Special Report – Understanding Hong Kong – A to Z (P – T) By João Paulo Meneses ‘Peg’ – Felix Chung, leader of the pro-Beijing Liberal Party, warned: If the United States includes the Hong Kong’ dollar’s 36-year-old currency ‘peg’ with the US dollar in sanctions related to the national security bill, thereby denying Hong Kong access to the U.S.dollar, “this will be the end of Hong Kong.” As is known, the Macau pataca is indexed to the neighbouring region’s currency.
MB September 2020 Special Report | Understanding Hong Kong – A to Z
And what if China responds in kind? Macau economist Albano Martins told the Portuguese-language newspaper Ponto Final: “If there is such retaliation, Macau will simply disappear from the map”.
The truth is that, as has been reported more than once, some of President Donald Trump’s top advisers want Washington to weaken the indexation of the Hong Kong dollar to the U.S.currency.
The idea would be to achieve the indexation, limiting the ability of Hong Kong banks to buy US dollars.
But the United States must think twice before making this decision — not only because of the inevitable retaliation by Beijing, but also because the proposal would end up harming Hong Kong’s banks as well as the United States, rather than China.And what about U.S.gambling companies in Macau?
Eddie Yue, president of the Hong Kong Monetary Authority, said a few months ago that any move to deny Hong Kong access to the US dollar clearing system would be an “apocalyptic” scenario that “would also send shock waves to global financial markets, including the USA.”
More recently, Yue argued that the peg “will remain the bedrock” of Hong Kong’s financial system.“This is underpinned by a strong foreign reserves position of over US$440 billion, which is more than two times our monetary base”, he stressed.
As is known, via ‘peg’, Hong Kong offers U.S.companies a relatively safe way to access the Chinese market, preserving the link with the U.S.financial system.
If such a scenario were to unfold, China would retaliate — and there would be no winners in this financial war: “This will, indeed, also be the end of the Chinese economy as we know it,” wrote the editor of Resonate in Guangzhou, Quote: d by The Diplomat.
In the meantime, other developments may change the rules of the game.
A digital renminbi trial is set to start in Hong Kong, alongside other areas in the mainland such as Shanghai, Macau, Beijing, Tianjin and the province of Hebei, in what is being described by experts as the most significant expansion anywhere of a prototype of cash that will reside entirely online”.Bloomberg expert Andy Mukherjee speculated about the impact of a successful digital Chinese currency in an article called “China’s Crypto Currency May Challenge U.S.Dollar Peg in Hong Kong”.
Q uestion, the – In 1984, China and the United Kingdom signed the “Sino-British Joint Declaration on the Question of Hong Kong.”
In Hong Kong, to ask someone “Between Beijing and Hong Kong, which side are you on?” can be seen as an “impossible question”, paraphrasing philosopher Jiddu Krishnamurti.
At the heart of the question is a structural tension between a capitalist system with Western-modeled institutions and a rule of law inherited from British colonialism and a socialist, Communist Party-led system with ‘Chinese characteristics’ ruling the nation, the so-called two systems in one country.
The role of the Hong Kong Chief Executive is a case in point in this intersection.Singapore’s founding father, Lee Kwan Yew, bluntly described the task as “a thankless job.”
“You have a master in China.You have subsidiary masters in Hong Kong,” he said in a 2005 luncheon during which Lee gave another prescient assertion: “Beijing has no intention of allowing Hong Kong to be a pacesetter or a Trojan horse.”
President Xi Jinping, who is also secretary-general of the Communist Party of China (CPC), underlined the Central Government’s view of the question while addressing the 19th CPC Congress in 2017: “We must ensure both the central government’s overall jurisdiction over the Hong Kong and Macao special administrative regions and a high degree of autonomy in the two regions.We should ensure that the principle of ‘one country, two systems’ remains unchanged, is unwaveringly upheld, and in practice is not bent or distorted”.
The Hong Kong question is set to continue ranking high on the international and domestic Chinese agendas.As foreign countries, namely the ‘Five Eyes’ (US, UK, Canada, Australia, and New Zealand) keep on issuing statements, suspending agreements, and in some cases even imposing sanctions, the Central Government has been reiterating that the Hong Kong question is an internal matter of China, strongly rejecting those countries’ “gross interference in China’s domestic affairs.”
The national security law has surely changed the terms of the equation, but the divide remains in Hong Kong, even though the noisy protests fell silent, hinting at the deterrent effect of the new legislation.
Looking ahead, we come across additional questions: would Hong Kong citizens wholeheartedly and pragmatically embrace Chinese patriotism, paving the way to full integration with the Mainland? Or will the 2019 protests lead to cementing a localist, autonomous identity? How vibrant will the city be in the future as an international financial hub? How successful will the Greater Bay Area development plan be, and which new opportunities will regional integration bring for Hong Kong?
The view from the bridge shows us another question over the horizon: What will Hong Kong look like by 2047?
R egina Ip – The pro-Beijing block in Hong Kong, inside and outside Legco, has several names, but few with Regina Ip’s track record and notoriety.
The fact that she was re-elected to the Legislative Council in 2016, with the highest vote of 60,760 in Hong Kong Island, says a lot about the public image of the first woman to be appointed Secretary for Security, (she had to resign from the administration of Chief Executive Tung Chee-hwa, after advocating the passage of the national security legislation to implement Hong Kong Basic Law Article 23, and after this legislation was withdrawn).
After that failure, she returned as leader of the New People’s Party (2008) and since then has always secured a seat in the local parliament, but that was not her main goal: Regina Ip had the dream of becoming the first female Chief Executive of Hong Kong.
She tried twice in 2012 and 2017, but in both situations she received the number of nominations “far behind what was needed”.
Has she given up?
Regina Ip did not return to the subject, but perhaps her 70 years are not a problem.
When she criticized Carrie Lam’s government last year (“The government has failed miserably in countering all the misinformation,” she said), many saw a sign that she was in the running.
Until that moment, she remained one of the closest voices to Beijing, as her most recent statements on the National Security Law attest: “Beijing authorities have no option but to get on with introducing a set of laws that will protect national security and discourage separatist activities” and “the motherland has nothing but good intentions” for Hong Kong.
But Ms.Ip also knows how to speak to the heart of the Hongkonger who is not radicalized.
When she says that, “the worries about the possibility of arbitrary arrest, trial in mainland China, and diminution of the freedoms of expression, association and of the press, are understandable.
But once promulgated and applied in Hong Kong, the well-established common law safeguards of judicial review, habeas corpus, presumption of innocence and proof of guilt beyond reasonable doubt will kick in,” Regina Ip is making a difference to other well-known faces in the pro-Beijing bloc..