In recent months China has been increasingly vigorous in asserting control over Hong Kong. Western politicians and the Western intelligentsia have been highly critical of China’s actions. I believe their criticisms are largely misplaced and reflect a lack of interest about in what has actually happened on the ground in Hong Kong. And they certainly demonstrate a lack of interest in Hong Kong’s disreputable colonial origins.
I remain a bull on Hong Kong Stock Exchange, the Hong Kong dollar and the territory itself. Consider the following financial and historical facts:
Before the Beijing passed the new security law in July 1920, Hong Kong had become ungovernable. It is now functioning normally again. From 2014 through 2019 the Umbrella protestors/insurrectionists had subjected the city to endless bouts of destruction including wrecking subway stations and entire shopping centers. The legislative (LEGCO) chamber was totally ransacked (a warm up for the January 6 invasion of the US capitol ?). Policemen were attacked with petrol bombs and their families were harassed. Hong Kong’s major universities were occupied and vandalized. Without a security law as required in the Basic Law worked out with the British , the Hong Kong police were overwhelmed. Beijing had to act to save the city from itself. So Beijing imposed a security law but did not send In troops. Beijing now is in the process of adjusting the process for selecting the next Chief Executive. Yes there is a risk Beijing will go too far. Remember the real goal of the protestors/ insurrectionists was independence. That never was on the table under the British and is not now under China. It was never realistic that China would tolerate a Hong Kong that was a hotbed of anti-China and pro-independence activity.
US Threats to delist Chinese ADRs and the Hong Kong Stock Connect Program have enhanced the value of the Hong Kong Stock Exchange.(HKEX) Chinese investors through the Stock Connect Program are flooding the Exchange. Chinese companies like Alibaba which trade in ADR form in the US have listed in Hong Kong to protect their shareholders against US sanctions. The IPOs keep coming. HKEX has some unique advantages. Through the Stock Connect Program it has access to the enormous pool of Chinese savers. At the same time the Hong Kong Stock Exchange has access to international savers. For example, US based investors made up the second largest shareholder group by geography in Kuaishou Technology, according to the South China Morning Post. This IPO was reputed to be Hong Kong’s hottest ever IPO.
Despite the ravages of the virus induced recession, the Hong Kong dollar remains solid as a rock. US bears on the Hong Kong dollar have been wrong. Hong Kong’s currency board system has continued to work and the money has been pouring in.
Don’t forget Hong Kong’s disreputable colonial origins. Hong Kong was acquired by the British in a series of wars fought on behalf of British drug dealers who wanted to sell India grown opium to China. Numerous indignities besides the loss of Hong Kong were inflicted on China as a result of these appropriately called Opium Wars but these are too numerous to go into here. One event worth mentioning was the wanton looting and burning of the exquisitely beautiful and immense Old Imperial Summer Palace (Yuanmingyuan) in Beijing. The Taliban could not have done a better job of cultural destruction!
Britain’s rule over Hong Kong could be called a benevolent dictatorship. But under Britain Hong Kong was never a democracy. The Governor was appointed by London. No election. There was a Legislative Council (LEGCO) which was confined to mostly advisory functions. There was nothing close to universal suffrage. And the British could be tough. The Hong Kong police under the British shot and killed demonstrators in the disturbances of 1967. In contrast, there were no deaths at police hands during recent years’ unrest. And when the ninety nine year lease for Hong Kong’s New Territories was up in 1997, the British never asked the populace what they wanted. No plebiscites, no elections to determine if the populace wanted to be part of the People’s Republic of China, stay with Great Britain or become independent. Like they were cattle, the British shipped the people of Hong Kong to China. Unlike Hong Kong, all other territories of the former British Empire were given their independence. As Hong Kong’s former colonial master, Great Britain does not occupy the moral high ground.
It is understandable that a large number of Hong Kongers are unhappy with the current situation. Many have parents who fled Communist China. There are forecasts that there will be a mass exodus from the City. But where will they go? If hundreds of thousands of Hong Kongers suddenly show up on recession plagued British shores, will the welcome mat stay out? And they are not welcome in the US. Senator Ted Cruz personally went to Hong Kong, dressed in black and joined the insurrectionists for a major photo-op. But this same Senator Cruz later personally KOd a bill in the US Senate that would have admitted Hong Kong refugees. Western hypocrisy when it comes to China knows no bounds! There is the famous incident when in 1979 US President Jimmy Carter visited Chinese leader Deng Xiaoping. Carter complained to Deng that China was restricting its people from leaving (a restriction long since removed.) “How many would you like?” Deng replied. Carter changed the subject.
Despite the turbulence of recent years, the Chinese intervention and the virus recession, Hong Kong apartment prices have not collapsed. That’s an indicator of confidence in the city although in some ways that’s too bad. Hong Kong house prices are too high and there is a shortage of affordable housing for the less affluent part of the population. Housing is really Hong Kong’s number one problem.