7 ms·

Here's a sobering fact: HK's GDP was about 14% of China's GDP in 2000. Now it's about 2.4%. This is mainly due to growth in mainland China. HK is no longer

by beloch 7y ago

Here's a sobering fact: HK's GDP was about 14% of China's GDP in 2000. Now it's about 2.4%. This is mainly due to growth in mainland China. HK is no longer China's golden goose, which is probably why China started this mess to begin with. From their viewpoint, HK's British hybrid law system is no longer worth putting up with. There's a very realistic possibility that China is going to crush resistance in HK by any means necessary. Keeping HK's economy and productivity intact probably aren't viewed to be important, but avoiding sanctions that would impact the entire country likely is. This really is a conflict in which the threat of economic sanctions might actually save lives, provided they're believable.

flyinglizard 7y ago
It's probably worth more to Xi to bring HK in line with the mainland to serve as a sobering example for other areas under Chinese rule.
throwaway1997 7y ago
GDP != Value. HK continues to be the jurisdiction of choice for mainland companies wishing to do business with the west and vice versa because the rule of law increases people's confidence in the validity of any contracts signed. The HK property and stock market is also where a huge amount of of Chinese money is parked. Neither of these contribute to GDP but provide a lot of value to the mainland.
- starfallg 7y ago
  Can't stress this enough. The number one priority for the political and business classes is to tunnel their wealth overseas and the first port of call is usually Hong Kong. In the last decade, much of the HK stock market (and economy) is propped up by Chinese money and these outflows. Shell companies are sold in Hong Kong just because they are listed on the stock exchange - the underlying businesses are often spun-off as a part of the transaction and the resulting operation just a way to funnel money and business outside of Chinese capital controls. The property market is also full to the brim with money from the mainland. Hong Kong has a much stronger hand than most people realise, because of the fact that the Chinese elite themselves lack confidence in their own system on the mainland.
- csomar 7y ago
  > The HK property and stock market is also where a huge amount of of Chinese money is parked. I wonder if this is the reason China wants to get rid of Hong Kong. Their capital restrictions are useless if Chinese can move a ton of value through Hong Kong. The world still needs China, though. So it'll make a new way to China. Maybe China has figured out: Value from Hong Kong < Value going to Hong Kong.
  - flag23147 7y ago
    Moving capital to HK from mainland is largely subject to the same rules and regulations as moving capital to a foreign country. The reason Chinese money is parked here is because HK offers a convenient way for mainland assets to be listed. Without HK, these assets can be listed elsewhere e.g. US or UK. In this sense, the existence of HK as an international finance center brings money closer to mainland rather than further away.
    - csomar 7y ago
      If you were to be moving capital illegally, my bet is that Hong Kong is the way you go if you are Chinese. It's close, people speak the language, lots of established chinese companies there; and if the gov. find out you just hide there since they can't extradite you?
  - api 7y ago
    The world might not need China as much as Xi Jinpeng thinks. A lot of production is already moving, and China is less and less valuable as you move up the value chain. Most high-end engineering and other high value stuff is not in China.
- monocasa 7y ago
  China is trying to replace those companies anyway. That's the shtick of their Made in China 2025 plan.
NeedMoreTea 7y ago
It's not like this is a recent change in policy as Hong Kong has become more insignificant in the scheme of things. China has been systemically fiddling with HK since 1997, despite lodged international agreement and "one country, two systems". The extradition was merely the last of many straws. One of the earliest protests I remember was around 2,000 (Edit: it was actually 2003) and tied in with the universal suffrage electing the Chief Executive that was in the handover agreement, written into Basic Law, and remains an issue for today's protests. It's one of the protest's "five points". Edit: There was an earlier demo in 2,002 over civil rights stemming from the subversion law, which spawned the yearly marches. https://en.wikipedia.org/wiki/Hong_Kong_1_July_marches https://en.wikipedia.org/wiki/Hong_Kong_1_July_marches
refurb 7y ago
There's a very realistic possibility that China is going to crush resistance in HK by any means necessary. I keep waiting for the shoe to drop. China, by her own standards, has been very soft on the protests so far. China is much more concerned with its global image than back during the Tiananmen Square protests. But if anyone should think this won’t end similarly, they’d be fooling themselves. I’d put lower odds on a sudden violent crack down than on a slow, methodical process of arresting leaders and slowly ratcheting up the pressure on protestors. As sad as it might seem, the CCP will come out on top in the end.
- csomar 7y ago
  > China, by her own standards, has been very soft on the protests so far. China is much more concerned with its global image than back during the Tiananmen Square protests. Surprisingly, things in this digital age are different and you can thank social media for that. If we didn't hav the Internet and live-broadcasting, the Hong Konguese are nothing but history now.
  - refurb 7y ago
    I think it’s also China’s awareness (more so than in the 1980’s) of the cost of being ostracized internationally. Being seen as a bloody dictatorship makes doing business much harder.
    - maxerickson 7y ago
      I mean, sort of. Many large companies seem happy enough to do whatever they think the CCP wants.
    - goatinaboat 7y ago
      Being seen as a bloody dictatorship makes doing business much harder But you can watch as much basketball as you want, and wear fashionable sneakers, and of course call your buddies in the Party over for a party on your smartphones “proudly designed in California”. Everyone already knows about Tibet, the Uighurs and so on. Everyone. And yet they still do business there unashamedly.
alkonaut 7y ago
It now seems like a symbolic nationalist issue. But isn't your argument that HK is a smaller fraction of China's economy an argument to NOT crush the dissent in HK? If China decides to "crush" resistance in HK by any means necessary, it would be the Chinese economy that took the blow of international sanctions and boycotts?
hnarn 7y ago
You're not entirely wrong, but I do think it's a gigantic oversimplification to only look at the value of Hong Kong in terms of percentage of GDP. While I do agree that a crackdown is likely, I also think the consequences to China's economy, both from direct factors but also from indirect factors that are hard to predict, may be significant in doing so. At the end of the day, it's my opinion that this struggle is from the CCP side of things not a rational one. They are willing to sacrifice "rational" values for the sake of things like honor and saving face, and I think (and to some extent, hope) that there is a risk that type of decision making will cause a downward spiral for the regime. I can't remember who made this point, but there's a historical anecdote about how "totalitarian regimes are suicidal". Sooner or later the fascist cocktail that has fueled economic growth explodes into unbearable oppression, unsustainable expansion, economically questionable decisions, or all of the above. I've heard the point many times that just like the Roman Empire was always just "one missed grain shipment away from a revolution", the only thing really standing between the CCP and a popular revolt is the downturn of the economy. The only reason people are tolerating the suffocating oppression of the state is because of tangible rewards.
- Aperocky 7y ago
  > Suffocating oppression If you’ve been to China, this is certainly not what the general population are feeling. There are enough entertainment and economic pressure to keep most everyone busy. And social injustice are _voiced_ and _acted upon_. As very few of those involve the legitimacy of whole CCP anyways, the lower level officials are mostly threading on thin ice. I think there’s a huge gap between the perceived conditions in China vs the actual sentiment in China, and western media have only been widening it.
  - hnarn 7y ago
    > this is certainly not what the general population are feeling Rosa Luxemburg said that "those who do not move, do not notice their chains". Of course most people in mainland China do not feel anything close to a "suffocating oppression" because the mere thought of disobedience may never have occurred to them. To insinuate that the reason for this is the fact that "social injustice" is "voiced and acted upon" is nothing short of insulting. Most people in China would want more freedom, because they are human and humans do: but most of them are also raised in a system that equates the communist party with stability, and most people believe the (of course, to some extent correct) propaganda that disobedience would cause chaos. That is not to say that the CCP is in power due to wide popular support, they are in power due to wide popular apathy.
ohnidoertous 7y ago
Hong Kong does not pay taxes to mainland China, and it’s GDP isn’t included in China’s GDP calculation. What I find interesting is that Macau is in the same position as Hong Kong, former colony, 1 country 2 systems, but it’s GDP per capita is double that of HK, and there have been no protests in Macau.
- hacknat 7y ago
  Macau has been a lot more strict with mainland Chinese residents. It’s not easy to funnel money into Macau and mainland residents are treated like foreigners. This has led to Macau not being a thorn in China’s side in anyway, as it is not a political or economic haven for mainlanders.

by beloch 7y ago

flyinglizard 7y ago

It's probably worth more to Xi to bring HK in line with the mainland to serve as a sobering example for other areas under Chinese rule.

throwaway1997 7y ago

GDP != Value. HK continues to be the jurisdiction of choice for mainland companies wishing to do business with the west and vice versa because the rule of law increases people's confidence in the validity of any contracts signed. The HK property and stock market is also where a huge amount of of Chinese money is parked. Neither of these contribute to GDP but provide a lot of value to the mainland.

starfallg 7y ago
Can't stress this enough. The number one priority for the political and business classes is to tunnel their wealth overseas and the first port of call is usually Hong Kong. In the last decade, much of the HK stock market (and economy) is propped up by Chinese money and these outflows. Shell companies are sold in Hong Kong just because they are listed on the stock exchange - the underlying businesses are often spun-off as a part of the transaction and the resulting operation just a way to funnel money and business outside of Chinese capital controls. The property market is also full to the brim with money from the mainland. Hong Kong has a much stronger hand than most people realise, because of the fact that the Chinese elite themselves lack confidence in their own system on the mainland.
csomar 7y ago
> The HK property and stock market is also where a huge amount of of Chinese money is parked. I wonder if this is the reason China wants to get rid of Hong Kong. Their capital restrictions are useless if Chinese can move a ton of value through Hong Kong. The world still needs China, though. So it'll make a new way to China. Maybe China has figured out: Value from Hong Kong < Value going to Hong Kong.
- flag23147 7y ago
  Moving capital to HK from mainland is largely subject to the same rules and regulations as moving capital to a foreign country. The reason Chinese money is parked here is because HK offers a convenient way for mainland assets to be listed. Without HK, these assets can be listed elsewhere e.g. US or UK. In this sense, the existence of HK as an international finance center brings money closer to mainland rather than further away.
  - csomar 7y ago
    If you were to be moving capital illegally, my bet is that Hong Kong is the way you go if you are Chinese. It's close, people speak the language, lots of established chinese companies there; and if the gov. find out you just hide there since they can't extradite you?
- api 7y ago
  The world might not need China as much as Xi Jinpeng thinks. A lot of production is already moving, and China is less and less valuable as you move up the value chain. Most high-end engineering and other high value stuff is not in China.
monocasa 7y ago
China is trying to replace those companies anyway. That's the shtick of their Made in China 2025 plan.

NeedMoreTea 7y ago

It's not like this is a recent change in policy as Hong Kong has become more insignificant in the scheme of things. China has been systemically fiddling with HK since 1997, despite lodged international agreement and "one country, two systems". The extradition was merely the last of many straws. One of the earliest protests I remember was around 2,000 (Edit: it was actually 2003) and tied in with the universal suffrage electing the Chief Executive that was in the handover agreement, written into Basic Law, and remains an issue for today's protests. It's one of the protest's "five points". Edit: There was an earlier demo in 2,002 over civil rights stemming from the subversion law, which spawned the yearly marches. https://en.wikipedia.org/wiki/Hong_Kong_1_July_marches https://en.wikipedia.org/wiki/Hong_Kong_1_July_marches

refurb 7y ago

There's a very realistic possibility that China is going to crush resistance in HK by any means necessary. I keep waiting for the shoe to drop. China, by her own standards, has been very soft on the protests so far. China is much more concerned with its global image than back during the Tiananmen Square protests. But if anyone should think this won’t end similarly, they’d be fooling themselves. I’d put lower odds on a sudden violent crack down than on a slow, methodical process of arresting leaders and slowly ratcheting up the pressure on protestors. As sad as it might seem, the CCP will come out on top in the end.

csomar 7y ago
> China, by her own standards, has been very soft on the protests so far. China is much more concerned with its global image than back during the Tiananmen Square protests. Surprisingly, things in this digital age are different and you can thank social media for that. If we didn't hav the Internet and live-broadcasting, the Hong Konguese are nothing but history now.
- refurb 7y ago
  I think it’s also China’s awareness (more so than in the 1980’s) of the cost of being ostracized internationally. Being seen as a bloody dictatorship makes doing business much harder.
  - maxerickson 7y ago
    I mean, sort of. Many large companies seem happy enough to do whatever they think the CCP wants.
  - goatinaboat 7y ago
    Being seen as a bloody dictatorship makes doing business much harder But you can watch as much basketball as you want, and wear fashionable sneakers, and of course call your buddies in the Party over for a party on your smartphones “proudly designed in California”. Everyone already knows about Tibet, the Uighurs and so on. Everyone. And yet they still do business there unashamedly.

alkonaut 7y ago

It now seems like a symbolic nationalist issue. But isn't your argument that HK is a smaller fraction of China's economy an argument to NOT crush the dissent in HK? If China decides to "crush" resistance in HK by any means necessary, it would be the Chinese economy that took the blow of international sanctions and boycotts?

hnarn 7y ago

You're not entirely wrong, but I do think it's a gigantic oversimplification to only look at the value of Hong Kong in terms of percentage of GDP. While I do agree that a crackdown is likely, I also think the consequences to China's economy, both from direct factors but also from indirect factors that are hard to predict, may be significant in doing so. At the end of the day, it's my opinion that this struggle is from the CCP side of things not a rational one. They are willing to sacrifice "rational" values for the sake of things like honor and saving face, and I think (and to some extent, hope) that there is a risk that type of decision making will cause a downward spiral for the regime. I can't remember who made this point, but there's a historical anecdote about how "totalitarian regimes are suicidal". Sooner or later the fascist cocktail that has fueled economic growth explodes into unbearable oppression, unsustainable expansion, economically questionable decisions, or all of the above. I've heard the point many times that just like the Roman Empire was always just "one missed grain shipment away from a revolution", the only thing really standing between the CCP and a popular revolt is the downturn of the economy. The only reason people are tolerating the suffocating oppression of the state is because of tangible rewards.

Aperocky 7y ago
> Suffocating oppression If you’ve been to China, this is certainly not what the general population are feeling. There are enough entertainment and economic pressure to keep most everyone busy. And social injustice are _voiced_ and _acted upon_. As very few of those involve the legitimacy of whole CCP anyways, the lower level officials are mostly threading on thin ice. I think there’s a huge gap between the perceived conditions in China vs the actual sentiment in China, and western media have only been widening it.
- hnarn 7y ago
  > this is certainly not what the general population are feeling Rosa Luxemburg said that "those who do not move, do not notice their chains". Of course most people in mainland China do not feel anything close to a "suffocating oppression" because the mere thought of disobedience may never have occurred to them. To insinuate that the reason for this is the fact that "social injustice" is "voiced and acted upon" is nothing short of insulting. Most people in China would want more freedom, because they are human and humans do: but most of them are also raised in a system that equates the communist party with stability, and most people believe the (of course, to some extent correct) propaganda that disobedience would cause chaos. That is not to say that the CCP is in power due to wide popular support, they are in power due to wide popular apathy.

ohnidoertous 7y ago

Hong Kong does not pay taxes to mainland China, and it’s GDP isn’t included in China’s GDP calculation. What I find interesting is that Macau is in the same position as Hong Kong, former colony, 1 country 2 systems, but it’s GDP per capita is double that of HK, and there have been no protests in Macau.

hacknat 7y ago
Macau has been a lot more strict with mainland Chinese residents. It’s not easy to funnel money into Macau and mainland residents are treated like foreigners. This has led to Macau not being a thorn in China’s side in anyway, as it is not a political or economic haven for mainlanders.