To calm protests, China could boost Hong Kong finances or ax top official

Leaders of the Occupy Central movement at the head of Hong Kong’s democracy demonstrations know they may not achieve the full sovereignty they have demanded for the territory but believe that having tens of thousands of people on the streets will compel Beijing to make concessions. 

Chinese policy experts, however, are warning of the danger of playing hardball with one of the toughest Chinese administrations in decades, although they say there remains room for Beijing to make concessions and still maintain authority.

Occupy leader Chan Kin-man told Al Jazeera on Monday that he realizes a call for autonomy is “unrealistic.” But encouraged by growing numbers in the streets, the movement has called for the resignation of Hong Kong’s unpopular chief executive, Leung Chun-ying, and expects the demonstrations will result in a review of Beijing’s decision to select candidates for Leung’s replacement in 2017.

Emily Lau Wai-hing, a lawmaker with Hong Kong’s Democratic Party and a key backer of the movement, said she is hopeful the protests will pressure Beijing into a dialogue.

“Of course, there is always hope,” she said. If successful, Occupy “would be a good demonstration for the whole of China and for the international community.”

But others fear that protesters have shut the door to what they say is a more promising option: negotiating with Beijing behind the scenes.

Sara Zhong Hua, a mainland-born sociology professor at the Chinese University in Hong Kong (CUHK), said that with protests aiming to force Beijing’s hand on Hong Kong electoral reform, democracy advocates may have closed off the chance to negotiate with Beijing.

A more sober conversation, behind closed doors, between Hong Kong’s pro-electoral-freedom camp and the more liberal members of China’s ruling Communist Party would have potentially resulted in a more fruitful dialogue, she said.

With protests zeroing in on Leung, who was handpicked by Beijing, and with some in Occupy’s constituency raising the issue of total autonomy — a nonstarter with the central government — China will have no choice but to crack down, Zhong said.

“We always say the party is fragmented,” she said, “Not all officials are very conservative. Some of them are very liberal. We need to find ways to talk to those liberal leaders but not through this radical way. This radical way will make the liberal members in the party need to shut up.”

One Occupy participant, originally from the mainland, agreed that the protests give Beijing few options other than to try to stamp out the demonstrations — despite pledges that no military force will be used.

“If the Chinese government compromises this time, many will follow. There is Tibet, Xinjiang, Taiwan and tons of minority issues in China as well” that will have to be addressed, the protester said, on condition of anonymity, saying that he has already faced pressure from Chinese authorities for his political dissidence.

Richard McGregor, author of “The Party: The Secret World of China’s Communist Rulers,” one of the most comprehensive accounts of the inner workings of China’s leadership, said a heavy-handed military response is highly unlikely.

“Certainly, China does not seek a 1989-style confrontation,” he said. “They will not admit publicly that the 1989 crackdown was an error, but internally it is well recognized as a disaster, for the country’s standing and that of the People’s Liberation Army.”

Chinese human rights activists also say Beijing will try to avoid another Tiananmen incident, after a quarter-century-long effort to suppress information on the lethal crackdown, which bloodied Beijing’s streets on June 4, 1989. 

“At a time when China faces massive economic and social problems, a misstep by the Chinese government now will result in even greater costs than in 1989,” said Sharon Hom, director of international advocacy group Human Rights in China.

While lethal suppression may not be in the works, McGregor disagreed with Zhong’s theory, saying, “I doubt there is much sympathy at the top for Hong Kong.”

Elizabeth Economy, a China policy scholar who is the director of Asia studies at the Council on Foreign Relations, said she was shocked to hear that some analysts like Zhong think there may be liberal factions of the Communist Party favorably disposed to Hong Kong’s cause.

“Nothing [President Xi Jinping’s] administration has done in his political reform of the last two years of leadership shows greater avenues for political participation and freedom of voice,” she said. “Everything has been in the other direction.”

So much so, Economy said, that “it may not be possible for Beijing to back down from preapproval” of Hong Kong candidates for chief executive — the issue that touched off the current wave of protests.

As she sees it, Beijing has three options. One is that the authorities can simply wait until protesters “need to go back to school or work.” But Occupy organizer Chan said that’s not going to happen: “The problem will not go away until the problem is solved.”

As one Occupy participant, Gisele Cheng, said, “We Hong Kongers need to stay firm, strong and united to make this happen.”

A second option would be for Beijing to concede to Occupy’s demand that Leung be replaced, using as an excuse the police violence against protesters that angered many sectors of Hong Kong society and giving the movement a symbolic victory without necessarily addressing its electoral-reform demands.

McGregor said the best route for Beijing would be for Leung “to be sacked as a sacrificial lamb, to be replaced by a more emollient individual who can hopefully — from China’s point of view — last out the protesters.”

“Leung has nothing to offer, as he is a figurehead chief executive who takes his orders from Beijing,” he added.

Economy suggests a third option: “The most positive step they might take is to form some sort of working committee with a combination of officials from the mainland and representatives of groups within Hong Kong to think about how post-2017 universal suffrage could be realized.”

Hong Kong’s Basic Law, the region’s constitution that Beijing agreed to before Hong Kong’s handover from Britain in 1997, says that nominees for chief executive will be chosen by a “broadly representative nominating committee, in accordance with democratic procedures.”

But under the decision from Beijing that sparked the Occupy protests, “candidates would be preselected by an electoral committee dominated by pro-Beijing voices,” said Charles Minzner, an expert on Chinese law and a professor at Fordham University.

Economy disagreed with Occupy activists that dissidents in Tibet and Xinjiang would be roused to demand freedoms by a more representative electoral committee in Hong Kong.

“There’s no such thing as Basic Law in either of those territories,” Economy said. “There’s nothing analogous to Hong Kong, at this point.”

But making any significant concessions would be out of character for Beijing, McGregor said, particularly under the Xi administration. “The political culture in China simply does not allow for any leader to even appear to tamper with issues of sovereignty,” he said.

He added that Xi has lost some support among China’s political elite because his “hard line against corruption has upturned the lives and wealth of many top officials, and in the process he has made many enemies. To my mind, as much as he is a strong leader, that makes him extremely vulnerable to criticism for his handling of an issue as serious as this.”

Considering its options in the coming days of protests and beyond, Beijing could choose to hit Hong Kong where it hurts: its finance sector.

While the city is a major financial hub and foreign enterprises station themselves there to avoid the mainland’s heavy business and banking regulations, Hong Kong may need China more than China needs Hong Kong.

In 1997 the Hong Kong economy was more than 18 percent the size of the mainland’s, according to World Bank statistics featured in a recent article on Vox. By 2012, Hong Kong’s economy shrank to 3 percent of China’s economy.

Since 2013, China’s central government has been cultivating alternative financial hubs on the mainland, gradually loosening regulations for international business interests.

“Both Shanghai and [Shenzhen] are likely to play a more significant role if the situation in Hong Kong gets worse,” said Kevin Tsui, a business professor at Hong Kong Polytechnic University.

“From what I have heard, [Beijing] has been thinking about diversifying risk for about a year, since the Occupy Central idea [came about],” he added.

Beijing could threaten a major source of revenue for the region, or it could offer business interests and Hong Kongers an additional incentive to stop the protests, Tsui said.

“If the leaders in Hong Kong can settle the unrest … the Chinese government may give Hong Kong a more important role” in its endeavors to internationalize the renminbi, which would reaffirm Hong Kong’s role as a financial hub and “sort of buy support from local people.”

Protests in Hong Kong