Having long brushed off concerns over Beijing’s influence, the Hong Kong business community fears that China’s efforts to silence critics, overrule courts and put pressure on the media is undermining rule of law.
When Chinese agents abducted a bookseller critical of Beijing and a politically connected tycoon from semi-autonomous Hong Kong, many foreign investors said privately that they were thorns in Beijing’s side. As the Hong Kong government ratcheted up the pressure on the city’s democracy movement, prosecuting activists, blocking opposition politicians from running in elections and banning a political party, investors said local politics did not affect business. Corporate executives have looked the other way as Beijing has emphasized its “comprehensive jurisdiction” over Hong Kong, reversing the self-restraint that marked the early years of the “one country, two systems” arrangement, under which China granted the city a “high degree of autonomy” and civic freedoms for 50 years after the British handed it back in 1997.
But the Hong Kong government’s decision to in effect expel Victor Mallet, the Asia news editor for the Financial Times, has finally pushed some representatives of the international business community to confront the growing threats to Hong Kong’s rule of law, the cornerstone of the city’s success as a global financial center. “As the issues mount up, it’s getting more difficult to sweep them under the carpet,” says Tara Joseph, president of the American Chamber of Commerce in Hong Kong. “The free flow of data and information is absolutely crucial to the reputation of this financial market.” The government declined to renew Mr. Mallet’s work visa — and then refused to let him enter the city in November — after he hosted a talk at the city’s Foreign Correspondents’ Club by Andy Chan, an advocate of the city’s independence whose Hong Kong National party was subsequently banned. Charles Mok, a former IT executive who represents the sector in Hong Kong’s partially democratic Legislative Council, says investors have been shaken by the decision. “Previously when I went abroad to promote investment, people asked me whether they could make money, but now they are asking about freedom of expression and rule of law-related problems,” he says. Hong Kong is much less important to Beijing in terms of economic output than it was in 1997, with its gross domestic product equivalent to just 3 per cent of China’s, compared to nearly 20 per cent at the handover. But it remains a key financial center, for foreign money coming in to China and, increasingly, for Chinese capital going out.
With the Hong Kong government under pressure from President Xi Jinping to curb opposition to Beijing’s rule, legal experts say that investors — and the government — should be much more concerned about the erosion of the city’s freedoms and autonomy. If Beijing’s influence continues to grow in the medium term, Hong Kong risks losing its preferential access to global markets, which is premised on the maintenance of the promised “high degree of autonomy”. “The situation is very serious,” says Ho-fung Hung, a professor of Chinese political economy at Johns Hopkins University, warning that Hong Kong risks being hurt by the deteriorating US-China relations. “Western governments can no longer pretend that Hong Kong has genuine autonomy from Beijing.” Hong Kong’s one country, two systems arrangement, as it was christened by former Chinese leader Deng Xiaoping, is a unique political experiment, to see if a city with many political freedoms can survive and prosper inside the world’s most powerful authoritarian state. A political compromise between the UK and China, it is ridden with conflicts and contradictions. Hong Kong’s Basic Law, the city’s mini-constitution, guarantees civic rights and judicial independence and ostensibly limits Beijing’s role to defense and foreign affairs. But it also requires the Hong Kong government to implement “directives” issued by Beijing, to enact laws to prohibit “treason, secession, sedition and subversion”