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The Future of Hong Kong

Copyright © 1997, 2020 by David E. Ross

As I heard repeated news stories on 30 June — which was already 1 July in Asia — about the transfer of Hong Kong from British to Chinese control, I began to wonder why anyone would celebrate this event. I expect some of the following to occur within the next five years:

• Beijing will impose the same controls on the people of Hong Kong as it currently imposes elsewhere in China. This most definitely includes controls on the press, public speeches, and other forms of communication and expression. But it also includes controls on reproduction, the Internet, and mobility. Some restrictions will be blatant, but many will be subtle. Already, Hong Kong newspapers have muted their criticism of Beijing because of implied threats against the publishers' other business interests.
• The liquidity of the Hong Kong Stock Exchange will be severely reduced by restrictions on new stock issues, trading in current issues, and international flows of capital. Overseas investment will drop like the Union Jack. Residents who invested in Hong Kong enterprises will be unable to leave China with their profits (if they can leave at all [see below]). The recent surge in the Hong Kong Stock Market fails to convince me that investing there is any different than flushing money down a toilet.
• The restrictions on communication will stifle innovation. The restrictions on capital will stifle economic growth. Together, these will lead to stagnation in the Hong Kong economy. Beijing will "kill the goose that laid golden eggs", possibly before even the first egg falls into a Chinese nest.
• As repression in Hong Kong evolves, those developed nations that could exert influence on Beijing will remain silent. "Doing business" will remain the top priority, whether the people who produce the goods in international trade live in a democracy or a dictatorship. The example set after the Tien An Men Square blood-bath will be reinforced. There will be no sanctions or embargo; there will definitely be no military force to make Beijing abide by its agreement to preserve civil liberties in Hong Kong. And Beijing knows that it can act without any reaction.
• As has happened more than once when its authority over former colonies ended, London will repudiate United Kingdom passports held by Hong Kong residents who are not of British ancestry. Those who wait until the repression becomes as severe as what drove their parents or grandparents out of China and into Hong Kong will be trapped.

In the early 1980s, I was working for the System Development Corporation (SDC) when it was bought by Burroughs (a friendly takeover). Along with all other SDC employees, I saw a video in which top Burroughs executives asserted that SDC's autonomy had a tangible value and that this autonomy would be preserved. Less than a year later, we saw how false that promise was. China's pledge of a special status for Hong Kong sounds very similar. Whether control resides in a corporation or a government, an anomalous subsidiary will not be tolerated.

30 June 1997

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