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Asia’s 'World City' threatened as Beijing tightens its grip

Image credit: VOA (Creative Commons: Wikimedia Commons)

In late June, thousands of anti-extradition protestors surrounded the Hong Kong Police Headquarters and began laying siege to the station. The protestors were demanding that the Hong Kong government condemn what they perceive to be the use of excessive force against protestors demonstrating against controversial extradition legislation which has now been withdrawn from the Legislative Council’s agenda.

However, anti-extradition protestors have pledged to continue to demonstrate until Chief Executive Carrie Lam resigns. Amid this political instability, businesses, investors and indeed, the youth of Hong Kong reassess whether Hong Kong really is the place to do business.

The extradition bill has stirred the fears of Hong Kong residents who fear that Hong Kong’s unavoidable integration into Mainland China would annihilate the unique institutions behind Hong Kong’s success, such as freedom of the press and an independent judiciary. Hong Kong has been governed under the “one country, two systems” framework since the UK handed Hong Kong back to China in 1997. The “one country, two systems” framework guarantees the integrity of Hong Kong’s political system until 2047 when the current arrangement is set to expire. In theory, Hong Kong enjoys a high degree of autonomy, but in recent years, decisions by the Beijing government have eroded the trust that Hong Kong residents have in Beijing to respect Hong Kong’s autonomy. The extradition bill was merely the latest move by Beijing to tighten its grip on Hong Kong.

The proposed extradition legislation would have allowed individuals residing in Hong Kong or passing through the city to be arrested and deported to China. While the Hong Kong government has stated that the new law would have aligned the city's law with international standards, legal experts argue that it would have allowed the Beijing government to extradite fugitives for political reasons. For example, in China, a person can be imprisoned for libel so journalists, analysts, and investors who criticise the Beijing government for either its economic policies or its political system can be arrested.

A fair trial is unlikely considering the Communist Party’s influence in the courts and a legal system that is said to have a nearly 100 per cent conviction rate.

Critics argued that the extradition bill showed Beijing’s willingness to influence Hong Kong’s independent judiciary, which many citizens view as the only protection they have against the mainland government. Without an independent judiciary to safeguard the freedoms and rights of residents talent, businesses, and capital will likely look elsewhere.

The Hong Kong economy is underpinned by its financial sector, which has flourished since colonial times due to its proximity to the mainland and its legal system rooted in English Common Law. It is China's only international financial centre.

Unlike Shanghai, Hong Kong has no restrictions on the movement of capital, transparent flow of information, and a legal system that is independent and protects private property. It's because of these advantages that investors have used Hong Kong as a staging area for business activity in China and East Asia, with investors in Hong Kong financing much of China’s rapid growth. However, moves to reintegrate Hong Kong with Mainland China, such as the extradition bill may wipe away the unique features that have been the foundation of Hong Kong's success.

Although it’s unlikely that the extended protests will result in investors fleeing on mass from Hong Kong in the coming months, it does put the city's future in danger. Its status as a global financial centre, and Asia's ‘World City’ will likely start to suffer death from a thousand cuts as businesses relocate and Hong Kong’s young talent emigrate to greener pastures.

Without the protection of Hong Kong’s legal system, investors will either flock to Tokyo and Singapore, where they have the freedom of speech and legal protection to conduct their business without fear of the Beijing government or go into the belly of the beast and move to Shanghai or Shenzhen. Regardless, as Beijing tightens its grip and the “one country, two systems” framework crumbles, Hong Kong’s status as Asia’s ‘World City’ and its future remains under a shadow.

Andrew Thomson is the International Trade and Economy Fellow for Young Australians in International Affairs.

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