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The Human Rights and Democracy Act
Hong Kong losing its special status with the US will cost Beijing trillions. The Hong Kong Human Rights and Democracy Act of 2019 was signed into law by President Donald Trump on November 27. The Act states that “Hong Kong must remain sufficiently autonomous from the People’s Republic of China to ‘justify treatment under a particular law of the United States…different from that accorded the People’s Republic of China.'”
As a result of of China’s new National Security Law, however, US Secretary of State Mike Pompeo announced that, in his estimation, Hong Kong is no longer free and insufficiently autonomous to warrant special trade and investment treatment by the US, which it has benefited from since 1992.
Hong Kong previously had been exempt from President Trump’s tariffs, prompting Beijing to ship through Hong Kong. Investment restrictions applied to China did not apply to Hong Kong, thus making Hong Kong a pass-through investment destination.
Nor did technology restrictions on China apply to Hong Kong. Many Chinese firms were able to obtain numerous other advantages in the US by registering as Hong Kong companies. The full impact and implications are yet to be seen.
It is possible that this changed relationship will have a knock-on affect where foreign banks and companies from other countries may find that they have lost much of the advantages from being situated in Hong Kong. In addition, they may no longer be permitted to store or process US financial data or use, buy, or sell certain US technology, or to ship tariff-free to the US. In the end, US law may cause these companies from other countries to relocate to Singapore.
Hong Kong losing its special status will cost China trillions of dollars in investment and trade revenues.
Hong Kong Special Status
Hong Kong is composed of three geographic components: Hong Kong Island, Kowloon Peninsula, and the New Territories, incuding an archipelago of small islands. When Britain defeated China in the First Opium War, the Treaty of Nanking, signed in 1842, made Hong Kong Island a Crown colony of the British Empire. In 1860, at the end of the Second Opium War, the UK gained a perpetual lease over the Kowloon Peninsula. In 1898, the Second Convention of Peking granted Britain a 99-year lease on the New Territories.
The governments of China and UK Prime Minister Margaret Thatcher signed the Sino-British Joint Declaration in 1984, which stated that upon the conclusion of the lease on the New Territories, Britain would return all three Hong Kong areas to China. The Chinese, for their part, agreed to establish “one-country, two-systems” under which Hong Kong would enjoy certain types of autonomy for 50 years.
In 1990, while still under British rule, the Hong Kong Basic Law was established as the mini-constitution of the Special Administrative Region (SAR). Among other rights, the Basic Law called for a number of seats of the Hong Kong Legislative Council to be elected by the citizens. Immediately after the handover in 1997, Beijing removed many of the elected officials and altered the law, filling these seats with officials elected by a council appointed by the Communist Party of China (CCP).
When Chris Patten, the last British governor of Hong Kong, completed the handover, he was replaced by the Hong Kong chief executive, elected by a council appointed by the CCP. Hong Kong’s first Chief Executive Tung Chee Hwa fired all of the incumbent government secretaries, replacing them with people with closer ties to the CCP.
At the time of the handover, many Hong Kongers were concerned about their future under mainland China’s rule. Others decided to take a wait-and-see approach. At that time, the rationale was that Hong Kong was too small to be an independent country, yet so wealthy and important to the Beijing regime economically that the CCP would never impose laws that would endanger Hong Kong’s role as a global investment and banking center.
Even when the Hong Kong Legislative Council was largely cleaned out and replaced with pro-Beijing appointees and other apparent violations of the handover agreement took place, many felt that they should just concentrate on making money and ignore politics. Many Hong Kong families sent their children overseas for education, particularly to Canada where they could get on a path toward dual citizenship just in case.
The Hong Kong Protests
The first major signs of trouble came in 2003 when the Hong Kong government announced that it would be implementing a National Security Law. The proposed Article 23 to the Basic Law indicated that Hong Kong “shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People’s Government…prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies.”
Article 23 would effectively have ended the freedom of affiliation and/or protest. Additionally, the Falun Gong spiritual movement which had been banned in China had found a new home in Hong Kong where religious freedom was in effect. The law would have meant any organization banned in China was also banned in Hong Kong, thus ending religious freedom.
Naturally, Hong Kongers were very upset and took to the streets in record numbers. In the July 1, 2003 protest, it is estimated that between 500,000 and 750,000 Hong Kongers, more than 10% of the population, participated. The National Security Law was not enacted, but for many, this was unfortunately a sign of what was to come.
In 2012, the government tried to amend the school curriculum to include subjects related to Chinese identity and patriotism. Joshua Wong, a 15-year-old schoolboy, formed a group called Scholarism to lead nonviolent protests of tens of thousands who surrounded government buildings until “then Chief Executive C.Y. Leung announced that he would give schools discretion on whether to implement the curriculum, rendering it effectively dead.”
The next major protest, the Umbrella Movement of 2014, was sparked by proposed changes in the legislature in which Hong Kong would receive universal suffrage, but that citizens could only vote for CCP-approved candidates approved by the CCP. The name Umbrella Movement, which occupied areas around key government and financial buildings, derived from pro-democracy protesters carried umbrellas to protect themselves from police pepper spray and teargas canisters. Joshua Wong was again at the front of this movement and was eventually arrested. After 79 days of protests, the movement dissolved “without any concessions from Beijing.”
The year 2016 saw the first pro-independence protests in Hong Kong history. These protests occurred in response to the CCP-dominated electoral committee prohibiting pro-independence candidates from running for the Legislative Council. The Hong Kong National Party, an independence party, was also banned.
Forbes magazine recognized Joshua Wong as one of the world’s 50 greatest leaders in 2015. Wong has been arrested at least seven times and in 2019, and the pro-Beijing government disqualified him from running for Legislative Council.
The National Security Law
In June 2019, the Hong Kong government under Chief Executive Carrie Lam announced that it would seek to enact an extradition law, allowing those arrested in Hong Kong to be extradited to mainland China for trial. Again, tens of thousands took took to the streets in protest, and the law was eventually withdrawn. This was the beginning of the contemporary 2019-2020 Hong Kong pro-democracy protests which have gone on almost continuously since.
In September, the extradition bill was cancelled, but the protests continued, as many Hong Kongers saw that Beijing was determined to end their freedoms. In June 2020, Beijing-based, so-called National People’s Congress passed a new National Security Law, which would effectively end most of Hong Kong’s special rights and autonomy.
Tiananmen Square Vigil
Since 1990, and particularly expanding in scope after the 2003 national security legislation,, a massive June 4 candlelight vigil has been held in Victoria Park, commemorating those killed in the 1989 Tiananmen Square Massacre in Beijing. Each year, the vigil has grown larger and larger as Hong Kongers regard Tiananmen Square as an allegory for their own struggle against Beijing. Any recognition of, discussion of, or remembrance of the massacre is prohibited on the Chinese mainland.
The 2019 vigil attracted 180,000 Hong Kongers. In June, 2020, police barricaded the entrances to Victoria Park, and the Hong Kong government issued a statement prohibiting citizens from holding the vigil. In spite of the government warnings, by the afternoon of June 4, young people had already begun tearing down the barricades. And that evening thousands defied the law by taking part in their peaceful remembrance.
For many Hong Kong citizens, their motivation may have been the feeling that this would be the last time.