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Opinion
The View
by Richard Harris
The View
by Richard Harris
Hong Kong is going through the five stages of grief, before acceptance of fate as a part of China
- Investors should realise it was always wishful thinking for the Basic Law to survive 50 years under a totalitarian sovereign
- When acceptance comes, it won’t be a victory for Beijing, nor the Hong Kong government or its people. Only the triads may emerge unbruised
The year 2019 has put Hong Kong into unknown territory, with a collapse of government decision-making, extrajudicial terror attacks on civilians, and radical police-baiters negatively impacting the economy.
No less a figure than Paul Chan Mo-po, the financial secretary, has admitted that it is difficult to be optimistic in the city’s short-term economic growth because of the impact of the protests. Bravo to him for being one of the few top government figures to come out of the bunker in recent weeks.
Economic growth has slid from 4.6 per cent in the first quarter of 2018 to 0.6 per cent this quarter, the worst performance in a decade. Visitor numbers are slowing, property sales volumes are down by half and the retail sector is weak.
It was always wishful thinking for the Basic Law to survive 50 years under a totalitarian sovereign – indeed we should be thankful that we had a good 15 years. A difficult transition period was always likely, as the autocratic People’s Republic found it increasingly unable to keep its hands off the freewheeling Hong Kong lifestyle. The only real surprise is that the first intense moves towards transition have come earlier and more quickly than expected.
Investors should look for a long-term model for the Hong Kong transition to the mainland. One particular model is the five stages of grief, as defined by Elizabeth Kubler Ross. In a sense, losing one’s lifestyle is a form of grief where the path of emotions traverse denial, anger, bargaining, depression, and acceptance.
The relationship with China before the hardline policies of President Xi Jinping was very good, as the self-satisfied chief executive Donald Tsang Yam-kuen was ineffectual but unthreatening. A free, prosperous and, above all, stable Hong Kong is surely in almost everybody’s interests, even if mainland bosses see Hong Kong as undisciplined and spoilt.
Xi Jinping marks ‘red line’ in warning to city on sovereignty
Xi Jinping marks ‘red line’ in warning to city on sovereignty
Any change in this relationship was obviously unnecessary and damaging for both sides, but former chief executive Leung Chun-ying, desperate for Beijing’s approval, took a very aggressive stance, which led to Occupy Central. He ended up generally derided in his own city; lasting just one term as chief executive and being rewarded with a minor position on the mainland.
Occupy Central resulted from a growing fear of Beijing’s interference but there had been a long period of denial. The student demonstrations were exacerbated by a deep frustration at the lack of opportunity for young professionals. More recently, this has led to a naked anger from people, not just students, which is spilling over in the current passionate demands and direct confrontation of Beijing.
The inevitable next step is bargaining – not made easier because the administration of Carrie Lam Cheng Yuet-ngor chose to lock up the moderate pro-democracy Occupy leaders, leaving the movement leaderless and radical. A negotiator is hardly likely to emerge if you are going to lock them up afterwards.
Cue the government’s unique recipe of shooting itself in the foot. Bargaining will frustrate the people of Hong Kong with little positive outcome (except no extradition treaty) and the current administration will remain in charge, albeit not in power.
Armed radicals or leaderless – who are violent extradition-bill protesters?
Armed radicals or leaderless – who are violent extradition-bill protesters?
It is unlikely that any solution will return Hong Kong to the spiritual autonomy of the Basic Law, leaving nigh on 7 million residents seething in a pressure cooker of frustration and dispute. Local people know that their career and lifestyle opportunities will henceforth be highly limited – not just in Hong Kong, but also on the mainland and elsewhere, as former immigrant countries limit that route.
Depression is the most damaging stage and the time when investors head for the door. The shock is likely to cause property to fall by 50 per cent, retail will collapse, trade will decline, unemployment will soar, and those who can emigrate will do so. This should not be a surprise; we saw this in 1987, 2003 and 2007.
The stages are clear, but the timing is not. A more liberal political environment in the future that would preserve Hong Kong’s autonomy is possible – but that seems a distant scenario at present.
Depression could come in 2025 or 2030 – or tomorrow, if the army comes in and declares martial law, with curfews and, of course, military justice. That would be an enormous shock but is also most unlikely, for Beijing obviously recognises that Hong Kong’s economic strength is a national asset.
[The triads] have learned to survive in any leadership environment – and will be just as big a challenge to authority in 2047 as they have been in 1967 or 2019
Acceptance comes when the special administrative region finally accepts its fate as part of the mainland system. We would normally hope that this may occur around 2040. Sadly, city life will not be as good for anyone as it was in 2013. It won’t be a victory for Zhongnanhai, or the Hong Kong government; nor for the people of Hong Kong or the battered police.
Perhaps the only current organisation to emerge unbruised will be the triads. Like the cockroach, they have been highly effective survivors, living in the dark for hundreds of years. They have learned to survive in any leadership environment – and will be just as big a challenge to authority in 2047 as they have been in 1967 or 2019.
Richard Harris is chief executive of Port Shelter Investment and is a veteran investment manager, banker, writer and broadcaster and financial expert witness
This article appeared in the South China Morning Post print edition as: HK’s five stages of grief
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