Day 4 post-election, and Hong Kong is still here

Hong Kong has nearly reached the end of its first week on a new political playing field and, so far, both social stability and the rule of law remain intact. Protests have not erupted into violence again. No intervention in Hong Kong’s security or political regime has come from Beijing, despite US President Donald Trump signing the Hong Kong Freedom and Democracy Act into law. And, perhaps most importantly, the National People’s Congress Standing Committee has not followed up on its threat to issue an interpretation of the Basic Law that would set aside the High Court’s ruling on the government’s face-mask ban.

That doesn’t mean it couldn’t still happen. As SCMP reports, an ominous column was penned by someone who is widely believed to be “in sync” with the senior leadership’s thinking, saying that Hong Kong is risking its autonomy by voting so brazenly against pro-Beijing election candidates. Ren Yi is his name, or “Chairman Rabbit”, and he is the grandson of a former powerful Guangdong party boss. He has a million followers of his online musings.

The central government, meanwhile, is clearly enraged by Trump’s decision to sign the Act, and could yet counter it by taking retaliatory action against American interests in Hong Kong and, possibly, Macau. Or it could somehow pressure lawmakers into pushing through Article 23 legislation that would likely curb freedoms, including freedom of speech. This seems almost inevitable if the Act’s passage is followed by a review of Hong Kong’s special trading status by the US government.  

And the High Court’s decision to extend the suspension of its ruling on the face-mask ban could be seen as a way to keep the door open for the NPCSC to issue a ruling, within the next month, which would likely erode the foundations of the rule of law in Hong Kong. 

But none of these worst-case scenarios has happened. Yet.

Indeed, today, Day Four since the District Council election, has been a good day. The sky hasn’t fallen. The sun is shining. Alibaba is counting its billions, after becoming the stock exchange’s most valuable constituent on the first day of trading in its IPO. Police officers have started to reclaim the Polytech University campus, without incident, besides stepping in piles of human waste.

Most importantly, political actors are calculating what comes next. Protest gatherings aimed at blocking traffic have dwindled. Newly elected district councillors are doing less camera work and more real work, behind the scenes, hopefully thinking more clearly about strategy. This is what happens in a place where the Election Commission still functions and grassroots democracy still works.

There remains much to do, and a long, uncertain road lies ahead. But so far, level heads are prevailing. This is likely to continue for the foreseeable future – or at least the next few weeks, until greater clarity is forthcoming from Beijing on how it views the election results. 

Cautious optimism is warranted, as it seems that someone has prevented the dogs from being let slip. Ren Yi is a princeling, not a politician. The only one who gets to decide what happens in Hong Kong is obviously not going to be rushed, or pressured, by anyone, into making a decision. That is probably because there are bigger priorities to take care of, such as getting a phase one deal in place between the US and China on trade. Yet there is also reason to believe it may be something bigger than that. Could a major rethink on Hong Kong policy be happening?

Time will tell. Meanwhile, it is important to focus on the facts, rather than the hysteria. There has yet to be published an insightful analysis decrying the end of the rule of law, or the disintegration of Hong Kong’s role as a business and financial center, which can be backed up with data. Those that make such claims without clear evidence ought to be ignored. Anecdotes from clients and friends isn’t enough.

The same goes for stories about capital flight. If Superman is diversifying his investments, as a Reuters hagiography of him is to be believed, and if his fellow tycoons who have milked this city’s life blood for decades also are seeking safer havens from China’s anti-corruption investigators, that should not be equated with Hong Kong losing its attractiveness as a financial center. It should be seen for what it is: a moneyed class that has played no small role in the formulation of Hong Kong’s crisis doing what they do best, taking care of themselves. The more they flee, the better it will be for bringing down Hong Kong’s outrageous cost of living – which is already happening, according to local media reports. 

There will be plenty of other opportunistic capitalists to replace them, as the MSCI reweighting of China has shown: US$7 billion of new portfolio flows will come into China’s A-share indexes in the coming days and months, and there are no guesses as to which city they will use as a conduit. 

To be sure, a balanced look at the situation shows that Chief Justice Geoffrey Ma remains the final arbiter of what happens in Hong Kong’s courts, not Chief Executive Carrie Lam. The Hong Kong Stock Exchange, meanwhile, continues to attract listings, and trade. Companies continue to invest here and set up regional bases here. 

Even the city’s worst affected institutions, the universities, are not done, yet, either. Their doors may be closed, and the government may be vacillating on funding for new projects, but there is time and opportunity to rebuild now that the campuses have been brought under control.

There might come a time when the worst fears about Hong Kong are realised, and when things happen that cause this Special Administrative Region to no longer fully fulfil its unique role in China’s development. But that time hasn’t come yet.

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