HONG KONG—Storefronts closed for weekend demonstrations are now shuttered, for weeks or even permanently. Protesters are occupying major roads, rail tracks, bridges and tunnels, cutting off critical thoroughfares for commuters and commerce on a daily basis. Universities are telling students not to come back for the rest of the semester.
Nearly six months into the anti-government protests, life in Hong Kong has dramatically changed, pushing the economy into recession, fraying faith in authorities, and pitting neighbours against one another. The turmoil has upended a city long known for its world-class transport, gleaming towers of global finance and cosmopolitan aura, with the potential to alter Hong Kong’s character. Some of the wounds may be lasting.
Violent confrontations with police and mass arrests of protesters have eroded faith in the government and the legal system. Those have been hallmarks of the city’s distinct status under the “one country, two systems” policy, Beijing’s pledge when it reclaimed the city from Britain in 1997.
Decisions by the city’s leadership, like an extradition bill that set off the protests and a face mask ban, have cemented fears that Beijing’s authoritarian reach stretches to Hong Kong. They are stark reminders that Hong Kong could become just another mainland Chinese city when the pledge expires in 2047. Other scars are likely to fade over time.
Students and teachers will sit together in classrooms again. Vandalized malls, smashed subway stations and destroyed sidewalks will be repaired. Shoppers from mainland China will eventually return to buy Tiffany rings and Chanel bags, lured by low taxes.
The economy will slowly recover, too. While multinational companies have drawn up exit scenarios, few have plans to move. As the bridge to China, Hong Kong is hard to leave and even harder to replace.
The healing process, though, cannot begin until the protests end. And with each escalation, both sides seem further apart and a peaceful outcome less likely.
“Nobody wants blood on his or her hands,” said Regina Ip, a member of Hong Kong’s Cabinet. “But because no decisive action is taken, Hong Kong is being destroyed.”
As the distrust deepens, the demonstrations, once largely peaceful and confined to the weekends, are now spilling over into weekdays. Activists speak of the police as a brutal tool of the Hong Kong government rather than blaming the Chinese Communist Party.
The narrative of an out-of-control police force is reinforced by footage and photographs in chat groups of officers beating protesters, and using pepper spray and tear gas on bystanders. Video of a policeman shooting an unarmed young protester Monday spread wildly on social media.
In recent days, bankers and lawyers in suits and ties have gathered with black-clad protesters outside their highrise offices at lunchtime to heckle and yell at police. One skirmish this week between a man and a group of riot police officers happened just feet from Hong Kong’s stock exchange. In another, a banker from Citigroup was arrested.
China’s top leader, Xi Jinping, on Thursday gave his toughest public comments so far about protests, pointedly giving his backing to the city’s police.
“The continued radical violent criminal actions in Hong Kong have gravely trampled on rule of law and social order, seriously damaging the prosperity and stability of Hong Kong,” Xi said in Brasília, Brazil, at a summit of developing countries, according to an online report from People’s Daily, the official newspaper of the Chinese Communist Party.
When police fired tear gas and rubber bullets into the grounds of Hong Kong universities this week, they breached the perceived inviolability of educational institutions, setting off some of the most violent confrontations. Administrators and professors now say they are bracing for a long-term hit.
Universities could struggle to recruit foreign and mainland Chinese students. Many mainland students fled across the border to Shenzhen this week as police and students activists fought at the borders of some campuses, and foreign universities have been cancelling exchange programs. In the coming years, foreign students could be dissuaded by the perception that the government might try to stifle academic and speech freedoms.
This week, hundreds of university scholars worldwide joined local peers in signing a petition calling on the police to halt campus attacks and warning they might reconsider academic partnerships in Hong Kong “if student’s safety is at risk and such blatant violation of academic and intellectual freedom continues.”
William Hayward, dean of social sciences at the University of Hong Kong, said the school’s president, Xiang Zhang, had reassured the faculty and students that “we remain a global university where we engage in a kind of academic discourse wherever it leads, where our colleagues think it should go.”
“So any of my colleagues can feel free to teach what they want, teach a class to pursue questions of scholarship that they want to pursue,” he said. “And nothing about the current environment has changed that in any way.”
The protests have created major gridlock in a city that runs on efficient logistics.
On the sprawling campus of Chinese University of Hong Kong, students in recent days fanned out to block the city’s oldest train line and one of its largest highways. The barricades have created a choke point, making it difficult for 1 million Hong Kong residents to reach the rest of the city. Trucks traverse the road, ferrying goods made in southeastern China like air-conditioners, cellphones, costume jewelry and shirts.
Get more business in your inbox
Get the business news and analysis that matters most every morning in our Star Business Journal newsletter.
Sign Up Now
Efforts to turn Hong Kong into an Asian cultural capital have been dented by the protests. Events and shows have been cancelled, including an appearance by “The Daily Show” host Trevor Noah and the Hong Kong Tennis Open. People are asking whether the annual Art Basel event will be held in March.
The performing arts venues that make up the ambitious West Kowloon Cultural District are still running. But they have had to cancel, postpone and adjust performances.
“We had nearly 15,000 people come to our inaugural Jazz Fest this past weekend,” said Alison Friedman, the district’s artistic director of performing arts. “While ticket sales are down, attendance is staying strong. We need the arts more than ever.”
It all threatens to make a bad economy even worse. The turmoil has pushed Hong Kong’s economy into a recession — the weakest since the depths of the global financial crisis. Daily headlines about violence have scared off tourists and business travellers.
On a recent Sunday afternoon, protesters and riot police faced off outside the Peninsula, one of Hong Kong’s oldest hotels. Employees quickly shut the front door, closed the blinds and rolled down the shutters, but they weren’t fast enough to prevent tear gas from floating into high tea, and while a lone violin played, guests wheezed.
Although the protests have hurt growth, the city’s economic core is also one of its greatest strengths for enduring the tumult. Multinational companies use Hong Kong as a gateway to China, and Beijing uses the city as a gateway to the world. There are few alternatives that offer the free flow of capital and information.
“As long as Hong Kong maintains these two distinct characteristics, it will have an advantage,” said Weijian Shan, chief executive of the private equity firm PAG.
Hong Kong has its currency pegged to the U.S. dollar, making it reliable and stable. China, which has a tight hold on its currency, also uses Hong Kong as the first financial stop to transact and trade with the rest of the world. China can’t afford to risk Hong Kong’s role.
Chinese financial institutions have hundreds of billions of dollars worth of assets in the city, while state-owned companies own as much as 30 per cent of assets in Hong Kong, according to an analysis by Global Source Partners, a research firm. Chinese companies, top Chinese Communist officials and rich businesspeople have parked their wealth in the city, which would be under threat if Beijing changed its policy.
In a vote of confidence for the city, the Chinese e-commerce giant Alibaba this month is expected to raise $ 13 billion by selling shares on the Hong Kong Stock Exchange.
Hong Kong is also still an important entry point for multinational companies into China. The city’s laws are based on British legal tradition. In China, the rule of law is weaker.
“I have not heard from one person that they are pulling out of Hong Kong,” said Rick Helfenbein, president of the American Apparel and Footwear Association, which has 335 corporate members with brands like Jimmy Choo, Versace and Gap.
“They may be pulling their hair,” he added. “Safety is a topic of conversation, leaving is not.”