Saturday, January 4, 2020

Meanwhile, Back in Hong Kong

For reasons not difficult to ascertain Hong Kong is dying. While the world’s attention and Democratic hysteria has gravitated to the Middle East-- it’s where the action is-- the Hong Kong protests, lustily cheered on by the American Congress, are destroying the city. 

Being Americans we love the romance of protest demonstrations. We love it when we see enthusiastic young people marching in the streets and burning down shops. Nothing like bands of fervent zealots to raise our blood pressure.

We do not quite get it, but in China, student protests have an entirely different valence. As I have often noted, what looks to us like Woodstock looks to the Chinese leadership like the Red Guards. If you understand that you will understand what is happening in Hong Kong.

Additionally, however fervent the support that the American Congress and Gordon Chang grant the demonstrators, their movement has not resonated on the Chinese mainland. This might suggest that the Chinese Communist Party has repressed dissent. And yet, such was not the case during the 1989 Tiananmen protests. Then, the protests reverberated throughout the country. Chinese people are not sheep. That means, they do not emulate New Zealanders.

Thus, the Beijing leadership has considerable flexibility in dealing with them. It can stand aside, for the most part, and watch them die a slow death. Besides, running tanks through the streets of Hong Kong, in front of the entire world, would be a major public relations disaster. For a country that fashions itself the wave of the future, it would be a bad look indeed.

If you would like a shorthand way to understand why the protests cannot succeed, you need merely to look at one Gordon Chang. You might recall that Chang is often trotted out by news outlets, like Fox Business, to offer an expert opinion on matters Chinese. He has definitively declared the Chinese regime is failing and that its collapse is imminent. 

The trouble with this prophecy is that Chang said exactly the same thing twenty years ago in a book. He was wrong then. He has been wrong for twenty years. Why anyone would imagine that he is right now makes no sense.

And yet, Chang does answer one question. What do you call someone who has been wrong about an issue for two decades? You guessed it, he’s an expert

Anyway, the latest reports suggest that Hong Kong is dying, not with a bang but with a whimper. The world’s eyes are distracted by events elsewhere, but the Hong Kong protests are only accomplishing one thing: they are destroying Hong Kong. Despite what Chang and many others think, they are not the next wave of liberal democracy.

Alexandra Stevenson reports in the New York Times:

Months of political turmoil have turned Hong Kong from a city of possibilities into a place of doubt and disillusion. Peaceful demonstrations have turned violent. Its economy is shrinking. Yet China’s leaders seem as determined as ever to do away with the high degree of autonomy they once promised, threatening to put Hong Kong further under Beijing’s authoritarian control.

That reality has upended the lives of the city’s seven million people. Plans to buy homes or have children have been put off. Families and friendships have been strained or broken.

And some — at least, those who have the option — wonder whether they should leave it all behind.

She continues:

Hong Kong’s future once looked bright. It benefited from China’s booming economy while maintaining its own system of laws. Its eventual absorption into the mainland, set to take place in 2047, seemed far away.

Soaring housing costs, fewer job opportunities and a rising income gap began to sully that image. But fewer people describe financial pressures as their main reason for wanting to leave the city these days, said Paul Yip, a professor and director at Hong Kong University whose studies show increased unhappiness and depression.

The last one to leave Hong Kong will please turn out the lights:

Official figures do not show whether more people are leaving Hong Kong than before, but the signs of interest are there. Applications for a certificate required to change citizenship have jumped by nearly three-quarters from a year ago, according to local data. Immigration consultants describe a flurry of requests for information. Fliers advertising investment-for-citizenship programs in other countries can be found in the lobbies of luxury apartment buildings.

And, at the same time, the Zero Hedge blog offers a similar assessment, based largely on the drop in retail sales. In truth, drop is not quite the right word: the right word is that these sales are cratering:

Offering yet another reminder that the city's economy has been reduced to a mere shadow of its former glory, Hong Kong retail sales have posted yet another double-digit drop as tourism continued to decline in November even as the pro-democracy movement started to fade from the front pages of Western periodicals.

Tourism has fallen through the floor, and there are not enough people left to shop:

By value, retail sales retreated 23.6% in November from the same period a year earlier, extending the city's record-breaking run of declines to ten months. By volume, sales contracted by 25.4%. It's the latest indication that Hong Kong's economy is suffering from a worsening recession with no end in sight.

Hong Kong was not merely a shopping mecca for all of Asia. It was especially a shopping mall for mainland Chinese. As they pulled back, the market felt the pain:

According to Bloomberg, the HK data serves as an ominous reminder that Hong Kong's retailers, who once benefited from the city's status as a premier tourist destination for most of Asia, are suffering the brunt of the economic fallout from the protests. And although the data for November came in slightly better than the consensus estimates, it's still a major problem ahead of the release of data from the all-important December holiday shopping season.

The biggest source of the sales drop appears to be the sharp downturn in arrivals from mainland China, who have spurned the special autonomous region since protests first broke out in June. Visitors from the mainland plummeted 58% in November.

As has often been mentioned on this blog, at the beginning of the demonstrations seasoned and qualified experts were saying that whereas China needed Hong Kong in 1997, now Hong Kong needs China more.

Unfortunately, the wide eyed idealistic students who led the protests miscalculated. As did the American Congress. We sympathize with their youthful enthusiasm, but we should not have been officially encouraging them.

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