Hong Kong is a special administrative region (SAR) of the People’s Republic of China (PRC) with certain political and economic freedoms based on the notion of “one country, two systems.” The former British colony is a global financial capital that has thrived off its proximity to China, but in recent years many in Hong Kong have become frustrated by growing economic disparities in the city and weary of delays in democratic reform.
Democracy activists in Hong Kong usually rally on the anniversaries of the 1997 handover to China and the 1989 Tiananmen Square crackdown, but protests in the fall of 2014 reached record levels in what was dubbed the “Umbrella Movement.” Experts say that Beijing views these demonstrations and the increasing popularity of pro-democracy parties as a challenge to its legitimacy, and fears a political compromise could have dangerous implications for other regions like Taiwan or Tibet.
What is Hong Kong’s political status?
Hong Kong is largely free to manage its own affairs based on “one country, two systems,” a national unification policy developed by Deng Xiaoping in the 1980s. The concept was intended to facilitate the reintegration of Taiwan, Hong Kong, and Macao with sovereign China while preserving their unique political and economic systems. After more than a century and a half of colonial rule, the British government returned Hong Kong in 1997. (Qing Dynasty leaders ceded Hong Kong Island to the British Crown in 1842 after China’s defeat in the First Opium War.) Portugal returned Macao in 1999, and Taiwan remains independent.
The Sino-British Joint Declaration of 1984 dictated the terms under which Hong Kong was returned to China. The declaration and Hong Kong’s Basic Law, the city’s constitutional document, safeguard the city’s “capitalist system and way of life” and grant it “a high degree of autonomy,” including executive, legislative, and independent judicial powers for fifty years (until 2047). Chinese Communist Party officials do not preside over Hong Kong as they do over mainland provinces and municipalities, but Beijing still exerts considerable influence through loyalists who dominate the region’s political sphere. Beijing also maintains the authority to interpret Hong Kong’s Basic Law.
Freedoms of the press, expression, assembly, and religion are protected. Hong Kong is allowed to forge external relations in certain areas—including trade, communications, tourism, and culture—but Beijing maintains control over the region’s diplomacy and defense.
What is Hong Kong’s economic connection to the mainland?
A metropolis of more than seven million people, Hong Kong is a global financial and shipping center that has prospered from its proximity to the world’s second-largest economy. It ranks first in the world in trade as a percentage of GDP. Relatively low taxes, a highly developed financial system, light regulation, and other capitalist features make Hong Kong one of the world’s most attractive markets and set it apart from mainland financial hubs like Shanghai. Hong Kong continues to take top spots in economic competitiveness reports, placing fourth in the World Bank’s annual Doing Business rankings and first in the world on the Heritage Foundation’s 2017 Index of Economic Freedom. Most of the world’s major banks and multinational firms maintain regional headquarters in the city.
Hong Kong’s economic power has diminished relative to the mainland—its GDP fell from 16 percent of China’s after the handover in 1997 to just 3 percent in 2014—but commercial ties remain tight. Hong Kong is China’s second-largest trading partner (after the United States), accounting for more than 8 percent of China’s total trade in 2016. The city is also China’s largest source of foreign direct investment (FDI) and a place where Chinese firms raise vast amounts of offshore capital.
Meanwhile, Hong Kong relies heavily on the mainland. China, the top destination for Hong Kong exports, accounted for more than half of the city’s total trade in 2015. More than half of the mainland’s outward FDI stock is destined for Hong Kong, though much of this investment is later channeled overseas. Hong Kong’s seemingly growing economic dependence on the mainland market signals that any economic hiccups in China will bear repercussions in the SAR.
What are the political tensions between Hong Kong and Beijing?
Beijing’s reluctance to allow Hong Kong to develop into a full-fledged democracy with free and fair elections is a perennial bone of contention. Experts say a source of the problem is ambiguity in the Basic Law, which Beijing continues to reinterpret. The document states that Hong Kong’s chief executive “shall be selected by election or through consultations held locally and be appointed by the Central People’s Government,” and that “the ultimate aim is the selection of the chief executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.” The nature and timing of electoral reforms are unclear.
Michael F. Martin, an Asian affairs specialist for the Congressional Research Service, says when Beijing proposed universal suffrage, it used the word 可以 (keyi), which translates widely to “can,” “may,” “possible,” or “able to,” thus making it difficult to discern whether Beijing’s decisions comply with the Basic Law.
Some analysts say China’s decisions in 2004, 2007, and 2014 to put off a popular vote for Hong Kong’s leader are an indication that Beijing will drag its feet on reforms indefinitely. China’s legislature ruled in August 2014 that only candidates vetted by a nominating committee chosen by Beijing would be allowed to run in 2017. Carrie Lam, viewed as an establishment candidate, won with 777 votes out of 1,994 in the March 2017 elections, becoming the first female chief executive of the SAR.
Pro-democracy factions were winners in the September 2016 elections for the city’s legislative body, the Legislative Council. Localist politicians, focused on preserving Hong Kong’s autonomy and local culture, won six seats out of the thirty-five geographic constituencies chosen by a popular vote and combined secured nearly 20 percent of the vote. Controversy erupted later in November 2016 when China’s National People’s Congress Standing Committee made a rare intervention in local court proceedings, passing a new interpretation of Hong Kong’s Basic Law provisions that require new legislators to take an oath of office. The ruling disqualified two pro-independence lawmakers who altered the language of the oath by pledging to defend a “Hong Kong nation.”
Additionally, the mysterious disappearances of a handful of Hong Kong booksellers and media executives in the fall of 2015 and the vanishing of a Chinese billionaire in January 2017 raise concerns about the independence of Hong Kong’s legal system and authorities. The media is believed to have been targeted by Chinese state agents for publications critical of Beijing. The alleged abduction of Xiao Jianhua, one of China’s wealthiest financiers who has reported links to Chinese President Xi Jinping and the military, stokes fears that Hong Kong’s autonomy is eroding further.
What are Beijing’s plans for Hong Kong?
Beijing and Hong Kong have benefited economically from the 1997 handover. As reforms have been delayed, frustration has built among Hong Kongers with what they deem to be actions taken to limit the city’s independence and an erosion of the “one country, two systems” principle. Since the handover, chief executives have been selected by an election committee, first composed of four hundred, then eight hundred, and now 1,200 members from four main sectors [PDF] (industrial, commercial, and financial sectors; other professional sectors, including higher education and engineering; labor, social services, and religious sectors; and Hong Kong political bodies). All changes to political processes have to be approved by the Hong Kong government and the National People’s Congress, the PRC’s legislative body.
Beijing has traditionally been reluctant to change its policy when faced with criticism. Hong Kong’s 2014 protests and 2016 Legislative Council elections caught Beijing’s attention and since, Beijing seems to be tightening its posture toward Hong Kong’s governance. Beijing views all protests and pro-democracy political voices as potential challenges to China’s one-party rule, but it perceives Hong Kong’s calls for democracy as particularly threatening because of the city’s status as an international economic hub.
China’s leadership is concerned that an elected democratic chief executive “would seek to destabilize Communist Party rule in China,” writes Richard C. Bush, a senior fellow at the Brookings Institution. Beijing also fears that any political compromise could set a dangerous precedent and spark dissent in other regions, including Tibet, Xinjiang, Inner Mongolia, Macao, and Taiwan, Bush adds. Beijing’s concerns have been coupled with tough rhetoric. In a January 2017 editorial in the state-run People’s Daily, China condemned separatist forces: “What so-called Taiwan independence and so-called Hong Kong independence have in common is that they are hell-bent on destroying the country and bringing disaster to its people, under the banner of freedom and democracy.” Zhang Dejiang, the head of China’s legislature and the leading official on Hong Kong issues for the PRC, said in 2017 that Beijing had the right to “step in” during Hong Kong elections and in a speech, he outlined plans to consolidate the Beijing government’s power over the SAR.
Given the changing power dynamic between Hong Kong and the mainland and China’s global rise, experts say it is unrealistic for protesters to expect Beijing to revise its stance. “Once the PRC government starts asserting itself, it isn’t likely to stop,” writes Doug Bandow, senior fellow at the Cato Institute.
Is Hong Kong united on democratic reform?
Public opinion in Hong Kong is divided. Some call for the preservation of Hong Kong’s current system, while others push for fundamental reforms of the Basic Law. A poll conducted by the Chinese University of Hong Kong in June 2017 found that 11.4 percent of people supported or strongly supported the idea of an independent [PDF] Hong Kong after 2047, but less than 3 percent believed such an outcome would be possible.
The political system still does not adequately represent the wide array of perspectives held by the Hong Kong population. The widening generational gap and mounting economic inequality—Hong Kong has one of the world’s highest levels of income inequality—have intensified political divisions. Younger generations have developed political grievances because they feel they are not reaping the benefits of their city’s wealth and face stiff competition from the influx of mainlanders. The influence of mainland money also exacerbates the divide between socioeconomic classes. The Hong Kong government must reconcile these opposing political forces while maintaining the city’s stability.
The ethnic identity of the city has also evolved since its handover to China. Though many still identify as having a mixed identity, more and more people see themselves as Hong Kongers or Hong Kongers in China, while the number of those who identify as Chinese or Chinese in Hong Kong has dropped since the 1997 handover.
Other public opinion surveys indicate that Hong Kong residents are increasingly dissatisfied with the Hong Kong SAR government, and trust in the Hong Kong and Beijing governments is waning [PDF]. Over the years, all chief executives have been unpopular. Hong Kong’s legislative body, made up of lawmakers both elected by geographical constituencies and selected by functional constituencies (representatives from social, industrial, and commercial sectors), as well as the chief executive’s election committee, disproportionately prioritize business interests and are generally loyal to Beijing. The political scene has traditionally been split, dominated by two major factions: pan-democrats, who call for incremental democratic reforms, and pro-establishment groups, who are, by and large, pro-business supporters of Beijing. Pro-establishment forces have typically been more dominant in Hong Kong politics.
Pan-democrats overwhelmingly advocate for the gradual implementation of political reform and a pragmatic, measured approach to Beijing. Pan-democrats recognize that Hong Kong cannot force Beijing into reforms that could contradict or undermine Beijing’s central authority; reforms are more likely to be successful when a change in Hong Kong is also beneficial to the mainland. As a result, even Hong Kong’s more progressive political groups are largely more conservative than the student protesters who are demanding full-fledged democracy.
Vocal and politicized youth are at the forefront of Hong Kong’s democracy movement. In the aftermath of the 2014 protests, young activists have formed new political groups and parties embracing a more overtly local, Hong Kong identity. These parties include more radical, anti-Beijing and nativist parties like Youngspiration and Hong Kong Indigenous, as well as the Hong Kong National Party, the first political party to call for formal Hong Kong independence, and Demosisto, a party advocating for greater autonomy and self-determination co-founded by Joshua Wong.
What is the role of international actors?
Many experts say there is little that foreign governments can do to influence Hong Kong’s democratization process. After the 2014 protests, the British government urged China to allow the “meaningful advance for democracy” in Hong Kong. In December 2016, Hong Kong’s last colonial governor, Chris Patten, said he believed the city would have democracy sooner rather than later but condemned the argument for independence, stating that fighting for independence dilutes support for democracy. The United States under the Obama administration issued statements backing pro-democracy protesters, but all statements avoided direct criticism of Beijing. U.S. congressional members have called for the revival of annual reports on political reform in Hong Kong, a provision of the 1992 U.S.-Hong Kong Policy Act that was suspended in 2000. More recently, Senators Tom Cotton, Marco Rubio, and Ben Cardin revived a bipartisan bill, the Hong Kong Human Rights and Democracy Act, that calls for sanctions on officials and individuals responsible for suppressing basic freedoms in Hong Kong. Some experts urge for a greater effort by Western democracies to support Hong Kong’s democracy movement and to condemn human rights violations.
In Beijing’s eyes, any interference by outside parties is a violation of Chinese sovereignty. In theory, the United Kingdom could seek recourse for Beijing’s failure to comply with the Sino-British Joint Declaration. However, the declaration provides no specifics on how the chief executive and legislative bodies should be selected. China also selectively recognizes international law, particularly when national sovereignty is involved.
Meanwhile, Hong Kong’s business community fears increased unrest could undermine investor confidence and heighten doubts about the city’s ability to carry on as an international financial center.
* A previous version of the above map mislabeled Hong Kong and Macao as autonomous regions and Guangxi, Inner Mongolia, Ningxia, Tibet, and Xinjiang as special administrative regions.