The history of the Hong Kong protests has distant roots. The present, however, seems increasingly dark. The Hong Kong Polytechnic has become a symbol of a crisis that has now exploded into political, economic and generational revolt. Hundreds of pro-democracy protesters have been barricaded inside the university surrounded by police for three days. Food and medicines are scarce and the conditions of the occupants are increasingly precarious also due to the violence of recent days. There is a guerrilla war between police and students made up of charges, tear gas and rubber bullets on one side, and stones, bricks, arrows and paper bombs on the other.
Governor Carrie Lam said she was "very concerned about the dangerous situation" of the Polytechnic, specifying however that she wanted to focus on "a peaceful solution" to overcome the stalemate. Lam said about 600 people have already left the campus, including 200 minors. The police have announced that the demonstrators will be arrested immediately once they leave the Polytechnic on charges of rioting. They risk 10 years in prison.
HONG KONG: HOW THE CRISIS BEGAN
For months, Hong Kong has been prey to a crisis that threatens to bring to its knees what until a few months ago was considered the home of business, the most unbridled luxury and innovation. The spark for the protest was ignited by an amendment, presented in early June, to the law on extradition. If the local parliament approved the proposal, citizens accused of some serious crimes, such as rape and murder, could have been tried in mainland China, which is currently not possible. Indeed, Hong Kong has extradition laws in force based on bilateral agreements with twenty countries, which however do not include mainland China, Macao or Taiwan.
The amendment was inspired by a real crime: in February 2018, a 19-year-old Hong Kong boy was accused of killing his girlfriend in Taiwan. The island's government had requested his extradition, but had had to surrender under Hong Kong law. Hence the proposal to amend the law. However, according to human rights movements, the amendment was not an end in itself, but represented a real interference by China on the Hong Kong legal system. A law that would have been exploited by Beijing to silence its opponents, inventing false accusations in order to extradite citizens who are "unwelcome" for their political ideas.
On June 12, the first clashes between police and protesters took place, attracting the attention of the world media. Three days later, the governor of Hong Kong, Carrie Lam, announced the suspension of the amendment, which however was formally withdrawn only on 24 October.
WHAT IS HONG KONG
To understand what is really happening in Hong Kong, you need to know its history. Until 1997 Hong Kong was a British colony, with a Western economy, a legal and legislative system based on the English model. In 1984 China and the United Kingdom signed a joint declaration which stipulated that on 1 July 97 Hong Kong would be returned to China, which in 1898 had ceded its territories to the British for 99 years. The agreement also provided that for 50 years, and therefore until 2047, Hong Kong would have to maintain its autonomy by becoming a Chinese special administrative region. China had pledged to respect this autonomy, even if it has been trying to expand its influence on the territory for years. The most striking example of this behavior dates back to 2014 when Beijing proposed to reform Hong Kong's electoral system by giving the Standing Committee of the National People's Congress the task of pre-selecting 3 candidates for the role of Chief Executive. Not only that, Once elected by the population through elections, the winner should have been formally nominated by the central government before officially taking office. The proposal triggered the so-called "Umbrella Revolution" and after months of protests the local Parliament decided to reject it.
HONG KONG: WHAT'S GOING ON?
From June to today the protests have continued, becoming a real revolt. The demonstrators are demanding greater freedom and autonomy from China, but they are also protesting against the Hong Kong government, which according to them is increasingly subject to the influence of the Chinese regime, to the detriment of the provisions of the '97 agreements. Not only that, among the activists there are also those who have upped the ante, calling for a referendum for Hong Kong's independence.
The protests, in some cases (which however are becoming more and more frequent) have been repressed with violence causing hundreds of injuries and 2 deaths. However, the repressive attitude of the police and government has resulted in an increasingly conspicuous adhesion to the cause of the demonstrators and a growing distrust in the local government (currently, according to polls, trust in Lam is around 20%).
On Saturday 16 November, the Chinese president, Xi Jinping, intervened for the first time on the issue, stating that the protests represent "radical and violent crimes" that "gravely trample the law and social order" and added that "stop the violence and restoring order is the most urgent thing to do at the moment”. Shortly after his speech, the Chinese army intervened in Hong Kong by sweeping the streets full of bricks left by protesters in the previous days. Socially useful jobs according to China, not too veiled a threat to the protesters.
Also worrying is what could happen in the next few days in the wake of the November 24 elections in Hong Kong to elect new representatives of the district councils.
THE ECONOMIC REPERCUSSIONS
The repercussions of a five-month long chaos are also manifesting themselves on the economy. After two consecutive quarters in which Hong Kong's GDP fell, the recession officially kicked off in the third quarter, for the first time in the last 10 years. In the months July-August-September, the Gross Domestic Product fell by 3,2% on the previous quarter and by 2,9% year on year, after -0,5% in the period between April and June. The government was therefore forced to revise the estimates downwards. According to the new forecasts, GDP in 2019 should contract by 1,3%. All main data are negative. Tourism suffers in particular, dropping by 40% in August. Private consumption, fixed investments and exports of goods and services in the quarter literally collapsed respectively by -3,5%, -16,3%, -7,0% and -13,7%. In the last six months, the Hong Kong Stock Exchange, the fourth largest financial center in the world after the Nyse, the Nasdaq and the Tokyo Stock Exchange, has lost 4,79% against the rise of the main international stock indexes.
The crisis in Hong Kong has also had strong repercussions on global markets, luxury in the first place. Self Alibaba is preparing for the maxi quotation, the big brands continue to suffer from the ongoing chaos in an area that has always been among the top five global luxury destinations. According to Bernstein, between 5% and 10% of global sales of luxury goods, estimated at $285 billion a year, are made in the city, and the vertical drop in sales (-47,8% in August) will impact heavily on the 2019 financial statements, as is already amply revealed by the data published by the main companies for the third quarter.
Anthony Chan, Chief Asia Investment Strategist of Union Bancaire Privée (UBP), said: “Hong Kong's third quarter 2019 GDP data confirms the economic shock caused by the protracted domestic protests and the lingering uncertainty related to the Trade War. The impact is expected to be greater than during the 2003 SARS epidemic or following the Tiananmen Square events in China in 1989. In our view, in the absence of a short-term solution, the combined effect of these two factors are likely to be as serious as that of the global financial crisis of 2008-2009 or the Asian crisis of 1997-1998”. The prospects are not encouraging.
