Fortune’s ‘Death of Hong Kong’ call looks like a good one

Bloomberg ViewJune 24, 2014 

TOKYO – Perhaps rumors of Hong Kong’s demise weren’t exaggerated after all.

Nineteen years ago this month, Fortune ran its infamous “Death of Hong Kong” cover. By 2007, the magazine had changed its tune, deciding, in the Mark Twain sense, that it had been “wrong” and that “reports of Hong Kong’s death have been greatly exaggerated.” Given recent events, however, Fortune’s initial prediction that Beijing’s meddling would cost Hong Kong its pivotal role in the world may have been spot on.

Take this month’s unnerving white paper from China’s State Council, which asserted that Beijing’s interests took precedence over Hong Kong’s. Its characterization of those who didn’t want to live in a communist society as “confused or lopsided” was as bizarre as it was chilling. So was its suggestion that Hong Kong courts effectively need to ask “what would Mao Zedong do?” before making decisions.

The upshot: Hong Kong’s 7 million citizens can forget about being truly free to pick their own leader in 2017, as Beijing had led them to believe would happen.

It’s no longer impossible to imagine the end of the “One Country, Two Systems” policy China agreed to after Britain returned the territory in 1997. And Hong Kongers don’t intend to surrender quietly. China is enraged by an unofficial online poll on Hong Kong democratic ambitions that’s been taking place since Friday. What Beijing has labeled an illegal vote, nearly 700,000 Hong Kongers so far have embraced to tell Beijing to back off.

This is nothing if not an own goal by Xi Jinping. China needs to become more like Hong Kong, not the other way around. What Chinese officials mean when they talk about rebalancing China away from exports and unproductive investment is creating a vibrant and innovative service sector.

A key part of that process will be inspiring more young Chinese to take risks and embrace innovation like Jack Ma, the billionaire founder of Alibaba. But that requires an environment conducive to true debate, creative destruction and more than a little countercultural discourse. How is that possible when the tools the rest of the world uses to spark thought and disrupt complacency – a free press, academics unafraid of thinking aloud, Google, Facebook and Twitter – are banned?

Hong Kong has nothing to learn from Beijing. An economy consistently rated the world’s freest has zero to gain from the self-censorship, patriotic education and opacity China increasingly wants to impose across the Pearl River. If China continues to muddle financial transparency, call into question the independence of Hong Kong’s courts and force expatriate economists to censor themselves, Singapore wins – not Hong Kong’s people. China must incorporate Hong Kong’s freewheeling ethos, not stamp it out.

In a recent opinion piece, state-backed China Daily likened Hong Kong’s democratic dreams to a fable about a greedy fisherman’s wife who wished for too much.

Greedy? Because they crave better local leaders? That kind of arrogant rhetoric is only driving more and more Hong Kongers into the activists’ camp, reports my Bloomberg colleague Natasha Khan.

On Friday night, “Occupy Central,” Hong Kong’s answer Occupy Wall Street, led a sing-along downtown of “Do You Hear the People Sing?” from the musical adaptation of Victor Hugo’s 1862 novel Les Misérables. If Xi pushes too far, millions more will add their voices to that chorus, miserable that their world-class economic system died a death entirely of Beijing’s making.

William Pesek, a Bloomberg View columnist based in Tokyo, writes on economics, markets and politics throughout the Asia-Pacific region.

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