Key Asian Financial Centre at Risk
Hong Kong has been making headlines throughout the past four months due to street demonstrations against both the local administration of Carrie Lam and her bosses in Beijing.
These demonstrations have escalated from entirely peaceful protests to more violent actions including Molotov cocktails, overturning cars and smashing store windows.
The escalation has been matched and prompted by escalating police tactics including thinly disguised thugs, rubber bullets, water cannons, armoured vehicles, digital surveillance, arrests, and the substitution of paramilitary forces for regular police.
Violence came to a head last week when an 18-year-old protester was shot with a live round at point-blank range (the protester survived)…
Be like ‘water’
The protests began with opposition to a Hong Kong bill that would have allowed extradition to Beijing of those arrested for certain offenses, mainly political, committed in Hong Kong.
Once in Beijing, any pretence of the rule of law would be gone and summary proceedings, including sentencing to concentration camps for thought control, could be expected.
Later, other demands were added, including an investigation into police tactics, amnesty for protestors, and the removal of Carrie Lam from office.
None of these demands are likely to be granted by Beijing.
But the protesters show no signs of backing off their protests or demands. As described in by The Atlantic, continued escalation and more violence can be expected:
‘It is almost a cliché now to note that the unofficial motto of this leaderless movement is “Be like water.” For months, the protests have morphed and shifted, moving far beyond the now-withdrawn extradition bill that sparked the rallies and coalescing around a ferociously anti-China message unique in that it is emanating from within China itself.
‘Yesterday’s demonstration, followed by the clashes that erupted across the territory, came as Beijing held a grand military parade to mark the 70th anniversary of the founding of the People’s Republic of China, and in spite of efforts by authorities to lock down much of Hong Kong, which included shuttering dozens of subway stations and malls. The rage expressed by protesters as the day wore on was imbued with a sense of desperation stoked by the feeling that they are largely powerless within Hong Kong’s political system.
‘An online forum popular with protesters described these frontline demonstrators as “the spear” clearing the way for other, nonviolent marchers to continue on their route. As I watched the marchers move past, a protester yelled out to me. He shoved two rubber bullets into my hand, offered a muffled “Thank you” through his black mask, and pressed on, likely to the next battle.’1
Western markets have been remarkably complacent about these events.
It’s almost as if the physical distance to Hong Kong insulates the West from the disruption.
That view is a mistake.
Physical distance is irrelevant in a densely connected digital world.
Hong Kong is one of the largest financial centres in the world alongside New York, London and Tokyo.
Already capital flight is emerging, GDP is dropping, property values are declining, and talented professionals are moving out.
Regional financial businesses are shifting rapidly to Singapore.
At a minimum, this represents sheer economic waste.
At worst, an unexpected entity failure or market crash could spark global contagion and a liquidity crisis.
All the best,