Economic Concessions in Reaction to the Movement in Hong Kong?

by Ralf Ruckus

[deutsch | english | português] – The Hong Kong government is so far mainly using repressive measures against the mass movement, but, recently, state media in China have started pushing for a change in the city’s housing policy – possibly a first sign for economic concessions in reaction to the pressure ‘from below.’

The Hong Kong economy, already hit by the trade war between China and the U.S., feels the effects of the protest movement.[1] In recent months, real estate prices have gone down,[2] retail sales fell as well as the number of tourists (leading to lower numbers of travelers at the airport,[3] falling hotel occupancy rates and prices, and more),[4] the transshipment volume of goods from China has declined,[5] the stock market has performed badly, and the rating agency Moody’s has downgraded Hong Kong citing “the rising risk that the ongoing protests reveal an erosion in the strength of Hong Kong’s institutions […] and undermine Hong Kong’s credit fundamentals by damaging its attractiveness as a trade and financial hub.”[6] Subway stations of the MTR have been closed down several times, in early October even all lines, disrupting the commute of many employees, and several shopping malls and many shops had to be closed during or after clashes.

All in all, the rebellious movement in Hong Kong hampers the development of the economy, and it also puts in question the city’s status as a financial hub for China’s capital imports and exports. The CCP regime still has an interest in keeping that status while avoiding any political reforms or granting any ‘autonomy’ to the city. So how does it want to get a hold of the confrontation in Hong Kong?

Actually, there are some similarities with social struggles in mainland China. First of all, there is an absence of formal leaders, representatives, or organizations the regime could talk to in order to ‘make a deal.’ In mainland China, any formal leadership or organization that is not in the hands of the CCP is repressed. The regime can just use forms of repression and concession and hope they work to calm down social discontent. In Hong Kong, the movement decided to have no formal leaders or organization for fear of repression (as during and after the 2014 Umbrella Movement).

This is a dilemma now for the Hong Kong government and the CCP regime, because without negotiations with a legitimated body of protester leaders or organizations and an agreement of some kind,[7] the are just left with two one-sided measures: repression and/or economic concession(s).

Repression has been the main measure used in Hong Kong – as well as in China – so far, except for the conceded withdrawal of the extradition bill (a minor concession if we consider what is at stake by now).

Economic concessions and a possible material improvement of living conditions is what the CCP regime has offered in reaction to social struggles like strikes in mainland China. While strike organizers and groups supporting workers’ struggles are tightly controlled, get arrested, and get punished when seen as a threat, the CCP regime has permitted and even orchestrated certain wage increases and other improvements, for instance, for the hundreds of millions of migrant workers – at least, until a few years ago when the economic slowdown limited the regime’s willingness and ability to make substantial economic concessions.

Regarding Hong Kong, Chinese state media has, in fact, recently started to criticize the role of Hong Kong’s wealthy real estate tycoons,[8] and the Hong Kong government actually discussed a change in its housing policies.[9][10]

Rents – and the huge gap between incomes and housing costs in the city – are one of the reasons why many people in Hong Kong are dissatisfied with their situation and the political system. An attack on the tycoons and their family businesses which control large parts of the Hong Kong economy would be a big change as the tycoons have so far collaborated with pro-Beijing political forces in the city and the CCP leadership itself.[11]

It is important to note that the movement in Hong Kong produces considerable pressure ‘from below’ that might lead to economic concessions. However, even if the CCP regime does take decisive steps and forces the Hong Kong government to introduce more social housing policies in Hong Kong, it would probably take years to deliver any improvements for the people in the city.

Whether such concessions would lead to political submission (as intended by the CCP regime) is doubtful anyhow.[12]