January 31, 2016
By Craig Stephen
Delicate challenge for authorities: Crack down hard? Or let independence party wither?
HONG KONG (MarketWatch) ¡X Discontent about stalled political reform in Hong Kong has taken a fresh twist with the launch of a new political party seeking independence for a Republic of Hong Kong.
While those calling for independence are a small group led by Occupy activist Chan Ho-tin, the dramatic reaction by authorities to ban the so-called Hong Kong National Party suggests an extreme sensitivity.
Dealing with a nascent independence movement poses a delicate challenge for the Hong Kong government. The message from the new party that independence is the only way for Hong Kong people to break away from China¡¦s oppression is highly inflammatory.
Of course, it could also be highly costly, given the degree to which Hong Kong¡¦s economy relies on China across tourism, financial markets and trade.
But the government must walk a fine line between placating Beijing and keeping a lid on a pro-independence ideology, amid a deeply politically divided population. If it is too heavy-handed in its crackdown, it risks acting as lightening rod to recruit more to the cause.
Investors with memories of the months¡¦ long Occupy Central showdown in 2014 will need to watch carefully, in case we are heading for a rerun or an escalation of political unrest.
The tactics so far appear to have followed the script of the protests two years ago when large swathes of Central Hong Kong were occupied.
Much like then, various politicians and tycoons, such as octogenarian billionaire Lee Shau-kee of Henderson Land and Li Ka-shing of Hutchison Whampoa, have come out to publicly express their disapproval.
Not surprisingly the move this week to announce the new party has been blasted by mainland Chinese media and the officialdom. The Hong Kong and Macau Affairs office said the establishment of the new political party ¡§was firmly opposed by all Chinese nationals, including some seven million Hong Kong people. It is also a serious violation of the country¡¦s constitution, Hong Kong¡¦s Basic Law and the relevant existing laws.¡¨
Meanwhile, the Hong Kong Office of Administration and Civic Affairs has said the party is illegal, with calls for independence a violation of Hong Kong¡¦s Basic Law. This is the law Hong Kong operates under which was to last until 2047, when the Sino-British joint declaration expires.
The Hong Kong National Party has said it repudiates the city¡¦s mini-constitution and promises to use any methods, including violence, to achieve its goal. So far the new Independence party has been prohibited from registering as a political party.
While currently there are few indications of any significant support for independence, there is widespread frustration at the lack of political reform and wealth inequality.
Hong Kong¡¦s leaders will likely be under strong pressure from Beijing to keep a lid on the independence movement as it deals with its own share of political protests. The obvious worry is a movement that is seen as opposing the ruling Communist Party could provoke copycat actions back home.
Last week an anonymous letter calling for Premier Xi Jinping to resign reportedly led to 10 people going missing.
The danger with coming down too hard on the new party, however, is how it plays out with the rest of the population and internationally. Signs of a clampdown on free speech or young members of the population could backfire.
This comes at a time when there is already heightened sensitivity about Beijing¡¦s intervention in Hong Kong affairs. Most recently, the alleged abduction of local booksellers by mainland authorities and their subsequent scripted apologies has been widely viewed as an assault on Hong Kong¡¦s sovereignty.
The tightening political linkages between Hong Kong and China was also cited by rating agency Moody¡¦s as one of the reasons for downgrading Hong Kong¡¦s credit outlook to negative. The underlying rationale being Hong Kong is increasingly perceived as another Chinese city.
Another strategy for authorities would be to back off and ignore the independence party and hope it will wither away as a fringe entity.
Indeed, this might have seemed the most sensible option. But the extreme sensitivity of the Chinese government to criticism likely makes this intolerable.
The other gamble with a softly-softly approach, is that the independence message might actually attract a wider audience seeking to protest in Hong Kong. The party has promised to field candidates in legislative elections later this year.
Experience elsewhere around the world from Donald Trump in the U.S. to the Independence party in the U.K., have shown how non-mainstream parties tapping into grassroots dissatisfaction can do much better than expected.
Ultimately the current situation is a hangover from the unmet political aspirations. Now it is not possible to effectively change the leader of Hong Kong by a vote, people instead want to change the system.