China’s pyrrhic Hong Kong victory

“A pyrrhic victory is a victory that inflicts such a devastating toll on the victor that it is tantamount to defeat.” The phrase originates from a quote from Pyrrhus of Epirus, whose triumph against the Romans in the Battle of Asculum in 279 BC destroyed much of his forces.

Since Hong Kong was transferred to China in 1997 after 156 years of British rule, it has always been treated as a special case. The “One Country; Two Systems” was used to great advantage by everyone.

Foreign companies could do business with corrupt private and public sector entities in the mainland without getting their hands dirty. Chinese companies could remove money from the Chinese economy with little fear of being caught. It was easy for the Beijing government to monitor this money laundering and take advantage of it too. And when they wanted to clamp down, it was easily done. Remember when the government basically shut down funds flowing through the Macau casinos?

Hong Kong has always been the largest source of Foreign Direct Investment into China, accounting for 47 percent of all FDI to the mainland. Likewise, China accounted for 26 percent of all FDI into Hong Kong. Geopolitics could be hidden too. Vietnam’s leading source of FDI in 2019 was from Hong Kong. That was fine since everyone accepted the “fact” that Hong Kong was not part of “China.” Hong Kong has been separate from China.

But Hong Kong has been an integral part of China for more than 2,000 years since the Qin dynasty in 214 BCE. Beijing has made it clear through its new laws, statements, and actions that it wants Hong Kong to be considered completely part of China.

The Beijing government would like the world to believe—primarily through its global apologists—that everything is about Trump and US fighting with China.

In July, China accused the US of using “gangster logic” after President Trump directed an end to Hong Kong’s special economic treatment. This week, the US formally halted its extradition treaty with Hong Kong.

Further, the US State Department announced that this was part of a total of three US bilateral agreements with Hong Kong being permanently dropped. “These agreements covered the surrender of fugitive offenders, the transfer of sentenced persons, and reciprocal tax exemptions on income derived from the international operation of ships,” a State Department spokeswoman said.

Australia, Canada, New Zealand, Germany, France and Britain did the same earlier. A month ago, the UK government unveiled the conditions under which almost 3 million Hong Kong residents will be able to start on a path to UK citizenship. Hong Kong’s British National (Overseas) passport holders and their immediate dependants will have the right to apply for a special UK visa from January.

President Donald Trump issued an executive order on July 14, which deemed Hong Kong “no longer sufficiently autonomous to justify differential treatment in relation to the People’s Republic of China.” Isn’t that the status that China wants for Hong Kong, to be considered wholly a part of China?

Xi Jinping is between a rock and a hard place with the fear of a call in Hong Kong for secession and cannot allow talk of genuine independence. But Xi may have to lose the advantage of a separate Hong Kong to gain that objective.


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