Speaking of thought-provoking, here’s Doug Bandow’s prediction at National Interest of what would happen when China cracks down on the demonstrators in Hong Kong which both I and, apparently, he think is inevitable:
The SAR would lose its relative autonomy, almost certainly ending up under direct Chinese rule, and, likely temporarily under military control. Business and investment would flood outward, not likely to return for years, if ever. Wealthy individuals would look to transfer their wealth overseas while seeking any possible foreign refuge.
The commercial impact elsewhere on China would be modest, but some foreign firms likely would prepare for Western economic and political retaliation. With foreign relations almost certain to collapse, businesses that remain in the PRC could become collateral damage.
The United States would revoke Hong Kong’s special trade status. Economic sanctions of some sort would be equally inevitable. A trade embargo would remain unlikely, but in contrast to 1989 the debate over American policy would occur during the nadir of post-Mao Sino-U.S. relations. The economic relationship already is under siege; human-rights concerns are on the rise; the Pentagon is emphasizing security issues in the Indo-Pacific region. A bloody crackdown would shatter what remains of bilateral ties and strengthen arguments of hawks who believe that a new Cold War is imminent, if it has not already arrived.
Europe also would face significant pressure to act. Despite their desire for expanded economic ties, European governments have become more concerned about recent Chinese behavior. When NATO members met in April the PRC topped the agenda. “China is set to become the subject of the twenty-first century on both sides of the Atlantic,†opined German Foreign Minister Heiko Maas. Earlier this month Secretary General Jens Stoltenberg urged greater attention to Beijing: “This is not about moving NATO into the Pacific, but this is about responding to the fact that China is coming closer to us.†Europe could ill afford not to impose at least some economic penalties on the PRC.
Asian countries would be more reluctant to act. However, those reliant on America for their defense could ill afford to continue business as usual with China. Even in its own region Beijing would find its neighbors more wary and hostile, and readier to strengthen their own militaries. Whatever additional stability the CCP might believe it gained by cracking down would be dearly bought.
Here are my questions.
- Will China crack down on Hong Kong?
- What will result from the crackdown?
- What would the consequences of the end of “one country two systems” be for the Asian financial system?
- What has Hong Kong’s role in the rise of China been? Note that much of China’s rise has occurred subsequent to the adoption of “one country two systems”.
- Whatever that role does China still need it? I don’t believe that the Chinese authorities think they do or, at least, they don’t believe its cost is worth maintaining.
Unless China can manage a quiet crackdown. Plainclothes police identifying and disappearing protest leaders, that sort of thing. I suspect they will at least attempt that strategy.
1. The CCP has been cracking down; through the police; through arbitrary court rulings. But a crackdown involving the PLA or the PAP; the CCP has a threshold and a timeline. My guess if the protests are not controlled by mid Oct they will act.
2. In Hong Kong? With control of the gun; the PLA will win (in the short term). But unlike 89; it would be restive for a long time – the protesters cannot be brought off with money or allure of Chinese superpower. The CCP could send all 7 million residents to re-education camps I suppose….
3. Everything financial would move to Singapore or Tokyo. Singapore has the advantage of using common-law and English.
4 and 5. It’s a simplification but China’s place in the international system is based on three agreements – the Shanghai communique; the Sino-British joint declaration about Hong Kong; and the WTO accession agreement.
All three were finely tuned agreements that delivered on interests to the “West†and to China. If they collapse; then questions resolved or deferred in those agreements would come to the fore — indeed that is what we are seeing with the WTO.
Questions opened include the status of Taiwan; relations with countries in the US alliance treaty system…
The importance of Hong Kong depends on what the Chinese government wants. If it desires autarky – Hong Kong is disposable. If it desires to be the superpower instead of a leading power of Asia; it needs a international financial center.
The other observation is on the protestor side; why the protests have gone so far is because Hong Kong has been mismanaged for 20 years and grossly mismanaged for the last 10.
Unless the Chinese government changes its approach to Hong Kong’s governance (which shows no signs of happening); the fuel for a protest leading to a crackdown will still be there.
Hong Kong’s contribution to Chinese GDP has steadily declined. It stood at 27% in 1997, at the time of the transfer, and before the Deng reforms took hold, but now is only about 2.7%. It has been largely replaced by Shanghai.
National pride means that Hong Kong must be fully absorbed into the mainland system, regardless of international consequences. Eventually, Taiwan will be forced under mainland control, too. No amount of American bluster will prevent that.
Our Ruling Class believes that Western hegemony over the world and liberal democracy are permanent. But there is no reason that a Russian-Chinese Eurasian empire might not achieve at least a co-hegemon status. There is also no reason to believe that liberal democracy will endure in the West. Europeans have no freedom of speech, no freedom of the the press, no freedom of religion, no freedom from self-incrimination, no freedom from surveillance and searches, and no right to keep and bear arms. In fact, they never have had these rights, not even in the time preceding the Roman Empire. The other Anglophone countries do not have these freedoms, either. In all of Europe, Australia, Canada, New Zealand and UK, people are routinely fined or imprisoned for saying things that are protected speech in the US. The US and the Bill of Rights are anomalies in the world.
How long before the American anomaly is erased? Hillary got a majority of the popular vote in 2016. The next Democrat Presidential candidate will almost certainly be a self-avowed doctrinaire socialist/communist. Sanders is only one of 20. That candidate might also get a majority of the popular vote. Socialism and communism are no longer anathema to Americans.
Grim times ahead.