A senior Hong Kong government official has accused the US of helping to foment the violent protests of 2019, saying the unrest dealt a severe blow to the economy which was now “back on track” under the Beijing-enacted national security law. But an activist investor says it is the city’s strict Covid-19 quarantine rules that has left some sectors “crippled.”

In a strongly-worded report published on Monday, Financial Secretary Paul Chan said “black-clad violence” during the months-long anti-extradition bill protests had plunged Hong Kong’s economy into a deep recession before it was hit by the Covid-19 pandemic last year.

Hong Kong business
Photo: GovHK.

Chan referred to various incidents from the 2019 unrest, including the defacing of the Chinese national emblem outside the Liaison Office, the storming of the Legislative Council Complex and a siege of the police headquarters. Such acts “took a heavy toll” on people’s livelihood and severely damaged business prospects, the report stated.

The finance chief said the city’s economy shrank by 1.7 per cent as a whole in 2019, the first annual decline since the 2009 global financial crisis. Sectors such as tourism, accommodation services and retail sales were the hardest-hit by the pro-democracy demonstrations.

Chan described protesters as “saboteurs” and “proxies” for foreign powers. Those who waved the “dragon and lion flag” – associated with Hong Kong independence – at demonstrations were said to have “plotted subversion” and posed a threat to national security.

“Shameless individuals willingly served as puppets and foreign proxies, begging foreign countries to sanction the nation and the HKSAR,” Chan wrote in the report.

October 1 National Day protests Hong Kong Island
A China Construction Bank (Asia) branch vandalised in 2019. Photo: Tom Grundy/HKFP.

It was the second time in a week that pro-Beijing forces had accused Washington of fuelling the protests. Last week, the Chinese Foreign Ministry issued a lengthy “fact sheet” that claimed the US had “wantonly interfered” in Hong Kong’s affairs and had supported “anti-China, destabilising forces.”

 A US State Department spokesman quoted by the South China Morning Post said in response that Washington’s their actions were fully consistent with international law and that suggesting otherwise was simply an attempt by Beijing to divert attention from “its own bad conduct.”

The comments undermined the city’s appeal as a hub of openness and free exchange, the spokesman said.

Chan claimed the US had used Hong Kong “as a pawn to suppress China’s development” by implementing “unjustifiable” policies on issues linked to the city.

October 20, 2019 protest petrol bomb
A protester throws a petrol bomb during a protest on October 20, 2019. Photo: Studio Incendo.

The finance chief said the citywide protests – which often descended into violent clashes between police and protesters – had been “severely trampling” on Hong Kong’s rule of law. Banks suffered major economic losses, while Hong Kong’s image as a safe city was undermined, Chan said. The financial security suffered “incalculable damage” when there were rumours that local authorities would implement capital controls.

“The violent acts seen in 2019 were miserably lawless, seriously threatening personal safety and jeopardising freedom of speech,” Chan said. “There was not a single day without violence…” he claimed, despite the early days of the movement seeing weeks of consecutive peaceful protests.

David Webb
David Webb. Photo: David Webb.

Activist investor David Webb told HKFP on Tuesday that “one has to look deeper” when determining the economic impact of the 2019 protests. He said the government report did not mention its failure to “promptly withdraw” the extradition bill, which triggered the city’s worst political turmoil in decades in the first place.

He added that, whether violence was involved or not, the prolonged protests were “likely to lead to an authoritarian crackdown on civil society” and a “reversal of democratic reforms.”

“The protests were initially peaceful, lawful and large, but a small minority of violent extremists attached themselves,” he said.

‘Hideous interference’ from the US

Chan then pointed the finger at the US for “supporting the opposition and black-clad violence to wreak havoc.” He said some American politicians had “glamorised” the acts of protesters and turned a blind eye to the damaged caused by the unrest.

September 29, 2019 anti-totalitarian march protest US flag
Hong Kong protesters wave US flags at a march in opposition to totalitarianism on September 29, 2019. Photo: Studio Incendo.

The finance chief accused Washington of double standards and hypocrisy by condemning the US Capitol chaos in January as an insurrection while failing to criticise the Hong Kong violence. Washington was said to have “hideously interfered” in the affairs of Hong Kong and China under the pretext of human rights, freedom and democracy.

“The US Government’s claim of ‘standing with Hong Kong people’ is in fact ‘standing with rioters and local terrorists of Hong Kong’ – this has not only become a joke to the informed, but also showed that the US Government has gone completely bankrupt of political ethics,” Chan wrote.

He criticised sanctions against Hong Kong and Chinese officials as “unreasonable bullying acts,” while a business advisory paper issued by the US Department of State in July was said to be “maliciously spreading rumours and slanders on Hong Kong’s business environment.”

‘Superior business environment’

Hong Kong’s “severely damaged” business environment was quickly restored after Beijing imposed a national security law on June 30, 2020, Chan said. This restored stability in society and allowed the government to roll out measures to revitalise the economy, he said.

In addition to a fall in crime rate and a rebound in the economy, the report said the local financial market now operates smoothly and international organisations and global investors remained confident in the city’s superior business environment.

HSBC Standard Chartered Bank finance business central
Photo: GovHK.

Chan said that together with a revamped electoral system and support from China, the city would see “long-term security, stability and steady development.”

“These changes will enable Hong Kong to maintain a safe and vibrant business environment
in future, continue to capitalise on its competitive advantages and promote steady economic development in the long run.”

Shareholder activist Webb disagreed with the analysis, saying the report failed to address the impact of its Covid-19 border closure policy and quarantine rules that “crippled” the city’s role as a hub. Without a clear roadmap to reopening its doors, Hong Kong may face greater difficulty in recruiting and retaining talent following a “post-crackdown brain drain,” he said.

“It has become “Asia’s Isolated City” rather than “Asia’s World City,” Webb told HKFP, adding only parts of the local economy has revived, while numerous sectors “remained crippled” by Covid-19 rules.

Asked what value the report had to those investing in Hong Kong, Webb responded: “None, but it helps people to deduce who is likely to run for Chief Executive – if that matters.”

Chan is seen as a potential contender when Hong Kong chooses its next chief executive next March, but denied speculation that his report was prompted by this.

Beijing hails report

China’s Hong Kong and Macao Affairs Office hailed Chan’s report as “addressing the root causes,” saying it “powerfully refuted” the “vilification” by the US. The document would help the international community understand the real situation and boost confidence in the city, it said.

Hong Kong flags national security
Photo: GovHK.

“The facts stated in the report adequately shows that the US’s anti-China forces is the biggest disrupter of Hong Kong’s business environment,” a spokesperson said.

Beijing’s agency in Hong Kong, the China Liaison Office, welcomed and supported the report, which it said proved that the local business environment became healthier and more stable after the national security law was enacted.

“The report gave a targeted response to the international community, especially global investors in Hong Kong,” the office said in a statement.

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Kelly Ho has an interest in local politics, education and sports. She formerly worked at South China Morning Post Young Post, where she specialised in reporting on issues related to Hong Kong youth. She has a bachelor's degree in Journalism from the University of Hong Kong, with a second major in Politics and Public Administration.