Because of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments or phone calls as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So we usually provide a quick general answer and, when it is easy to do so, a link or two to a blog post that provides some additional guidance. We figure we might as well post some of these on here as well, which we generally do on Fridays, like today.
In the last three months or so, one of the most common questions our China lawyers have been getting is some variant on “what is going to happen with Hong Kong?” Not sure how all of my fellow attorneys answer this, but my answer is usually to say that few people ever really believed China would uphold its one-country two-systems commitment and that what we are seeing is simply a manifestation of that.
My reason for writing on Hong Kong today stems from just having read a terrific Linkedin post by Roberto DeVido, entitled What’s Next for Hong Kong? Roberto lived in Hong Kong for 13 years and just spent a few days there and his post is a report on what he saw while there and a reflection on how much Hong Kong’s role vis à vis China and the rest of the world has changed and, most importantly, on what will happen next.
I’ve excerpted much of Roberto’s post below, but I strongly urge you to read the whole thing on Linkedin.
I spent a few days in Hong Kong last week and it was saddening. Certainly Hong Kong is no longer the attractive regional hub for international business it once was. Its rule of law has been badly damaged, and its world-class infrastructure has been shown to be at the mercy of local politics (the frustrations of residents and the inability of government to mitigate those frustrations).
I spent 13 years living and working in Hong Kong up to and through the 1997 handover, and my interest in politics and economics means I have kept a close eye on recent developments there.
In the run-up to 1997, many of us suspected the medium-term outcome for Hong Kong would be that it would become “just another Chinese city”. That has proven true, I think, not due to any decline in Hong Kong’s attractiveness, but instead because the growth of China’s main business centres (including what we used to call second- and third-tier cities) has been so astonishing (and lightning-fast).
Twenty to thirty years ago foreign executives and their families could rightly protest that China’s residential, educational, social and transportation infrastructures were inadequate. And while Chinese cities are certainly not leading in most of these areas, they are much, much more livable for foreigners – and importantly, for their families – than they used to be. But if you are doing China business, there is no longer a good reason to base your senior executives in Hong Kong.
The events of the past four months have shown the world that Hong Kong is just another piece on the Chinese Communist Party’s chessboard. On a much more accelerated schedule than expected, Hong Kong has become “just another Chinese city”. The CCP’s sole objective is to remain in power, and the continued pre-eminence of Hong Kong as a regional hub for international business is a very distant secondary goal.
Just before I arrived in Hong Kong last week the police used lethal force for the first time in this conflict, shooting an 18-year-old boy. Two days later, a policeman shot a 14-year-old boy. The angriest segment of the (nearly all peaceful) protest movement was enraged, and attacked the city’s infrastructure, focusing on the MTR rail network. The government responded by invoking emergency powers and banning face masks (used by many to filter tear gas, but also to hide their identities from the facial recognition systems that are undoubtedly identifying thousands). The people (all of them, not just the anarchists) became angrier.
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So what happens now?
I don’t have a crystal ball, but it’s impossible to see Chief Executive Carrie Lam as anything other than a dead woman walking. Beijing will replace her, because she has proven incapable of managing the situation, and not least because she was caught saying she would resign if she could. I imagine they are looking hard for the right candidate, someone completely loyal to Beijing, of course, but not horribly offensive to Hongkongers, who will be willing to accept the poisoned chalice of Hong Kong leadership in exchange for future considerations. As for the timing, I would be astonished if Carrie Lam is still in her job at the start of the new year.
Roberto then sets out his prescription for moving forward while noting the following constraints facing any efforts by President Xi’s to fix things:
Although President Xi Jinping does not much care if Hong Kong continues as China’s pre-eminent “international” business city, he does want the situation resolved. And domestically, at least, he wants to be seen as having “won”, to have restored peace, not ceded anything of substance to the protestors, and certainly not to have provided any hope to mainland malcontents that Hong Kong-style demonstrations provide a roadmap to political change.
You tell us. Whither Hong Kong?