Hong Kong puts Beijing in a quandary

CRYSTAL Kan, a young veteran of the protests that have rocked Hong Kong since mid-June, knows where she will be if Chinese troops roll across the territory to help its embattled police force quell the movement.

"If the People's Liberation Army comes, I will probably just stay at home, anticipating the withdrawal of all foreign investment from Hong Kong and the possible economic collapse of China that will probably follow," the 22-year-old told Financial Times.

"Then we will all gather on the streets again after the PLA has left, unless they would like to stay in Hong Kong forever," she added. "I can't wait for them to come! We have nothing to lose."

Until this week, the scenario that she welcomes with the bravado of youth was, for most people in the former British colony of 7.4 million people, unthinkable. But events over three dramatic days have threatened the long-held assumption that Beijing would never do anything that might jeopardise Hong Kong's status as a leading international financial centre.

Enraged by what they saw as instances of unjustified police "violence" against protesters on the night of Aug 11, including the use of tear gas inside an underground metro station, thousands of youths descended on Hong Kong International Airport, forcing the cancellation of hundreds of flights.

During an emotional press conference called amid this crisis at the airport, Carrie Lam, Hong Kong's embattled, Beijing-appointed chief executive, sounded despondent. She said: "Hong Kong is seriously wounded. It will take a long time to recover. Let's set aside differences and spend one minute to look at our city and our home. Can we bear to push it into an abyss where everything will perish?"

Hong Kong's current political crisis erupted when she tried to implement a controversial extradition law that would have allowed Hong Kong residents, for the first time, to be extradited to China to face trial for certain crimes. The move ignited a public firestorm, given the Bill's perceived threat to the "one country, two systems" framework that has preserved both Hong Kong's civil freedoms and independent legal system grounded in English common law when it reverted to Chinese sovereignty in 1997. Ms Lam has since shelved the Bill but not formally withdrawn it, as Ms Kan and her fellow protesters are demanding.

The fact that Ms Lam's appeal was followed by another night of chaos at the airport demonstrates just how rudderless her government now is.

Her apparent desperation also suggests that the Chinese government might have no other choice but to intervene if Hong Kong's 30,000-strong police force cannot contain what has become a "flash mob" rebellion, with fleet-footed, lightly-clad protesters routinely running circles around clunkily armoured police in the city's notorious summer heat and humidity. Indeed, Chinese officials, academics and state-controlled media all seized on events at the airport to justify military intervention if needed.

Zhang Jian, a Hong Kong specialist in the Shanghai Institute of International Studies, said on Thursday at a Beijing media briefing organised at short notice by China's State Council: "The violence in Hong Kong is moving towards terrorism. If you don't take necessary measures, it might morph into real terrorism."

Linda Li, a professor at the City University of Hong Kong, said: "Beijing doesn't think [military invention] would violate 'one country, two systems'. They want to prepare the international community for it. They want to send the message that this is an option for them."

Chinese officials recognise, however, that it would still be a very costly option.

Deployment of either PLA troops from their various barracks in the territory - or their People's Armed Police counterparts now camped out just across the border in southern Guangdong province - could end Hong Kong as the world has known it since it was seized by British troops in 1841 and declared a crown colony.

For almost 180 years, Hong Kong has performed two essential and irreplaceable roles for its Chinese hinterland. It has been an interface between the rest of the world and China, whose economy has been entirely or partially closed since Hong Kong's establishment, and a refuge for millions of Chinese and their money during periods of turmoil.

Chinese Communist Party leaders have long hated Hong Kong as a symbol of the "humiliations" suffered by China at the hands of the UK and other colonial powers in the late 19th and early 20th centuries, as well as its role as a bolt-hole for the party's many capitalist "class enemies" who fled there after the Communist revolution in 1949. But because they also recognised Hong Kong's immense value to China, especially as the party launched daring new economic reforms in the 1970s and 1980s, they came up with the "one country, two systems" arrangement.

More recently, many powerful Chinese political families have also come to appreciate Hong Kong as a safe haven for their immense wealth. The territory has both its own currency, pegged to the US dollar, and an open capital account that has helped it thrive as an international finance centre where Chinese state-owned enterprises have raised billions of dollars through equity offerings since the mid-1990s.

Zhang Lifan, a Beijing-based historian and prominent party critic, said: "Many big families have an interest in Hong Kong so Beijing wants to keep Hong Kong alive."

He also notes that slower economic growth in China and its ongoing trade war with the US make this a particularly bad time for a dramatic escalation of events in Hong Kong. "In the context of the trade war, if Beijing sends in the PLA or PAP, it will trigger international sanctions and put Beijing in an even-worse situation. Sending in the PLA is a lose-lose situation."

A member of Hong Kong's pro-Beijing establishment, who asked not to be identified, says the central government is still confident it will not have to do the unthinkable. "Beijing is betting this will die down. It is thinking 'We should present a united front and focus on restoring order'."

But he is also very concerned about what will happen if Beijing is wrong and it will have to resort to sending forces into Hong Kong. "I worry about the young people," he says. "They shouldn't underestimate how ruthless the Chinese Communist Party is." FT