Over the past two weeks, we have seen Hongkongers staging massive rallies against the administration’s proposed changes to the extradition law, which, once passed, would allow criminal suspects in the city to be sent to mainland China for trial.
Critics assert that the bill would be a huge blow to the rule of law in Hong Kong, and without the rule of law, foreign and mainland investors would lose confidence in Hong Kong and sell off their assets in the city.
It’s been reported that many mainland tycoons are starting to move their assets out of Hong Kong. The thought that they might one day face trial in the mainland under the proposed extradition bill has indeed terrified them. And so they would rather move their assets to Singapore or elsewhere, according to the report.
Last week, HSBC has taken the lead to scrap the minimum balance fee that applies to 3 million customers in Hong Kong. The move was followed by the Bank of China (Hong Kong). Some say it was a preemptive move in order to compete with virtual banks that have recently been given licenses. However, others argue it’s also intended to convince customers to keep their assets in Hong Kong.
Meanwhile, some of my friends in the local finance industry told me that their confidence in Hong Kong as a global financial hub remains strong, and they cite the recent strong rebound of the local currency to support their view.
However, I believe the rebound of the Hong Kong dollar was mainly due to the narrowing spread between HIBOR and LIBOR. Lately, the market is expecting the Federal Reserve to deliver an interest rate cut. At the same time, Alibaba’s secondary listing in Hong Kong has drawn liquidity from the market, leading to a rise in HIBOR. That has forced many investors to wind up their carry trade positions, boosting the Hong Kong dollar.
In my opinion, Hong Kong is truly an international city that is extremely open and mature. It’s hard to believe that Hongkongers fighting for the city’s core values are all “brainwashed” by “foreign forces”. Most of the Hongkongers have been to mainland China and many other places in the world; they know about the pros and cons of different political, economic and social systems. They know that democracy is not a cure-all (look at the gun violence in the United States).
During a recent lunch, some of my mainland friends insisted that the problem with Hong Kong society boils down to the economy and livelihood. “If the government is willing to deliver a large sum of cash handouts to everyone in the city, any problem will be solved,” they said.
The fact is, the Hong Kong government doesn’t have the courage to deliver universal cash handouts, much less the courage to listen to the demands of Hongkongers: universal suffrage and democracy.
The government has buried its head in the sand. It refuses to listen to the real demands of the people, particularly the young people, while accusing them of being overly idealistic.
For many people in mainland China, the political system is only a means, while improving material life is the real end. But for most young people in Hong Kong, the end that they are pursuing is the democracy, and we can see that many more others, such as those with lower income, those in the middle class, and the professionals in the city, are increasingly supporting that pursuit.
The Hong Kong government has a responsibility to communicate the real demands of the people to the central government in Beijing, and to help find ways to satisfy their demands.
Of course, it is also necessary to balance the people’s demands with the interests of the central government in setting priorities and determining policies. However, what we have seen is that the Hong Kong government is unable to perform this bridging role. Instead, it has only served to heighten tensions in society.
Five years ago, the government’s failure in its political reform crushed Hongkongers’ hopes of electing the chief executive and all the Legislative Council members by universal suffrage, triggering the Occupy Movement.
I believe the failure of this attempt at political reform lies at the root of the massive protests against the extradition bill. Therefore, the government, with courage and wisdom, should resume discussions to pursue political reform ahead of the Legislative Council elections in September next year.
I understand Beijing faces a dilemma in dealing with Hong Kong’s governance crisis. Beijing might even want to tighten its reins on the city.
But I think the government should pursue political reform. It can be launched in two parts, first by introducing universal suffrage in the election of members of the Legislative Council next year, given that this is less controversial.
If the political reform in Legco goes well, the government will be able to restore public confidence. It can also buy time for the government to prepare for the second part of the reform, which is the chief executive election.
Having said that, the question arises: Who among our top Hong Kong officials has the boldness to deliver this significant reform?
Chief Executive Carrie Lam Cheng Yuet-ngor has lost much of her support from the public after the extradition bill row. Beijing may not let her step down since the central government would not want to look weak. But how can she and her team restore public trust?
This article appeared in the Hong Kong Economic Journal on June 25
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
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