China watches as the dreams of Hong Kong's Umbrella protesters shatter

by Joseph Dobbs The Umbrella Revolution has shown that Hong […]

Image by © Dreamstime

Image by © Dreamstime

by Joseph Dobbs

The Umbrella Revolution has shown that Hong Kong’s democracy is subject to Beijing’s ultimate power. The student-led ‘peaceful’ protests turned ugly as police cracked down on demonstrators calling for greater democracy. Beijing has become increasingly impatient. Tensions in Hong Kong have been created by divergent interests between Hong Kong’s economic tycoons advocating loose ties with the mainland and the city’s youth, fearful that economic benefits will not extend to them. But few now are optimistic about the city’s democratic prospects, writes GIS guest expert Joseph Dobbs.

BEIJING is losing patience with Hong Kong’s Umbrella Revolution which has seen tens of thousands take to the streets in ‘peaceful’ protests to call for universal suffrage and oppose China’s interference in the city’s affairs.

The protesters want the Chinese government to withdraw its proposal to vet nominees for Hong Kong’s top office of chief executive.

Demonstrators, a mix of students and a pro-democracy group, Occupy Central, have occupied key parts of Hong Kong for nearly three weeks. But on October 15, 2014, police abandoned their ‘softer approach’ and clashed with demonstrators to free streets near government offices and financial institutions.

Chinese state-run media have castigated the protesters and suggested that the Occupy movement is being engineered by the US. Beijing is due to host the annual forum of the Asia-Pacific Economic Cooperation (APEC) for 21 Pacific Rim member economies in November and this is an embarrassment on its doorstep.

Hong Kong was plunged into what is seen as its worst political crisis since the former British colony’s return to the People’s Republic of China (PRC) 17 years ago when in August 2014, China’s National People’s Congress (NPC) offered Hong Kong ‘universal suffrage with Chinese characteristics’.

But while the current unrest found its spark after the August ruling, discontent has been brewing long before the NPC’s decision – and not just in Hong Kong; Taiwanese youth too are sceptical about closer ties with the mainland.

Political experiment

In 1997, Hong Kong swapped one undemocratic system for another. After more than 150 years of British colonial rule, the southern Chinese city began a radical political experiment. ‘One Country, Two Systems’ promised Hong Kong it could keep its distinct system and way of life while at the same time rejoining a de facto communist China. Ensuing attempts by both the national and local governments to engender a sense of belonging to the Chinese nation have been repeatedly met with deaf ears or angry outbursts.

In 2003 the proposed Article 23 of the Basic Law, Hong Kong’s mini-constitution, which aimed to counter subversion against the central government, spurred more than half a million Hong Kongers to take to the streets. Again, in 2012, when the government tried to implement a new ‘Moral and National Curriculum’ in schools, thousands of angry parents forced a government retreat. Hong Kongers have a good record when it comes to protesting.

On September 26, 2014, a small group of students, led by 17-year-old Joshua Wong, tried to occupy the government’s offices. The teargas and pepper spray response from a usually upstanding local police force sparked fears around the world of a Tiananmen-style massacre, and brought tens of thousands of young supporters onto the streets.

Weary society

The disproportionate response by the local authorities to largely peaceful protests, together with embattled Hong Kong Chief Executive C.Y. Leung’s refusal to meet with student groups, fostered much goodwill for the ‘Occupiers’ across a weary society. But after more than a week of occupations and demonstrations, and despite the wide local and global support for what was dubbed the Umbrella Revolution, the protests ran out of steam. Few now are optimistic about Hong Kong’s democratic prospects.

The purging of once powerful security chief Zhou Yongkang in a widespread anti-graft campaign has indicated to many that Xi Jinping, only 18 months into his tenure as China’s President, is already the country’s most powerful leader since Chinese communist leader Mao Zedong. Early on in Mr Xi’s presidency the world was given an indication as to how the Communist Party (CCP) would continue its political development.

What has been referred to as Document Number 9 – a communique circulated by the CCP’s General Office to members – outlined President Xi’s stark opposition to any liberalisation of China’s political structure.

Western Democracy

Specifically targeting ‘Western Constitutional Democracy’, ‘Universal Values’ and the ‘Promotion of Civil Society’ as threats to one-party rule, Document Number 9 makes it clear that President Xi’s ideology is fundamentally against the core values of the Umbrella Revolution.

Beijing has demanded that any future Hong Kong chief executive candidate must ‘love the country and love Hong Kong’ and also not oppose the CCP’s one-party rule. This vetting of candidates, when considered as part of China’s wider political development, makes many Hong Kongers believe that the rule of law is under threat. Rule of party trumps rule of law in Mr Xi’s China.

This is not merely a belief held in the radical fringes of Hong Kong society, but also in the mainstream. In June 2014 around 1,800 lawyers marched through Hong Kong wearing black. Their message to the authorities in Beijing was that they will not compromise on Hong Kong’s rule of law and that they oppose Beijing’s increased meddling.

British colonial rule

The 2014 protests have been characterised by the huge number of young Hong Kongers who have come out to protest. The pro-democracy movement has seen a dramatic change of guard, from a generation whose formative political years were in the twilight years of British colonial rule, to one whose political and social education has been entirely framed by ‘One Country, Two Systems’.

Take as an example Joshua Wong, the convenor of prominent student group Scholarism, whose arrest by local authorities served as a cause celebre for the protesters. Mr Wong is 17 years old; he was less than a year old when Hong Kong returned to Chinese sovereignty. Like his contemporaries, he has no first-hand memory of the fact Britain offered only limited democracy to Hong Kong in the dying years of its rule, or the incredible wealth afforded to the city by closer ties with China in the 1980s and 1990s.

Many of the protesters have grown up in a political environment where Beijing is seen as the cause of many of Hong Kong’s problems, and where mainlanders are criticised for causing a housing bubble that means many now live with their parents well into their 20s. Persistent cultural legacies from the British era such as the city’s education system, as well as Western influences stemming from the tide of globalisation, mean these youngsters see themselves as very different from their mainland counterparts and more at home in London and New York than Shanghai or Beijing.

Universal suffrage

While the pursuit of universal suffrage is the core motivation for most young protesters, socio-economic factors have also played into the dissatisfaction many feel with their government and towards closer ties with the mainland.

They see Hong Kong as a city of economic opportunity. Its rule of law affords security to investors, while loose ties with the mainland allow China’s high levels of growth to be tapped. This has been one of the foundations for those who argue for closer ties with Beijing. The response of the city’s economic tycoons to the growing unrest – to fly to Beijing and meet with the CCP leadership – underlines what the rich fear they have to lose.

It is this divergence of interests that has weakened the protest movement. In contrast to their elders, the city’s youth feel the economic benefits of closer ties with the mainland will not necessarily be extended to them, and their prospects for the future are not as strong as they once were.

The city’s Gini coefficient, the statistical measure of economic equality, is one of the most unequal in the developed world. A recent study has shown that Hong Kong is second only to London as the most expensive place to live and work.

Rising costs

The rising cost of living, combined with growing youth unemployment, meant that in 2012 the poverty rate for 15-24 year olds was 17.7 per cent. What is perhaps most telling with regard to the 2014 protests is that nearly 85 per cent of young people believe the situation will get worse in the next decade.

While the older generations experienced a huge boom in the 1980s and 1990s as a result of close ties with China’s rapidly expanding economy, the current youth generation has far less cause to be optimistic. Rising social inequality means that whatever the economic benefits of closer ties with the mainland, which the business community believes is worth a trade-off for political freedoms, the youth are less inclined to accept.

The protesters also called for radical changes to Hong Kong’s political structure. They feel that the unequal society in which they live is, in part, perpetuated by who is afforded a say in the city’s governance. Currently an Electoral Committee of 1,200 people largely from the business community select the chief executive. The Legislative Council, with the role of holding the government to account, derives 30 of its 70 seats from functional constituencies, coming from those same business interests.

Business interests

This has made passing social equality legislation difficult. August’s NPC ruling means that if the protesters fail in their demand for full universal suffrage, as now looks certain, the Electoral Committee will continue to reflect business interests. In essence, the pro-Beijing lobby is largely synonymous with the pro-business lobby.

The cruel reality for the Umbrella Generation is that their protests could potentially make positive legislation less likely. The relationship between the Legislative Council and the Executive was already fraught before the recent unrest, and as Chief Executive C.Y. Leung has refused to step down, the political system could be effectively frozen for years to come. Furthermore, as public support for the current administration reaches new lows, it will increasingly have to look to its pro-Beijing and pro-business base for support.

Taiwan protest

The Umbrella Revolution in Hong Kong comes less than six months after Taiwan experienced its own student-dominated Sunflower Movement. In Taipei the hundreds of students who occupied the Legislative Yuan (Taiwan’s parliament), fearful of Beijing growing influence, called for the controversial Cross-Strait Service Trade Agreement to be scrapped.

Taiwanese President Ma Ying-jeou, of the nationalist Kuomintang, has staked much of the country’s post-global financial crisis recovery on closer cross-Strait ties. For Taiwan’s younger generation, like their counterparts in Hong Kong, there is little reward for the political risk of allowing Beijing more power in Taipei. The poor wages for hard-found work and increasing competition in a less sure economic environment, are common concerns in both Hong Kong and Taiwan. Taiwanese in their 20s are the most fearful of closer ties with the mainland, and some of the most likely to support independence. When asked, in a scenario in which the status quo was no longer an option, whether they would opt for unification or independence, 74 per cent of 20-29 year-olds chose independence.

Damaging prosperity

So far, the protests have not affected Hong Kong’s economy in the way mainland press has suggested. As Beijing cried foul that the Umbrella Revolution was damaging the city’s prosperity, Hong Kong’s Hang Seng Index actually rose, outperforming many other global indexes.

It appears it will take far more than peaceful protests to muddy the shine of the city for investors. Furthermore, Hong Kong’s share of China’s GDP may have fallen since the handover but the city remains a crucial part of China’s economy, a reality that is unlikely to change any time soon meaning Beijing cannot risk threatening Hong Kong’s economic freedom.

The tension between the legislature and the executive and the resulting difficulty for the government to pass laws to alleviate Hong Kong’s economic concerns, such as an ageing population and the spectre of a growing housing bubble, could well see the city slip into recession.

However, what the Hang Seng’s resilience shows is that investors continue to see Hong Kong as the best place for their money. Companies have long favoured Hong Kong over the likes of Shanghai and Shenzhen for Initial Public Offerings (IPOs) precisely because they want access to China but do not trust the mainland’s legal system to protect their investments.

Rule of law

The lawyers in June 2014 and the students in September have both been fighting to preserve Hong Kong’s way of life, a way of life that has attracted both human and financial capital to the city.

China’s lack of rule of law is a far bigger turn off for investors than some polite and peaceful protesters. This is not to say that Shanghai will not compete with Hong Kong in the future however, threats to the city’s status as a global financial centre are not coming from within but rather from reforms in the mainland, which are yet to appease the concerns of global capital.

What next?

The anger of Hong Kong’s Umbrella Generation underlines a worrying demographic reality for Beijing.

After 17 years of ‘One Country, Two Systems’, and decades of attempts to close the divide across the Taiwan Strait, both Hong Kong and Taiwan’s future generations are more and more sceptical about the Communist Party.

Economic prosperity

The lure of economic prosperity is weakening, and the central Government will have to begin thinking of new strategies. What worries many is that if the carrot is increasingly ineffective, the stick approach may become more attractive.

The next few months will be critical. Hong Kong has come perilously close to a serious police crackdown, which would have threatened the stability of the whole of China.

Beijing’s decision to allow the protesters to tire themselves out appears to have worked for now, but persistent grievances look set to remain. The city’s economic position is secure in the medium-term but global investors will certainly be assessing the risk of investing in Hong Kong far more than they have previously.

The problems in the ‘One Country, Two Systems’ framework revealed in recent weeks by young Hong Kongers look increasingly beyond repair. This reality means the protests in Hong Kong have a far wider impact than on the city’s streets. The already established fear of the mainland in Taiwan’s youth will be reinforced by Beijing’s lack of movement on the Hong Kong issue. Without a political deal that takes into account the newly-voiced concerns of the next generation, and can appease Taiwan, we can expect turbulent times ahead.

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Source: Geopolitical Information Service


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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