Hong Kong, China – Rumor has it that the Hong Kong dollar will be freed from the US dollar through local brokerages. Thousands of middle-class families have sold their flats and spent cash for a new life abroad. Hong Kong’s strongest developers when Beijing claims they will address the region’s housing shortage.
Over the past year, Hong Kong’s society has been alienated by the Beijing-imposed national security law and changed the electoral process designed to ensure that only people considered “patriots” can hold office in the region.
Now the focus is on whether it can survive as its famous free economy and global financial hub.
Observers are not optimistic.
“Economic freedom is not sustainable in the long run without democracy and other freedoms,” said Fred McMahon, a resident fellow at the Fraser Institute, an independent non-partisan think tank in Canada.
Last month, the Institute’s annual report on economic freedom still crowned Hong Kong as the world’s most free economy, but it pointed to national security laws and the city’s “landing in torture” as a threat to keep the title even longer.
McMahon told Al Jazeera, “The key to economic freedom is the rule of law, which does not bow to power but enforces justice and the freedom of government.” However, for the Chinese Communist Party, “law is subject to politics,” he added.
Last year, the Heritage Foundation, which for decades toasted the city as the poster child of the lace-fair economy, dropped Hong Kong from its rankings.
Within months of the security law being enacted, Next Digital, a thriving business published by the popular pro-democracy Apple Daily, was forced to close after owner Jimmy Like was accused of “colluding with a foreign power” and the company’s assets were frozen.
While Lai has been in jail awaiting trial and has been charged with other crimes since then, businessmen are wondering whether the tycoon’s trial under the new law is a single exception – or whether the proverbial canary in coal mines has been proven.
“This is a special event that has alerted the international business community,” said George Catherly, vice chairman of the International Chamber of Commerce – Hong Kong. “They are waiting to see if the government will go further than that and how it will develop.”
Hong Kong’s economy still seems buoyant at the moment, but Beijing’s recent crackdown on mainland tech giants, tuition centers and debt-ridden real-estate developers has raised doubts about what might be in store.
Assuming history to be any guide, it may only be a matter of time before Beijing expands its interest in Hong Kong’s economic affairs.
An incident: The National Security Act was issued in mainland China a few years before it was imposed on Hong Kong, bypassing the territory’s own elected legislature.
Most recently, the city’s “big four” developers, blamed for the world’s highest house prices and the smallest flats, were asked to do something to solve the region’s housing problem.
For traders, there are also ghosts of the past: when China was a command economy and private ownership was illegal.
“Businesses are probably not so much concerned with their own personal freedom as the value of their assets has been invested in Hong Kong and China,” said Joseph Lian, a former commentator and top editor of the city’s business press who now teaches economics at Yamanshi Gakuin University. Japan. They “will be for a tough ride,” he said.
Eyes on Beijing
But it’s only those who think good heels. Middle-class families devastated by the crackdown are also seeking to protect their money and investments.
Thousands of people in Hong Kong who are planning to emigrate have family flats – often their most valuable assets – for sale. Some – and not only those planning to move – are also opening offshore bank accounts due to concerns that the region could soon be subject to the same kind of capital control as the mainland.
The world’s longest and most expensive quarantine mandate – in 14 to 21 days in a hotel for all residents returning from abroad – has also affected the minds of business and once-regular travelers.
The European Chamber of Commerce warned earlier this month that many of its member companies were considering relocating some of their work – including to Singapore – because of the order, local governments have shown little willingness to relax even for full vaccinations.
Chief executive Carrie Lam has achieved her goal of aligning the city’s epidemic control with the mainland’s zero-COVID goal – whatever the cost.
But the price of an increasingly limited economy can be heavy.
Hong Kong’s separate economic system has long held the status of both China’s most important financial center and a global one.
But with a perpetually smaller territory from Beijing, Lian hopes that the investment dollar that has driven it to pre-fame over the past half-century could soon pave the way for the inflow of speculative funds known as hot money.
“The proportion of hot money in a mature financial center is low; Hong Kong could go the other way, “Lian said.” It can still make money for many people; casinos do too, but it’s not for a financial center. “