Hong Kong Is a Black-and-White Issue

Does the Hong Kong government want a solution? Waiting and hiding is not a strategy.

By Matthew Brooker
Time is running out. 

Hong Kong is running out of time. 

Signs are building that the city’s political crisis is starting to affect its financial and business prospects. 

Waiting is no longer a viable option for the government.
It’s a measure of the poverty of expectations that Hong Kong stocks rebounded from their lows during Monday’s press conference by the Hong Kong and Macau Affairs Office in Beijing. 

The briefing offered no initiative to break the deadlock. 

It was simply enough that spokespeople didn’t broach any of the more apocalyptic contingencies that have been floated in recent weeks – such as intervention by the People’s Liberation Army to quell the unrest. 

Having been heading for its worst loss in more than a month, the Hang Seng Index pared losses to close 1% lower.
Yang Guang, spokesman for the Chinese agency that oversees Hong Kong, certainly appeared intent on lowering the temperature. 

He offered a regulation defense of the city’s government and ritual condemnation of the actions of the more radical protesters, who have battled with police, defaced national emblems and broken into the legislative chamber during eight weeks of unprecedented turmoil triggered by a proposed law that would have allowed criminal suspects to be extradited to mainland China.
But Yang’s tone was notably softer and more measured than the incendiary language used in recent editorials by China’s state-controlled media, which have railed against “outside meddling” in Hong Kong and urged stern action by the police. 

That will have reassured those who feared that Beijing might use the unrest as a pretext to tighten its grip on the former British colony, further eroding the autonomy promised under the “one country, two systems” model that has governed the city’s relationship with the mainland since its return to Chinese sovereignty in 1997.
The trouble is, a holding pattern is no longer adequate in a dynamic situation that’s lurching toward rapid deterioration. 

While Hong Kong equities have been generally resilient to the protests, Monday’s stock-market action shows that the price of political inertia is getting higher. 

Stocks fell again in a storm-shortened session Wednesday after further violent clashes between police and protesters on Tuesday night.
Signals in other areas are flashing red, too. 

Businesses are already reporting serious consequences from the protests, a survey of members by the American Chamber of Commerce found. 

These range from an immediate hit to revenue caused by disruption to supply chains and consumption, to longer-term doubts over cancelled events and shelved investments, AmCham said. 

A clear majority of members surveyed said the government “needs to address the underlying causes of the protests and not simply to paper over the cracks of social instability with a short-term law-and-order fix,” AmCham President Tara Joseph said in a release.
Such warning flags are ignored at the government’s peril. 

Anecdotal evidence also points to unusual levels of anxiety among the city’s local business elite. 

The downside of being a small, open economy is that capital and companies can turn on a dime. 

For multinationals with operations across multiple Asian cities, moving some functions and headcount to, say, Singapore may be a relatively trivial matter. 

Similarly, for local tycoons with billions of dollars to deploy, moving a few hundred million out of Hong Kong may seem like a prudent hedge.
Such cycles, once started, can feed on themselves. 

Hong Kong’s reputation for political stability, reliable institutions and effective governance was won over decades. 

Once lost, it will be hard to regain.
AmCham’s call for clear leadership to resolve the crisis is apposite. 

There is a vacuum at the top of the Hong Kong government. 

As of Tuesday, Chief Executive Carrie Lam hadn’t spoken publicly on the protests for more than a week. 

Over the weekend, when black-shirted protesters gathered in Yuen Long to confront the white-shirted thugs who attacked commuters and demonstrators in a subway station the previous weekend, a picture circulated on social media of Lam – at a PLA youth summer camp in Hong Kong. 

The optics are of a government that is almost comically out of touch.
If the government’s strategy was to wait out the protests in the hope that violent clashes would drive a wedge between the radical minority and more moderate opponents of the extradition bill, it has failed spectacularly. 

Instead, the opposition has metastasized, to encompass social workers, the elderly, aviation staff, transport systems and even the civil service.
Beijing spokesman Yang noted Monday that the protesters’ demands have been diffuse and changing, implicitly pointing to the difficulty of negotiating with them. 

That’s no excuse for not trying. 

Some of the demands are clearly beyond the purview of the Hong Kong government – such as reopening the political reform process that stalled in 2014.
Yet the government has signaled no willingness to move on any of them since suspending the extradition bill last month. 

Such intransigence is baffling. 

What, for example, is the objection to stating that the bill has been formally withdrawn, given that Lam has already said it is “dead”? 

And what explains the resistance to calling an independent inquiry, which now has a chorus of pro-establishment interests behind it?
The choice for the government between continuing on its present course and trying something proactive to break the impasse is as stark as that between black shirts and white shirts. 

The costs of inaction are rising each week.