Hong Kong’s future thrown in doubt

    China’s Government has imposed a new security law that answers the One Country Two Systems question conclusively as One China. What will be the impact of this?

    Violence is expected to escalate as protesters will mistakenly assume American intervention on their behalf.

    A few days ago, the National People’s Congress (NPC), which is equivalent to the Dewan Rakyat in Malaysia, moved to impose a security law that will allow for officers from China’s Ministry of State Security to operate in Hong Kong as well as meet out stiff sentences for those accused of protesting against China. In effect, in one fell swoop, the legal system in Hong Kong will be changed and Hong Kong will no longer operate under a One Country, Two Systems approach but under a One China model.

    This move is intended for one goal: To crush any form of protest against China’s claims of sovereignty over Hong Kong.  China has decided this after taking stock of the last Hong Kong local government elections which saw a complete rejection of parties friendly to China,  in favor of pro-democracy candidates. From China’s point of view, they view this as a point of no-return for Hong Kong: Either they enforce their iron grip over Hong Kong or Hong Kong will secede.

    This move forces Hong Kongers to make a decision, either to accept or to reject this move.  We will know soon enough of their decision.

    The HK protest movement died at PolyU when Government security forces successfully laid a siege to the protesters stronghold.

    Last years protest movement ended with the climatic Alamo style siege of protestors at Poly University (#PolyU) by the Hong Kong (and Mainland China) security forces , which was a decisive victory for the pro-China faction. Ever since the defeat at PolyU, the protest movement has been unable to muster a response . Hong Kongers may have experience protest fatigue as a result.

    In drafting this law, one has to understand a little bit about how things work in the Chinese Communist Party.  When bad decisions are made, those in power may sometimes agree to it without debate because they see that this decision will ultimately backfire on those responsible for the decision, leading to their ouster. For information, President Xi Jinping is currently China’s President-for-life.

    There are 3  related questions to answer arising from this decision, which are

    1. How will Hong Kong people react
    2. How will China respond
    3. How will the economy perform
    4. Repeat 1, 2 and 3 until conclusion

    How will Hong Kong people react?

    This is really the big question, which will be the factor that governs 2,3 and 4. If Hong Kong people do not react, the law gets passed, and things go on as usual. If this premise if false, and the Hong Kong people do react, it is no longer a protest against a law imposed by Hong Kong’s own mini-Government but because of a direct intervention from China. This form of reaction can be extremely explosive – far beyond the scale of protests we saw last year, but a struggle for independence. On the flip side, many of the front line protesters from last year’s protest have been arrested and may have had a time to reflect and/or regret their decision.

    How will China react?

    My view is that if the reaction from Hong Kong people is sufficiently alarming, that China will deploy the National People’s Army in Hong Kong, which could trigger an armed guerrilla warfare, with tacit support from the United States. (This is how guerrilla wars are usually conducted).

    What gamble has China made?

    The biggest gamble is whether or not there will be large scale protests against China, which translates to actual armed confrontation between Hong Kongers and China’s People Army. We are currently in an election year in the United States, where by and large an overwhelming majority of American’s loathe China. If this does turn out into an armed confrontation, there could be significant political pressure for the United States to intervene indirectly in this.

    Rembau Times view as of 23 May 2020

    • Muted reaction from Hong Kong people due to the lethargy over the 2019 Protest movement and Coronavirus contagion concerns.

    Possibly United States Congress could hit China with massive tariffs, leading to economic collapse and the ouster of President Xi Jinping.

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    1. Not a wise decision to do this. Actually there is no much difference if CCP implement this law or not, the control of Hong Kong still the same. There is so much problem CCP face especially economic part. Do this only give reason to Western world on the legitimacy of fighting with China. Furthermore, Worst case scenario if Hong Kong lose it status of Asia financial centre, China will be severely impacted.

    2. Well Calvin , HK M3 measure of money supply is HKD $14.8T. The question is how much of this flows out? If we say 20%, that is about HKD $3T or about USD $350 Billion, enough to collapse the pegged exchange rate and drive up overnight bank lending rate. That is a very important point to see whether currency speculators take large positions against HKD. Hang Seng could crashing will be the earliest indicator whether the interbank market in HK is under stress. Not good for HSBC bank