China Plus Published: 2020-05-31 17:16:20
Two International Finance Centre(C) and other commercial and residential buildings standing on Hong Kong island. [Photo: VCG]
By Digby Wren
The rise of Trump in American politics is marked by one overriding external political and economic narrative; the rise of China is the single greatest cause of American imperial decline. Hong Kong, however, has long been in the sights of American elites and officials. The Hong Kong Relations Act which, allows the US to continue to treat Hong Kong separately from the Chinese mainland for matters including trade, was enacted by the US Congress in 1992, in the aftermath of the collapse of the Soviet Union. And, the early ‘pivot’ to Asia, was immediately focused on the most successful trading port in the east, Hong Kong.
In Washington, the view that Hong Kong’s success was a product of Anglo-American business acumen and liberal ideas is however, misplaced. Hong Kong’s importance as a global trade entrepot was not derived from its forced transition into a British crown colony as a tea and opium smuggling port, but rather that it allowed first the UK and, later the US, almost unfettered access to the fabulous riches of China. In fact, Hong Kong has long offered the US a sizable trade surplus and ‘cultural’ open door into the mainland’s vast manufacturing and later, consumer base. Clearly, the ideologues in the Congress and White House who seek to reverse the ‘loss of China’ have gained the upper hand. Economic and trade realities are no longer the basis for Hong Kong’s status in Washington. In the Trumpian view, Hong Kong is a ‘pressure point’ for the exercise of US economic and political coercion of Beijing.
The timing of recent statements from both Trump and secretary Pompeo demonstrate a planned and coordinated assault on China’s and East Asia’s increasingly important markets. It is doubtless that the almost year-long protests by radicalised youth in Hong Kong have been, if not entirely then at least in large part, fermented, funded and directed from Washington. For Trump, perception is everything. On the one hand, ‘pro-democracy’ narratives play to public opinion in the US, UK and other liberal democracies thus, underpinning political and media support for US activities in Hong Kong. On the other hand, Anglo-American media bias provides cover for the larger US objective of de-coupling US-China trade and, more importantly, sanctioning off-shore finance and capital movements through Hong Kong with the purpose of re-dollarizing Asian capital markets.
However, what the Trump administration has failed to realise is that the ongoing economic importance of Hong Kong to the overall Chinese economy has seen a substantial decline. In 1989 Hong Kong accounted for 19.8% of China’s GDP, by 2019 that had fallen to 2.6%. In fact, the section 301 tariffs imposed by the US on China in 2018 already covered more than half of all exports from Hong Kong to the US. While technology imports are still an important portion of US exports to Hong Kong they are not ‘critical’ to the advancement of China’s high-tech industries. Far more important to China is the ongoing fusion of Shenzhen, Hong Kong and Macau into the Greater Bay Area, a megapolis that is effectively East Asia’s largest and most vibrant centre for commerce and capital.
As the effects of the global COVID-19 pandemic recede and China acts firmly to protect Hong Kong from the malign intentions of the Trump administration, it is becoming increasingly clear that US domestic ills are the real motivation for its ongoing attempts to disrupt the Chinese economy. Today, there are reports of protester riots in over 30 US cities. Both public and police deaths have occurred and in Minnesota over 10,000 National Guard soldiers have been mobilised. The almost total inability of US politicians to address the deep structural flaws in the US economy, the inept response to the COVID-19 pandemic and the cumulative ‘gap’ between the stock market and the real economy are being felt by over 40 million unemployed and the increasingly impoverished minorities and urban poor. The future of Hong Kong is now premised not on America or the UK but, on China, ASEAN, the Belt and Road and the Greater Bay Area.
Note: Digby Wren, Deakin University, is a visiting international relations scholar at Sichuan Normal University, Chengdu, Sichuan, and Soochow University, Taipei, Taiwan. The article represents the author’s own views.