Issue Briefs

The End of Hong Kong

Paolo von Schirach

July 05th, 2020

WASHINGTON – Hong Kong as we knew it –an island of economic (and at least to some extent) political freedom living a somewhat precarious, semi-independent existence as a special status appendage to mainland China– is now finished. China just killed it.

For a while, hesitation

A while back, confronted with the defiance of the Hong Kong citizens who were protesting almost daily, desperately clinging to the hope that somehow they would be able to preserve their exceptional autonomous status indefinitely, (or at least for a much longer period of time), the Chinese government hesitated. It allowed loud and at times violent protests that would be simply unimaginable in the mainland.

New course

But now the leaders in Beijing changed course –in a dramatic way. They made what is clearly an irreversible decision regarding ways to put an end to Hong Kong’s open rebellion. A Chinese national security law will be applied to Hong Kong. Along with this momentous decision, comes a simple message. From now on, the recalcitrant trouble makers in Hong Kong will be arrested and punished, harshly. All the others are on notice. Hong Kong will be tamed, with force. And, if this tough Beijing approach to a territory that is supposed to enjoy special autonomies for many more years looks bad in front of world public opinion, so be it.

Chinese pragmatism?

If we step back, the world used to view China’s willingness to accept that Hong Kong, as of 1997 a territory under its sovereignty, would continue to operate according to vastly different (Western) principles of economic and to some extent political freedom (the legacy of British rule) as a sign of reassuring Chinese enlightened pragmatism.

Well, it turns out that China now decided that Hong Kong is too big of a problem, and therefore it must come under its full mainland control. The massive demonstrations organized by those who feared that this development might come about –Chinese direct control– triggered this very outcome. Henceforth, a national security law from mainland China will be applied to Hong Kong. No more Hong Kong special status. Therefore, this is the beginning of the end, in fact the end, of any residual meaningful autonomy and related freedoms inherited by the Hong Kong citizens from British rule.

The end of Hong Kong

Of course, this also means that any hope for Hong Kong’s continuing viability as a vibrant global financial and trade hub, sustained by its special status and related freedoms as a territory that is in essence a free appendage to autocratic China, is now gone.

Make no mistakes. With this open assertion of Chinese power over the territory, Hong Kong is finished –politically and economically. Most fundamentally, this move by Beijing also spells out that China does not have any problems in contravening both the spirit and the letter of the 1984 Sino-British Joint Declaration which explicitly stipulated that Hong Kong would retain its distinctive system and laws for 50 years after the 1997 end of British colonial rule. So, we have to conclude that, according to Beijing, international commitments are binding until they are not, based on its discretion.

How is this possible?

Many observers may argue that there must be some mistake here. This dire scenario cannot be true. Why would China kill Hong Kong, the goose that lays so many golden eggs? Along with the stick of this tough new national security law, surely there must a carrot somewhere. There must be some compromise offer coming from Beijing, some new arrangement that will preserve Hong Kong’s status as a vibrant global trade and financial hub. Hong Kong, the optimists would say, plays a really unique role. It is too valuable to China. As a minimum, it performs a useful role as an open western-style gate linking China’s opaque economy to the free trading world. Why would China destroy this tool?

Hong Kong no longer so important for China

For two reasons. Reason number one. China concluded that tolerating open defiance from some of its subjects is bad for the image of the ruling Communist Party that is supposed to be in control of everything. Yes, there may be some flexibility regarding special situations, (and Hong Kong would be one of them), but only as long as there is complete understanding that on fundamental matters there must be total compliance with the dictates coming from Beijing. Clearly, a large portion of Hong Kong’s citizens do not agree with this understanding. Hence their defiance expressed via protests. And now Beijing tells them and the world that enough is enough. Open defiance will be crushed.

Reason number two, Beijing’s leaders have concluded that the tremendous growth of the Chinese economy in the last thirty years over time reduced the strategic relevance of Hong Kong as a precious bridge to the West. China obviously concluded that while this loss is regrettable, it is not that significant.

What about the damage to China’s image around the world?

But here is the open question. Will Beijing come to regret this choice? Have the Communist Party leaders in Beijing fully assessed the damage to China’s image and prestige around the world? Don’t they see that international public opinion, already suspicious about China’s behavior, will become even more skeptical about the notion that China has become a responsible global citizen?

In Hong Kong, at this point the people do not need additional evidence to be convinced that they are doomed. Clearly the Hong Kong business elites, as well as the ordinary citizens, see the full implications of the new national security law. And the global companies that have been operating in Hong Kong because of its special status that granted western-style freedoms, and because of its unique role as a regional hub and as the intermediary between global business and mainland China, see this as well. Once it becomes clear to all global investors that going forward Beijing will run the place at every level, and that the local government no longer matters, this will spell the end of Hong Kong’s as a vital economy. Therefore, we can expect to see an exodus. may be not a stampede, but an exodus out of Hong Kong.

People will leave

We know that the British government already offered to those Hong Kong citizens who are so entitled (about 3 million) to relocate to the United Kingdom. Expect many of them to take advantage of the offer. Others will try to follow them, and/or try to go somewhere else: be it Taiwan, Singapore, Australia, Canada, or the US. The smart and wealthy most probably already have contingency plans in place, (second passports, investor visa in other countries), that will soon be activated.

The logical consequence of all this is that in a not so distance future Hong Kong will become something like a ghost town. Not literally, of course, but in practice. The vital juices of the former British Colony are kept flowing by the tens of thousands of entrepreneurs who run large and medium local businesses that have prospered because they had the confidence of living under a regime of significant personal and economic freedom. If this regime is indeed over, and my sense is that it is over, then Hong Kong as we know it is over.


The Chinese government obviously factored all this before declaring that its national security law now will be enforced in the Territory. However, I am not sure that they have fully evaluated the ripple effects, the long terms consequences of what they are doing today. As indicated above, I am sure they evaluated the economic pros and cons and concluded that, with a much bigger and much more sophisticated mainland China economy, Hong Kong’s role is no longer that important for China’s growth and welfare. Therefore its loss as a hub for global finance and trade is really not such a big deal. Shanghai can replace it. And that may very well be true. However, and here is Beijing’s miscalculation born out of hubris, in so doing the ruling Chinese Communist Party is also showing the world what China is all about.

The true face of China

Now it comes out in the open that, when dealing with China, there are no nuances, and no special considerations. In this new world, as defined by Beijing, there is rising China’s power. The others have a choice to be either compliant vassals, or opponents. Noisy opponents will be dealt with using whatever means may be available until they accept their role as vassals.

Hong Kong is obviously a special case, with unique features. It has a special history. After 1997 it became legally part of China. Yes, we know that. Yet, precisely because of Hong Kong’s unique history and features, it was pointed out by the optimists outside of China as a good and reassuring example of Chinese wise pragmatism, suggesting that there will always be the possibility of mutually satisfactory agreements with a Chinese government deep down committed to further global progress through a variety of deals with its partners around the world. You know: “Live and let live”. “No matter what, we can find a productive way to get along”.

Well, not so. The deal made with the UK back in 1984, way before the Territory was handed over to China, guaranteed that Hong Kong would enjoy its special status for at least 50 years after China would regain sovereignty over the Colony in 1997. That deal has now been broken. Hong Kong’s protesters will be silenced. Many will go to jail. The lucky ones will escape or learn to be quiet.

Not like us

Sadly, Hong Kong is over. And now the world will look at China with different eyes. This turn of events will not benefit China’s image and prestige at all. Finally the world, in particular the rather absent minded, wishful thinking old democracies, will come to the realization that getting close to China under the assumption that “the Chinese have become more ot less like us” was and is a mistake.

Paolo von Schirach He is the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC. He is also the Editor of the Schirach Report.