The fact that there have been continuous protests in Hong Kong since June 2019 is world news. Initially it was largely a Hong Kong only issue, which could have been resolved amicably at the onset if the Chinese Government had given in to, what most would call, the protestors reasonable demands. Instead, the protests were allowed to spiral out of control, crippling one of the world’s foremost financial centres, spilling over and now possibly threatening global stability in terms of economics and social order.
Why Protest?
To understand the rationale behind the Hong Kong protests, it’s necessary to understand a bit of history. Hong Kong was under British control up until 1997, when control was officially and peacefully handed back to China. However, this handover was subject to an arrangement called the “One Country, Two Systems” agreement.
Under this arrangement, Sovereignty of Hong Kong would return to China, but Hong Kong would remain a Special Administrative Region allowing it a fair degree of autonomy from mainland China and leaving its citizens with significantly more rights than their mainland counterparts.
Earlier in 2019, the Chinese government pushed forward a bill in Hong Kong’s legislature that would allow for those in custody in Hong Kong to be extradited to mainland China for trial and possible incarceration. This is what sparked outrage amongst Hong Kong citizens as they saw it as a move by China to crackdown on critics and dissidents of China’s Central Government.
In September 2019, the extradition bill was withdrawn, but by this time this was “too little too late” and the protests only escalated and became more violent with protestors making further demands.
Economic Fallout
Hong Kong is a major global financial centre and a hub for business in the Far East. Instability and unrest are extremely negative for such a place. As a result of the protests, official statistics show that Hong Kong’s economy has now slipped into recession having contracted during the second half of 2019. Foreign businesses are either weary or have already begun pulling out of Hong Kong. Shops and restaurants are losing business and are even forced to close during protests. The property market has also taken a huge hit has investors are choosing to postpone purchases.
Hong Kong is also home to one of the world’s foremost stock markets, which has seen sharp declines in the second half of 2019 and IPOs on this exchange have reduced dramatically. Fitch Ratings was also forced to downgrade Hong Kong’s sovereignty rating from AA+ to AA due to the emerging instability. Another major industry to be hit was tourism, which saw sharp declines and numerous flight cancellations.
Given that Hong Kong is a key financial centre in the Far East and on the global stage, this unrest is having a trickle-down effect in the region and the situation only seems to be deteriorating.
Social Fallout
The social impacts of this crisis are also huge. The public have lost their respect for the police and the government, which was made clear at the Hong Kong local council elections in November 2019. The pro-democracy movement received a landslide victory with 17 of 18 councils now being controlled by the pro-democracy faction.
Online harassment and cyberbullying have seen a massive upsurge since the eruption of protests and, online and off, the rift between the “Yellow” pro-democracy and “Blue” pro-government factions has grown. However, the effectiveness of the protests has also served to bring Hong Kong citizens together on a scale never seen before.
The Spill-Over
The protests in Hong Kong have had spill over effects globally. In cities around the world, Hong Kong citizens and mainland Chinese have come out to demonstrate, sometimes leading to clashes.
There is fear that Hong Kong-style protests may take place in other locations around the world, especially in emerging markets, causing headaches to everyday people and governments alike. In fact, it is reasonable to assume that some of the more prominent protests we saw across Europe, Asia and Latin America in 2019 could have been inspired by the mass scale and arguable success of the Hong Kong protests.
Protests on this scale destabilize economies and create an environment that is hostile to peaceful cohabitation and economic activity, which can threaten societies and is best avoided. This is one of the major reasons why the world is now weary about the Hong Kong protests.
A Clash of Super Powers
China is clearly growing agitated about the Hong Kong issue, but its hands are largely tied until 2047, when the “One Country, Two Systems” agreement expires. It’s unclear what may happen after that but Chinese aggression towards Hong Kong before or after will likely upset the West and the US, leading to a possible flashpoint in the region.
Could Hong Kong be at the centre of the next global conflict? We certainly hope not. However, with things as they are it’s unclear as to when or how Hong Kong can return to normal. This instability is being felt around the world and it’s definitely not good for the global economy.
