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INDIA’S WORLD : Nov 25, 2019


• Investors are closely watching the progression of Hong Kong Human Rights and Democracy Act in Washington for fear that it will further sharpen the risk of making investments in the city.

• For the moment the city remains the primary offshore hub for those wanting to do business in mainland China despite over 5 months of disruptions caused by anti- government protests with the main damage thus far to sentiment rather than material loss of earning.

• But equally unanimous is the feeling that it with the pace of escalation in Hong Kong’s situation in recent months, this could change very quickly, with the bill that could pave the way of diplomatic action and economic sanctions against city’s government adding to the pressure.

• For many, the act, which was passed by the US Senate is just the latest in a long line of issues to have damaged the city’s risk profile over the past 6 months, adding to a complex and uncertain picture, almost a parallel reality to Hong Kong’s erstwhile image as a stable, secure trade and financial hub.

• There are two aspects :-

-One, is the political aspect which is that China had given an undertaking that it will maintain One Country, Two Systems policy which seems to be now questioned. The large section of the Hong Kong’s population has challenged the legitimacy of Chinese Communist Party and its rule in Hong Kong.

- Second, is economic aspect, the importance of Hong Kong to China has dwindled steadily over the past few years, today it’s about 7-8% of its value that contributes to China.

• The troubles which are now entering the 6th month have also meant to several other things:-

- One, the people who are providing services and labour in Hong Kong have been badly hit. They are actually living on subsidies.

- Second, is a lot of Hong Kong businessman are moving their assets out of Hong Kong, currently on temporary measure but they are also preparing for long term shift.

- Third, the manner in which the troubles are going on and the inability of Hong Kong special Administrative Region Authorities to really crackdown on it for 6 months indicates that sentiments against Anti-China sensor sentiments are deeper than what can be presumed.

•Whatever is happening as far as China is concerned India has to be watchful.

• There is sense of pressure on China itself, China will start moving in.

This is for the first time that all the 452 seats are being contested otherwise earlier many of the seats used to be walk over uncontested for Pro-Beijing, Pro-China parties.

• More than half a million people have come onto streets to protest and this has really grown much longer than any of the protest earlier whether in 2003 or 2014.

• As far as India is concerned, approach has been wait and watch how it develops.

• Continuation of protests in Hong Kong are being cited as the fundamental challenge to the leadership of president XI Jinping, so that kind of insinuation is being built internally.

• In 1978, US Congress had also approved Taiwan Relations Act, that hardly helped Taiwan other than tactical use of legislation.

• All 18 district councils are controlled by Pro-Beijing parties and even one of them shifting to Pro-Democracy, could be seen as success of protestors and that impact of pro democracy movement.

• Hong Kong itself is suffering a great deal and domestic people there would also to be disillusioned with fact that nothing is coming out of it.

• China which is celebrated for unprecedented growth rate now has Hong Kong in recession so will the people be disenchanted.

• Basic law article 68 clearly says that ultimately all elected bodies will move to Universal Suffrage-One person, One vote.

• There was no democracy in Hong Kong until it was being shifted to China. Britain never had any democracy in Hong Kong, it’s only 1984 when they set the date of July 1997 for shifting of sovereignty of Hong Kong.

• 1995 was first Legislative Council which was actually elected directly.

• Height of the protests there were over one and half million people came out on streets and at the lowest point there were about 3,00,000 in terms of public protests the students are sustained there in the Hong Kong Polytechnic and other places.

• The protesters have continued for six months and there was no action by Beijing till October that is pertinent, these are indications or hence that this led to weakening of Xi Jinping’s own position because there was lack of consensus in the Politburo on how to deal with Hong Kong.

3 • In 2015, China had offered One Man, One Vote but then they had wanted to retain the right to be able to screen, all the candidates for the chief and the Hong Kong protestors even at that time had decided not to accept that offer.

• China is very conscious of how major powers are responding to situation in Hong Kong.

• Fundamental dichotomy is the fact that China is One Party System and Hong Kong right now has more than two dozen political parties which are active.

• When push comes to shove China will use heavy hand differently from what they did in chairman square way back in 1988.

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