Hong Kong will be lucky to end up like Singapore

Growth in the city contracted 9% year-on-year in each of the first two quarters of 2020

  
Media mogul Jimmy Lai Chee-ying, founder of Apple Daily is detained by the national security unit in Hong Kong, China August 10, 2020.

Media mogul Jimmy Lai Chee-ying, founder of Apple Daily is detained by the national security unit in Hong Kong, China August 10, 2020.

Reuters/Tyrone Siu

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

HONG KONG  - Hong Kong will be lucky to end up like Singapore, or even a second-tier Chinese city. Police arrested pro-democracy media mogul Jimmy Lai for “foreign collusion” on Monday. Meanwhile, Chief Executive Carrie Lam’s administration has postponed elections and is purging the education system of dissidents. Businesses might have hoped Hong Kong would settle into a model resembling Singapore, where politics are authoritarian and commercial rule of law is upheld. That looks increasingly far-fetched.

After months of violent demonstrations, followed by the ongoing pandemic, it’s understandable why some in the business community cheered Beijing’s tough new national security law. Growth in the city contracted 9% year-on-year in each of the first two quarters of 2020; the last thing struggling retail and tourism businesses wanted was more disruption.

Lai’s arrest is the sharpest sign yet that the city’s pro-Beijing camp will strictly implement the controversial legislation and freely go after perceived enemies. The law green-lights arrests, extraditions and secret trials for vaguely defined crimes like sedition and inciting hatred of the government. On the mainland, authorities censor and arrest at will, but for the most part manage to do so without mass unrest or economic turmoil. The pace of official action in Hong Kong threatens a mess.

So if Singapore’s model is out of reach, many businesses might happily settle for the repressed stability of Shanghai. But even that might be a stretch. Hong Kong’s social and economic divisions are deeper than those in many mainland cities, for one. Meanwhile, the national security law is already having unintended business ramifications; multinational banks like HSBC and Citi, for example, must decide whether to comply with U.S. President Donald Trump’s sanctions, or with the security law which says such sanctions are illegal. Internet service providers must also carefully consider their positions.

The city’s awkward political structure, containing both pseudo-democratic bodies and autocratic agencies, has been kept in balance by its independent courts. Having started the process of weakening their credibility by arresting at will, Beijing will struggle to prevent it from infecting commercial life.

CONTEXT NEWS

- Hong Kong media tycoon Jimmy Lai became the highest-profile person to be arrested under a new national security law on Aug. 10. He was detained over suspected collusion with foreign forces. Around 200 police searched the offices of his Next Digital-owned Apple Daily newspaper.

- Hong Kong leader Carrie Lam on July 31 postponed a Sept. 6 election to the Chinese-ruled city's legislature by a year because of a rise in coronavirus cases, dealing a blow to the pro-democracy opposition which had hoped to make huge gains.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

(Editing by Una Galani and Sharon Lam) ((pete.sweeney@thomsonreuters.com; Reuters Messaging: pete.sweeney.thomsonreuters.com@reuters.net))

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