A path forward for Hong Kong

Reanimating the Lion Rock Spirit is possible - and in Beijing's interest

It is easy to dismiss Hong Kong as a city whose time has passed. The 2019 protests and resulting national security crackdown, Covid, and a decline in the territory’s property sector have undoubtedly diminished the city’s dynamism. No less challenging has been mainland China’s economic slowdown and inward turn, making Hong Kong’s role as a bridge to the rest of the world all the more precarious. 

The city is now threatened by the United States Congress with the closure of its Economic and Trade Offices in that country, which could prompt retaliation against the US consulate in Hong Kong. It is also facing calls for greater scrutiny of the territory’s alleged facilitation of sanctions evasion. Both actions would further wound the confidence of multinational businesses, many of whom have already decamped elsewhere. 

Even prior to these blows, Hong Kong was struggling with the existential question of its role, both within China and in the broader world. Once possessing a GDP equivalent to 18% of the mainland at the time of its handover in 1997, it is now around 2%. It has failed to diversify its economy beyond finance while its next door neighbor Shenzhen has flourished as a technology hub. 

And yet, Hong Kong is a city with a promising future - one that is still in China’s interest to nurture. It remains on track to surpass Switzerland as the largest offshore wealth hub by the end of this decade. The city’s importance as the offshore renminbi capital will only grow as China continues to diversify its exposure away from the dollar. The city will remain the primary gateway for inbound and outbound investment to and from the mailand. And Hong Kong continues to set the pace for China in many aspects of public administration and quality of life.

Jumpstarting Hong Kong will require China to exercise the pragmatic leadership that it has abandoned in favor of the ideological. More than two decades since Jiang Zemin once chastised a Hong Kong journalist for being “too simple, sometimes naive,” it has become an apt critique of Beijing’s management of Hong Kong. The first step is the hardest: a blanket amnesty to those arrested in the wake of the 2019 protests that includes the possibility of their holding office. 

In parallel, Hong Kong should provide clearer guidance about the interpretation of its national security laws and affirm protection of speech on the local issues that matter most to the quality of life of residents. Hong Kong’s days of often irreverent needling in Beijing may be behind it, but will be far from the only place in the world with a form of lèse-majesté. 

Second, Hong Kong should not shy away from its political complexity, but embrace it, both in its official actions and public branding. As the mainland drifts back towards opacity and inaccessibility, Hong Kong can restore its role as a form of looking post and meeting ground. (From a public relations perspective, in the wake of the successful adaptation of James Clavell’s Shogun, an updating and remake of Noble House’s take on the city’s business and political intrigue would do the city well.) 

Third, Hong Kong needs to get back to outpacing the mainland when it comes to regulatory innovation. Today, the city is taking the opposite approach, for example by upholding a harder line on Japanese fish imports than the mainland itself - a misalignment that, if it metastasizes to other issue areas, will lead to Hong Kong becoming less than a Chinese city instead of just another as some critics assert. 

Hong Kong is better served - and better serves the mainland - when it is a sandbox. The city maintains a more liberal approach to cryptocurrency. It similarly should be a locus for artificial intelligence innovation unhindered by the mainland’s restrictive focus on ideological security. 

This extends to personal freedoms: the city should heed the majority of Hong Kong’s people who support the legalization of same-sex marriages. And with one of the world’s lowest fertility rates, it should also allow single and gay women who wish to start families on their own via IVF. 

Fourth, Hong Kong needs to recommit to being a world city. The city has long punched below its weight in attracting non-mainland international students to its universities: New York University and Columbia University together have ten times as many international students as Hong Kong. The city’s primary and secondary schools need to address lagging English proficiency. At the same time, the city should end its de facto policy of non-assimilation, in particular welcoming and supporting non-Chinese who wish to enrol their children in Chinese-language schools.  

Fifth, tax and housing reform is overdue. An overreliance on land sales for revenue contributes to oppressive house prices and is now jeopardizing the territory’s fiscal position as the property sector downturn continues. The city should adopt a goods and services tax and sharply increase the stock of quality public housing.

Finally, Beijing has an opportunity to signal its magnamity and revive Hong Kong’s civil society by restoring the number of elected district council positions and re-extending its 2014 offer to allow the popular election of the chief executive from a slate determined by a nominating committee loyal to Beijing. It is far from ideal, to be sure, but a tremendous step forward from the abyss that Hong Kong civil society now confronts.

Recommitting to Hong Kong will not only make life better for the millions who live there, but it will send a powerful signal to mainland Chinese who are losing hope that China’s best days remain ahead of it, and to the world that China is still capable of pragmatic leadership. Understandably, it will make little difference to the people of Taiwan, who have long dismissed “one country, two systems” as a viable model.

There is arguably no action in any other domain that Beijing could take that would simultaneously demonstrate as much confidence in its system, deliver such social and economic good, and be cheered by so many around the world as to recommit meaningfully to Hong Kong. The people of Hong Kong deserve it.

Photo via Flickr