Tag Archives: Hong Kong protests

Try harder, Xi tells Hong Kong govt

It is becoming clearer that something has shifted in Beijing’s approach to governing Hong Kong. We pointed out the beginnings of this shift last week, after CE Carrie Lam’s visit to Shanghai and Beijing, where she met President Xi Jinping and her direct report, Vice Premier Han Zheng. She came back more confident, less inclined to give middle-ground statements on the protests. We speculated that it was because the central government had reached a new consensus on Hong Kong, and a change of direction was needed: restrained passive-aggressive interventionism was out; active, overt policy guidance was in.

However, until late yesterday, it hadn’t seemed like the new approach was being timed on a stopwatch. The central government was upping the pressure to introduce national-security legislation, but no deadline had been hinted at.

Then President Xi Jinping interrupted a busy schedule on his overseas trip to comment on the situation in Hong Kong. He reiterated that he wants to see the Hong Kong government and police do whatever is necessary to put an end to the protests. It was no longer just the Hong Kong government’s most important task; it was now its most “urgent,” too.

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Mainland students flee to Shenzhen, some to campuses

As mainland students flee Hong Kong’s embattled university campuses for the safety of neighboring Shenzhen, a spotlight is being shone on the relationship between the Hong Kong universities and their affiliates across the border.

Fearing that they could become targets of the anti-government protesters who have turned their campus into a battlefield, mainland students staying at the Chinese University of Hong Kong in  Sha Tin have found themselves among the more fortunate, as the university has a Shenzhen campus that opened its doors to them from late yesterday.

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Hong Kong as regional HQ: time to move?

For those who care to look, the Hong Kong protests are exposing flaws in many assumptions about Hong Kong’s competitiveness. This is not only a short-term concern, either. As revenues come under pressure, partly due to the protests, partly due to a slowing Chinese economy, operating costs are inevitably being looked at more carefully by companies based in “Asia’s World City”. It would be surprising if only a few were considering moving or scaling back their operations here.

The question is: Can other cities in the Greater Bay Area offer compelling alternatives?

The short answer would be: Yes. But do some homework first.

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In Hong Kong, end slips further out of sight

We ended our weekend analysis of the situation in Hong Kong by urging readers to remain calm and look ahead to see how a change of approach by Beijing might play out in the coming weeks and months. We didn’t have to wait long to see this advice put sorely to the test. It would have taken a deeply rooted stoicism to remain calm in the midst of Hong Kong’s newsflow today. Another shooting by police, a man set on fire, university campuses in chaos, and teargas and stormtroopers in Central: such scenes were surely enough to have sent anyone running for the exits. SCMP has it all.

We never said that Hong Kong’s situation was likely to get better anytime soon. On the contrary, it has seemed evident for some time that what is playing out now is still the prelude to a long, drawn-out conflict that will get significantly worse before it gets better. It would be right and proper to hope for peace to prevail as soon as possible, but it would be wise to plan for worse to come.

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New direction set for Hong Kong

It is fitting that Fintech Week took place at the same time as Carrie Lam’s duty visit to Beijing last week. The three-day event, held at the AsiaWorld Expo Center, provided a reminder of Hong Kong’s enduring value for the Greater Bay Area. As the city’s tourism industry withers after 15-plus years of rich yields, Hong Kong needs a new Chinese export to sell. Financial technology is one of the most promising, and Fintech Week was done well. Its success supported the Chief Executive’s declaration, at the end of her Beijing trip, that Hong Kong’s role within the GBA was “completely unchanged”.

She is right. Selling Chinese goods and services to the world has always been Hong Kong’s strength. From textiles, to toys, to computers, and, yes, to the spending power of mainland tourists, Hong Kong has, to date, been the best place to get a deal done. Until China completely liberalizes the Renminbi, it will remain so. This is a major reason why the Greater Bay Area masterplan was drawn up in 2017 and launched in February of this year: the region needs Hong Kong to put its companies on the world stage. International marketing is Hong Kong’s forté.

Until Lam’s trip to Beijing this week, it had appeared that Hong Kong was playing another, unspoken role within the Greater Bay Area (and the country): as a salon for debating ideas about the future, and as a laboratory for testing their applications. This premise was established by the late Deng Xiaoping in his prescient 1984 agreement with the late Margaret Thatcher, which laid the foundation for the “One Country, Two Systems” principle that underpins the Basic Law. He clearly wanted to see what China could learn from a melting pot of East and West on its doorstep.

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GBA Briefs: 09/10/2019

Golden Week woes: Hong Kong lost HK$2.8bn over the recent National Day holiday period, according to according to local analysts and business leaders quoted by SCMP. Read more.

Senseless: Hong Kong-based AI unicorn Sensetime is in danger of losing a precious relationship with MIT, the world’s premier tech university, due to its landing on the US Entity List, SCMP reports. Read more.

Megvii may lose Goldmans: Another AI unicorn that had been hoping to list in Hong Kong, Megvii, might lose its sponsor, Goldman Sachs, for the same reason, Caixin reports. Read more.

Contrasting Views: Washington-based academics like David Meyer think Hong Kong is irreplaceable as a financial center and that Beijing backs it to the hilt. Jamil Anderlini of the FT, on the other hand, believes “Beijing will have its revenge on Hong Kong”. Read them on SCMP and FT.

Bracing for a drop in Hong Kong

It’s hard to see where Hong Kong is headed, now that the government has decided to invoke emergency powers to ban the use of face masks at protests. There are at least two evident certainties: that protesters will be energized, leading to a rise in violence levels; and that arrest numbers will climb. Beyond that, however, it remains to be seen whether the announcement will hasten a decision in Washington to restrict financial flows through Hong Kong or result in any other damage to the city’s economy caused by a loss of investor confidence.

Key to monitor is whether the decision can be effective in quelling the protests. This, too, is hard to guess at the moment. It will likely embolden the more radical protesters, and radicalize others who had previously been hesitant to commit acts of violence. Yet it will also likely result in violent protesters being taken out of action quicker, blunting the protests as their more charismatic leadership is neutralized. Whether this turns out to be net positive or negative will take time to ascertain.

In the meantime, and apologies if this sounds Cyclopian, but the Greater Bay Area is not likely to be able to chug along as normal and pretend that what’s happening in Hong Kong won’t affect the rest. Putting aside the damage inflicted on the region by plunging international tourism – especially business tourism – it is important to be realistic about the effects of the Hong Kong crisis on the pace and scope of reforms being implemented in the GBA.

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Hong Kong gets reform agenda rolling

American scholar Andrew Nathan has an interesting piece in Foreign Affairs summarizing what “insiders” say is Beijing’s approach to the crisis in Hong Kong. Though the presentation of this analysis fits too neatly into a US-centric worldview, it helps explain why the Hong Kong government is moving quickly to address the city’s dire shortage of housing: Because the central government believes the protests are being driven primarily by intolerable socio-economic conditions. Fix those, and the rest will take care of itself.

The logic has appeal. While Nathan’s sources are almost certainly wrong to suggest that the country’s senior leadership isn’t worried about addressing the political dimension of the protests, it makes sense to train attention and resources on fixing first what can be fixed easiest. Any capable government would be taking this approach.

This doesn’t necessarily mean that Beijing misunderstands where the protesters’ rage is coming from. The country’s leadership probably knows all too well that the crisis is not going to be fixed with bread alone. But it also likely understands that without a commitment to deep socio-economic reform, no other grievances can be addressed in a sustainable way. Fixing the land issue is about much more than bringing down the cost of living. It’s about changing the way people live.

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GBA Briefs: 25/9/2019

Scapegoats or scoundrels? SCMP takes a closer look at the political weight of Hong Kong’s property oligarchs and notes that they have been shedding pounds ever since President Xi Jinping came to power. Read more.

No force necessary: An online opinion poll claims that most Hongkongers would rather see the police force disbanded than merely held accountable for recent alleged violent acts. Read more.

Alibaba preps for IPO: Alibaba has bought out a direct one-third stake in its finance subsidiary, Ant Financial, which analysts see as a precursor to its next mega-listing. This IPO would give the battered HK Stock Exchange a major boost. Read more on Caixin.

CICC teams with Tencent: One of the country’s biggest asset managers has established a joint venture with Tencent to run an online wealth-management firm. Talk about a fintech disruption. Read more on Caixin (in Chinese).

In HK, battle over land heats up

It’s becoming clearer now that the Hong Kong government is pushing more actively to resume its process of reclaiming land from big property developers under the Land Resumptions Ordinance. Why else would the city’s largest property developer, Sun Hung Kai Properties, be invoking the Basic Law?

Mike Wong Chik-wing, SHKP’s deputy managing director, gave a textbook example of how to take a bullet for the family, telling reporters the company would cooperate with the government, but only on land parcels it had been collecting – for “30 to 40 years” – which had already been zoned for social housing. Otherwise, he asked the government to respect the Basic Law, which protects private property. (SHKP is owned by the Kwok family, one of the city’s five richest, who between them control nearly half of the market.)

SCMP has a good story on it, and has also started a series on the land and housing mess, beginning with a look at how land auctions subsidize the cost of pretty much everything in Hong Kong. The story has some great stats, including a table of the richest CPPCC members from Hong Kong. 

Draw up a chair and grab the popcorn, folks. There will undoubtedly be plenty of drama and intrigue to come.