The Chinese government’s suppression of civil liberties in Hong Kong hit new heights in March with the unanimous passage of sweeping national security legislation by the city’s rubber-stamp legislature.
The move is just the latest indication of how willing China is to jeopardize its own economic interests to crack down on Hong Kong.
The so-called Safeguarding National Security Ordinance is the latest in a series of actions by Beijing and Hong Kong authorities aimed at stifling dissent in the city following mass protests in 2019. It builds upon the National Security Law, which Beijing forced upon the city in 2020 by increasing penalties for alleged crimes against the state and creating entirely new categories of punishable offenses, including mandating up to 10-year jail sentences for criticizing the government.
This new legislation makes a mockery of the rule of law and due process in Hong Kong, for which this once-vibrant economic powerhouse long had been known.
What is shocking about the legislation, along with other measures Beijing has taken to bring Hong Kong to its knees, isn’t that it has stripped the city’s residents of their rights or that it failed to comply with the Sino-British Joint Declaration, in which China promised to let Hong Kong maintain its own system through 2047.
Rather, these actions severely undermine China’s own critical economic and financial interests. Even more remarkably, China continues doubling down on this behavior even as its own deepening economic and diplomatic challenges make Hong Kong’s role as a global financial hub even more critical for Beijing.
China long has relied on Hong Kong as a gateway to engage with the world. The mainland’s strict capital controls make many types of cross-border investments burdensome and, without a workaround, impede some of the business activity its domestic and international ambitions depend on.
Hong Kong, with one foot in China and one in the global financial system, has served as a conduit of foreign investment into China as well as Chinese investment abroad. This has facilitated China’s efforts to enjoy the benefits of the global system while maintaining strong control over its own economy.
In 2018, the year before the protests, Hong Kong accounted for about 55% of China’s overseas direct investment—including investment through Chinese Communist Party leader Xi Jinping’s signature Belt and Road Initiative.
Hong Kong is so important to China’s financial system and global ambitions that most in the international business community didn’t think Beijing would ever risk jeopardizing its unique role. Many even expected the central authorities to let Hong Kong continue operating under its separate system long after 2047.
Even after Beijing imposed the National Security Law on Hong Kong, much of the business community remained in denial, insisting it was merely a tool to deter future unrest. They were wrong.
The law punched a widening hole in the city’s famed rule of law. National security authorities have interpreted its vague clauses liberally, using it to stamp out all signs of dissent at home and even pursue dissidents abroad. In 2021, Beijing imposed “electoral reforms” that gutted Hong Kong’s legislature of anyone not deemed by the authorities to be thoroughly loyal to Beijing.
These actions have eroded the trust of the business community, resulted in an exodus of many of the city’s most capable workers, and killed any chance that Taiwan’s citizens might eventually come around to the idea of unification under the “one country, two systems” model. The moves also spooked the international business community, causing many to halt new investments and some to pull out completely.
Indeed, by destroying Hong Kong’s political freedom and rule of law, Beijing killed the goose that laid the golden egg responsible for much of China’s economic development and some of its global ambitions. But rather than recognize its error and try to revive the goose, it keeps stabbing the goose’s corpse to make sure it’s dead, sacrificing its own national interests on the altar of political control.
What makes the least sense about all this is that the protests already had ceased prior to the National Security Law’s passage in 2020. The start of the COVID-19 pandemic, following a monthslong police crackdown, had all but eliminated any chance of the unrest regaining momentum.
Beijing could have declared victory and left the city—and the system upon which so many of its interests depend—largely intact. By the time it created this law, there was no active threat to Chinese control over Hong Kong.
If the National Security Law was unnecessary and irrational, the actions by Beijing and Hong Kong following its passage have been downright superfluous. A few high-profile cases under the law would have had the chilling effect Beijing desired.
The wide-reaching crackdown that remains ongoing to this day only serves to further tarnish the city’s image. The “electoral reforms” that created an overtly rubber-stamp legislature were similarly unnecessary, given the government already had all the tools needed to disqualify opposition politicians on trumped-up charges.
The latest national security legislation is yet another self-inflicted wound to the city’s reputation, and thus its viability as a hub driving China’s economic development and global ambitions.
Although national security legislation was required under Article 23 of the Hong Kong Basic Law, its vague and draconian contents—and hasty passage through the Legislative Council—expose just how paranoid Beijing and its subordinates in the Hong Kong government are about any perceived opposition to their hold on power.
