29 July 2019

Hong Kong may be destined to become another Shanghai

By Barry D Wood

Having spent the first part of July in Shanghai and Hong Kong the differences between these Chinese mega cities are stark.

Shanghai with 23 million people dwarfs Hong Kong’s population of 7.5 million. It is also less crowded and considerably cheaper than Hong Kong, 800 miles to the southwest, which is typically ranked as the world’s most expensive place to live.

While Hong Kong’s wealth is built on property and finance, the lower cost structure of Shanghai contributes to it being a centre for entrepreneurship and tech start-ups. English language skills are strong in both cities, despite Hong Kong’s huge head start.  Each city is home to more than 150,000 non-Chinese foreigners.

The pace of technological advance in Shanghai is extraordinary. Visitors arriving at the international airport are whisked to the city’s outskirts on the world’s fastest train, a German built maglev that reaches speeds of 200 mph.

Shanghai’s trendy Jing An district is a pleasant mixture of old and new. Fashionable cafes stand shoulder to shoulder with hole in the wall shops. But despite the city’s fast pace, street life is more relaxed and less hectic than Hong Kong.

Shanghai is a vibrant, welcoming place. Along with Beijing it is brimming with venture capital. I visited the headquarters of Mailman, a sports marketing firm started by a young Australian and a Brit.

Situated on the upper floors of a nondescript building, the youthful scene inside echoes Brooklyn or San Francisco. Casually dressed young people of varying nationalities stare at screens in tight work spaces. A ping pong table, couches and refreshment bar provide diversions.  I heard as much English as Mandarin and the firm’s mission statement posted on the wall is in both languages.

China is way ahead in financial technology and leads the world in becoming a cashless society.  Even the smallest purchases are done by tapping a payment app on a smart phone. Financial arms of Alibaba and Tencent control the ecosystem, each having over 1 billion accounts. All that’s required is a Chinese smart phone and a linked bank account. You pay by holding your personalised QR code against that of the merchant.  It takes only seconds. There’s no plastic and no fees. Debit and credit cards are seldom used.

But these demonstrable achievements are diminished by the pervasive big brother censorship that distorts China’s stature in the globalised economy.

Arriving at your Shanghai hotel Google is absent from the homepage on your laptop. Not only are Google and YouTube banned by the Communist Party’s great firewall so too are Twitter, Facebook, Instagram and WhatsApp. Switching on cable television, there are 14 channels from CCTV, the state broadcaster, but little else. Only when I find the partially hidden right-facing arrow at the end of the CCTV scroll can BBC or CNN be viewed. It’s a chilling introduction to China’s pervasive censorship.

As to the protests in Hong Kong, state television lacks any semblance of balance. Its reporting emphasises violence while downplaying the magnitude of what had been largely non-violent demonstrations.  More recently CCTV gave huge play to the defacing of the government insignia on a prominent building.  Shanghai people have little opportunity to understand what is really going on in Hong Kong.

You get a clear feeling in Shanghai of an unwritten understanding between people and government. This Faustian bargain is near total economic freedom in return for keeping your mouth shut and staying out of politics. With the exception of the Tiananmen Square tragedy 30 years ago the deal has been successful. Chinese people are justifiably proud of their country’s extraordinary economic achievements.

Further evidence of China’s technological advance comes from travelling from Shanghai to Hong Kong aboard the high-speed train link that opened less than a year ago. A 1,200-mile journey across southeastern China that used to take 19 hours now requires only 8 ½ hours. New tracks have been built atop concrete pylons 20 feet above ground level. The average speed is 190 miles per hour and the ride is exceedingly smooth.

Arriving in Hong Kong it is a smooth passage through customs and passport control to that city’s modern subway system. There are cash machines to convert Chinese currency into Hong Kong dollars. Under the 1997 agreement transferring Hong Kong from British to Chinese control, the former colony retains its own currency as well as limited self-government during a 50-year-long  transition.

The current wave of student-led protests began after Hong Kong’s Beijing-appointed chief executive, Carrie Lam,  proposed legislation that would allow criminal suspects to be extradited to mainland China. Under pressure Lam declared the unpopular measure dead but protesters are not satisfied. They seek resignations from the governing council and a commission of enquiry into police handling of the unrest.

Hongkongers are alarmed by a gradual erosion of their freedoms, including the assault on the independent judiciary and rule of law.  Older Hongkongers tend to be strongly anti-communist as many came to Hong Kong to escape communist rule on the mainland.

Hong Kong is regularly judged to be the world’s freest economy. It is the regional headquarters of over 1,000 global corporations. It has strong institutions, an independent judiciary, firm property rights, a currency linked to the US dollar, and a vibrant free press.

Protest organisers including respected lawyer Martin Lee, a founder of the opposition Democratic Party, says “Hong Kong is the key to China.” If the defenders of democracy in Hong Kong prevail, he says, there is hope for the rule of law in China. Another protest leader says, “we want to change China before it changes us.”

Talking to protesters one comes away respecting their courage but worrying about their slim chances for enduring success. They seek to preserve freedoms that by treaty would expire in 2047. They know they are on their own, with friends abroad providing nothing beyond moral support. In addition, they are aware that that people on the mainland tend to view Hongkongers as privileged spoiled children of colonialism. Or as one young friend in Shanghai who had lived in Hong Kong observed, “They are filled with mental conflicts.”

Some ascribe the protests to young people seeing no future for themselves, ignored by a local government that  doesn’t speak for them.  Rents are excessive, housing scarce, and well-paying jobs hard to find. Hong Kong lacks the entrepreneurial culture that is so attractive to highly educated young people.

But Hong Kong’s future is far from bleak. The city has a long tradition of reinventing itself. And even as Hong Kong is steadily absorbed into the megalopolis of 17 cities with 70 million people that Beijing calls the Greater Bay Area, the city remains the region’s financial and transport hub.

The stakes are high. If China intervenes with the army HK could begin a downward slide.  Violence is the enemy of Hong Kong’s future. The biggest threat to Hong Kong may be an unresolved conflict and a gradual exodus of people and business.

I departed for home hoping Hong Kong ultimately will change China but fearing instead that China will turn it into a smaller version of Shanghai.

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Barry D Wood is a journalist, author and educator in Washington, DC