Over the past year, Hong Kong society has been torn apart by Beijing’s national security law and changes to the electoral process aimed at ensuring that only those deemed to be “patriots” can hold office in the country. the territory.
Now the focus is on the survival of its free economy and its status as a global financial center.
Observers are not optimistic.
“Economic freedom without democracy and other freedoms is not stable in the long term,” said Fred McMahon, resident researcher at the Fraser Institute, an independent, non-partisan think tank in Canada.
Last month, the Institute’s annual report on Economic Freedom crowned Hong Kong as the freest economy in the world, but noted that the National Security Law and the “descent into tyranny” of the city threatened to retain the title longer.
“The key aspect of economic freedom is the rule of law, which does not bow to power but enforces justice and government independence,” McMahon told Al Jazeera. However, for the Chinese Communist Party, “law is subordinate to politics,” he added.
Last year, the Heritage Foundation, which for decades touted the city as the star child of the laissez-faire economy, dumped Hong Kong of its rankings.
Months after the security law came into effect, Next Digital, a thriving company that published the popular pro-democracy Apple Daily, was forced to shut down after owner Jimmy Lai was accused of “colluding with a foreign power ”, and the company’s assets were frozen.
While Lai is behind bars awaiting trial and has since been charged with other offenses, businessmen wonder if the tycoon’s prosecution under the new law turns out to be a singular exception – or the proverbial canary in the coal mine.
“This is a special case that has put the international business community on its toes,” said George Cautherley, vice president of the Hong Kong International Chamber of Commerce. “They are waiting to see if the government will go further than that and how it will evolve. “
Hong Kong’s economy still appears to be buzzing for now, but Beijing’s recent crackdown on tech giants, training centers and indebted real estate developers has raised suspicions about what may be in store.
Assuming history is a guide, it might only be a matter of time before Beijing expands its interest in Hong Kong economic affairs.
A case in point: The National Security Law was enacted in mainland China just a few years before being imposed on Hong Kong, thereby bypassing the territory’s own elected legislature.
More recently, the city’s “big four” developers, accused of some of the world’s highest house prices and smallest apartments, have been urged to do their part to solve the territory’s housing problems.
For businessmen, there is also the specter of the past: when China was a managed economy and private property was prohibited.
“Businessmen are perhaps less concerned about their personal freedom than about the value of their invested assets in Hong Kong and China,” said Joseph Lian, former commentator and editor of the business press. city, which now teaches economics at Yamanashi Gakuin University in Japan. They “would be in a difficult race,” he said.
But it’s not just the haves who are worried. Middle-class families distraught by the crackdown are also seeking to protect their money and investments.
Tens of thousands of Hong Kong people who are considering emigrating have put up for sale the family apartment, often their most precious possession. Some – and not just those considering leaving – are also opening offshore bank accounts for fear that the territory will soon come under the same kind of capital controls as the mainland.
The world’s longest and most expensive quarantine warrant – between 14 and 21 days in a hotel for all residents returning from abroad – has also weighed on the minds of business and formerly regular travelers.
The European Chamber of Commerce warned earlier this month that many of its member companies were considering relocating some of their operations elsewhere – including Singapore – due to the mandate, which the local government has shown little willingness to release. even for fully vaccinated people.
Chief Executive Carrie Lam hammered home her goal of aligning control of the city’s pandemic with the continent’s zero COVID goal – no matter what the cost.
But the price of an increasingly small economy could end up being high.
Hong Kong’s distinct economic system has long supported its status as both China’s most important financial hub and a global hub.
But with the territory on the leash increasingly short compared to Beijing, Lian expects the investment dollars that have propelled him to preeminence over the past half-century may soon give way to a influx of hedge funds, known as hot money.
“A mature financial center has a lower proportion of speculative capital; Hong Kong may be going in the opposite direction, ”Lian said. “It can still make money for a lot of people; casinos do it too, but that’s not what a financial center is for.