Hong Kong is Set for a U.S.-China Showdown

Authoritarian governments deploy a range of strategies to maintain their grip on power. Sometimes, they terrify their citizens into submission. At other times, they take a softer approach, trying to persuade the public that democratic contestation threatens stability and prosperity. A middle way strategy looks to grind people down until they are too tired to resist and give up hope for change.

In semiautonomous Hong Kong, China is rolling out this last playbook. But it is squeezing the territory so hard that it risks overplaying its hand and forcing the United States and other Western governments to intervene.

Hong Kong was promised “a high degree of autonomy,” an independent legal system, and democratic freedoms when Beijing took back control from the British in 1997 under the One Country, Two Systems formula. For much of the first 20 years of ownership by Beijing, it seemed like those promises were holding—and that efforts to extend mainland practices could be rolled back by civil resistance. A huge street demonstration in 2003 halted the imposition of a national security law that would have endangered Hong Kongers’ human rights. A student protest movement in 2012 succeeded in pushing the local government to drop plans to implement a compulsory communist-influenced “moral and national education” curriculum.

But as Chinese President Xi Jinping has concentrated power and suppressed opposition in mainland China like no leader since Mao Zedong, so too has he looked to stamp out dissent in politically defiant Hong Kong. It doesn’t help that the city is an ever-shrinking part of China’s GDP; a region that was once critical to its success is now one city among many, with an economy similar in size to the neighboring metropolises of Guangzhou and Shenzhen.

The pace of the erosion of freedoms and autonomy in Hong Kong in recent years has been relentless, even though it was those very attributes that made the financial center a global success story.

Within the last three years, the Hong Kong government, which is appointed by Beijing, has taken many unprecedentedly repressive steps.

It has disqualified elected lawmakers, banned young activists from running for office, prohibited a political party, jailed pro-democracy protest leaders (including a sitting lawmaker and two respected professors), expelled a senior foreign journalist, and looked the other way when Beijing kidnapped its adversaries in Hong Kong.

The latest move to spark concern is a proposed law that would allow the Hong Kong government to extradite people into the black hole that is the mainland legal system. That prompted tens of thousands of Hong Kongers to protest last month in the biggest demonstration since the pro-democracy Occupy movement of 2014. But such actions are unlikely to prompt a rethink as Beijing looks to accelerate the integration of Hong Kong.

The heightened pressure on Hong Kong is prompting increasingly tough criticism from the United States, the United Kingdom, and the European Union. All three have a fundamental economic and political interest in the maintenance of the city’s prosperity and its unique freedoms within China.

Like clockwork, every condemnatory statement from the West is matched by a standard response from the Chinese foreign ministry—and the increasingly pliant Hong Kong government. Back in 2003, Hong Kong’s No. 2 official paid tribute to the spirit of the protesters who forced a reversal in policy. These days, the government sounds more and more like a mouthpiece for its bosses to the north, lavishing praise on Xi and refusing to engage substantively with criticism. So when faced with criticism from the West today, first it insists that Hong Kong has “all along” upheld the rule of law and One Country, Two Systems. Then comes the inevitable warning not to interfere in China’s internal affairs.

The problem is that the extent of Hong Kong’s freedoms and autonomy is very much a global issue.

Hong Kong’s independent access to the global economy is the basis of its success—and it is predicated on its autonomy from Beijing.

The U.S.-China Economic and Security Review Commission, a U.S. congressional body that monitors the national security implications of trade with China, warned that the extradition law would make Hong Kong much less safe for U.S. companies, at a time when Beijing has already shown itself willing to detain foreigners such as the Canadian diplomat Michael Kovrig or the American children of former officials as political hostages.

More importantly, it warned that the change could violate parts of a critical U.S. law. The United States-Hong Kong Policy Act was brought in before the handover to allow the United States to maintain its extensive economic and trade relationships with the former British colony once it returned to Chinese control. The condition was that China adhered to the promises it made to Britain to maintain a “high degree of autonomy” and uphold democratic freedoms.

The act allows the U.S. president to suspend by executive order America’s special treatment of Hong Kong if it is deemed “not sufficiently autonomous.” As the rivalry between the United States and China intensifies, and Beijing’s pressure on Hong Kong increases, the prospects of this provision being deployed will surely grow.

Andy Chan, the founder of a small pro-independence party that was banned by the Hong Kong government last year, is one of several activists who have called on U.S. President Donald Trump to pull the U.S.-Hong Kong Policy Act trigger to punish Beijing for its actions and deter future backsliding.

U.S. diplomats have tried to play down the suggestion that the government might sanction Beijing in such a fashion. They fear that such a move would be counterproductive, reducing the United States’ ability to engage in Hong Kong. But after the recent jailing of several leaders of the Occupy movement, the U.S. Consulate General in Hong Kong warned that continued erosion of the city’s autonomy “puts at risk Hong Kong’s long-established special status in international affairs.”

In similar fashion, the EU and the U.K. have also warned that Beijing’s actions risk undermining the trust of the global business community and damaging Hong Kong’s international standing. International chambers of commerce in Hong Kong, which long refused to publicly acknowledge the shifting ground for fear of upsetting Beijing, have recently become more vocal about the threats to the rule of law there. But their complaints sound like too little, too late.

The bigger question is whether U.S. sanctions on Hong Kong would be effective in deterring Beijing—and whether they would help or hinder Hong Kongers.

The city’s 7 million people would undoubtedly suffer from the economic fallout of any such move. Beijing would also have much to lose. Hong Kong is a vital valve for outbound investment by large Chinese companies, state-owned and private, as well as the piggy bank of choice for many Chinese billionaires. But the problem, as can be seen in the trade war, is that Xi cannot afford to be seen backing down in the face of external pressure.

The One Country, Two Systems arrangement was always ridden with contradictions, promising human rights, elections, and the rule of law while giving ultimate authority to a communist dictatorship that is bitterly opposed to these democratic cornerstones. The original hope was that the mainland would come to look more like Hong Kong—that now seems wistfully idealistic. When China was still “hiding its strength and biding its time” under Jiang Zemin and Hu Jintao, Hong Kong was able to flourish amid the ambiguity.

With the advent of Xi’s more muscular—or, perhaps, paranoid—leadership, the Chinse Communist Party is increasingly unwilling to tolerate what it sees as the use of Two Systems to undermine One Country.

With the Chinese leadership unlikely to shift direction, the ball is in the court of the United States and other Western governments.

It is getting harder and harder to maintain the fiction that Hong Kong is “sufficiently autonomous.” But is the West willing to cut off its preferential access to this key financial center in an attempt to correct Beijing’s course? And would such actions improve—or worsen—the prospects for Hong Kong’s people?