The security law that the Chinese government is reportedly planning to impose on Hong Kong this week is being described by observers as the effective end of the arrangement in place since the end of British colonial rule in 1997, under which Hong Kong has been formally part of the People’s Republic of China but enjoyed significant political autonomy. “If this move takes place, ‘one country, two systems’ will be officially erased,” pro-democracy lawmaker Dennis Kwok told reporters. “This is the end of Hong Kong.”
Globally, this law could mark an even more profound shift in relations between China and the West.
The law, according to local media reports cited by Reuters, would ban “secession, foreign interference, terrorism and all seditious activities aimed at toppling the central government and any external interference.” Opponents of Chinese rule believe the bill poses a direct threat to Hong Kong’s political independence and freedom of speech. A similar bill was proposed in Hong Kong’s legislature in 2003 but was abandoned after mass protests. This time, the Chinese government is circumventing Hong Kong’s local legislature by passing the law at the annual National People’s Congress in Beijing and inserting it into the Basic Law—Hong Kong’s mini-constitution. (The Basic Law already requires that this legislation be passed at some point.)
The law’s latest incarnation is a direct response to the mass protests in Hong Kong last year, which Communist Party leaders saw as a sign that local authorities in Hong Kong were no longer capable of governing the city on their own. The party also appears to be taking advantage of coronavirus-era restrictions, which make it harder to organize the kind of mass protests that have scuttled controversial legislation in the past. Nonetheless, street protests are almost guaranteed and violence is likely.
The U.S. is likely to respond as well. At a press conference on Wednesday, before the new law was announced, Secretary of State Mike Pompeo noted the recent arrest of pro-democracy activists in Hong Kong, saying, “Our decision on whether or not to certify Hong Kong as having ‘a high degree of autonomy’ from China is still pending. We’re closely watching what’s going on there.”
Under U.S. law, Hong Kong is treated as a separate economic entity from China, which means, for instance, that it is exempt from the tariffs the U.S. has slapped on Chinese goods. Pompeo was referring to the Hong Kong Human Rights and Democracy Act, passed by Congress last year, which requires the State Department to certify every year that Hong Kong is sufficiently autonomous from China to warrant this special status. De-certifying it would have a major impact on U.S. China trade: Hong Kong alone is America’s 21st largest trading partner, with total trade of $43.8 billion in 2018, according to the Congressional Research Service. The Chinese Foreign Minister responded to Pompeo’s comments by accusing him of blackmail and interference in China’s internal affairs
President Trump has never seemed particularly concerned about the fate of Hong Kong in the past. When protests broke out last summer, he praised China’s Xi Jingping for his restraint. In November, he suggested he might even veto the Hong Kong Human Rights and Democracy Act to avoid unnecessarily antagonizing Xi in the middle of trade negotiations, telling Fox News, “I stand with Hong Kong. I stand with freedom. I stand with all of the things that we want to do, but we also are in the process of making the largest trade deal in history.” (He eventually signed the legislation.)
Now, however, the politics have changed. Trump seems to have lost interest in the trade deal as he has sought to pin sole blame on China for the COVID-19 outbreak, and is gearing up for a reelection fight during which he will portray himself as tougher on China than the Democrats. Trump might be more inclined to listen to hawkish advisers who advocate taking a stand of contentious issues like Hong Kong, Taiwan, and the South China Sea. There’s increasing support, in Washington and among the public and business community, for the notion of “decoupling” the U.S. and Chinese economies. As Pompeo put it on Wednesday, “For several decades, we thought the regime would become more like us through trade, scientific exchanges, diplomatic outreach, letting them in the WTO as a developing nation. That didn’t happen. We greatly underestimated the degree to which Beijing is ideologically and politically hostile to free nations.”
Full decoupling is probably impossible, but rising geopolitical tensions and slumping trade are disastrous for Hong Kong, whose prosperity is linked to its role as an interface between China’s rising economy and the West. Hong Kong’s legal and financial independence has made it an attractive base for international companies looking to do business in China. Two-hundred and ninety U.S. companies had their regional headquarters in Hong Kong as of 2018, according to the CRS. Likewise, mainland Chinese firms set up shop in Hong Kong as a springboard to expansion overseas.
But Hong Kong is less important to China than it used to be: it accounts for 2.7 percent of the country’s GDP now as opposed to 18.4 percent in 1997. Leaders in Beijing may have come to the conclusion that its autonomy is no longer worth the headache.
Hong Kong had a critical role to play in the global economy as long as there was still widespread commitment to the idea that China’s growth and integration into the global economy would benefit all, smoothing away any ideological differences. The end of Hong Kong’s autonomy will also mark the end of this sort of optimism.