Since Beijing officials have described Hong Kong as first and foremost an “economic city,” it follows that the local official responsible for such matters should present the follow-up case with local detail.

Hong Kong’s Financial Secretary Paul Chan Mo-po issued his Report on Hong Kong’s Business Environment in tandem with Beijing’s September 24 Fact Sheet, a lengthy list of allegations about US interference in Hong Kong affairs by aiding and abetting the 2019 protests here.

Financial Secretary Paul Chan (left), accompanied by the Deputy Government Economist, Mr Adolph Leung (right) released “Report on Hong Kong’s Business Environment: A Place with Unique Advantages and Unlimited Opportunities”. Photo: HK Gov.

Paul Chan’s 68-page report, issued on September 27, presents the local dimensions of the 2019 story, with special emphasis on economic costs and consequences. Like Beijing’s Fact Sheet, Chan blames the US as a way of defending and justifying the ongoing political clampdown here.

The clampdown began on June 30 last year, when the central government in Beijing promulgated a National Security Law tailor-made for Hong Kong and with immediate effect. 

Mainland-style rhetoric and terminology is now the norm for Hong Kong officials. Chan later explained that it was a deliberate choice, intended to convey the factual reality of events from a local perspective as they unfolded here.

The report is presented in three chapters. Chapter One conflates the “black clad violence” with the “US strategy of suppressing China.” The combination is responsible for wreaking havoc on Hong Kong’s economy and business environment. 

Chapter Two explains how the new National Security Law and new insistence on “patriots administering Hong Kong” have effectively restored law and order, thereby safeguarding the local business environment. Chapter Three looks ahead to a Hong Kong renewed and back on the right track, with unlimited prospects for a prosperous future.

The violence: perpetrators and costs

The report does at least acknowledge that it was the local government’s attempt to force passage of an extradition bill through Hong Kong’s Legislative Council that precipitated the upsurge of resistance. Peaceful protests turned violent at that point, in mid-June, 2019, when it became clear that the bill was set to pass.

Paul Chan delivering the 2021 budget. Photo: GovHK.

Chan notes that Hong Kong’s economy had already been affected by US-China trade tensions and the global economic slowdown. Things then worsened abruptly once resistance to the proposed legislation took hold.

After initially turning out dressed in white, demonstrators switched to black as the color of resistance. Hence the report’s frequent references to “black-clad violence” responsible for the sharp economic contractions of over 3 percent in each of the last two quarters of 2019.  

Unemployment rose from 2.8 percent to 3.3 percent. The tourism sector was badly affected. Visitor arrivals fell by 50% in the final quarter of 2019. Retail sales fell by 24%. Not surprising since there was not a single day without violence, asserts the report. 

Such acts were justified in the name of “mutual destruction “ —  the logic of protest when a cause is lost, although Chan’s Report like the Fact Sheet before it does not address the larger long-term and continuing political causes.

“Saboteurs” attempted to storm the central government’s Liaison Office here, as well as Hong Kong government buildings, and even succeeded in breaking into the Legislative Council where they trashed the main chamber. The police headquarters building in Wanchai was besieged, law courts targeted. Even Hong Kong’s airport was invaded, paralyzing operations there. 

The report provides some specifics from police files. Over 10,000 petrol bombs were seized along with large quantities of various kinds of explosive materials. An estimated 22,000 square meters of pavement bricks were torn up from sidewalks for use as projectiles; 60 kilometers of street railings were dismantled; 740 traffic lights damaged; and 90% of Hong Kong’s 93 MTR stations were vandalized in some way.

Photo: Dylan Hollingsworth/HKFP.

All this was in addition to storefronts and bank lobbies boarded up after damage done by protesters in retaliation for unsympathetic owners and managers. Reported casualties numbered over 2,800; 600 police officers were injured.

The local business community naturally took a hit and foreign chambers of commerce grew pessimistic about the economic outlook. Financial stability was affected. Hong Kong’s international credit rating was downgraded.

American responsibility

Yet through it all, the US continued to turn a blind eye. This is spelled out in section three of the report’s first chapter, which asserts that “the US strategy of suppressing China caused serious disruption to Hong Kong.”

Chan’s account places the allegation in global perspective. A once-in-a-century transformation is underway with a shift in the global center of economic gravity, moving from West to East. Trade relations have deepened between China and other economies, creating anxiety in the US about the rise of China.  

Consequently, the US has even resorted to using Hong Kong “as a pawn to suppress China’s development.” This is demonstrated by the measures adopted, “casting a shadow on Hong Kong’s business environment.”  

On the pretext of human rights and freedoms, the US government and Congress introduced measures and passed acts aimed at suppressing Hong Kong’s economic development. Such acts, like imposing sanctions on officials and revoking Hong Kong’s special trade status, violated the basic norms of international relations about non-interference in the affairs of other states. 

The special status had been granted in deference to Beijing’s original promises about giving Hong Kong a “high degree of autonomy” after its 1997 transfer from British back to Chinee rule.

There was also the matter of hypocrisy. Some US politicians “beautified” the 2019 violence in Hong Kong. But then many proclaimed themselves outraged at the insurrectionary behaviour of President Trump’s supporters in Washington on January 6 this year.

Backed and encouraged by foreign or external elements, Hong Kong protesters even advocated “independence” and “self-determination” for Hong Kong. Chan’s report only cites the usual allegation without exploring the variable meanings the two terms conveyed. 

But since they inspired hatred for the central and Hong Kong governments, support for such advocacies aimed in turn at subverting the political authority they represent.

Especially since the new National Security Law was introduced, the US government and Congress have been engaged in a smear campaign. They are claiming that the new law is being used in ways that violate the formal agreements governing Hong Kong’s 1997 return to Chinese rule. 

These were the Sino-British Joint Declaration of 1984, and Hong Kong’s Basic Law. This law was drafted and promulgated by Beijing to serve a Hong Kong’s post-1997 governing document. It contains all the promises about autonomy and universal suffrage elections and other rights and freedoms that the US government and others now say are being violated.

Chan’s report claims just the opposite. The central government is adhering to Hong Kong’s Basic Law and the “one-country, two-systems” governing principle enshrined within it.  Accordingly, the central government “fully safeguards Hong Kong’s strengths.” He claimed it was the US that was reneging on its original promises by revoking Hong Kong’s special separate trading status.

In fact, US claims about “standing with the people of Hong Kong” actually mean “standing with rioters and local terrorists.” The US “has become an international dictator in ideology and genuinely the biggest threat to democracy and peace in the world.” 

Toward a bright new beginning… with a hasty course correction

In this official version of events, the National Security Law has restored law and order and stability to Hong Kong, returning it to its natural state as one of the world’s safest cities.  Reinforcing these benefits, the redesigned electoral system will put the right sort of people in charge, thereby enhancing the effectiveness of governance. Such conditions will also allow enforcement of the epidemic control measures necessary to ensure economic revitalization.

Perhaps most important in the eyes of a Financial Secretary, the economy is now back on track with everything — financial markets, net capital inflow, total bank deposits — moving in the right direction. International organizations and the business community are responding favourably.  

Foreign and local chambers of commerce are expressing confidence and the financial sector is continuing to expand both locally and on the mainland. Looking beyond Hong Kong’s immediate revival phase, opportunities for economic momentum and outbound cross-border growth are portrayed as limitless.  

But within days of issuing his report, Chan had to speak out again. According to the old mass movement rules on the value of going to excess, once a campaign has succeeded in establishing its goals it’s time to begin pulling back and correcting the mistakes made along the way. 

In this case, however, the new national security campaign is still in full swing. But political exuberance stood in danger of racing too far ahead and undermining the all-important economic indicators essential for establishing the ultimate success of the new national security regime.

Central, November 12, 2019. Photo: Studio Incendo.

Chan’s good news appeared along with the reports on October 1 National Day celebrations. He wanted to reassure everyone that Beijing’s retaliatory plan to impose an anti-sanctions law on Hong Kong was not imminent after all.  

The legislation, already in effect on the mainland, allows authorities to seize assets from entities such as banks that implement the foreign-imposed sanctions on Chinese officials. The same also applies to those who refuse to assist Beijing in enforcing counter-measures. 

This tough new anti-sanctions law, advertised as imperative during the summer, had raised anxieties in the business community where official attempts to play down the dangers did little to allay fears. Understandably, since the initial attempts to play down the reach of the new National Security Law have proved totally inaccurate.

But Chan himself is now saying, not to worry. Passage of this new law will not be rushed. As far as he knew, the Hong Kong government actually had no definite timetable for proceeding with the new legislation, which is aimed at fighting back against foreign sanctions. 

It follows that the time to declare complete victory has not yet arrived. There is more to come. And Chan did not backtrack on any of his accusations against the US.


HKFP is an impartial platform & does not necessarily share the views of opinion writers or advertisers. HKFP presents a diversity of views & regularly invites figures across the political spectrum to write for us. Press freedom is guaranteed under the Basic Law, security law, Bill of Rights and Chinese constitution. Opinion pieces aim to point out errors or defects in the government, law or policies, or aim to suggest ideas or alterations via legal means without an intention of hatred, discontent or hostility against the authorities or other communities.

Suzanne Pepper

Suzanne Pepper is a Hong Kong-based American writer and Hong Kong resident with a long-standing interest in Chinese politics. In her book, 'Keeping Democracy at Bay: Hong Kong and the Challenge of Chinese Political Reform', Pepper addresses debates surrounding democracy and dictatorship. Her blog following Hong Kong's integration within the Chinese political system dates back to 2009.