Hong Kong Protests – Can Chinese Economy Survive?

  • The UK continues to use it to its advantage for economic purposes.
  • The current protests were predicted in the mid 1990s.
  • One of the biggest worries for Chinese officials would be any noticeable decline in the quality of life and lifestyle that Chinese nationals have been able to enjoy.

Hong Kong is presently experiencing a political crisis. Large scale use of law enforcement and military is being used to disperse the protesters. However, the system itself is failing and it will lead to additional protests. Historically, an achievement of the Freudo-Marxists was the quantum leap through the rationalistic outlook which had dominated in the Marxist tradition. Furthermore, the escalation of the crisis in Hong Kong is inevitable due to the bygone times and political reality of the Chinese territory.

The transfer of sovereignty over Hong Kong, commonly known as the handover of Hong Kong (or simply the Handover, also the Return in Communist China and Communist Hong Kong governments), occurred at midnight on 1 July 1997, when the United Kingdom ended administration for the colony of Hong Kong and passed control of the territory to China. Hong Kong became a special administrative region and continues to maintain governing and economic systems separate from those of mainland China.

The colonization of Hong Kong by Britain had a large impact on the region. Even though the territory went back to China in 1997, cultural and trade ties remained.  The UK continues to use it to its advantage for economic purposes. Besides Britain, the US has its own interests in Hong Kong, including trade and a political presence.

Both US Democrats and Republicans have expat party members in the region to promote their own party’s political agendas. Those factors are perfect conditions to contribute to anti-government protests. The current protests were predicted in the mid 1990s. As a child attending The Bishop Strachan School (a private Anglican school in Toronto, Canada), I experienced the massive influx of boarding students from Hong Kong. Their families were concerned about how China’s takeover of the territory was going to change the economic and political situation. They sent the children out of Hong Kong to Canadian private boarding schools and also started making large investments in Canadian real estate market, to avoid their capital being frozen or possibly seized by the Chinese government after the take over.

Meng Wanzhou (born February 13, 1972), also known as Sabrina Meng and Cathy Meng, is a Chinese business executive. She is deputy chairwoman of the board and chief financial officer (CFO) of China’s largest private company, the telecom giant Huawei founded by her father Ren Zhengfei.

Thus far, China has not successful maintained the “One Country, Two Systems” approach. It is clear China is going to force one system across the nation. The current trajectory will lead directly to Hong Kong losing additional freedoms that it used to enjoy.

China is in a precarious position. Over the past 20 years China provided convenient, cheap labor in exchange for foreign investments. This strategy is good for a flexible nation willing to accommodate the needs of foreign investors, but it does not work if China wants to position itself as a global influencer. Currently, even though China has been trying to diversify its portfolio outside of manufacturing, it is not enough to change the global view of them at this time. Sanctions imposed against Huawei and the pending extradition to the US top executive Sabrina Meng Wanzhou, signals a downturn to the Chinese economy. The US-China tariff trade war is not aiding the Chinese economy either.

The Belt and Road Initiative (BRI) is a global development strategy adopted by the Chinese government involving infrastructure development and investments in 152 countries and international organizations in Asia, Europe, Africa, the Middle East, and the Americas. “Belt” refers to the overland routes for road and rail transportation, called “the Silk Road Economic Belt”; whereas “road” refers to the sea routes, or the 21st Century Maritime Silk Road.

One of the biggest worries for Chinese officials would be any noticeable decline in the quality of life and lifestyle that Chinese nationals have been able to enjoy due to the manufacturing “deal” of the past two decades. The trade war could cause economic stagnation and the downturn will not be met favorably by the populous.

The open economy approach China is promoting to attract additional foreign investments into areas outside of manufacturing might grind to a halt due to the trade war. Many investors would not want to invest in an economic situations perceived as unstable. China’s One Belt, One Road initiative, the resurrection of the silk road, is the right direction for them, however they face a Russia that is looking to expand its own geopolitical interests and global dominance.

China is facing challenges and it is unknown if the Chinese economy can withstand it. It is doubtful that in the short term China will achieve it’s ambitions to become the number one global economy, based on the current situation.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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