END OF HONG KONG
meet while living in shoebox apartments that they don’t even have enough money to buy. Many young people have no hope of grabbing even the lowest rung of the property ladder. More immediately, protestors have demanded an investigation into the use of police force against protestors, amnesty for the thousands of protesters who have been arrested, and that officials not use the word “riot” to describe the protests. Protestors want the people of Hong Kong to be able to elect their own representatives who aren’t beholden to China. More broadly, protestors want Hong Kong to have greater independence from the increasingly heavy hand of China. The only real achievement of the protests so far, though, has been the withdrawal of the extradition bill. And the chances that Hongkongers make any other headway are close to zero. No one I spoke with in Hong Kong – from ardent protestors to investors to political risk analysts to cops – could fathom a world where China agrees to any of these. And even if they did, nothing would really change. China has to tread very carefully with Hong Kong. As China’s financial gateway to the world, Hong Kong has helped drive China’s incredible economic growth over the past few decades. That growth has helped reduce the importance of Hong Kong... In 1997, Hong Kong’s economy was one-fifth as big as China’s, and today, it’s less than 3% the size of China’s. But while the largest Chinese companies are less reliant than they used to be IT’S A VERY TRICKY SPOT FOR CHINA
(LMREƶWIǺSVXWXSXEOI a seat at the head of the global table – potentially displacing the U.S. –would be set back by years.
on Hong Kong to tap global capital markets, it’s still the only viable path for many smaller issuers. The other signaling China has to be careful of is to the rest of the world. It took China years to wash the blood off its hands from the 1989 protests in Beijing’s Tiananmen Square. That was when protestors wanting a more democratic government were dispersed – following weeks of escalating demonstrations – with tanks and bullets, killing thousands. That kind of heavy-handedness in Hong Kong, even as violence has escalated, would be impossible for the rest of the world to ignore. The consequences would be astronomically higher for the world’s second- largest economy. China’s efforts to take a seat at the head of the global table – potentially displacing the U.S. – would be set back by years. So far – despite vociferous complaints and some very obvious exceptions – the Hong Kong police have showed remarkable restraint (and Chinese forces haven’t been sent in). Only a small handful of live rounds have been fired in the months of protests and only two deaths have been attributed to protest activities. (It helps that in Hong Kong, the rate of private gun ownership is 3.5 guns per
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January 2020
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