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  1. Home
  2. / Investing
  3. / Global Equity

Hong Kong Marks 25 Years Since Handover With New Version of History

Just don't call it a handover - Chinese President Xi Jinping has been on a whistle-stop tour of Hong Kong, which we're now told never belonged to the British.
By ALEX FREW MCMILLAN
Jul 01, 2022 | 07:47 AM EDT

Today marks the half-way point for the existence of the "Special Administrative Region" of Hong Kong. It's 25 years since Britain handed back the keys to China, which pledged to allow Hong Kong to retain a "large degree of autonomy," and to introduce democracy in the former colony. It has done nothing of the sort.

Chinese President Xi Jinping has been on a heavily choreographed and tightly controlled whistle-stop tour of what's now basically a Chinese colony. Quite what today recognizes in his eyes is a good question. In Beijing's revisionist version of history, Hong Kong never belonged to the British in the first place. Handover? What handover?

Xi and 1,300 hand-picked attendees witnessed the swearing in of Hong Kong's new leader, former policeman John Lee Ka-chiu, and his deputies. Xi has been performing in a bubble, heading to Hong Kong on the high-speed train from Shenzhen, where he spent last night. He won't overnight in Hong Kong just in case a longer stay would allow protestors to make themselves heard. Anyone meeting him has been cloistered in an anti-Covid, anti-dissent bubble before getting to shake his hand.

It's noteworthy that Lee gave a speech in Mandarin, not the local language, Cantonese. Hong Kong has under its last two leaders, C.Y. Leung and Carrie Lam, seen a complete stripping away of its civic protections. Political opposition is now banned in the name of "patriots-only" elections that allow only candidates who are vetted by Beijing to run. Opposition politicians have been jailed or fled into exile. Pro-democracy news organizations and civic groups such as trades union have disbanded.

So it is Orwellian to hear Xi say that the "One Country, Two Systems" system granting Hong Kong its autonomy must be "implemented in an accurate and comprehensive manner." Xi told the audience of Communist loyalists that "there is no reason to change such a good system, and it must be maintained for a long time," to a hearty round of applause.

Back in the real world, Hong Kong's very identity is in question. It nominally has its own legal system, currency and corporate law. But Beijing simply steps in and rewrites those laws, and even the city's history, if they prove inconvenient. It has already established that Beijing courts are superior to Hong Kong's supreme court, the Court of Final Appeal, which is not actually final at all. Any decision can be overturned by Beijing.

Investors have been voting in their own particular way. The Hong Kong stock market was last year's worst major performer globally. The benchmark Hang Seng Index is down 24.2% in the last 12 months, considerably worse than the 14.6% drop for the CSI 300 index of the largest mainland listings.

Are investors losing faith in the city? China has been stripping away what makes Hong Kong special. Beijing laid down a much-hated National Security Law that it inserted into Hong Kong's constitution in 2020 without consultation, or any input from Hong Kongers at all. That makes it mandatory to love the Communist party, love the central government, and love whatever it does. It's all for your own benefit.

"Whatever the central government does, it's for the good of the nation, Hong Kong and Macau, as well as their compatriots," Xi told today's audience. He then left to tour the Chinese army base in what Hong Kongers still colloquially call the Prince of Wales building, the former headquarters of the Royal Navy in the city.

China has completely reneged on its promise to allow Hong Kong its own identity, to maintain "autonomy," and is well on its way to converting Hong Kong into just another mainland city. Hong Kong's laws and permissions are now equivalent to the mainland's oppressive political regime, allowing no dissent against the Communist dictatorship.

"Youngers have a future, Hong Kong has a future," Xi insisted, basically reinforcing that neither statement is true. China likes having Hong Kong as an offshore financial center, with a currency that's pegged to the U.S. dollar and freely convertible. By contrast, the Chinese yuan is as heavily stage-managed as Xi's trip to Hong Kong.

China likes having Hong Kong; it just doesn't like having the Hong Kongers in it. They've always been a mouthy lot who hold inconvenient 2-million-person marches demanding that China live up to its promise of democracy for the city, or the candlelight vigils marking the June 4 anniversary of the Tiananmen Square massacre in 1989. The vigil has been banned for the last three years, supposedly on public-health grounds that bar gatherings. But you will have witnessed no such ban or public-health concern if 1,300 people want to get together in the Hong Kong Convention and Exhibition Centre when Xi is in town.

Orwellian is also how you'd have to describe the rewriting of school textbooks that is now under way. Although Hong Kong was in British hands for 150 years, from 1841 to 1997, the latest textbooks insist that it was still actually Chinese during that time, and illegally occupied by the British invaders. China in fact signed over Hong Kong Island to the British in perpetuity in the Treaty of Nanking, to end the First Opium War. The Kowloon peninsula and the New Territories came a few years later, with Britain leasing the "N.T." for 99 years in 1898, which led to the 1997 date set for the handover.

The new textbooks about to be unleashed on students claim the Chinese government didn't recognize the treaties that ceded Hong Kong to Britain. The Chinese Communist Party insists that although the British imposed colonial rule on Hong Kong, the territory secretly remained Chinese all this time. Beijing now maintains that the treaties handing Hong Kong over were "unequal," and not recognized by the People's Republic of China - which could not possibly have recognized the Qing Dynasty treaties, since the PRC only came into existence in 1949, when the Chinese Communist Party took power.

It matters not at all that the vast majority of colonies the world over were seized by invasion or handed over in a war-ending treaty. Americans, for instance, might similarly be surprised to learn that the United States were never a British colony, under the Chinese definition. The U.S. government, coming into existence as it did to end the British occupation, did not recognize British rule, after all.

"In the Xi approach to history, facts are merely incidental," Steve Tsang, the director of the SOAS China Institute in London, told The New York Times. "Only interpretation matters. And only one interpretation is allowed."

China and the Hong Kong government have done nothing to address the problems that led to pro-democracy demonstrations in Hong Kong in 2014 and again in 2019. Instead, they have sought to punish those who took part, imprison critics, ban dissent, and whitewash history, very much in Communist style. The 2019 demonstrations were terrorist acts, driven by "external forces," in the rewritten version of history.

Outgoing leader Carrie Lam complains that students need protection from being "poisoned" and fed "false and biased information."

What lies ahead for Hong Kong in the next 25 years? Officials hint that the "SAR" system may be extended beyond its scheduled end in 2047. That matters little because Hong Kong's laws and identities are being transformed to make them the same as those in mainland China, even if Hong Kong supposedly has its own special status.

What of Hong Kong's former colonial power?

British Prime Minister Boris Johnson says the United Kingdom is "not giving up on Hong Kong," with Britain increasingly critical of the way Beijing is ruling the city. "We simply cannot avoid the fact that, for some time now, Beijing has been failing to comply with its obligations," the British leader said.

But Britain's trade relationship with China trumps its trifling concerns over its former colony. The handover document signed between China and Britain was ratified before the United Nations, so it could push a claim there. Until it does, China will continue recrafting Hong Kong and Hong Kong history, however it wants.

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At the time of publication, Alex Frew McMillan had no position in the securities mentioned.

TAGS: Investing | Markets | Stocks | Trading | China | Global Equity

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