Hong Kong In The Crosshairs Of Global Power And Ideological Struggles

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Above photo: Anti-government protesters wave the American flag during a rally in Hong Kong earlier this month © Chan Long Hei/EPA-EFE/Shutterstoc

Hong Kong is one of the most extreme examples of big finance, neoliberal capitalism in the world. As a result, many people in Hong Kong are suffering from great economic insecurity in a city with 93 billionaires, second-most of any city.

Hong Kong is suffering the effects of being colonized by Britain for more than 150 years following the Opium Wars. The British put in place a capitalist economic system and Hong Kong has had no history of self-rule. When Britain left, it negotiated an agreement that prevents China from changing Hong Kong’s political and economic systems for 50 years by making Hong Kong a Special Administrative Region (SAR).

China cannot solve the suffering of the people of Hong Kong. This ‘One Country, Two Systems’ approach means the extreme capitalism of Hong Kong exists alongside, but separate from, China’s socialized system. Hong Kong has an unusual political system. For example, half the seats in the legislature are required to represent business interests meaning corporate interests vote on legislation.

Hong Kong is a center for big finance and also a center of financial crimesBetween 2013 and 2017, the number of suspicious transactions reported to law enforcement agencies rocketed from 32,907 to 92,115. There has been a small number of prosecutions, which dropped from a high of 167 in 2014 to 103 in 2017. Convictions dropped to only one person sentenced to more than six years behind bars in 2017.

The problem is neither the extradition bill that was used to ignite protests nor China, the problems are Hong Kong’s economy and governance.

April, 2019. Demonstrators marched over the weekend to demand authorities to scrap the extradition bill [Tyrone Siu/Reuters]

The Extradition Bill

The stated cause of the recent protests is an extradition bill proposed because there is no legal way to prevent criminals from escaping charges when they flee to Hong Kong. The bill was proposed by the Hong Kong government in February 2019 to establish a mechanism to transfer fugitives in Hong Kong to Taiwan, Macau or Mainland China

Extradition laws are a legal norm between countries and within countries (e.g. between states), and since Hong Kong is part of China, it is pretty basic. In fact, in 1998, a pro-democracy legislator, Martin Lee, proposed a law similar to the one he now opposes to ensure a person is prosecuted and tried at the place of the offense.

The push for the bill came in 2018 when a Hong Kong resident Chan Tong-kai allegedly killed his pregnant girlfriend, Poon Hiu-wing, in Taiwan, then returned to Hong Kong. Chan admitted he killed Poon to Hong Kong police, but the police were unable to charge him for murder or extradite him to Taiwan because no agreement was in place.

The proposed law covered  46 types of crimes that are recognized as serious offenses across the globe. These include murder, rape, and sexual offenses, assaults, kidnapping, immigration violations, and drug offenses as well as property offenses like robbery, burglary and arson and other traditional criminal offenses. It also included business and financial crimes.

Months before the street protests, the business community expressed opposition to the law. Hong Kong’s two pro-business parties urged the government to exempt white-collar crimes from the list of offenses covered by any future extradition agreement. There was escalating pressure from the city’s business heavyweights.  The American Chamber of Commerce, AmCham, a fifty-year-old organization that represents over 1,200 US companies doing business in Hong Kong, opposed the proposal.

AmCham said it would damage the city’s reputation: “Any change in extradition arrangements that substantially expands the possibility of arrest and rendition … of international business executives residing in or transiting through Hong Kong as a result of allegations of economic crime made by the mainland government … would undermine perceptions of Hong Kong as a safe and secure haven for international business operations.”

Kurt Tong, the top US diplomat in Hong Kong, said in March that the proposal could complicate relations between Washington and Hong Kong. Indeed, the Center for International Private Enterprise, an arm of NED said the proposed law would undermine economic freedom, cause capital flight and threaten Hong Kong’s status as a hub for global commerce. They pointed to a bipartisan letter signed by eight members of Congress, including Senators Marco Rubio, Tom Cotton, and Steve Daines and Members of the House of Representatives, Jim McGovern, Ben McAdams, Chris Smith, Tom Suozzi, and Brian Mast opposing the bill.

Proponents of the bill responded by exempting nine of the economic crimes and made extradition only for crimes punishable by at least seven years in prison. These changes did not satisfy big business advocates.

Protesters hold a placard featuring U.S. President Donald Trump and U.S. flags as they take part in a march at Victoria Park in Hong Kong, July 21, 2019. | Vincent Yu / AP

The Mass Protests and US Role 

From this attention to the law, opposition grew with the formation of a coalition to organize protests. As Alexander Rubinstein reports, “the coalition cited by Hong Kong media, including the South China Morning Post and the Hong Kong Free Press, as organizers of the anti-extradition law demonstrations is called the Civil Human Rights Front. That organization’s website lists the NED-funded HKHRM [Human Rights Monitor], Hong Kong Confederation of Trade Unions, the Hong Kong Journalists Association, the Civic Party, the Labour Party, and the Democratic Party as members of the coalition.” HKHRM alone received more than $1.9 million in funds from the NED between 1995 and 2013. Major protests began in June.

Building the anti-China movement in Hong Kong has been a long-term, NED project since 1996. In 2012, NED invested $460,000 through its National Democratic Institute, to build the anti-China movement (aka pro-democracy movement), particularly among university students. Two years later, the mass protests of Occupy Central occurred. In a 2016 Open Letter to Kurt Tong, these NED grants and others were pointed out and Tong was asked if the US was funding a Hong Kong independence movement.

During the current protests, organizers were photographed meeting with Julie Eadeh, the political unit chief of US Consulate General, in a Hong Kong hotel. They also met with China Hawks in Washington, DC including Vice President Pence, Secretary of State Pompeo, National Security Adviser John Bolton, Senator Marco Rubio and Rep. Eliot Engel, chairman of the House Foreign Affairs Committee. Larry Diamond, a co-editor of the NED’s publication and a co-chair of research, has been openly encouraging the protesters. He delivered a video message of support during their rally this weekend.

Protests have included many elements of US color revolutions with tactics such as violence — attacks on bystanders, media, police and emergency personnel. Similar tactics were used in Ukraine, Nicaragua, and Venezuela, e.g. violent street barricades. US officials and media criticized the government’s response to the violent protests, even though they have been silent on the extreme police violence against the Yellow Vests in France. Demonstrators also use swarming techniques and sophisticated social media messaging targeting people in the US.

Mass protests have continued. On July 9, Chief Executive Carrie Lam pronounced the bill dead and suspended it. Protesters are now calling for the bill to be withdrawn, Lam to resign and police to be investigated. For more on the protests and US involvement, listen to our interview with K. J. Noh on Clearing the FOG (available on Monday).

Makeshift shelters at Tung Chau Street Temporary Market in Sham Shui Po. Photo: Nora Tam

What Is Driving Discontent in Hong Kong?

The source of unrest in Hong Kong is the economic insecurity stemming from capitalism. In 1997, Britain and China agreed to leave “the previous capitalist system” in place for 50 years.

Hong Kong has been ranked as the world’s freest economy in the Heritage’s Index of Economic Freedom since 1995 when the index began. In 1990, Milton Friedman described Hong Kong as the best example of a free-market economy. Its ranking is based on low taxes, light regulations, strong property rights, business freedom, and openness to global commerce.

Graeme Maxton writes in the South China Morning Post: “The only way to restore order is through a radical change in Hong Kong’s economic policies. After decades of doing almost nothing, and letting the free market rule, it is time for the Hong Kong government to do what it is there for; to govern in the interests of the majority.”

The issue is not the extradition proposal, Carrie Lam or China. What we are witnessing is an unrestricted neo-liberal economy, described as a free market on steroidsHong Kong’s economy relative to China’s gross domestic product (GDP) has fallen from a peak of 27 percent in 1993 to less than 3 percent in 2017. During this time, China has had tremendous growth, including in nearby market-friendly Shenzen, while Hong Kong has not.

As Sara Flounders writes,For the last 10 years wages have been stagnant in Hong Kong while rents have increased 300 percent; it is the most expensive city in the world. In Shenzhen, wages have increased 8 percent every year, and more than 1 million new, public, green housing units at low rates are nearing completion.”

Hong Kong has the world’s highest rents, a widening wealth gap and a poverty rate of 20 percent. In China, the poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, according to the World Bank.

China’s middle class. Alamy.

Hong Kong In The Chinese Context

Ellen Brown writes in “Neoliberalism Has Met Its Match in China,” that the Chinese government owns 80 percent of banks, which make favorable loans to businesses, and subsidizes worker costs. The US views China subsidizing its economy as an unfair trade advantage, while China sees long-term, planned growth as smarter than short-term profits for shareholders.

The Chinese model of state-controlled capitalism (some call it a form of socialism) has lifted 800 million people out of poverty and built a middle class of over 420 million people, growing from four percent in 2002, to 31 percent. The top twelve Chinese companies on the Fortune 500 are all state-owned and state-subsidized including oil, solar energy, telecommunications, engineering, construction companies, banks, and the auto industry. China has the second-largest GDP, and the largest economy based on Purchasing Power Parity GDP, according to the CIA, IMF and World Bank.

China does have significant problems. There are thousands of documented demonstrations, strikes and labor actions in China annually, serious environmental challenges, inequality and social control through the use of surveillance technology. How China responds to these challenges is a test for their governance.

China describes itself as having an intraparty democracy. The eight other legal “democratic parties” that are allowed to participate in the political system cooperate with but do not compete with the Communist Party. There are also local elections for candidates focused on grassroots issues. China views western democracy and economics as flawed and does not try to emulate them but is creating its own system.

China is led by engineers and scientists, not by lawyers and business people. It approaches policy decisions through research and experimentation. Every city and every district is involved in some sort of experimentation including free trade zones, poverty reduction, and education reform. “There are pilot schools, pilot cities, pilot hospitals, pilot markets, pilot everything under the sun, the whole China is basically a giant portfolio of experiments, with mayors and provincial governors as Primary Investigators.” In this system, Hong Kong could be viewed as an experiment in neoliberal capitalism.

The Communist Party knows that to keep its hold on power, it must combat inequalities and shift the economy towards a more efficient and more ecological model. Beijing has set a date of 2050 to become a “socialist society” and to achieve that, it seeks improvements in sociallabor and environmental fields.

Where does Hong Kong fit into these long-term plans? With 2047 as the year for the end of the agreement with the UK, US and western powers are working toward preserving their capitalist dystopia of Hong Kong and manufacturing consensus for long-term conflict with China.

How this conflict of economic and political systems turns out depends on whether China can confront its contradictions, whether Hong Kongers can address the source of their problems and whether US empire can continue its dollar, political and military dominance. Today’s conflicts in Hong Kong are rooted in all of these realities.

 

 

 

  • Red Robbo

    All animals are equal but some animals are more equal than others,’ an apposite description of state capitalist China which has over 100 billionaires. Together they have wealth equal to twice Ireland’s GDP! According to a Peking University report from 2016, the income disparity is getting worse with the top 1 percent owning a third of the country’s wealth and the bottom 25 percent of the population just 1 percent. The 99% never voted for this!

    Capitalist hallmarks, such as class society, commodity production, profit motive, exploitation of wage labour, markets, etc., are found worldwide, including China and Hong Kong.

  • Jon

    Acknowledging the truth contained herein, still, when as much as 1/4
    of the population comes out on a rainy day to protest, that magnitude
    says something of the class character of the protest. It seems to me
    that lack of trust that this extradition law would not be used against
    any type of political protest is what fuels it. I doubt that there
    would be this huge a crowd to protect economic crimes or run of the
    mill criminal behavior. Jon

  • kevinzeese

    Don’t be fooled by these protests. They are attacking the wrong target. If they want democracy, only the Hong Kong government can give it to them. Mainland China is not able to change the Hong Kong government or economy.

    The extradition law was not a big deal. It was very limited in that it focused on people accused of offenses that could be impisoned by at least 7 years. The business lobby in Hong Kong opposed it because they control the Hong Kong government and therefore are not held accountable. Extradition could lead to them being prosecuted for business and finance crimes.

    The US-funded NGOs that organized these protests are really anti-China groups wearing a disguise of pro-democracy or anti-extradition. The real purpose is to demonize China because the US national security strategy is ‘great power conflict’ and that means conflict with China. The protests, with professionally made signs in English, are designed to manufacture consent for escalating conflict with China.

  • kevinzeese

    Yes. This is especially true in Hong Kong because it is a capitalist dystopia created by the UK when it colonized Hong Kong and put in stone for 50 years in the agreement to return Hong Kong to China. China cannot change the Hong Kong system and the Hong Kong system is failing in comparison to the state-controlled economic policy of China.

  • While I empathize with the plight of the Hong Kong population, the present global circumstances do not bode well for a successful outcome for them at this time. The United States and its sidekick Britain are squealing with joy; the protests are simply providing them with another possible justification for military conflict with China. Until something horrible happens to scare the pants off these demented global powers, no trade deal will be reached; China will not agree to the West’s demands which relegate it to perpetual subordination and the U.S. will not agree to share the throne. I wonder if China will be wise enough to enable the Hong Kong authorities to strike a compromise with the protestors and in doing so, calm their home waters for a while.

  • kevinzeese

    Good point. China sees what is going on. They are well aware of UK and US funding of an anti-China movement in the guise of a pro-democracy movement or an anti-extradition movement or whatever other opportunities come up to attack China in the future. As a result, Hong Kong is of shrinking importance to China. China is investing heavily in Shenzhen to make it a model city that will replace Hong Kong in importance. By the time we get to 2047, Hong Kong will be a tiny part of China’s GDP and not all that relevant. China will be able to deal with US/UK efforts to make it independent of China without much worry.
    https://www.scmp.com/video/china/3023458/china-make-shenzhen-model-city-bolder-reforms

  • What about the exploitation of workers in both HK and mainland China? Is it any different in either place? Chinese goods in Australia are cheap because they exploit workers in both systems – capitalism.

  • kevinzeese

    In Hong Kong, the Chinese do not control the government or economy. I do not see any effort to lift up workers, quite the opposite.

    In China there are thousands of strikes and labor actions each year due to workers being under paid or mistreated. The Chinese government is well aware of this and realizes they must lift workers up if the Communist Party wants to keep monopoly control over the government. As we point out in the article, China “has lifted 800 million people out of poverty and built a middle class of over 420 million people, growing from four percent in 2002, to 31 percent.” However, that is not enough especially when there is a tremendous wealth divide in China. Again, the government is aware of this and claims it is trying to do something to correct this. We’ll see.

  • ANTONIO

    Thank you for clearing up all the CIA lunging attacks on China as the mainland prepares to become the leading economy in the world. This is the only site I’ve seen that tells the truth and doesn’t pull the wool over the reader’s eyes.

  • Are there demands made in the HK protests to shift wealth back to the working class? What is the composition of the rallies does it have a class character? https://uploads.disquscdn.com/images/5afc835279c6b5b0280e6342db0f6aa754c354d6489958cbb70f7b6dd4a3cd18.jpg The picture is of protests in Brisbane in solidarity with Hong Kong.

  • kevinzeese

    I have not heard of class demands being made. The attack on China is strange because China is not able to change Hong Kong’s economy until 2047 and it cannot change its governance until then either. The protest movement has been funded not only by NED but by capitalists in Hong Kong. It is not a working class protest movement. See these two articles:

    http://m.fightbacknews.org/2019/8/17/hong-kong-protests-are-attack-socialism

    https://thegrayzone.com/2019/08/17/hong-kong-protest-washington-nativism-violence/

  • The HK protesters have called for a ‘general strike’ and claim support from some unions but the major unions oppose them.

    Equally, there is much worker unrest on the mainland.

    Who among them could carry the working class?

    Do you sympathise with the working class?

    Isn’t that the test?

    Where are the model governments in the west for the working class to follow? There are some that think progress Will come from government, but surely it comes from the workers?

  • John Lee

    Exactly. China still abides to the one country two systems agreement. If HK people want universal suffrage, only HK government can give it to them, but as you had already said, the business lobby controlled half of the legislature seats by legal force. In reality the business lobby actually controls more than half of the legislature. In a way, this reminds me of the British House of Lords the seats of which are entirely inherited by bloodlines. I wonder how many Americans and Chinese people (Hong Kong residents included) are aware of this. The business lobby will never entertain any chances that will erode the neoliberal capitalism advantage that the rich enjoys.

    China is legally barred from intervening directly in HK legislature. China can try to influence but the final outcome rests with HK government. There is one thing that China can do though, that is removing one country two systems, which will fold HK back into the same one system as China is currently practicing. You are right that the protests are directing at the wrong target. The well planned protests and riots are designed to demonize China and sow chaos in Chinese territory as part of US national security policy of “great power conflict with China”. The faster people wake up from this manufactured consent, the better.

  • kevinzeese

    We sympathize with the working class in Hong Kong, China and the US as well as most of the world. Hong Kongers should focus on changing the neoliberal big finance capitaist economy that will continually mistreat workers in Hong Kong. It is their government that can change their situation in Hong Kong, not the Chinese government.

    Allying with the US in an anti-China campaign will not get them what they need. The US is interested in Hong Kong because they want an independent uber-capitaist country on China’s border. If hey get it, the US will militarize it and Hong Kong will become a US military base. This approach will end up being worse off for the workers of Hong Kong. They need to be independent of western capitalism if they want to improve their economic security.

  • You say ‘the business lobby actually controls more than half of the legislature (in HK)’. Name a democracy where that is not the case?

  • kevinzeese

    Hong Kong goes a step further, not only can businesses lobby but of the 70 seats in their legislature, 35 are indirectly elected through trade-based functional constituencies. In otherwords, representatives of corporations are elected to the legislature in seats reserved for those constituencies. Corporations actually write and vote for laws.

  • The business lobby controls more than half of the legislature in HK.

    Do you think change comes through politicians and government or through ordinary people making a stand?

    You say: “Hong Kongers should focus on changing the neoliberal big finance capitaist economy” but do not say how? By bringing down the government?

  • Australia has a long history of transnational mining corporations changing laws to suit their interests eg Adani had State and Federal governments and their respective EPA’s sign off the largest coal mine in the world during a climate emergency.

    How is Australia any different to HK? Or any democracy for that matter?

  • ” … but the final outcome rests with HK government”… hmmm
    HK is next to the largest economy in the world … wouldn’t Beijing have more influence over Carrie Lam than her own legislature?

  • kevinzeese

    The reason there are representatives of business in the legislature is because of Hong Kong law. It’s legislature reserves half the seats for industry. Hong Kong has been a capitaist haven for decades. The UK built it that way and made China agee to leave it that way for 50 years after it was returned to China.

    I am uncomfortable telling locals what to do to advance their goals because they know better than I do what is needed, but anti-China protests serve US and western interests, as well as the interests of the capitalists in Hong Kong, they do not serve the people’s interests. They have very serious ecoonomic problems for the people of Hong Kong, e.g. housing prices are astronomical, wages are low, long hours are the norm and poverty is high. If I were an activist concerned about those issues in Hong Kong I would look for opportunities to raise specific issues of concern while also educating the public on the impacts of neolibaralism and how big finance capitalism leads to these results. So, I’d be working both on impoving specific issues and working for transformational change.

    China has its challenges for workers as well but I would also be organizing to ensure that after 2047 changes are made to the Hong Kong ecnomy that serve he people of Hong Kong. I’d be doing outreach to China now to prepare for that time period.

    If the Hong Kongers continue to be manipulated into anti-China protests, it will not serve them well. They need to stand for their own interests. How they do so is up to them.

  • Thanks Kevin for your article and for clarifying the answers to my questions much appreciated in solidarity Ian

  • John

    Just put it this way.

    In Australia, Adani relies on lobbyists (through political donations) to make or change laws to suit its interest. If Australia has the same system as HK, then it means Adani has direct ownership of seats in both upper and lower house of parliament to pass laws favorable to itself.

  • Yes, that may be true … different method, same result. Plus transnational corporations like Adani, Boeing, Dow, Apple, when they move into a country they never spend their own capital. Adani is a good example of this.

  • Ishi Crew

    In US media i listen to (eg NPR, right wing talk radio, and some others) these protests are portrayed as about Hong Kong people protesting China’s attempt to abolish the ‘one country, 2 systems’ constitution/law/system, although it apparently is over one ‘extradition bill’ . I guess the idea is there will be a ‘domino effect’—ie after that law goes, then the rest of the ‘hong kong system’ will gradually go. ‘if you give an inch, they’ll take a mile’.

    i have no idea if this portrayal is correct.

    however some of the economic data in the above article might need some context. While Hong Kong’s relative share of GDP to china decreased from 27% to 3% since 1993, hong kong has only 0.5% of China’s population (7 million versus 1.4 billion) so you wouldn’t expect 1 relatively small city to have 1/3rd of the GDP of a huge territory with many huge cities. Thats like saying its terrible that NYC used to have 1/3rd of the total income of the USA, but now only has 3%, and rural america’s economy has been growing faster than NYC because some people now have running water , cars and electricity while NYC is not able to keep adding penthouses on the top of their luxury condos at the same rate as before, and people in the Hamptons can’t tear down their mansion and build a bigger one each year. (my mother partly grew up on a farm without cars, electricity or running water.)

    also while the ‘extreme poverty rate’ (1$/day or less) in china has fallen to like 1-2%, the ‘poverty rate’ (which is defined differently, just as in USA a homeless person is seen to be in a state of more extreme poverty than a family getting section 8 rent subsidides and food stamps) (5$/day) is about 20%, like hong kong’s. and the poor people in hong kong are senior citizens primarily, and likely students/young people.

    while there is a working class in hong kong, its a finance capital, so alot of the people are white collar workers, not toiling in factories or putting up power lines. they’re doing IT, etc. median income in hong kong is 66G; in china its 20G (in PPP).

    i sort of support the ‘democratic’ or ‘self rule’ aspects of those protests, but since its partly about like a wealthy family wanting to ‘self rule itself’ about how it distributes its (often ill gotten wealth–lots of corruption in hong kong) wealth, i only have mixed support. 40% pf hong kong’s income is collected by a few bilionaires. but students and IT professionals are happy anyway with that system, same as in USA–rofessors at JHU making 100G/yr and their grad students aren’t going to complain about Bloomberg’s billions$ since they work at JHU’s bloomberg school . but china basically wants that wealth, even if they call it socialism. they are going to liberate that economy from capitlism by looting the banks and puting alot of it in a few billionaire chinese pockets while giving a bit to the masses.

    china has vast inequality and many billionaries. the gini coefficient –which measures inequality—is .51 in hong kong, .41 in USA, and .46 in Chijna. . this suggests that the usa shares the wealth more than china or hong kong.

  • Kapricorn4

    Have you read “Taipan” by James Clavell ?