Guardians at the Gate

PROTESTS SPARKED

PasaAuYeung - Umbrella Revolution

Yeung, Pasa Au. Umbrella Revolution. 2014. Hong Kong Umbrella Revolution, Hong Kong. Flickr.

On September 26, just before the start of a major Chinese national holiday, student groups in Hong Kong organized a class boycott and moved to reclaim Civic Square, home of the Legislative Council. As police detained student leaders, a third group, Occupy Central with Love and Peace, called on its supporters to join with the students in the Admiralty District. By 6:00 PM riot police were firing tear gas in an attempt to disperse what had been a largely respectful and peaceful crowd. Images of the protesters shielding each other with umbrellas drew thousands more to the district in support. Overnight, the protest swelled to over 100,000 people and spilled into other districts, most notably working class Mong Kok. The following week was the heyday of the protests. Umbrellas, stockpiled for future defense against tear gas, were used for protection against the sun. As with the first night, students drove the occupation. Most were college age but it was not unusual to see high school students in their blocky uniforms studying together or playing games on their smartphones.

The protesters turned out in response to an anti-democratic ruling by the Hong Kong court in the lead up to the 2017 election of Hong Kong’s chief executive. Hong Kong’s Basic Law provides universal suffrage for all Hong Kong citizens but candidates for the upcoming election are to be selected by a government-run committee. In response to this ruling that the protesters claim infringes on their universal rights, the pro-democratic protests have been surprising for their orderliness and respect for existing rules.

Hong Kong protests reinforced the city’s unique and embedded status.

Hong Kong has been a Special Autonomous Region in the People’s Republic of China for seventeen years now. The protests have thrust into focus Hong Kong’s knotty relationship with China, as business pulls the island closer and closer to the mainland while a sense of Hong Konger alienation simultaneously deepens. Any impact this protest movement may have on the Chinese or Hong Kong economy must be understood through the lens of Hong Kong’s historic place in the Chinese world order(s).

LET’S GO BACK TO GET TO TODAY

Hong Kong (along with all of China) flourished during the Tang dynasty (618-907 CE), although the island’s inclusion in imperial China dates back to the first dynasty in 210 BCE. The first inhabitants were ethnically Chinese, but culturally and linguistically distinct from the Han majority of the Chinese empire. For most of Chinese history, the island of Hong Kong was special only as far as

Door Guard - Zhengding

Unknown. Door Guard – Zhengding. Woodcut. The Britisth Museum, London.

the rest of this Yue speaking region. Southern China was special, however, in its access to sea and trade networks. The domestically inclined imperial governments were keen to leave the region alone, as long as the trade benefits continued to flow inward. Foreigners, emperors felt, were distasteful.

This was a time period spanning thousands of years. The relationship between Hong Kong and the Chinese capital, as it moved around the domestic heartland, was obviously not static during this time. However, the general political and cultural arrangement was not upended until the humiliating terms imposed by the British after the First Opium War in 1842. For the previous few hundred years, the Chinese had restricted European access to its domestic market. All exports left through Guangzhou (Canton) and Hong Kong, the two ports foreigners were allowed to dock. If the sailors had to debark (which often they did not), they were confined to small districts. The imbalance of trade, whereby China exported its goods in return only for silver or other precious metals, was untenable for the European colonial powers, especially Britain whose own preference for tea was ever growing. After the war, the isolationist Qing government was forced to cede Hong Kong in perpetuity, creating the first colonized territory in China. This was just the start of a series of shameful concessions by the Qing government to the European and American powers that ultimately ended the dynastic system and incited decades of civil strife.

BRITISH RULES

Recognizing Hong Kong’s geographic benefits and historical precedent as the gateway to the Chinese market, Britain maintained an open trade port and an open border with the mainland. The British territory became a refuge for those seeking escape from turmoil on the mainland. One of the largest Chinese influxes came during the years around 1949 when the communist government won the civil war and established the People’s Republic of China (PRC). This growing Chinese population was a useful labor source as the British industrialized the island. Nevertheless, Hong Kong was a productive and successful British territory even throughout the Cold War when Britain effectively cut off the mainland’s means of direct access to Western economic and political networks when it closed the Hong Kong border.

Meanwhile, the difference between a Hong Konger and a mainlander protracted. As China worked to redefine itself outside the Western paradigm through its own internal struggles and Mao’s theory of continuous revolution, Hong Kongers saw their standard of living rise and were more greatly enamored of British style rule of law, even while they remained politically disenfranchised. Government, legal, and other public affairs were conducted in English on the island. In their daily life, Hong Kongers spoke Cantonese, since most of them came from Guangdong, the province to which Hong Kong had once belonged. There was no use for Pu Tong Hua, or Mandarin, the most prestigious language standard in China, especially during the years of separation.

umbrellaRevolution_PasuAuYeung

Yeung, Pasa Au. Umbrella Revolution. 2014. Hong Kong Umbrella Revolution, Hong Kong. Flickr.

As it was, it would be the generation of Hong Kongers who fled the harsh policies of the communist regime who would benefit the most from the opening up and economic reforms begun in the PRC by Deng Xiaoping in 1976. Those whose standard of living had risen so dramatically were strategically placed to transition from a manufacturing to service economy by developing real estate and factories on the mainland. These dealings with their backwater cousins would only heighten the Hong Kong superiority complex.

In the 1980s, the image of a colonial British Hong Kong increasingly jarred with the post-colonial global landscape. This was even more so as Hong Kong became a staging point of foreign visitation to the mainland. Strictly controlled, visitors either entered or exited China through Hong Kong. Once more, the island was the logical choice as China’s physical gateway.

At the same time, a 99-year lease of extra territory around the island was due to expire. Hong Kong industries had developed without thought towards the possibility of the end of British rule. The logistics of the expiring lease were a nightmare, especially since there was no doubt the People’s Republic would ever renew such an affront to its national sovereignty. Thus, discussions for the reunification of Hong Kong and China began. Involved in the global ideological battle for democratic principles, the British government could not in good faith hand over Hong Kong without ensuring the democratic rights of its inhabitants. With a new focus emphasizing economic development over ideology after almost fifty years of turmoil, China was willing to compromise. On July 1, 1997, Hong Kong was formally transferred to PRC sovereignty as a Special Autonomous Region with its own constitution. The Basic Law ensured g reater democratic institutions to Hong Kong citizens that their mainland compatriots did not enjoy. The British government called it a successful hand over; the Chinese named it an overdue return. However named, the peaceful transition was a marked moment of immense national pride.

GROWING DEPENDENCE ON THE MAINLAND

Since its return to the PRC, Hong Kong’s ties with the mainland have intertwined even more, to its detriment some say. In 1997, Hong Kong’s economy comprised 16% of China’s GDP. Today it is just 3%. In the last ten years, the number of yearly visitors to Hong Kong from the mainland has more than doubled, from 15 million in 2003 to over 40 million visitors in 2013, according to the Hong Kong Tourism Bureau. Mainlanders are drawn to Hong Kong for shopping, where they can find fashionable status symbols and safe, reliable products. A major point of contention has risen between Hong Kongers and mainland mothers, who bought up the city’s entire supply of baby formula when a mainland manufacturer’s tainted formula was revealed to have killed six children and sickened at least 300,000 more in 2008. Since then, the government of Hong Kong has barred people from taking more than 1.8 kg of baby formula out of the city.

HongKong_China_Relationship2Because of their different political system, belief in Hong Kong prestige has not altered (citizens, more than ever, consider themselves Hong Kongers, not Chinese), even as the greater number of wealthy mainland visitors has caused more Hong Kong citizens to cater to their northern neighbors for a living. With superiority comes greater animosity against the mainlanders, especially recent immigrants, who are believed to have taken all the good jobs and left Hong Kongers in the cold. This is one reason why the student movements are so popular- many students feel they have no viable future in Hong Kong and the government’s pliant relationship with Beijing is to blame. Thus, mainland visitors are referred to as “locusts”. In Mong Kok, the pro-democratic protests could perhaps be better described as “anti-Chinese”.

HONG KING STILL A BRIDGE BETWEEN THE MAINLAND AND THE WORLD

Still, the connection between Hong Kong and the mainland is not all grim. The 100 year separation between China and Hong Kong was a national humiliation. Reunification was a joyous occasion; a necessary step towards healing the faults and fractures instigated by imperial powers and internal weaknesses. Business has always been a positive bridge between Hong Kong and the mainland. Currently, half of all Hong Kong exports are sent to the mainland. Twenty percent of Hong Kong bank assets are loans to mainland Shanghai_HongKong_ThroughTrainbusinesses. And, if they are “locusts,” at least the locusts are buying. According to The Economist, the money spent by mainland Chinese visitors currently accounts for 10% of Hong Kong GDP. Economically, the tie between city and country has never been stronger.

Even more positive is the linking of the Hong Kong and Shanghai stock exchanges. The so-called “Through Train” allows a foreigner more direct access to mainland Chinese companies (previously restricted to domestic investors and a few Hong Kong brokers). More than anything, this link is a long-term boon for both sides. Over the years, as more light shines on shadowy accounting practices, Chinese companies will benefit (although the process will inevitably cause hurt for some investors). Yet Hong Kong remains the major conduit through which foreign investment in China is conducted. In this way, Hong Kong is maintaining its traditional gatekeeper role and is well placed to argue with Beijing for its own unique position.

What is the Shanghai – Hong Kong Through Train?
There’s a major change taking place in the Chinese stock market – one that could effect markets worldwide.

The “Through Train” or Stock Connect between the Shanghai Stock Exchange and the Stock Exchange of Hong Kong expands the connection between the mainland Chinese stock market and the rest of the world. The result could be a flood of new opportunities for investors and companies inside and outside of China.

“We want true democracy,” the signs in Admiralty proclaimed. “Sorry for the inconvenience.” Neither the Hong Kong nor PRC government had any happy options for ending the protests that lasted well over two months. After the disastrous first night when police brutality drew more protesters into the fray, both governments stuck resolutely to doing nothing while giving the protesters no opportunity for progress. The HK government unequivocally refused to speak with the protesters and the PRC continued to insist on the illegality of the protests.

Waiting for student energy to fade and for public sentiment to turn against the protesters did not take long. But in the face of the dire predictions of economic turbulence when the protest began, Hong Kong business has emerged relatively unscathed. Some retailers (especially jewelers) in occupied areas saw a huge drop in sales, while others saw huge gains by selling supplies to the protesters. Outside occupied areas, life in Hong Kong went on without interruption. In fact, this year the number of Chinese tourists visiting Hong Kong during the mainland Golden Week holiday, and the height of the protests, increased 4.83% from last year. Other travelers made their way through the city without incident. One even commented that it was impossible to know protests were going on if Hong Kong was only a through point on the itinerary.

Dont Forget the Original Intention

The taxi industry, severely hampered by the street blockades, begged to differ and won an injunction against the protests. The major areas have since been cleared. Before the police moved in, the fragile alliance of movement groups began to unravel as decisions on whether to stay, provoke the police, or abandon the effort had to be made. Some decided that getting arrested through the Hong Kong system might just prove their point that Hong Kong works best under democratic laws. Still, their arrest won’t alter opinion in Beijing and until some real concession is made, anti-Chinese sentiment in Hong Kong will continue to fester. Business, as it does, goes on.

By | 2015-01-30T11:36:40+00:00 January 30th, 2015|Categories: UI Journal|Tags: , , , , , |0 Comments

About the Author:

Veronica Peterson is an Investment Officer of Charter Trust Company. She joined the firm in 2014 and is based in our Concord, NH office. Ms. Peterson received her Bachelor of Arts degree from Vassar College with honors in anthropology and Chinese. She has studied abroad in China and Ireland and is also a member of Sigma Xi, the scientific research society, and the Society for American Archaeology (SAA). She has been published in the International Journal of Osteoarchaeology and presented research results at SAA, American Chemical Society – Hudson Valley, and Northeast American Anthropology Association annual meetings. Ms. Peterson has also served as editor of Helicon, the Vassar College literary magazine.

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