For the West, this step rings the death knell for their presence in Hong Kong. Western companies are going to lose the only Western-oriented business center within Chinese territories and their business interests will no longer be well protected by the British-style common law jurisdiction. U.S. business interests in Hong Kong – which include 1,300 companies and $82.5 billion in direct investment — have now been put at risk by China’s long arm. Apart from the economic presence, the extensive presence of the West in Hong Kong in terms of international nongovernment organizations (INGOs), media branches, and intelligence operations are also at risk of being uprooted by China’s heavy hand. The West, particularly the United States, may forever lose its foothold in the door of China.
Because it is a step that seemingly serves no one’s interests, China’s announcement of the national security law has sent shockwaves through both Hong Kong and the international community.
It is difficult to open the black box of China’s decision-making process, but one logical explanation for such a lose-lose decision is that it fits with the Chinese nationalist agenda of the Xi Jinping regime. Facing unprecedented challenges at home and abroad — ranging from a faltering domestic economy and growing pressure for “internal stability preservation” to the global trend of economic decoupling, a worldwide backlash against the spread of COVID-19 from Wuhan, and rising geopolitical pressure from the U.S. — it is comprehensible that the Xi regime would choose to shift the blame to “foreign forces” by playing up its Chinese nationalist card.
For this purpose, Hong Kong’s pro-Western orientation, its people’s strong desire for greater autonomy, and its extensive connections with the West have set the perfect scene for the Xi regime to flex the Chinese nationalist muscle. To this end, Xi seems to have prioritized the nationalist fervor to control Hong Kong over utilitarian calculations of the territory’s financial contribution. Xi’s nationalist agenda becomes more obvious if we put Hong Kong’s national security law in a wider context together with China’s tougher tack toward Taiwan and aggressive increase in military spending, as simultaneously announced in the latest PRC State Council annual work report.
Whatever the calculations being made by the Xi regime, the fact is that China has decided to make Hong Kong its battlefield with the West.
This signals a fundamental change of China’s policy toward Hong Kong. Since 1949, the party-state has all along exercised a high degree of tolerance toward the foreign presence in Hong Kong, in the name of “long-term planning, full utilization” (under the Mao Zedong regime) and “one country two systems” (from the Deng Xiaoping to Jiang Zemin and Hu Jintao regimes). In exchange, China gained privileged access to foreign capital and international trade through the territory. By placing pragmatism over nationalist fervor, China provided the room for Hong Kong to function as a geopolitical buffer zone from the Cold War to the post-Cold War period.
But now the countdown to the end of Hong Kong as the world knows it has begun. By deviating from the CCP’s longstanding utilitarian approach toward Hong Kong, the Xi regime seems to have no interest in keeping Hong Kong as its buffer zone with the West. Driven by a nationalist political agenda, Xi instead sees Hong Kong as the frontline battlefield in the new Cold War with the United States.
Now Pandora’s box has been opened. The decision to push for a national security law, bypassing the local legislative process entirely, will entangle Hong Kong, China, and the West in a vicious cycle.