On June 15, the Hong Kong's Chief Executive Carrie Lam announced that the Government of the Hong Kong has decided to suspend the legislative amendment of the controversial Fugitive Offenders Ordinance. Lam said a responsible government should uphold law and order, but also evaluate the situation and safeguard the best interests of the people; this includes restoring calm and order in society as soon as possible and preventing further harm to law enforcement officers and citizens. According to Lam, the Hong Kong government will further communicate with all sectors of society, better explain the proposed legislation and listen to different views on the matter. She further stated that after the work in communication, explanation and listening to opinions is completed, the Hong Kong government will report to and consult members of the Legislative Council Panel on Security before deciding on the next step forward.
Regarding the decision of the Hong Kong government, a spokesman from the Hong Kong and Macao Affairs Office of the State Council said that they “support, respect and understand the decision”. A spokesperson for the Ministry of Foreign Affairs too said that the Chinese central government has fully affirmed the work of the Chief Executive and the Hong Kong government and will give their continuous support in their administration of the law, as well as working together with people from all walks of life to safeguard Hong Kong's prosperity and stability.
This decision of the Hong Kong government should put an end to the recent turmoil in Hong Kong society and appease some Hong Kong residents who are dissatisfied with the Fugitive Offenders Ordinance. It is worth noting that in their statements, the Hong Kong government and the Chinese Foreign Ministry respectively mentioned the protection of the well-being, prosperity and stability of Hong Kong citizens, which are their fundamental demands for the development of Hong Kong. What then, does prosperity mean to Hong Kong? What are the key conditions for maintaining Hong Kong's prosperity?
The prosperity of Hong Kong is understood differently by different people, even among its own citizens. Looking from the perspective of public policy, Anbound’s researchers tend to believe that as a special international financial center and freeport under China's sovereignty, the core of the Hong Kong's prosperity should be related to its stakeholders, including its citizens, foreign investors, and the Mainland China. This would mean that the prosperity of the island city is the positive result of the co-development of related stakeholders.
Historically, Hong Kong's prosperity is multi-faceted, from economic development to income and welfare levels, from the rule of law to freedom, democracy and autonomy under "one country, two systems". Other elements of this prosperity include its internationalization, highly developed service industry, and so on. Among these elements, economic prosperity is certainly the crucial foundation for Hong Kong's prosperity.
From an economic point of view, as a freeport with a linked exchange rate system, Hong Kong's economic prosperity depends on two key factors. The first is the support from Mainland China, and the second is the recognition from the international community and market. As some Hong Kong analysts have pointed out, the international status of the Hong Kong depends both on the support of China and the international community. The Mainland's support for Hong Kong's development is a stable factor, but the international community's recognition is variable and uncertain. Any country can take the initiative to set up its own special zones, yet it cannot demand the international community to recognize it. In terms of Hong Kong's global competitiveness, the island city has always enjoyed a high degree of international recognition, often ranks the first in the world in terms of economic freedom and business environment. Hong Kong's long-standing international recognition is an important reason why it has been able to attract international capital and maintain its prosperity.
In the context of U.S.-China trade friction, maintaining Hong Kong's prosperity has become particularly important. There is a view that when the Chinese economy is strong enough, the Mainland market will become sufficient enough to support Hong Kong's development and prosperity. Such view proposes that the views and intervention of the U.S. and the UK on Hong Kong can be ignored. We believe that however, this view is highly biased. If there is no recognition and support from the international community, the basis of the Hong Kong's prosperity will be greatly harmed. Hong Kong is currently implementing a linked exchange rate system, which mean the Hong Kong dollar exchange rate and its monetary policy are tied to the U.S. dollar and the Federal Reserve's monetary policy. Without the linked exchange rate system, Hong Kong's economy will be tumultuous, and its status as an international financial center will be shaken, and it could even be disrupted by speculators such as George Soros.
Another noteworthy question is the possibility for the U.S. to change its treatment of Hong Kong as a separate customs territory. The U.S. Congress conducts an annual policy assessment on Hong Kong based on the Hong Kong Policy Act to determine whether to treat the island city as a separate customs territory. Using local acts to exercise jurisdiction over other parts of the world in its long-arm jurisdiction is a typical modus operandi of the U.S. to intervene in the politics of other countries. This also reflects the consistent hegemonic characteristics of the U.S. Yet objectively speaking, the status of separate customs territory is indeed extremely important for Hong Kong's prosperity. Once this important "niche" is abolished, it would cause the international community to reassess Hong Kong’s freeport status, tariff costs, business environment, and its status as an international financial center. If the situation is developed to this stage, the importance and prosperity of Hong Kong would be compromised. The prosperous and internationalized Pearl of the Orient would then be degraded into an ordinary coastal city constantly in need of financial assistance from the Chinese central government.
The changes in Hong Kong does not merely affect its own urban economy, but also other regions in China as well. The most direct impact will be on the construction of the Guangdong-Hong Kong-Macau Greater Bay Area. China hopes to develop the Greater Bay into a world class economy, making it a driving force for the Chinese economy in the future. Hong Kong is a main supporting pillar of the Greater Bay, and if its international status changes, the important premise of the Greater Bay would change as well. The impact extends far beyond this; if the economy of Hong Kong collapses, it would affect the economy of the entire Guangdong, which in turn would affect the economic development of the entire South China, even impacting China as a whole. Should there be changes in the status of Hong Kong, this domino effect is a logical and inevitable outcome
It should be noted that with the intensification of the trade friction between China and the United States, the possibility of the U.S. government playing the Hong Kong card is getting higher. Being an adept in strategy research and formulation, the United States understands clearly Hong Kong’s role and reaction mechanism. Whether the U.S. will really play the Hong Kong card depends on the changes in Hong Kong and how the U.S. judges the effects of such changes on its national interest. For China, the counter-measures is simply to maintain the overall stability of Hong Kong. Indeed, this is also the most appropriate option for both Hong Kong and Mainland China. China should see the value of Hong Kong from a bigger picture, and ensure its continuous prosperity. Afterall, the stability of Hong Kong is crucial for the geo-strategical development for China.
Final analysis conclusion:
The prosperity of Hong Kong depends not only on Mainland China, but also on the international community. If Hong Kong is no longer being recognized by the international community, this would undermine the foundation of its prosperity and ultimately affect the overall stability of the Chinese economy.
