Hong Kong’s security law is going to devastate its economy

https://asia.nikkei.com/Opinion/Hong-Kong-security-law-is-going-to-devastate-its-economy

by partingshots • 6 years ago

243 142 6 years ago

asia.nikkei.com

The sad fact of the matter is that Xi has already calculated that and deemed it an acceptable loss in the name of "national security."

rwmj• 6 years ago

I'm kind of wondering if he will step down next year, or find a reason to keep going. (I don't know what the constitutional arrangements are, but assume that he can only have a single 10 year term)

green-bottle• 6 years ago

I doubt Xi's going away anytime soon. He got constitutional term limits on Presidency removed.

https://www.bbc.com/news/world-asia-china-43361276

jorblumesea• 6 years ago

If anything, doesn't that strengthen China's hand?

More reliance on the mainland for jobs and handouts, more protests and counter protests so they can justify additional crackdowns. Less westerners and less international firms, less exposure to the West.

Feels like a calculated move.

dade_2• 6 years ago

The CCP can now afford to sacrifice HK, their economy is now much larger than it was in 97.

adventured2• 6 years ago

They can't. For one thing they desperately need the dollars that flow through Hong Kong.

The GDP size is now among the least valuable aspects of Hong Kong as it pertains to China. That has never been primary.

Hong Kong is the economic staging point that much of the world uses to enter China's economy. Think of it as a translating middleman, that the world uses to convert from foreign market-based economics to China's domestic way of running things as a rigid command economy that is operated by fiat and is often hostile to foreign operators/owners/investors. Hong Kong's role in that respect has been critical to China's economic rise.

adventured2• 6 years ago

More reliance on the mainland for jobs and handouts, more protests and counter protests so they can justify additional crackdowns. Less westerners and less international firms, less exposure to the West.

That the US is announcing this now, means the context is already well past the tipping point. The US has been reluctant to go too far regarding Hong Kong, because of its importance to the rest of the global economy as a conduit into China's economy (a large share of all foreign direct investment into China goes through HK, and they depend on it as a large source of US Dollars to conduct trade with the rest of the world). This response is actually quite late, running from behind. The writing has been on the wall in extra large letters for several years now, for much of Xi's reign.

supernova87a6• 6 years ago

I read all these headlines, but when I then followup to read more about the text of the proposed laws [1], I have a hard time seeing that aside from freedom of speech infringements (and ability to imprison, fine based on those -- which are clearly a bit vague in terms of enforcement, but otherwise as bland as a lot of US legislation), these laws are not egregiously different from what exist in some other countries.

Aside from the symbolism, can someone enlighten me why they have practical, real worries that this is going to cause some massive political or social change over there? Or whether companies will really shy away from doing business when they already face laws like this elsewhere? Or that the economy there is going to dry up because of this?

[1] https://en.wikipedia.org/wiki/National_People%27s_Congress_D...

jhvkjhk• 6 years ago

This will cause massive social change because all the headlines said so. Most people won't read the original law, they only read the media's story.

elliekelly2• 6 years ago

There's a reason businesses use Hong Kong as a home base to access the Chinese market and that reason is the legal system. Hong Kong is like the Delaware of China - an established and reliable system that protects business interests. It's fair, it's transparent, and it's predictable. None of those things can be said about China's legal system.

Mediterraneo10• 6 years ago

The special treatment that Hong Kong gets from various other nations, treatment different from mainland China, is dependent on Hong Kong being viewed as autonomous. The laws in the territory aren’t really the point, what matters is the source of those laws (Beijing as opposed to truly local efforts).

akamaka2• 6 years ago

This law, if implemented fully, will effectively demolish the “one country, two systems” agreement, which has been the basis of Hong Kong’s stability and success for the last 23 years. The Beijing government is pulling out of their side of the deal they made in 1997. What will happen next is not something I can predict, but history shows us some of the things that can happen when communist parties impose their rule onto a new territory. Usually it’s not good for business.

supernova87a6• 6 years ago

But as I understand it, the "2 systems" has to do with economic and political governance. I see nothing in those laws about changing the financial or economic systems of the country that would lead businesses to gulp and say no thank you?

inimino• 6 years ago

The ability to have their own laws, their own courts, and their own government is under ongoing and successful attack. Perhaps you're blissfully unaware of the tightening grip of Beijing over the last 20 years, of which this is just the latest incremental move? It's hard to know whether to read your posts as earnest ignorance or subtle propaganda.

alisonatwork• 6 years ago

I don't think the main problem Hongkongers have with this law is necessarily the content, but the fact it has been pushed on them by an external government which many Hongkongers expected to remain independent from for the next 27 years. From their perspective, having their own government taking marching orders from Beijing undermines the principle of "one country two systems".

Aside from the principle of it, there are also several aspects of the proposed law that go beyond what many people consider to be reasonable. Most notable for migrants and tourists is the emphasis on preventing and penalizing "foreign interference", which doesn't sit well in a city that is still the most multicultural in East Asia. Allowing the mainland security apparatus to set up offices in the city is also concerning, given mainland law enforcement is famous for disappearing and torturing people who do not support the single party dictatorship.

I think it's fairly clear that this is an opportunistic power-grab by the central government. The coronavirus has allowed them to dramatically increase the intensity of their security measures in the mainland, instituting Xinjiang-style movement tracking apps, "temporary" barricades and checkpoints all over the country. The state media has whipped up intense anti-American hatred, and the government is emboldened by the fact that America is dealing with the virus comparatively poorly. There is a widespread public support for cracking down on Hong Kong, which has been presented here in mainland as a city besieged by terrorists and American agents of chaos, all out to destroy China. I suspect from the point of view of the central government, being able to advance their timetable on the takeover of Hong Kong is the silver lining of this pandemic.

chrischen8• 6 years ago

Was Hong Kong ever really independent though?

supernova87a6• 6 years ago

Thanks for that informative reply

av_engr6• 6 years ago

First of all, the law has been used in China to persecute political dissident. (Political dissident in that case is anyone who expose any problems in the country or being vocal about particular problem in the society or government)

Second, CCP is planning to bypass Hong Kong Legislature to implement this law as an amendment to the Basic Law (Like an HK constitution). This is completely decided by the CCP government and Hong Kongers has no say over it.

Third, Hong Kong has no universal suffrage for its chief executives and Legislative Counsel. In this case, there is no checks and balances. With some draconian law (see National Security law and the previous public emergency ordinance) and lack of checks and balances, Hong Kongers are deeply concern about their freedom in all senses.

Lastly, police brutality and the mass persecution on pan-democratic individuals also spooked Hong Konger's confidence on the city itself and its autonomy. The HK HangSeng Index dropped 5% on the first day. Then massive influx of Chinese money came into the market the next day to prop the market up.

hkmaxpro• 6 years ago

If you blindly trust what’s written, then they do look similar.

Much like the Constitution of the PRC stating “citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession, and of demonstration.” [1]

One would be a fool to believe it’s similar to the US constitution.

OK, here’s my answer to your questions:

Jimmy Lai runs the biggest pro-democracy newspaper, Apple Daily, in Hong Kong, and his Twitter account was recently named by Chinese state media Global Times as providing “evidence of subversion under new national security law”. [2] Pro-democracy newspaper will be the first to disappear after passing the national security law.

Infringement on freedom of press (and speech) would have drastic consequences. Just look at Covid-19. When no newspaper stands up to reveal the scale of a mysterious disease and doctors were forbidden to warn others, the government can cover it up for much longer than in an open society [3], ultimately costing hundreds of thousands more lives [4].

When short selling in China could be classified as “malicious” and “illegal” [5], or as the rumor goes, “a financial coup to overthrow Xi” [6], I doubt Hong Kong can remain an international financial hub under the new law.

Media companies also like to stay in Hong Kong [7]. That could change with the new law, and with the loss of free flow of information, financial industry will hurt, too.

[1] https://en.wikipedia.org/wiki/Constitution_of_the_People%27s...

[2] https://www.reddit.com/r/HongKong/comments/grjw6s/traitor_ji...

[3] https://www.scmp.com/news/china/politics/article/3049606/cor...

[4] https://hongkongfp.com/2020/03/14/china-may-prevented-95-vir...

[5] https://www.reuters.com/article/us-china-stock-crime/chinese...

[6] http://www.rfi.fr/tw/%E4%B8%AD%E5%9C%8B/20200127-3%E5%B9%B4%... (in Chinese)

[7] https://www.ejinsight.com/eji/article/id/1104520/20150724-wh...

camgunz2• 6 years ago

It’s less the text of the law (though it’s vague and meant to function as a pretext for the CCP to take my action in the name of “national security “) and more that they’re inserting it into Article III, which they legally cannot do. It functionally kills HK’s Basic Law.

kyrra• 6 years ago

"U.S. Officially Declares That Hong Kong Is No Longer Autonomous

WASHINGTON—The State Department has officially determined that Hong Kong is no longer autonomous from China, Secretary of State Mike Pompeo said in a statement Wednesday that holds implications for the future of economic ties and could lead to sanctions against China.

The State Department is required by the Hong Kong Policy Act to assess the autonomy of the territory from China. It certified to Congress on Thursday that Hong Kong is no longer autonomous."

smaili• 6 years ago

Besides sanctions, what other implications would this declaration realistically have?

Kalium• 6 years ago

Previously, Hong Kong had a status that let it trade with the US under terms very different from those mainland China is subject to.

Clear consequences have not, as near as I can tell, be spelled out yet. The gist is that US trade policy will stop privileging HK. US/HK trade seems to be something like $66 Billion a year, so this is potentially a major thing.

bigie35• 6 years ago

It's going to devastate the Swiss watch industry which is already in rough shape from COVID. Hong Kong WAS their No. 1 market.

https://www.nytimes.com/2019/09/11/fashion/watches-hong-kong...

Aunche3• 6 years ago

Not that I disagree with the act, but I love how politicians are trying to frame destroying Hong Kong's economy as supporting "Human Rights and Democracy."

ng122• 6 years ago

In the post-nuclear world economic pressure is the only tool we have to deal with bad actors. It's why we sanction North Korea, Iran, and Russia.

ep1033• 6 years ago

Because that's exactly what it is? It is literally one of the main points that people in Hong Kong have been protesting for

lstodd• 6 years ago

There is no longer an 'Hong Kong economy'. That is all.

ipiz06182• 6 years ago

This is what a lot of Hong Kong people advocated. By treating Hong Kong the same as China, it's hoped Chinese companies can no longer exploit Hong Kong's different system to export stuff cheaper than in China, especially when the economic warfare was going on before.

m-p-3• 6 years ago

And the real losers in this fight here are Hongkongese citizens, who fought for their freedom and ultimately are losing it, on top of facing an economic crisis.

f00_2• 6 years ago

yeah, hopefully they just move to taiwan

gpm• 6 years ago

Or the UK, or really anywhere else outside of CCP control.

magicsmoke• 6 years ago

The smart ones already moved out in 1997 to Hongkouver. The ones left in HK are those without the money or skills to emigrate.

tasogare• 6 years ago

Yet Taiwan is also under threat from PRC. Also emigrating (ie leaving born place, family, friends, etc) is not that easy even when money/job is not an issue.

pkaye• 6 years ago

Elsewhere I've ready that Hong Kong and Taiwan have a lot of differences like Mandarin vs Cantonese. Also Hong Kong has a much higher GDP per capita.

redisman• 6 years ago

What all of them?

supernova87a6• 6 years ago

As I genuinely asked in my comment separately in the thread, what practical freedoms are being lost by the everyday person in Hong Kong that would not be considered crimes in the US (or Hong Kong prior to this), for example?

marcinzm• 6 years ago

The freedom to not have China dictate it's laws.

dade_2• 6 years ago

Random detention for annoying the CCP will now be the actual law.

ng122• 6 years ago

A reasonable degree of self-representation.

vore2• 6 years ago

What practical freedoms are being lost by the everyday person in the US if the US decided to replace public courts with shadow puppetry?

Probably none, but I would be terrified.

jcranmer• 6 years ago

The obvious answer is criticism of the Chinese government, which is I believe a Chinese constitutional right that is ignored in practice. Although, practically speaking, this has already been lost in Hong Kong ever since the abduction of the bookseller.

spyckie2• 6 years ago

The founding fathers of the US did not write the US constitution with practical freedom in mind. They wrote it with the principles of freedom as sacred. The battles they fought weren't for being able to buy groceries or walk the streets. They fought the battles over things like the right to not being taxed, to not be under the bank of England's monetary regulations, to have their own voice in the political system and legal system. These things don't affect the majority of the population, but they are extremely, extremely important. Why?

This is because systematically, over the course of hundreds of years, those in power abused those without power, over and over and over and over again, based on their own personal gain. ESPECIALLY if you don't care about the people you're in power over. This is basically why the American Revolution happened, England ran out of money fighting wars and tried to squeeze America for it. America said, no way, you don't give 2 pence about us.

Yes, your practical freedoms may not be affected in the micro timescale of the days and weeks, but over the course of centuries, countless people lose their lives and livelihoods, not their freedom, because of any number of reasons, none of them being that they did a crime to deserve it.

If history has taught us anything, you could lose your life for being:

1) A religious minority

2) A racial minority

3) A friend of someone who the person in power wants to get rid of

4) Too rich / powerful and a threat to governance

5) Well educated or with radical ideas

and much more.

You could also lose your livelihood or future by any number of means:

1) being taxed unfairly so that you make next to nothing

2) being forced to do things in a way that would benefit your mother country, at the expense of yourself

3) needing to follow laws that you have no control over that inconvenience or ruin your trade or businesses

4) needing to report to the government suspicious persons or activities

And just to be clear, I'm talking about themes from the American Revolution and escaping from the tyranny of European influence, not current affairs.

This situation is not in the same ballpark of possible outcomes as "Facebook exposing your private data to advertisers", of which only minor inconvenience is at stake. It's a lot more than that.

symmitchry• 6 years ago

Didn't they mandate learning Mandarin in schools, and remove English as the second language (some time ago?)

Here is another example: Mandatory Mandarin proficiency exams at university: https://www.scmp.com/news/hong-kong/education/article/213041...

I have lived in HK and know many people there, and their day to day doesn't seem impacted, but culturally I suspect a massive gradual change is inevitable.

It would be like asking: does living in China differ tremendously from living in the US, for you and I? Not that much really, on a day-by-day basis!

lykr0n• 6 years ago

Not having to worry about being abducted and reeducated by a government that has shown a depraved indifference to human life?

sethherr2• 6 years ago

As a pacifist (in high school, no longer), I took issue with the US war in Iraq and refused to stand during the national anthem in classrooms. I was not arrested, or fined - just teased by fellow students.

One thing being fought over is disrespecting the Chinese national anthem. Sure, I might not be “the average person” but that’s the point, small deviations are criminalized.

hker2• 6 years ago

TL;DR: limiting freedom of expression in name of national security, without a just trial.

Stretching a bit, we call it the freedom from fear (of unjust prosecution), which is the—arguably justified—distrust of the rule by law in China (not the rule of law that Hong Kong previously had). Note that Hong Kong people are using “Freedom from Fear” [1] differently from how US is using it [2].

Chinese courts work very differently from Hong Kong ones: they swing with politics. Many people have been—as perceived by Hong Kongers—unjustly detained or prosecuted (such as the milk powder incidents [3], the two Canadians in China after the Huawei case [4], or the more recent whistleblower Li Wenliang). And those people, in some cases, are sued for charges such as spying or subversion, which is the main theme of the national security law.

Given that Chinese agents extracted Hong Kongers in the Causeway Bay Books disappearances [5], Hong Kongers fear that the new national security law (which allows state agents to police Hong Kong [6]) means that Hong Kongers (and perhaps foreigners) may face state agents extraction from Hong Kong. To many Hong Kongers, voicing out for social injustice could mean instability in China, and could mean theft of state secret or subversion as CCP see it.

Hence it is limiting freedom of speech.

[1]: “Freedom from Fear” is a slogan in Hong Kong protests, see for example this image https://cdn.cnn.com/cnnnext/dam/assets/181114165731-hong-kon...

[2] https://en.wikipedia.org/wiki/Freedom_from_fear

[3] https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal

[4] https://www.cnn.com/2019/12/10/asia/canada-china-kovrig-spav...

[5] https://en.wikipedia.org/wiki/Causeway_Bay_Books_disappearan...

[6] https://www.wsj.com/articles/china-to-allow-state-security-a...

camgunz2• 6 years ago

- freedom of expression

- freedom of association

- freedom of religion

- freedom of the press

- the right to privacy

- the right to a democratic, representative government

- the right to a fair trial

- freedom from cruel and unusual punishment

The CCP is one of the most oppressive regimes on Earth, depriving its people of even the most basic of rights and freedoms.

davidw• 6 years ago

I saw the suggestion on twitter that the US and other countries should hand out visas to people from Hong Kong who want to live in a free country (with the hope that the US doesn't continue to decline, from that perspective).

chrisco255• 6 years ago

We should go one further and carve out a territory for a New Hong Kong and let them re-build there.

troydavis• 6 years ago

There’s a much stronger argument that Britain should do so, which would partially undo the damage they caused during the handover - not only not granting British passports, but pressuring Portugal/Macao to do the same: https://www.scmp.com/news/hong-kong/politics/article/2156385... (2018, about the period leading up to the handover)

nickff• 6 years ago

I am reminded of the proverb: 'when elephants fight, it is the grass that suffers'.

vmception• 6 years ago

who fought for their freedom and ultimately are losing it

Okay so lets rewind like a year ago, what did you or anyone realistically think was going to happen?

100% of the will of the people can only make up for a fraction of the political consensus in Hong Kong, with corporations making up the rest. This isn't unique to Hong Kong, The City of London within London has a similar form of representation.

The corporations derive their power and hegemony from mainland China.

The Chief Executive (Head of State) is appointed unilaterally by Beijing.

The politics are interesting but if you were a betting man, what are your odds for any outcome?

yibg• 6 years ago

Personally I'm saddened by this. I have a lot of friends there that I worry about and I've been fond of Hong Kong the way it was even a decade ago.

I'm afraid it'll never be the same.

mamborambo2• 6 years ago

Although HK appears to be the direct casualty of US change of trade status, the reality is that China is one who will bleed once the HK trade window is closed.

For too long China practised a kind of hostage diplomacy where it solves its problems by taking hostages and then negotiating for concessions. For instance the two Canadians detained to pressure Canada to release Huawei CFO.

Hong Kong is now another hostage of CCP, Xi betting that the US dare not tighten the screw on its tariff as long as HK is a hostage in its grip. But most likely China will fail, as HK people have prepared themselves to be sacrificed to bring down the CCP. On an individual level HKers will begin another mass exodus like in pre-1997.

voisin• 6 years ago

Anyone else wonder why legitimate, thoughtful responses are being downvoted?

billme• 6 years ago

There are a lot of “shadow” voters on HN. One might speculate there’s voting rings, but given HN doesn’t allow a given user’s voting history to be public, impossible to audit it to look dark patterns, puppet masters, etc.

ganzuul• 6 years ago

I regularly upvote downvoted comments if it looks like someone used a downvote as an "I disagree"-button.

Just undo that nonsense.

dang• 6 years ago

Please follow the site guidelines when posting here.

https://news.ycombinator.com/newsguidelines.html

supernova87a6• 6 years ago

So in terms of after-effects and alternatives, should we all start investing in... Singapore real estate?

ab_testing• 6 years ago

I don't understand why the world in general is worried about Hong Kong being taken over by the Chinese. In 1842, Hong Kong was a chinese territory. It was taken over by the British during the first and second opium wars and then leased out to the British for 99 years. The keyword here being leased out. If now China is wresting back control of its territory, how is that disputed. The people of Hong Kong always knew that their autonomy was only till the time when the lease ends.

Interestingly, When the union flag was raised over Possession Point on 26 January 1841, the population of Hong Kong island was about 7,450, mostly Tanka fishermen and Hakka charcoal burners living in a number of coastal villages. Today Hong Kong's population is 7.5 Million so 1000 times its original population. So every body who came later knew about the lease and the length of the autonomy.

spacehunt5• 6 years ago

The key detail you missed is One Country Two Systems, which is what allowed Hong Kong to have a financial system integrated with the Western world's, and a legal system that works more or less the same as in London and New York.

PunchTornado• 6 years ago

only part of HK was leased for 99 years. the main island was taken over permanently after the war.

ww5204• 6 years ago

This is better understood in the context of Hong Kong's trade relating to China.

HK import volume 2018: USD $627 billion [1]

HK export volume 2018: USD $568 billion [2]

The top 2 imports are: (see [3])

1. Electrical machinery, equipment: US$307.7 billion (53.2% of total imports)

2. Machinery including computers: US$66.4 billion (11.5%)

HK has only 7 million people. There's no way it can consume that much import nor produce that much export, especially not consuming $307 billion worth of machine equipment. Hong Kong is China's 2nd top trading partner [4]; China is basically using Hong Kong as a trading proxy to evade sanction. Most of the imports are purchased by China because it cannot buy them legally and has to use HK's "autonomous" status to import. Most of the exports are routed by China to take advantage of its tax free zone status.

Not to mention 70% of the foreign money going into China every year is via Hong Kong. Killing Hong Kong's "autonomous" status is the stupidest move done by China in the recent years. It allows the outside world to plug the last gateway into China.

[1] https://www.tid.gov.hk/english/aboutus/publications/tradesta...

[2] https://www.tid.gov.hk/english/aboutus/publications/tradesta...

[3] http://www.worldstopexports.com/hong-kongs-top-10-imports/

[4] http://www.worldstopexports.com/chinas-top-import-partners/

sangnoir2• 6 years ago

I don't believe China is currently under any trading sanctions - did you mean they are evading tariffs?

ww5204• 6 years ago

Not sure it's sanctions or tariffs, just there're $307 billion worth of machine equipment per year they cannot buy directly.

blackrock5• 6 years ago

Plugging up the China gateway, also kills the billions of dollars in profits, that American companies make in China.

Look it up. Qualcomm now makes over 60% of their revenue from China! Just in Intellectual Property royalties alone.

Boeing, Coke, KFC, Microsoft, Apple, AMD, Intel, nVidia, Ford, GM, Starbucks, and on and on.. All American companies.

These companies depend on China, to make the cream of their profits, so they can pump that back into new research, to keep their edge.

Say goodbye to all those sweet juicy dollars.

ww5204• 6 years ago

What these companies do are selling/shipping components to China for assembly and then re-export the final products, which make the biggest revenue and profit. It's relatively easy for these companies to shift the manufacture (assembly) to other countries to keep the same revenue and profit. An India or Vietnam assembled iPhone generates the same profit for Apple.

Foreign companies have difficult time making profit in China due to protectionism. McDonald opened thousands of restaurants in China and had to sell their ownership to Chinese companies last year.

zachguo• 6 years ago

https://ustr.gov/countries-regions/china-mongolia-taiwan/hon...

Trading volume with US is just a fraction, and US actually has a surplus. It's unlikely for US to change the status quo in HK which would hurt US companies more.

Most of the imports are purchased by China because it cannot buy them legally and has to use HK's "autonomous" status to import.

This is simply groundless speculation without concrete data.

blackrock5• 6 years ago

You have to wonder about the hypocrisy about all this. Every country, every territory, all over the world, has anti-sedition laws.

Hong Kong, as part of the agreement between China and Britain, must enact their own security and anti-sedition laws. They had 23 years to do it!

Hong Kong failed to do so.

Now, a security law, is going to be shoved down their throats, whether they like it or not.

Foreign forces have successfully infiltrated Hong Kong, and brainwashed the young, into believing what the western world wanted them to believe.

The white western nations love Hong Kong for what it is, because the place is lawless. Capitalism is unbridled over there. It’s predatory, and it eats the young, and the poor. The rich take all the spoils. It’s about laws that favors the rich.

But really, Britain should step up, and give these Hong Kong residents, the right to British citizenship. They extracted trillions of dollars from China, from their plunders during their opium terrorism reign. It’s time to give back what they owe. But I doubt it. The British don’t have any morals or balls to do anything. They’re all talk.

throwaway1997• 6 years ago

What are you even talking about. Hong Kong has one of the strongest legal systems in Asia, although it's being slowly eroded by the government. Have you even visited or do you just watch shitty Kung Fu movies and assume the whole place is Kowloon Walled City or Chungking Mansion?

sunstone• 6 years ago

Xi is following the game plan laid out by Putin but at a faster pace. It's not clear to me that Xi is personally as corrupt as Putin but he's definitely as destructive.

Hong Kong’s security law is going to devastate its economy

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