Support Not Bought: The Chinese elite’s Hong Kong dilemma
October 22, 2019
2 min read
What's going on here?
As protests in Hong Kong seem to be escalating, and Chinese troops line up on the border, a dilemma arises for the rich of Mainland China, many of whom have their money in Hong Kong.
What does this mean?
In previous weeks, the Chinese government has been making bold statements about the Hong Kong protests, such as labelling them rioters and likening some behaviour to terrorism. Hua Chunying, Chinese foreign minister, also blamed the protests on the US and made the case that China would “never allow foreign forces” to interfere in the city. There have also been recent reports of the first use of live ammunition to quell the protests. All this seems to indicate a growing willingness for China to intervene if it perceives the interests of Mainland China are being threatened. However, the question remains as to whether such an intervention would be backed in Mainland China.
What's the big picture effect?
It is not just Hong Kong citizens who benefit from the “one country, two systems” constitutional arrangement, but also many of Mainland China’s elite. A big proportion of the elite keep their wealth in Hong Kong, so as to keep it in China but to take advantage of some Hong Kong specific features. For example, their money is protected in a territory with an independent judiciary, meaning that their wealth cannot be confiscated if they fall out of political favour. Many businesses also base themselves in Hong Kong to avoid political conflicts. For example, Hong Kong is not currently under US sanctions arising from the US-China trade war, as the US and most other nations see Hong Kong as a separate economic entity. For the same reasons, the Chinese state also funnels 58% of its foreign investment through Hong Kong, funding big projects such as Chonese President Xi Xinping’s Belt and Road initiative.
The takeaway from all this is that while China might make bold statements, it will be difficult for them to garner support from many Mainland Chinese elite who benefit immensely from the current system and don’t want to see any changes just yet.
Report written by Luke Hatch
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