July 1 was Hong Kong's version of July 4: The anniversary of the moment when, on the night of June 30, 1997, Prince Charles, Prime Minister Tony Blair and the United Kingdom handed the city back to China, in the form of President Jiang Zemin and Premier Li Peng, who took possession as the clock ticked into the first day of the next month.
There was a small flag-raising ceremony to honor the event, the Chinese anthem played as the Chinese flag took pride of place above Hong Kong's, and Chief Executive Carrie Lam clinked champagne glasses with dignitaries inside. For the first time, the festivities were held indoors, to avoid threats of protest.
Those came later.
Over the afternoon, all of Hong Kong watched in awe as demonstrators broke the shatter-proof glass to enter the building that houses the government. Then at night they pierced the metal shutters protecting the central chamber of the Legislative Council. They daubed anti-administration and anti-China graffiti on the walls and desks, spray painted over the Hong Kong emblem, and draped Hong Kong's colonial flag in front of the speaker's chair.
The police, who cracked skulls and inundated faces with pepper spray earlier in the day, beat a retreat. Surprisingly, they did not respond until after midnight, when most of the crowds had voluntarily dispersed to demonstrate another day. Some now see police inaction as a "trick" to get the demonstrators to behave badly, but I think they were wary of getting caught on camera responding violently against crowds of university and even high-school students.
The demonstrators were focused in their anger. They left a sign stating that "cultural objects should be preserved," and another to "Preserve books. Don't destroy."
Gifts from foreign governments remained untouched. After thirsty protesters broke into the Legislative Council canteen, they put up a reminder, "We're not thieves," and some left small change to pay for the cans of soda that they took.
There will be a lot of focus, particularly from the governments here in Hong Kong and China, about the what of what happened on July 1. But the real issue that these governments should be tackling is the why.
We can all agree that it's outrageous and illegal to break into the very heart of the government and trash the place. There were half a million peaceful protesters at a march yesterday as well, my wife and daughter among them, and a lot of them feel violence is not the way to make your point.
At the same time, these protesters represent many Hong Kongers when they make it abundantly clear that they do not respect the Hong Kong government. They do not feel it represents them.
The government here is rigged so only a handful of candidates are picked by the public. A cabal of business figures pick the leader, the Chief Executive. Since we can't make our voice heard with our votes, we use our feet in the streets. And some now use fists.
After the pro-democracy Umbrella Revolution ended in 2014, nothing changed. Those protests five years ago kicked off because Beijing did not deliver on a promise to bring democracy to Hong Kong. Instead, the central government handed down a ruling that the citizens could have "one man, one vote" -- so long as they chose between two or three candidates cherry-picked by Beijing. That seemed like democracy to precisely no one.
Efforts at subsequent dialogue with the pro-Beijing government led nowhere. Instead there were piecemeal changes in legislation that have whittled away Hong Kong's much-prized freedoms. Booksellers were abducted and appeared in mainland China, for interrogation on the "subversive" books they sold. Even in early June, when a million people marched in white to protest a bill to allow rendition of suspects from Hong Kong into mainland China, Chief Executive Lam said the numbers in the streets didn't matter, and the law should go ahead.
That she subsequently put the proposed law on hold has not appeased anyone. The Sunday after she paused, but did not withdraw, the law, around 2 million people took to the streets, this time dressed in black. They demanded that she scrap the law, and step down.
After the protests, many are predictably giving their response to the what of what happened, from the government here and mainland China's mouthpieces such as the Global Times. That newspaper, used to convey Beijing's opinions abroad, predictably decries "mob-like behavior" of people acting "out of blind arrogance and rage."
"Although Hong Kong is a capitalist city, it will never condone such violent behavior," its editorial on the day's events states. "It is a disgrace that such a developed society could carry out this kind of reckless and savage violence that has signaled an ominous alert for the city's future."
There's a lot to unpack there, and elsewhere, in the editorial, not least that Hong Kong has minimum standards of behavior although it is a capitalist city. The "ominous alert" hints at an ominous response from the mainland government, which is certainly something we all here fear.
There's a hint that the mainland government is worried this kind of dissent will cross the border into China. "Using violence to hijack a society like Hong Kong's is the greatest evil of the modern era," the editorial states, with significant hyperbole, and apparently ignoring China's Communist Revolution. There's a warning, too, that this "recent round of rioting will forever be a stain upon Hong Kong's image as a reliable hub for international finance and commerce."
Will it? That remains to be seen. There's certainly a concern that businesses will seek other bases for operating in Asia. Taiwan, with its democratic government, is emerging as greater China's bastion of freedom. But Hong Kong remains the capital of capital for East Asia.
Hong Kong is fighting for its future, with the Beijing administration using a system of "rule through law" in the city. Elected members of the government have been thrown out, in every case pro-democracy figures. Their reduced numbers prevent them from blocking changes to the city's constitution, the Basic Law. Some democrats have even been prevented for running for office because they're believed to harbor anti-Beijing sentiment. And in one of the ever-increasing "interpretations" of the Basic Law handed down from the central government, China's courts have been given superiority even to Hong Kong's supreme court, the Court of Final Appeal.
There are lots of other reasons as to why these protests have happened. Home prices are the highest and least-affordable in the world. Inequality between rich and poor is great, even though we all live alongside each other. Although employment is very high, high-quality, high-paying jobs are in short supply. Sometimes they go to the very smart mainland Chinese graduates who come to Hong Kong. A Financial Times editor was kicked out of the city, his visa not renewed, just for moderating a speech at the Foreign Correspondent's Club where a pro-independence politician spoke.
As an investor, how do you price in Hong Kong's unrest? Under the administration of President Donald Trump, geopolitics has grown increasingly volatile. It is hard to know what long-term impact these events will have on Hong Kong companies, which for the most part are doing business as usual.
The U.S.-China trade war caused a 13% sell-off in stocks this spring in mainland China, where exports have flagged. But thanks to a huge rally at the start of 2019, Chinese shares have still advanced by 31% in 2019.
So far in Hong Kong, investors have not flinched. The Hang Seng has closed up 1.2% on Tuesday, catching up on the rally in global stocks on Monday, which was of course a public holiday here. Hong Kong stocks are up 11.7% to date this year.
This situation will change if Hong Kong cracks down hard on demonstrators, and there are serious casualties beyond government pride. This is, after all, the 30th anniversary of the Tiananmen Square massacre in Beijing.
We wait to see if there is indeed an ominous response from the powers-that-be. They are in a very difficult situation. Equally, they deserve to be. How will we all get out?