In September 1984, when Deng Xiaoping told former British Prime Minster Margaret Thatcher that China planned to govern Hong Kong using the formula “one country, two systems”, she praised the idea as ingenious. The 1984 Sino-British Joint Declaration promised for Hong Kong a high degree of autonomy and separate economic, legal, and social systems. These promises were concretized in Hong Kong’s post-handover constitution, the Basic Law.In the years immediately after Hong Kong returned to China’s control as a “special administrative region,” its civil freedoms and capitalist economy were safeguarded. But almost two decades after the 1997 handover, Deng Xiaoping’s ingenious solution, and especially the provision that Hong Kong’s Chief Executive will eventually be chosen by “universal suffrage”—a goal deferred until 2017—has locked the Chinese government and Hong Kong’s pro-democracy camp in a bitter fight over fundamentally different visions for the territory’s political future. One of these visions emphasizes the primacy of Beijing’s authority, while the other stresses the importance of Hong Kong’s “second system.”On August 31, in fact, it became plain that the rule would be universal suffrage with “Chinese characteristics.” Hong Kong’s voters would be able to choose whoever they like, provided they like one of a short list of party-approved candidates. Under proposals put forward by the National People’s Congress, no more than two or three candidates will be allowed, and these candidates will need the endorsement of at least half the members of a “nominating committee.” This body is to be modeled on the 1,200-strong committee that picked the current Chief Executive, Leung Chun-ying, in 2012. It’s an elaborate construct with a very simple purpose: to ensure “pro-China” votes have a built-in majority. The NPC’s proposal would prevent democrats and others of whom China might disapprove from seeking election as Chief Executive in a free and fair vote by Hong Kong’s citizens.Pro-democracy activists in Hong Kong have launched a campaign of civil disobedience, “Occupy Central with Love and Peace,” whose declared mission is to paralyze the territory’s main financial district with sit-ins. The activists’ aim is just and their courage impressive, but the wisdom of their tactics are debatable—certainly they are a departure from what Hong Kong democrats have always done best: staging the kind of peaceful protests that in 2003 forced the Hong Kong government to shelve plans to introduce an anti-subversion bill and resulted in the resignation of then-Chief Executive, Tung Chee-hwa. These are the kinds of protests that made Hong Kong a model of rational political discourse in a part of the world where it is often sorely lacking.If the unrest gets out of hand and riot police and tear gas are replaced by troops, it would be a calamity for Hong Kong, and especially for the pro-democracy activists’ cause. Besides, there is another form of peaceful protest available: Hong Kong’s legislators can reject China’s proposals, even though that would mean the region would revert to the equally undemocratic system used in 2012. Only a few dozen democrats now sit in the electoral college; they could boycott it. Political embarrassment might not be an effective tool in mainland China, but it remains a powerful weapon in Hong Kong.The August 31 ruling on Beijing’s right to politically screen candidates for Chief Executive has also exposed a significant divide between Hong Kong’s democrats and the European Union, for which economic and trade relations remain paramount. In 2013, the value of trade in goods between the EU and Hong Kong reached 46 billion euros, with the EU enjoying a growing trade surplus. EU foreign direct investment to Hong Kong quadrupled between 2009 and 2012 reaching 15 billion euros, and FDI from Hong Kong to the EU reached an annual average of 5.3 billion euros over the same period.In 1997, the EU pledged its support to the “one country, two systems” formula and to Beijing’s promise to bring democratic elections to Hong Kong. Yet the EU has remained silent since the confrontation between Beijing and the pro-democracy activists began to grow hot this summer. It hasn’t expressed its concern through official diplomatic channels, and it hasn’t put the issue of Hong Kong democracy on its international affairs agenda. Why is the EU acting so timidly, when one of the cornerstones of Western liberal democracy—the ability to choose one’s leaders—is being flagrantly denied to Hong Kong’s citizens?The answer to these questions is a relatively simple one: billions of euros in trade of goods and services with China, and the promise of further access to Chinese markets. Hong Kong is, after all, the key conduit for two-way trade and investment flows between the EU its largest and fastest-growing trading partner: mainland ChinaChina and the EU trade more than a billion euros every day—up from almost nothing two decades ago. As of 2013, bilateral trade in goods reached 428 billion euros, whereas trade in services is still about ten times lower, at 49.9 billion euros; this latter area is ripe for expansion if China opens its market further. The EU argues that in the long run China’s importance as a strategic market will only increase. Every year, 20 million Chinese households pass the $13,500 annual income marker, beyond which middle class families become able to afford key consumer goods and services. This could translate into extraordinary growth opportunities for European businesses, if their existing access to Chinese markets is broadened and improved. To put the rapidly expanding Chinese consumer market into context, the EU to date exports 1.2 times more goods and services to Switzerland than it does to China. Finally, Europe contributes about 20 percent of China’s FDI, which makes the EU one of China’s top five FDI providers, along with Taiwan, Hong Kong, the USA, and Japan.With this much at stake, if the EU has any complaints for Beijing, it’s unlikely to be about political liberties in Hong Kong. Europe is more likely to focus its complaints on uncertainties relating to the rule of law (or lack thereof) and the bureaucratic difficulties that European service companies face in accessing the Chinese market. Or it will focus on China’s obstinate refusal to remove investment and ownership caps in sectors such as banking, construction, and telecommunications. Or perhaps it would focus on intellectual property rights: In 2012, four out of every five European businesses operating in China rated Beijing’s enforcement of intellectual property rights and regulations as inadequate, citing lack of transparency, unfair implementation of existing laws and regulations, and unsatisfactory appeals procedures.While the EU’s silence over Hong Kong’s democratic deficit is conspicuous, what about individual EU member states? Fierce competition among EU countries to gain more access and an ever larger share of the Chinese market are the main reasons EU member states are staying as silent as the EU itself. Economic recession may have strengthened the determination of member states to go their own way in relations with China and weakened their interest in speaking up, even when core EU values like democracy are flagrantly disregarded. This is particularly so for Germany and the United Kingdom.Long before many of its European competitors, Germany understood the business opportunities offered by emerging economies—China most of all. Since the resumption of diplomatic ties in 1982, Germany has favored a pragmatic, “business first” policy toward China that has paid off. From 1995 to 2010, German exports increased sevenfold, whereas its imports of Chinese goods increased by 800 percent. In 2009, China became Germany’s first supplier and is now its third largest trading partner, with bilateral trade volumes exceeding 140 billion euros as of 2012. Today Berlin accounts for more than 25 percent of China’s total trade with Europe and is the most influential European player in China.There are three compelling reasons for Germany’s continuing silence. First, Berlin’s goal is to boost trade flows with non-European countries in an effort to diversify export destinations and hold a strategic presence in one of the most dynamic regions of the globe. Second, China has been deemed fundamental for sustaining German manufacturing primacy. German firms not only saw China as a big global factory; it understood its huge potential as a consumer market. Third, the German government is eyeing up the growing interest of Chinese investors in Europe. Over the past ten years, the number of transactions between Chinese and European companies has more than tripled. And following the Chinese Ministry of Trade’s statement that Germany is the European country with the best investment opportunities, investments are piling up.The UK’s silence on Hong Kong, however, is truly perplexing. The 1984 Joint Declaration under which Hong Kong passed from British to Chinese rule guaranteed Hong Kong’s way of life for 50 years after 1997; successive British governments have accepted that the UK has a continuing “moral and political obligation” to ensure that China respects its commitments. The British government’s lack of comment on the political developments in Hong Kong, and specifically its failure to note that the development of democratic structures is key to Hong Kong’s stability, prosperity, and autonomy, looks like an abandonment of the UK’s obligations.The British government, too, fears the commercial implications of upsetting Beijing. Over the past three years, Prime Minister David Cameron has made strengthening economic ties with China one of the priorities of the government’s international agenda; he frequently emphasizes that the UK sees China’s rise as an opportunity, not a threat. However, for the UK to make the case for Europe to open itself to more trade, China must also further open its markets.In the face of such strong economic and commercial interests, obligations to defend democracy look like little more than a nuisance.But why should the EU and European countries care about Hong Kong’s fate? Two reasons: First, accountability. It is critically important that Beijing be held accountable for violating its promises—even more so because Britain never consulted Hong Kong’s citizens before handing it over to China’s rule. The second reason is that a Hong Kong that practices democracy and governs itself efficiently would be a powerful model in the region. Hong Kong’s success could even pave the way for political reform on mainland China. If Beijing prevents Hong Kong from even trying to be a democratic city, China’s transformation into an accountable and democratic power will be seriously jeopardized.
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In 1997, the EU pledged its support to the “one country, two systems” formula and to Beijing’s promise to bring democratic elections to Hong Kong. Yet the EU has remained silent since the confrontation between Beijing and the pro-democracy activists began to grow hot this summer.