Hong Kong's Dilemma

China's national security law threatens the cultural fabric of Hong Kong. How does the history of HK shed light on its destiny?

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Although the western world’s gaze has been averted by the fall of its famous statues, a new power balance has stirred in Hong Kong (HK) with the passage of the National Security Law, which threatens the city’s cultural ideals. Kept hidden until its approval, the law states:

  • Crimes of secession, subversion, terrorism and collusion with foreign forces are punishable by a maximum sentence of life in prison

  • Damaging public transport facilities can be considered terrorism

  • Beijing will establish a new security office in Hong Kong, with its own law enforcement personnel - neither of which would come under the local authority's jurisdiction

  • People suspected of breaking the law can be wire-tapped and put under surveillance

  • The law will also apply to non-permanent residents and people "from outside [Hong Kong]... who are not permanent residents of Hong Kong"


TLDR; anything that upsets the CCP in the slightest way is illegal; they’re going to enforce measures with their own security office run by officials in the mainland. (There’s a shocking, yet unsurprising, silence from the left about this law – some go so far as to say that it will be better for HK in the long-term.)

When the British agreed to leave HK in 1997 and sign an infamous treaty with China for a 50-year lease, the elites couldn’t have imagined China’s influence 23 years later – now, no political decision takes place without first pondering China’s reaction.

How did we get here? In a sense, the city was destined for civil war since 1997: the British have a history of nasty divorce settlements with their former colonies. Certainly, Hong Kong – one of the world’s great metropolises – wouldn’t allow its freedom to be taken without bloodshed.

But that doesn’t account for the velocity of change – no sane leader had expected an onslaught of violence roughly 20 years after independence – they had hoped for a peaceful succession, perhaps society could have moved beyond riots. Alas, the political uprisings of the last decade have shattered our panglossian expectations of human behavior.

This was the case a century before when Britain acquired control of the Hong Kong islands in 1898. In fact, when asked why he chose 99 years for the lease, British diplomat Claude MacDonald replied that it was “as good as forever;” he never thought Britain would ever lose control of Hong Kong, so what was the point in caring about the future?

When we think about Asia, the two shining examples have been Hong Kong and Singapore for their emphasis on free-trade, cosmopolitan environments, and international communities.

With the recent national security law passed earlier this week, it has become apparent that Singapore is one of the last bastions of capitalistic citadels in the East; everyone else has fallen prey to the CCP in some shape or form.

Consequently with Hong Kong’s future treacherously uncertain, what should we do with its residents and how do we preserve its glamorous history, which is at risk of destruction?

In nearly a century, Hong Kong skyrocketed to power under British rule, starting in 1898. Of course, while unhappy at the loss of Kowloon during the First Opium War, they must not have been that upset that the land they were leasing to Britain was a wet, humid island, filled with Chinese refugees fleeing war.

To understand the current situation, it’s important to view the larger picture – momentous shifts like China’s current draconian rule of law over Hong Kong happen over the span of decades, not days. Here’s a succinct look at the critical events and epochs of immigration that shaped HK before the handover to China.

  • 1842: After losing the First Opium War, China gave up control of the island of Hong Kong to the British. Like America, the first major wave of Chinese immigration to Hong Kong was marked by those leaving China in the hopes of a better life elsewhere.

  • 1898: I discussed the Scramble for Africa in The Sober Thought Experiment, but what many people don’t know is that there was also a scramble for China in the wake of the Opium Wars. So as to prevent the French from dominating southern China, Britain demanded an extension of Hong Kong’s territory, what they called New Territories, and signed the now-infamous 99 year lease of the territory for the crown.

  • 1937: The second mass immigration to Hong Kong begins as thousands flee upon the outbreak of Sino-Japanese war.

  • 1946: Japan’s brutal rule over Hong Kong, including forcibly withholding food from citizens, saw nearly 1 million people emigrate from the island. But, Britain declared dominion over Hong Kong once more, creating the third mass wave of Chinese immigration, especially after the nationalists and communists start fighting.

  • 1950-1970: Hong Kong industrialized in the 50s, yet concurrently, it witnessed labor riots from its poorly-paid middle class. Technocrats who controlled technology got rich and, like today, trickle down economics was still a fantasy. Obviously, HK’s current cage home phenomenon can be directly linked back to this period of burgeoning inequality; In comparison, this trend started after about 1971 in the United States.

    As the first of the Asian tigers, Hong Kong became globally known as a service-economy with liberal values, building the public-housing estate programme, Independent Commission Against Corruption (ICAC), and Mass Transit Railway, in this period.

  • 1989: Tienanmen Square is a message to protestors in Hong Kong that nobody is safe – democratic barriers start to arise.

  • 1992: The last British governor of Hong Kong wants to widen the voting range for elections; immediately, he’s shut-down and China threatens to undo all these changes upon gaining back power. Their criticisms worked, the bill passed in 1994 is far from universal suffrage and merely adds a thin veneer of democracy.

  • 1997: Farcically, Beijing handpicks Tung Chee-hwa, a capitalistic shipping executive with no political background, to lead HK.

Since then, China has gradually taken more of an interest in HK – their gleaming, authoritarian sword that has gotten stronger, but they’ve become more brazen in wielding it. Those who don’t stand for something, fall for everything: the CCP is certain that if the west was too weak to fight back against the atrocities committed to the Uighurs in XinJiang that HK would be no risk despite the protests last year.

Yet, the CCP seems to be burning the candle at both ends: why fight India, HK, and consolidate northern China simultaneously? Fundamentally, if people believe they can fight back against the all-powerful state, everyone will feel empowered to do so. Tienanmen, despite occurring 31 years ago, is not far from Xi Jinping’s mind; this is why the CCP bans large groups of people from gathering together – it has the potential to turn into the seeds of the Arab Spring, so it must be nipped in the bud.

After the hand-off to China, Hong Kongers enjoyed the fruits of the western cosmopolitan lifestyle: glamorous bars in five-star hotels and yachts docked in the port were pervasive. However, the signs of a sinister ideological trap were taking place if one was paying attention.

“On the 30th anniversary of the Tienanmen crackdown, people who produce books documenting it and other key moments in Chinese history fear they will soon be driven out of business.

“Independent publishing has been reduced to a nonprofit activity for preserving some important historical documents, memoirs and recollections,” said Bao Pu, the founder of New Century Press, one of the few surviving Hong Kong publishers focusing on modern China. “Otherwise it would be gone.”’

In 2015, five booksellers in Hong Kong were seized by the mainland for spreading salacious political fiction about the CCP. It’s not as though they were authors, they were persecuted for simply marketing these books. In a sense, Fahrenheit 451 has already mirrored the present – Beijing is revising its history as we speak.

Those whose mouths were taped shut in the mainland would later shop around their memoirs in Hong Kong, where it would be met with the crazed hunger of a populace salivating for the truth. Nevertheless, in the last few years, everyone from booksellers, publishers, and distributors have felt the pressure and have shied away from speaking truth to power.

The recent security law has lagged far behind the ideological straitjacket imposed on Hong Kong years earlier. Since denizens were forced to remain quiet upon the eradication of these independent booksellers and magazines, China won the battle years in advance; revolution can’t exist without independent thought.

Moreover, the rise of Shenzhen and Shanghai have made Hong Kong less attractive to Chinese mainlanders – as China itself has grown to account for 20% of the world’s GDP, why leave the mainland?

Indeed, this is an inflection point for the world – will we continue to stand by and watch as China humiliates and shreds a global city? I don’t think so.

Byrne Hobart makes the case that there is a massive arbitrage opportunity at play; Hong Kong has a wealth of extraordinarily sharp people who now find themselves lost at sea in a city they barely recognize anymore. There’s a vast opportunity for astute nations to let them in as fast as possible.

“The industries of an ICC would combine the talents of the Hong Kong people with the needs of the host country. Each ICC will likely have an industrial campus to attract Hong Kong manufacturers. The type of manufacturing would depend on the host country’s local conditions, skills, and supply chain.

As many Western countries think about how to onshore supply chains and redevelop manufacturing expertise, we believe an ICC could be a great mechanism to accelerate that transition.”

Some don’t want to go gently into that good night. In this discussion with Mark Lutter, Ivan Ko, the founder of the Victoria Harbor Group, is helping those who want to emigrate from Hong Kong by creating a for-profit company that will develop a new city and a foundation that will use the company’s proceeds to transport keen travelers to his International Charter City (ICC). A few years ago, it would have been ludicrous that more than 60% of Hong Kongers would want to emigrate and that now, “a sufficient portion would be enthralled at the challenge of constructing a charter city.”

I definitely believe that there is a will to do so. The other option is to peacefully bring these citizens to different countries. Taiwan and the UK are following this approach – the latter is extending its visa to five years, after which these refugees can apply for permanent residency. Shockingly, Japan has opened up visas and perhaps even they know that it would be idiotic to not accept these highly-educated people en masse.

“There is no such thing as society,” as Margaret Thatcher once said. “There are individual men and women and there are families.” In other words, it might be too late to rescue Hong Kong, the geographical location, but not so for those men, women, and families.

Ultimately, our actions have consequences long after we’re gone and the decisions that countries make in this critical moment will shape the global, geopolitical landscape for decades, if not centuries, to come.

Until next time,

– Anirudh