Zixuan (Evelyn) Wang CMC '22 interviewed Dr. Michael C. Davis on December 8, 2021.
You wrote in Chapter 5: 2019 Fury – The People Respond that Beijing is “inexperienced with an open society” and consider “any sign of weakness [as inviting] more resistance – a rigidity consistently opted for over meaningful democratic reform.” How do you evaluate the projection of strength on Beijing’s side? Do their policies serve more of a reflection of confidence or insecurity in the face of public discontent in Hong Kong?
I think the projection of strength on Beijing’s side flows from insecurity. Beijing officials, in their DNA, like to maintain order from the top down to control. When they set upon this project in Hong Kong, with the Basic Law promising a kind of liberal order, a rule of law, human rights, and ultimate universal suffrage, they faced a challenge of ruling an open society with much less control. The only way Hong Kong would be able to maintain these things would be to have a high degree of autonomy with much less Beijing control. The Basic Law in fact says that mainland officials should not interfere in local affairs and mainland laws will not apply except outside of the scope of autonomy.
The Chinese government just doesn't know how to run such a society. The more it tried to do it from the top down by exercising control, the more fearful Hong Kong people would become about the mainland system taking over. People did not simply end up one morning protesting. Rather the evolving circumstance provoked their resistance. What was happening was more and more Beijing interference, with more and more Beijing nervousness about this open society where they couldn't control everything that was happening, what people were doing and saying. That made these mainland officials very uncomfortable. The more uncomfortable they got, the more they interfered, the more they interfered, the more people in Hong Kong pushed back. That created the kind of perfect storm of resistance, and then the crackdown because of it.
There's a deep hostility in the CCP leadership to liberal constitutionalism. So, they are fundamentally hostile to the constitutional system in Hong Kong. They are simply not comfortable with what they have agreed to — I think that that is the problem. When Hong Kong people are exercising these rights in the courts, for example, the courts have been frequently attacked for exercising their role under such a system.
I really think the cause of these massive protests is in the government’s hands. If they had allowed the system to develop naturally, with the promised democratic reform then Hong Kong officials would not want to antagonize Beijing, because that would gain them nothing. The society would now be peaceful and, the guarantees that were made would be maintained. But now they are not maintained. Beijing just handled the situation very badly, perhaps with bad advice from their local supporters, who may have been looking out for their own interests.
Through an interview with a Hong Kong businessman, you concluded that “with mainland business in Hong Kong also suffering, the flight of international companies would entangle Hong Kong further in the trade war with the United States.” How do you evaluate the role of Hong Kong in China’s economic ties with the world?
Hong Kong has always been central for China’s economic ties with the world because you can do business on the mainland but with limited legal protections. There is a sense that even when someone from Beijing does business in rural Xinjiang, they may not know whether the legal protections will be available and are aware that locals may have more influence—with local corruption. When you are a foreigner, the anxiety that the rule of law does not operate is heightened. Even though Hong Kong’s share of the Chinese economy has gone down, as the Chinese economy has grown dramatically, still, when it comes to international investment, Hong Kong has been a very important vehicle to access China because Hong Kong offers more legal security. That legal security is the most important thing. When the recognition of Hong Kong’s independent status is withdrawn, as a result of recent overreaching policies, foreign investments could leave Hong Kong. Hong Kong may become less important because it is no longer a safe vehicle for legally protected investment.
China’s response may be to encourage more mainland investment in Hong Kong so as to maintain a certain level of growth, but this may come at a price. There may be a sense that local businesses must go along to get along, which may constitute a kind of corruption that is intruding into Hong Kong: that your “guanxi,” or connections with people in power, specifically political power and influence, is the most important ingredient for doing business. To gain this level of influence and connections local business persons may seek to serve on mainland committees. To gain such favor they will want to be seen to support official policies, and so on. And if you don't go along, you're more likely to exit. We are seeing this kind of corruption evolving in a context where mainland businesses become more and more important. Mainland business leaders will also compete for this favour. Mainland business elites have even formed a political party to try to gain some of the political status in Hong Kong’s political realm. Of course, if you do not have such influence you exit. A lot of the Hong Kong’s wealthy elites have started putting most of their investments overseas. I have even heard the term “loyal rubbish” being used to describe these Hong Kong pro-government officials. While the opposition is being arrested and jailed, even the supporters of the government face risk under this system. If they are trying to protect themselves by sending their investments elsewhere and they do not get fully on board, they may be entering the category of what I just saw in some reports. This is a very perilous circumstance for business. For foreign businesses it is worse. There was a recent opinion poll from the American Chamber of Commerce of non-Americans indicating that 40% of foreigners in Hong Kong were planning to leave.
Historically, if you went directly to the mainland to make an investment, you faced higher risk, which could yield higher return on your investment. Alternatively, you could go through Hong Kong, if less risk, less return is okay for you. But now Hong Kong is becoming like the mainland in some regards, because of this kind of corrupting relationship between politics and economics.
What implications does the U.S.-China economic decoupling pose for Chinese policies towards Hong Kong?
Hong Kong would have less of an impact on this policy front. If mainland officials crack down in Hong Kong, then they obviously have made a judgement: We don't need them anymore. Now whether that is a good judgment or not, we cannot know for sure. If people in Hong Kong emigrate, then Beijing can bring people from the mainland. This will surely change the very character of the city. The mainland-U.S. trade relationship on a broader front, in terms of their own economic recovery, may not be directly influenced by Hong Kong. But it would play a role over issues of trade negotiations: typically, things like how much agricultural products and technology China buys from the U.S., whether the U.S. allows technology into China, and whether they can cooperate on things like climate change. I think there is a much bigger set of issues beyond Hong Kong that will be more important in the mainland-U.S. economic relationship.
The international community has supported Hong Kong’s pro-democracy movement and recognized PRC policies as a threat to the “one country, two systems” model in Hong Kong. In discussing the role of international support, you argue that “if China degrades Hong Kong’s ‘high degree of autonomy,’ its rule of law, and its basic freedoms, then the basis for special recognition will fail and withdrawing such special recognition would be justified.” However, no significant actions were taken by most western countries after the national security law. What is holding back the international community from exerting its full pressure?
The premise of the question is not entirely up to date. I think most of the world is at wit's end, as to what to do, in considering if there is any possibility of pressuring China to rethink its crackdown on Hong Kong. Ten countries have withdrawn or suspended their extradition agreements, including Australia, Canada, Finland, France, Germany, Ireland, the Netherlands, New Zealand, United Kingdom, and the United States. So there has been a very forceful response. The Parliament of the EU has stepped in with declarations and so on. The UK, for example, has authorized all BNO Passport Holders, which is nearly half the population of Hong Kong, to obtain residency in the UK. They and their children -- about three plus million -- could emigrate to the UK. The U.S. is also slowly passing laws in Congress to respond to Hong Kong-related immigration questions.
I think the general conclusion is the Communist Party's ego is invested in in these policies so that the more you push, the more they push back, and the more they double down on these questionable policies. There is a sense of futility about trying to change the conditions on the ground. So, most responses have been focusing on immigration questions, where the destination country is largely in control.
Since the National Security Law was focusing on extradition, the most part of international response was understandably also focused on immigration. Do you think there will come a point where countries might pose other diplomatic measures, such as imposing sanctions, to punish China in response to the Chinese cracking down on Hong Kong's autonomy?
They have imposed sanctions. But personally, I think the sanctions they have chosen so far have not been effective because of their focus on individuals. There are a lot of Hong Kong and mainland officials that deal with Hong Kong now targeted with sanctions. Freezing their bank accounts may have little impact since they have nothing in the U.S. There is a big debate going on now within the U.S. Congress and the U.S. government, and within other governments as well, about whether there are more effective measures that can be taken, perhaps in the finance and trade areas.
Many have considered Hong Kong’s COVID-19 response as jeopardizing Hong Kong’s position as an international financial center. What would be the justification and impact of their exclusive focus on reopening with China, instead of reopening to the rest of the world? Specifically, what would be the negative economic consequences?
I think the Hong Kong government has a problem of trust. And it did not help that they came out of the gate emphasizing the Chinese vaccines such as Sinovac and Sinopharm—which have since been judged ineffective against the latest variant. Hong Kong people do not trust the mainland, and now they do not trust the Hong Kong government. Are they going to trust their vaccines? Probably not. So, I think this is one of the problems that they faced with COVID.
Kenny Huang for Studio Incendo, CC BY 4.0 <https://creativecommons.org/licenses/by/4.0>, via Wikimedia Commons