What’s going on here?

After weekend protests spilled (at times violently), we’re keeping a close eye on what exactly is going on in the global financial hub.

The backstory

Hundreds of thousands have taken to the streets to oppose a bill that would permit extradition from Hong Kong to mainland China, undermining the “one country, two systems” framework (has been in place since China gained power over Hong Kong in 1997).

The big picture

Business leaders with Hong Kong outposts are concerned the bill could put some executives in the crosshairs, wondering if Hong Kong could lose its status as the preferred venue for international business should the bill pass.

The local business impact

• Rabobank’s Michael Every: “Foreign firms could leave Hong Kong for Singapore, where you won’t be at risk of ending up in the Chinese judicial system.”
• Hong Kong property developer Goldin pulled out of a $1.4 billion bid for a city property citing “recent social contradiction and economic instability.”

The global perspective

You don’t just become the middleman for China and everyone else by visualizing it. For Hong Kong, it took

• a tolerant, independent governance system, paired with
• the notable absence of Communist Party-controlled courts.

It also helps to have special trading privileges with the U.S., which keep Hong Kong mostly immune to the China trade war.

But those are at risk:

• The “continued erosion” of one country – two systems “puts at risk Hong Kong’s long-established special status in international affairs.”
• Congressional leaders from both parties voiced readiness to yank those special privileges if Hong Kong loses more autonomy.

Content source: Freyman. N. (2019) "Why Hong Kong Matters". Moring Brew. Available from: https://www.morningbrew.com/stories/why-hong-kong-matters/ [Accessed 18 June 2019]