Two countries, one system

China struggles with its own regional 'special status' issue

Escalating tensions between Hong Kong’s pro-democracy protestors and the Chinese authorities have transcended the specific issue of extraditing criminals to the mainland, which was the proximate casus belli for the unrest that began 10 weeks ago. As Beijing sends paramilitary forces from nearby Shenzhen to augment the territory’s garrison troops and cuts international airline links with the island territory, at stake is the nature of the relations between China, and its unique version of authoritarian capitalism, and the semi-democratic capitalism of the former British colony. Signals from the Chinese leadership augur a savage crackdown. This is the biggest internal threat to Xi Jinping’s authority since his assumption of the mantle of President for Life in 2018. Inevitably, comparisons are drawn with the students’ revolt in Tiananmen Square in 1989, where hopes of democratic concessions were met with a brutal crackdown by the People’s Liberation Army on the unarmed people of China.

But there are critical differences between that pro-democracy movement, which erupted about a decade after the start of China’s extraordinary economic transition, and the one in Hong Kong, now that China is attaining superpower status. The impulse for the ’89 democracy movement came from students rather than the rapidly expanding cohorts of workers and peasants who were beginning to enjoy the fruits of Deng Xiaoping’s economic reforms and were unlikely, if not uninclined, to challenge Communist Party power in any meaningful way. Protestors converged in the vast square in the symbolic heart of Beijing — outside the iconic Forbidden City, overlooked by a giant-sized portrait of Mao Zedong — and exposed China to global cynosure. At a time when “capitalism with Chinese characteristics” was still to gain credence, a crackdown, however condemnable by world opinion, was inevitable.

On the other hand, when the British exited Hong Kong, an island linked to the continent through reclaimed land, in 1997, the city was guaranteed a basic constitution that granted it limited democracy, which was to stay till 2047. Hong Kong’s citizens could vote for its administrators — albeit from a slate of candidates approved by Beijing (the current embattled CEO is one of them). “One country, two systems” is the euphemism for it. China’s dictatorship tolerated this exceptionalism principally because of Hong Kong’s status as a global financial hub and tax haven. This not only enables millions of non-resident Chinese to invest their dollars in mainland ventures but also facilitates all manner of offshore financial transactions for the Chinese leadership. Most global corporations also route their investments through this.

It has largely been the financial underwriter to China’s economic miracle. The mandarins of the Communist Party of China, therefore, have a vested interest in maintaining Hong Kong’s quasi-democracy. Diminishing Hong Kong’s financial clout just as China is suffering the impact of its trade war with the US would not be in the country’s broader interests. This is the unstated dilemma that the Chinese leadership faces even as it ups the threat levels on the territories’ unarmed protestors. For India, the Chinese leadership’s preoccupation with Hong Kong offers a welcome distraction from a more robust response to the changing constitutional and territorial status of Jammu & Kashmir. But the disruptions in the former British colony also offer the Indian leadership a cautionary story of the consequences of ignoring local sentiments when altering governance architectures.