Hong Kong’s position in the world spotlight is moving fast. Now that the US Congress has approved the Hong Kong Human Rights and Democracy Act, which President Trump seems ready to sign into law, the world’s focus on the rule of law in Hong Kong will likely take on a broader dimension. Every time the central government does or says something related to the power of Hong Kong courts to issue rulings, foreign investors will need to hold their breath and remain that much more alert to what the reaction could possibly be from the United States.
Never mind all the high-falutin language about freedom, the new law’s real threat is if it forces a review of Hong Kong’s special trading status, separate from the rest of China. If Hong Kong has its status revoked by the US, the blow to not only the flow of goods, but of finance, between the two countries could be devastating.
It is not as if the new Act has given the US government more power or authority to act. It has just ratcheted up tensions between the executive and legislative branches over how China is negotiated with and dealt with. Because the legislation gained such overwhelming bipartisan support, it is effectively tying the president’s hands more tightly in his discussions with his Chinese counterpart. Could this affect the current US-China trade talks? It is not likely, yet not unthinkable, either.
Although there are signs from Beijing that the harsh rhetoric from the National People’s Congress Standing Committee is perhaps going to be softened or simply not followed up on in the coming days, its damage has largely been done. The Hong Kong Act would not likely have been pushed through so effectively were it not for the NPCSC’s broadside on Wednesday against the High Court’s ruling on the government’s face-mask ban. This harsh reality must be settling in Up North by now, and it can only be assumed that cooler heads are prevailing.
Meanwhile, reports that surfaced today of a British ex-consulate worker allegedly having been tortured by National Security Bureau agents in Shenzhen will likely inflame passions further, both on the streets and in Washington, London, Paris and Berlin. The report, to be frank, seems dubious. But so were all those reports disseminated by Cambridge Analytica about Brexit. In other words, it doesn’t matter, because Beijing doesn’t have a PR machine that is able to deal with it. Investors were right, therefore, to head for the exits in Hong Kong trading today. Until the central government figures out a way to get a better grip on the global narrative of what is going on in Hong Kong, tensions between China and the West – not only the US – are likely to continue rising.
It can only be hoped that both sides find a way to dial down these tensions, because the December 15 deadline for the US to impose another round of tariffs on Chinese imports is fast approaching. If it is crossed without a compromise deal, it is hard to imagine how steep the downside could be for Sino-US relations, and the global economy. In this kind of environment, it is similarly hard to imagine how investment-hungry projects such as the Greater Bay Area can make much progress.
Stay tuned. And don’t believe most of what is going around on Facebook.