In June 1995, two years before this longtime British colony and its 6 million crown subjects were due to be handed over to communist China, Fortune Magazine printed a famously controversial — and widely panned — cover story titled “The Death of Hong Kong.” It predicted that once business-friendly Hong Kong became infected with China’s culture of corruption and patronage, this glittering international finance hub would become just another typical mainland city. “In fact,” the article declared, “the naked truth about Hong Kong’s future can be summed up in two words: It’s over.”
Those of us who thought we knew the region had a good chuckle. That Fortune essay seemed so silly because, for many locals, and for the multitude of foreign correspondents here at the time, including myself, the exact opposite seemed true. Beijing desperately wanted — needed — what Hong Kong had: wealth, stability, good relations with the world. What did Beijing have that Hong Kong wanted? Nothing. China was not about to change Hong Kong; Hong Kong was going to change China.
Much of the talk then was of “convergence .” Hong Kong boasted a freewheeling capitalist system underpinned by an independent judiciary, a largely unshackled press and basic individual freedoms. China, meanwhile, was still a nominally communist dictatorship just a few years removed from massacring pro-democracy demonstrators at Tiananmen Square. But China was changing rapidly in the ’90s, becoming wealthier, freer, more urban and eventually, many thought, more democratic.
Surely Hong Kong’s liberalism, respect for human rights and relatively open (if not democratic) political system would prove irresistible to the mainland. It would be a great test for the end-of-history theory — the idea that the arc of human government bends toward liberal democracy. One New York Times columnist, writing about the handover in 1997, suggested that China was inheriting “a colossal Trojan horse” that in time could undermine the entire communist regime.
Now, 20 years after Hong Kong’s handover to China, it seems that the pessimistic Fortune article was right.
Of course, not all the early predictions proved incorrect. China grew much wealthier: The per capita GDP in 1997 was about $780, and today it tops $8,000. In the mid-’90s, China was still largely rural, with 70 percent of the population in the countryside; now the share living in cities is nearly 60 percent. Back then, when China was still the kingdom of bicycles, private cars were a relative rarity. Today, there are more than 172 million private cars in China, and the country is one of the world’s fast-growing auto markets . China is also a freer, more open place: Unlike two decades ago, Chinese can live where they want, take jobs they want, make as much money as they’re able, marry and divorce whom and when they want, and travel virtually everywhere.
But as China has developed and gotten richer, and its people freer, what it has not become is more democratic. China under the Communist Party has historically gone through cycles of limited openness followed by repression, and the country now, under President Xi Jinping, is arguably in one of its most politically restrictive periods since the Mao Zedong era, and certainly since the crackdown that followed the Tiananmen massacre. Human rights lawyers and activists have been rounded up and jailed ; some have been sentenced to long prison terms after closed trials, while others have simply disappeared . China’s nascent civil-society movement has been quashed. Websites and blogs deemed critical of the government have been shut down and bloggers and journalists arrested.
Alongside an ongoing propaganda attack in the official media against perceived “hostile foreign forces,” the security services have been given sweeping new powers to regulate and monitor the 7,000 foreign nongovernmental organizations working in China, with many groups now saying they may have to leave the country . Universities have been told to stop using imported textbooks that might spread Western ideology, and teachers were warned not to “defame” the Communist Party or “smear socialism” in their classrooms. Those fears have reached Hong Kong, too.
Two decades ago, it seemed that China needed Hong Kong as its gateway to the world. But China today sees that gateway as a threat, a potential beachhead for subversion and a problem to be contained before it infects the mainland.
China’s wariness about its newly claimed territory in the south started early. In 2002, Hong Kong’s Beijing-installed government tried to implement a sweeping new anti-subversion provision to give local police the power to conduct warrantless searches and arrests, ban any organization on “national security” grounds and criminalize “instigative” speech. But Hong Kongers took to the streets by the tens of thousands in protest, and local officials backed down. China’s leaders today constantly remind Hong Kong officials of their failure to pass the law.
For China, the breaking point was the 2014 “Occupy Central” protest movement, also known here as “the Umbrella Revolution,” which lasted 79 days and brought thousands of demonstrators, mostly students and young people, into the streets demanding political reforms. The protests paralyzed parts of the city but failed to achieve any reforms. Still, they left China’s communist rulers more paranoid about this territory.
As Beijing’s leaders came to worry about Hong Kong more, they also began to need it less.
Hong Kong’s 20th-century role as the entrepot, or connector, between China and the West has long since vanished, as foreign firms are able to base offices in China and sell directly to Chinese consumers. Dozens of Chinese companies, such as the e-commerce giant Alibaba, chose to skip Hong Kong and list on the New York Stock Exchange. Ships now bypass Hong Kong’s harbor to sail to mainland ports. Hong Kong in 1997 accounted for some 16 percent of China’s GDP; that figure has now shrunk to 3 percent. China is also outpacing Hong Kong in digital innovation, including e-commerce, social-media start-ups and particularly fintech — proprietary software used in the financial industry.
Hong Kong still has some comparable advantages. Its regulatory system is efficient, its courts dispense justice impartially, the Hong Kong dollar is a freely convertible currency and English is still widely spoken. But China is catching up rapidly, loosening its notoriously cumbersome red tape and slowly shifting to a more convertible currency.
As China needs Hong Kong less, the reverse is also true: Hong Kong has become almost entirely dependent on the mainland for its survival.
Well more than half of Hong Kong’s exports end up in China, and a growing share of its bank loans are to mainland Chinese customers. Tourism and retail spending from mainland visitors account for about 10 percent of Hong Kong’s economy, propping up the shopping malls and luxury boutiques. “Red chip” stocks from mainland companies make up more than 40 percent of the Hong Kong stock market’s capitalization. Students from mainland China are filling spaces in Hong Kong universities. And the Mandarin language is heard increasingly here, even supplanting English as the second language for Cantonese-speaking Hong Kong.
What we are seeing now is the mainlandization of Hong Kong. It’s the gradual absorption of Hong Kong by the new sovereign. It’s the slow erosion of the separate culture and norms that have set it apart. And it’s the incremental marginalization of Hong Kong in the Chinese economy.
Since the Occupy protests, China has shown an increasing propensity to meddle directly in Hong Kong’s affairs. Chinese security agents operating in Hong Kong have abducted book publishers, as well as a reclusive Chinese billionaire secluded in a five-star hotel, and spirited them back over the border for secretive interrogations. China’s rubber-stamp assembly has short-circuited the local judicial process by making rulings on Hong Kong laws — in one case banning two elected members of the legislature from retaking their oaths.
After the handover on July 1, 1997, there was an assumption, or hope, that the “one country, two systems” formula negotiated in the 1980s by Chinese leader Deng Xiaoping and British Prime Minister Margaret Thatcher might actually be allowed to work. Hong Kong was promised full autonomy for 50 years, which in 1997 seemed a lifetime away.
What few predicted was Hong Kong’s slow-motion mainlandization. Hong Kong and China have been converging — just not in the direction many of us thought.
I recall the line from Chris Patten, the Conservative politician who was Britain’s last colonial governor, when he was confronted with the old adage about China not wanting to kill the goose that laid the golden egg. He replied, with percipient understatement: “History is littered with the carcasses of decapitated geese.”