gini coefficient, which measures income inequality, has been rising and in 2013 hit 0.537. In the Gini coefficient, 0 is perfect equality and 1 is perfect inequality. Economists regard anything over 0.40 as a possible trigger of social unrest. And, while China’s economy has marched ahead at the fastest pace in human history, Hong Kong’s has stagnated.

Property prices are the big problem. But the lack of a social safety net, with anyone over 70 being paid only “fruit money” of HK$1,300 per month, is an issue, as is health care. While the city has government-run hospitals, waiting times for serious operations can run into the years, and private care rivals that of the United States in costs.

Beijing is not going to reverse itself on universal suffrage for 2017. It will select the candidates. But if Beijing actively studies the root causes of the protests, it could go some way toward regaining its respectability in the city if not earning any love. That is not going to happen with a population whose elders escaped to Hong Kong to get away from the disastrous Great Leap Forward and Great Proletarian Cultural Revolution that devastated China under Mao Zedong. Polls also show the young do not regard themselves as citizens of China.

But Beijing could actually push the local government to build far more housing, causing prices to drop. That is not going to be popular among the home-owning populace, who make up 70 percent of Hong Kong. It also would not be popular among the oligarchs who control the market with the help of a government that is stingy in releasing land for building. But otherwise both Beijing and the Hong Kong government risk the continuing loss of support of the city’s young.

Last year, 42 million tourists from China showed up in Hong Kong, six times the population who live there. That has engendered continuing outrage for at least two to three years, with Chinese matrons taking maternity beds away from the locals and high-priced boutiques to cater for the tourists crowding out the dai pai dongs, small eateries that Hong Kong residents frequent for their meals. Jimmy Lai, the irrepressible democracy advocate who publishes Apple Daily, labeled the mainlanders “locusts.” It is a pejorative that has stuck.

While not giving in on the universal suffrage issue, Beijing may actually look at these things and decide to do something about them in an effort to win Hong Kong back. In 2003, they gifted the territory with the Closer Economic Partnership Agreement, a trade pact that was significantly favorable to Hong Kong. They could do it again.

In all, the big question is whether Beijing is going to take the city seriously. There will probably be continuing protest despite the waning support. The police, for once, appear to have handled the clearing of Mongkok streets intelligently after they were filmed beating an already handcuffed demonstrator last week. The Hong Kong cops are dealing with increasing attempts by anti-protest mobs, a lot of them generated by triads with shadowy ties to the mainland. According to SVA, a risk consultancy, “the maintenance of police morale and efficiency over the coming weeks will be critical, especially as there is an increasing likelihood of further civilian on civilian incidents as Anti-Occupy Central elements, aided by murky forces increase pressure on the movement.”

SVA has continued to say longer that the Occupy movement goes on, the more likely that non-government groups and/or criminal elements and triads will continue to make gains, through leveraging the civil disorder to promote their own interests. Any perceived decline in performance by the police could exacerbate this situation.

Certainly the police, having learned their lesson twice over, appear committed to controlling the situation without the use of force – although that is beginning to anger anti-Occupy elements who have lost patience and want the situation ended.

When fatigue finally settles the situation, it is at that point where Beijing must make its decision. Hong Kong has so far been a magnificent experiment, one where all manner of protest has taken place almost on a weekly basis. Falun Gong, whose members in China are jailed and beaten regularly, has permanent exhibits on some of the city’s walkways without incident. Thousands of people walk by them every day.

Until recently the Hong Kong press has been wide open, freewheeling and, depending on which paper you read, objective. It can be taken seriously unlike that in China and much of the rest of Asia. Personal freedoms are not under threat unless, as US Supreme Court Justice Oliver Wendell Holmes once said, they infringe on the freedoms of others. It would be a shame to see that end.