Friday, 10 October 2014

Hong Kong talks cancelled as protests dwindle

The Hong Kong government called off promised talks with student groups this morning in a worrying sign that the pro-democracy protests could re-intensify.

The talks were organised to resolve Hong Kong’s political standoff but were in chaos Friday morning NZT as both the government and student protest groups traded confrontational rhetoric in multiple news conferences.

Protests in the city-state had been winding down after almost two weeks of widespread but largely peaceful unrest. The talks hoped to clear the streets of protesters and return the city to normal function.

Despite dwindling crowds over the bulk of this week, particular streets of Hong Kong key areas of the city remain barricaded. The students are now under pressure to justify those barricades as the anticipated talks have been cancelled.

Hong Kong’s No. 2 official, Carrie Lam, issued the cancellation of talks saying the students were “shifting their demands”. The protesters, she said, began by demanding the public nomination of political candidates for the upcoming chief executive elections in 2017.

However, Ms Lam says the students are now calling for the Chinese government to rescind its decision to intervene in Hong Kong’s elections entirely. To restart the talks, Ms Lam says students will have to accept the decision by Beijing to select candidates for the leadership position.

Student representatives fired back at the official’s statements saying their demands are reasonable and that the government intentionally terminated the talks. They gave no indication they are ready to agree to Beijing’s demands.

The cancellation of the talks indicate Beijing still has confidence in the current chief executive Leung Chun-ying. But this confidence may change if the demonstrations fail to end comprehensively soon.

Beijing would rather not intervene unilaterally, preferring to leave fixing the situation up the Hong Kong government, but it has serious options to quell the protests should it need to.

Protest groups are now calling for a new wave of civil disobedience on Friday night. However, the momentum appears to be slowing significantly with fewer protesters in the streets on Thursday.

At their peak, the protests reached an estimated 190,000 participants. The movement displayed a high degree of self-discipline despite the Chinese government decision to use force on multiple occasions.

If the protests are to continue, they will need more support from a quickly demotivating and disinterested wider Hong Kong public. If they do intensify, Beijing could be forced to provide a limited political concession.

However, Beijing has made it clear that it will not back down from being the arbiter of the nomination of the next chief executive in 2017.

Yet the underlying democratic currents stirred over the past week are sure to reappear in the future. What worries Beijing is that the feeling could spread.

Some of the protest groups voice concern that continued blockages of the famously efficient city will bring more harm to their cause than necessary.

Agnes Chow, a spokesperson for the high-school student-led protest group Scholarism, says the group is considering pulling out of thinly occupied streets and consolidating pressure near government buildings now that the talks have collapsed.

“We are also aware that we can’t block roads or streets that make a majority of citizens there unhappy,” she said.

Their apprehension is not misplaced. The damage to the city is not physical, but economic. Merchants are now taking stock of the business they lost during last week’s protests.

Sales at some major retailers fell by up to 50%, according to Bloomberg. Smaller companies fared much worse with sales tumbling by closer to 80%. A loss of revenue between 40-60% could also hit major hotel and restaurants located near key protest sites in the city centre.

During the heaviest days of protest, 17 banks were forced to temporarily close their doors in 29 branches and offices.

A Hong Kong academic at the University of Science and Technology says the protests could cost the city-state around $HK350 billion ($57.4 billion), or about one-sixth of Hong Kong’s GDP.

Now as protesters appear to return to their normal lives in the expensive Chinese city-state, the demonstrations will lose more support from business leaders.

The protest’s negative impact on business in Hong Kong will unfortunately only exacerbate the decreasing importance of the city-state compared to other faster-growing and more Beijing-friendly cities in mainland China.

This reflects China’s transformation into less of an export oriented economy and into a consumer economy. That gradual evolution has created multiple alternate options for Beijing which Hong Kong used to occupy.

Shanghai, Shenzhen and Guangzhou are three cities just as commercially large as Hong Kong and growing in importance for Beijing.

Ultimately, the two Chinese systems in Hong Kong and Beijing will continue to rely on each other over the short term. Both sides need to weather the protests if they continue because neither has a better option presently.

Beijing needs Hong Kong to prove that a one country, two systems approach can work - especially when it has its eye firmly set on potentially reuniting with Taiwan. On the other side, Hong Kong still relies heavily on the mainland for development and investment.

But in the long run, the question of greater autonomy for the city-state will not disappear and Beijing will need to decide what political concessions it is happy to make without setting too much of a precedent that demonstrations will result in democracy.

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