“Beijing’s ideal scenario is to keep Hong Kong as a financial center without all the freedom.” But freedom, it seems, has been a key driver of Hong Kong’s success.

By Lindsay Maizland and Clara Fong | Published by the Council on Foreign Relations

Summary

A special administrative region of the People’s Republic of China, Hong Kong has remained largely free to manage its own affairs based on the “one country, two systems” national unification policy developed by Chinese leader Deng Xiaoping in the 1980s. When Hong Kong was returned to China by the British government in 1997, Beijing pledged to preserve much of what makes Hong Kong unique, in particular its standing as a global financial hub. In recent years, assertive actions by China to impose more control over the city have sparked massive protests; a chill felt throughout the international business community. Companies with regional bases in Hong Kong are looking to other Asian financial capitals such as Singapore and Tokyo. Even TikTok, an app owned by mainland-based company ByteDance, suspended operations in the city.

Executives of some companies with large footprints in Hong Kong have voiced concerns about the strict national security law imposed by Beijing in 2020 that extended broad new powers to punish critics and silence dissenters. A law which has fundamentally altered life for Hong Kongers. This law was emboldened by a fast-tracked piece of legislation, known as Article 23, in March 2024 [See: Hong Kong Authorities Rush Through Most Repressive National Security Legislation in City’s History].

Condemnation of the 2020 national security law prompted retaliatory measures from come countries but opposition was not unanimous. Fifty-three countries—most of which are participating in China’s Belt and Road Initiative—signed a statement read before the UN Human Rights Council in July 2020 supporting the national security law, while twenty-seven countries signed a statement criticizing it.

According to Victoria Tin-bor Hui, a political science professor at the University of Notre Dame, freedom has been a key driver of Hong Kong’s success.

“Beijing’s ideal scenario is to keep Hong Kong as a financial center without all the freedom. But it seems that you really cannot maintain Hong Kong’s international financial standing while stifling its freedom.”

Although Chinese Communist Party officials do not preside over Hong Kong as they do over mainland provinces and municipalities, Beijing exerts decisive influence over the region’s political sphere [and this is especially so in the wake of the 2020 national security law]. Beijing also maintains the authority to interpret the Basic Law for Hong Kong, a power that it had rarely used until recently. All changes to political processes are supposed to be approved by not only the Hong Kong government, but also by China’s top legislative body, the National People’s Congress, or its Standing Committee.

This report published by the Council on Foreign Relations looks in-depth at China’s increased grip over a city often ranked the best for business in the world. A distinction it still manages to maintain for the time being.

To counteract its lost lure due to curbs on freedoms and the 2019-2020 demonstrations against China-imposed extradition legislation, Hong Kong launched a “Top Talent Pass Scheme” visa to attract professionals from around the world in late December 2022. A report by the New York Times notes that, so far, 95 percent of applications have come from mainland China. Viewed as an attractive place to live and work by mainlanders, NYT lists “better pay and career opportunities, as well as better schools, greater freedom, and greater respect for women and people who are L.G.B.T.Q.” as the main reasons for its appeal. [See: Why Mainland Chinese Flocked to Hong Kong’s New Global Visa].

To read the full report on “Hong Kong’s Freedoms: What China Promised and How It’s Cracking Down” continue to the publisher’s website here.