Xi and Lee demonstrate Beijing's iron grip on Hong Kong 25 years after the handover
Foreign companies and investors should not assume they can maintain commercial success by avoiding the city's politics. Valarie Tan and Katja Drinhausen express concern.
Xi Jinping's two-day visit to Hong Kong, his first official trip outside of mainland China since January 2020, is intended to signal that Beijing has firmly established control over the former British colony 25 years after taking over.
Pro-democracy protests and weeks of deadlock between protestors and the government that shook the city in 2019 and early 2020 are over, and Beijing has bestowed some stability on its global trading hub.
However, it has also created a new climate of fear and uncertainty, which international businesses and investors must deal with in novel ways.
Avoiding politics in order to focus on business is no longer an option, as Beijing expects public and private-sector stakeholders to support its all-encompassing vision of security.
Xi wishes for Hong Kong residents to "love the motherland."
The UK's return of the city to China on July 1, 1997, coincided with Beijing's promise to preserve Hong Kong's social and economic systems, as well as its rights and freedoms, until 2047.
However, Xi Jinping is officially breaking his promise only halfway through. Xi's dream of the "great rejuvenation of the Chinese nation" by 2049 - of a prosperous global power led by the Chinese Communist Party - is at the heart of China's efforts to reform Hong Kong identity so quickly.
It has no room for a city flush with cash and civic liberties to thrive as a political outlier whose residents openly criticise Communist rule.
Xi wants Hong Kong residents to "love the motherland" that has helped them prosper and to be loyal to Beijing.
The city has undergone significant changes since the implementation of the Hong Kong National Security Law (HKNSL) two years ago, and more are on the way. On July 1, Hong Kong's former hardline security chief, John Lee, will take over as Chief Executive of the city's Legislative Council.
He has promised a "new chapter" for Hong Kong, including law-and-order measures that will solidify Beijing's grip. Article 23 of the city's Basic Law alls for laws "to prohibit any act of treason, secession, sedition, or subversion," and it serves as the foundation for a planned series of laws to protect the city from fake news and foreign sanctions, as well as to improve cybersecurity defences.
These measures appear to be providing legal cover for a growing number of purely political red lines.
As on the mainland, content regulations and cybersecurity requirements will almost certainly target a wide range of information deemed harmful to the government, encouraging the establishment of a censorship regime in Hong Kong. Xi has already urged the media to be patriotic, and the city's police commissioner, Raymond Siu Chak-yee, has warned citizens who watch a banned documentary about the Hong Kong protests that they are breaking the HKNSL.
More authority and resources to investigate and monitor will aid the police in catching those who misbehave.
Hong Kong's social and political fabric has shifted.
Beijing is still intent on forcibly integrating the city.
The central government viewed Hong Kong's sustained mass protests in 2019, as well as the subsequent landslide victory of its pro-democracy camp and low identification with the People's Republic, as a threat to its sovereignty over the city and even its territorial integrity.
The solution was to impose a key component of Beijing's view of national security: the absence of collective dissent.
The sweeping measures that followed transformed Hong Kong's social and political fabric. It now has national security units in the police and judiciary, mainland security forces operating on the island, and media, civil society organisations, and activists who have been targeted for a variety of nonviolent acts.
Beijing is still determined to forcibly integrate the city. The central government saw Hong Kong's sustained mass protests in 2019, as well as the landslide victory of its pro-democracy camp and low identification with the People's Republic, as a threat to its sovereignty over the city and even its territorial integrity.
The solution was to impose a key component of Beijing's national security vision: the absence of collective dissent.
The sweeping measures that followed transformed the social and political fabric of Hong Kong. It now has national security units in the police and judiciary, mainland security forces on the island, and journalists, civil society organisations, and activists who have been targeted for a variety of nonviolent acts.
Even after losing its "previous [...] way of life," a city that retains its "capitalist system," as the Basic Law puts it, can still make money.
However, foreign companies and investors should be aware that the HKNSL and subsequent steps are making the commercial environment even more difficult. Under Lee's leadership, new laws will soon require greater regulatory compliance not only from individuals but also from businesses.
Businesses will be legally required to ensure that their operations, employee behaviour, and social media content (to name a few) do not incite Beijing's wrath. Staying out of politics will become impossible under its control.
Mercator Institute for China Studies
Head of Program