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Hong Kong’s Delicate Balance

Jun 10, 2021
  • Brian Wong

    Assistant Professor in Philosophy, HKU and Rhodes Scholar

Hong Kong has found itself rocked by crisis after crisis over the past decade. From political instability and social unrest, to the fallout from an ossified governance structure and administration, to precipitously ascendant competition from regional rivals and competitors within its own country – it is only unsurprising, then, that many believe that Hong Kong has now lost its mojo. The Pearl of Orient – is no more. 

It needn’t be this way. A Hong Kong that embraces the world whilst being rooted in its Chinese identity remains in the interests of both China and the U.S. The Special Administrative Region can and should step up to mediating between the two behemothic actors, in aligning expectations and rebuilding bridges burnt over the past five years of deteriorating relations. Hong Kong should remain not only competitive internationally as a gateway to China, but also seek to actively complement and carve out its own path within China’s vision for the region – including, but not limited to, the Greater Bay Area. 

Firstly, Hong Kong provides the vital buffer, still, for the large number of international (especially American) firms that are bent on entering into the China market, yet are wary of the restrictions, over-regulations, and legal uncertainties in the mainland. The city’s comparative advantages – its proximity to and connectivity with the rest of China, its stable financial and fiscal infrastructure, and its exceptional living environment for expats – would only go from strength to strength as the Greater Bay Area expands in scale and depth. Indeed, these are virtues that have rendered Hong Kong as the prime location of choice for regional headquarters amongst most international firms looking to set up shop in Asia (estimates put the proportion at over 60%).

Yet there are apparent challenges, too. Singapore offers lower corporate tax rates and cheaper rents, alongside a more functional government and stabler politics with minimal domestic opposition. Hong Kong has been set back by years of turmoil and political intransigence, as its ruling elites refuse to take a much-needed look at how to reposition the city within the ascendant country, as well as in relation to international actors with mixed – at times detrimental – incentives for the city. Furthermore, as Hong Kong trends increasingly towards becoming just another Chinese city in its cultural and social norms, its appeal to international companies inevitably would decline, when juxtaposed against Singapore, which has aggressively marketed itself as a more international, independent, and secure location for business. 

Secondly, Hong Kong should seek to become a source of diplomatic talents for China. Hong Kongers are culturally versatile, socially adept, and dispositionally pragmatic. Many possess the networks, knowledge, and skills to liaise between both sides of the Pacific, or China and the world at large. The city’s stock of human capital – despite recent events – has largely retained its fundamental depth and fluidity, no less thanks to the fact that Hong Kong hosts three out of the top ten universities in Asia. Progressive yet rational voices from Hong Kong can serve as vital constructive critics that relay international perceptions and concerns to Beijing, whilst communicating Beijing’s baselines and genuine discontents to the world at large. This is a role for which few are as well-equipped as highly educated Hong Kongers, brought up under a confluence of Western ideals and Eastern values. Should the SAR administration succeed in their ongoing quest of tackling socioeconomic mobility and boosting the city’s overarching competitiveness and educational quality, the city could well find its new role within China – very much as Shanghai, back in the 1980s and 1990s, served as the national beacon of economic reform and social liberalism. 

Yet the city’s leaders must also beware the dangers of hubris and complacency. Other Chinese cities such as Shenzhen and Shanghai are rapidly catching up in terms of the quality and breadth of international education on offer. From importing boarding schools to aggressively attracting top academic talents from overseas – especially members of the Chinese diaspora who have found themselves subject to abominable abuse overseas – these cities have long sought to promulgate alternatives to Hong Kong as hubs of human capital and talents. Hong Kong has historically leant on its similarities with the West, in political and civic culture, has a primary point of strength – with the radical transformations that have taken the city over the past 48 months, it is high time for the city to diversify, as opposed to remain a one-trick pony. 

Thirdly, Hong Kong’s rule of law remains vital and unique, in enabling it to serve as a regional and international mediation centre. As the only common law jurisdiction on Chinese soil, Hong Kong’s rule of law and independent judiciary are vital assets that must not be stripped away at the behest of political intrigue and pressure. Western firms and non-governmental organisations count on Hong Kong as the bedrock to their many operations in the mainland. 

The seismic political changes that have rocked the city herald both opportunities and dangers. The opportunities lie in the room created for genuine, thorough, structural transformations that seek to resolve the problems that have long plagued the city’s down-trodden and poor. The dangers, of course, rest with the perceptual wariness and substantive objections harboured by Western firms towards Hong Kong’s legal infrastructure. 

The city must also look towards expanding its range of expertise, into spheres including nascent legal technology, AI law, and the intersection of commerce, finance, and law. The need for innovation has never been stronger, as the core pillars of property and (old) finance that have long supported the city’s economic vibrance are gradually – though notably – dwindling in vitality and tenability. 

It goes without saying, that Hong Kong is a constituent part of China. Indeed, this fact must be acknowledged by all who are interested in the city’s future trajectory. It is a no-brainer that the city cannot go against the interests of its own country. To think that it could act as an ostensibly neutral and independent zone between China and the West would be erroneous and delusional – the city can neither be politically nor economically decouplable from the rest of the country. 

What is equally indisputable, however, is that given the increasingly bellicose and vociferous views held by many towards China, and the consequent polarisation of the China debate internationally, Hong Kong remains an indispensable gateway and cornerstone for the world in making sense of what China really thinks. It behoves those in the West with savviness to cut through the silos and the noise in engaging the country, and well-intentioned, well-equipped Hong Kongers must play a role there. 

Rumours of Hong Kong’s death have been greatly exaggerated. 

Those in the West who genuinely cherish the city’s liberties should recognise that flamboyant condemnatory gestures and threats of sanctions would only send the city down the path of irrelevance as it becomes continually isolated from its own country. Of course, it also behoves Beijing to recognise that keeping the city open, cosmopolitan, whilst secure, would serve all parties’ interests. 

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