ANALYSIS: Hong Kong Stock Market Challenged as Bear Market Persists (Part 2 of 2)

A screen shows the closing price of Hong Kong's Hang Seng Index, at the Hong Kong Stock Exchange, on August 18, 2023. Photo by Kwok Wai Li/The Epoch Times

Part one of this series examined the crisis in Hong Kong’s stock market, which has been decimated by an exodus of foreign capital and a pessimistic mood as foreign investment, human freedoms, and human capital leave the once thriving city.

Experts theorize that the current bear market reflects a brutal strategy to bring the former British colony in line with mainland China—one that is content to lose Hong Kong’s people in order to remake the city in the communist mold.

Driven by growing discontent with the current situation in Hong Kong, a steady stream of residents are choosing the path of emigration.

Data sourced from the Hong Kong Census and Statistics Department illuminates the magnitude of this trend. From January 1, 2020, to June 30, 2022, almost 300,000 Hong Kong residents took the momentous step of emigrating.

Results from a survey conducted by the Hong Kong Public Opinion Research Institute in March 2022 unveiled the motivations behind this exodus. Among the respondents, 35 percent highlighted “personal freedom” as a driving force, while a striking 58 percent expressed a lack of confidence in the future political climate.

Adding depth to this narrative is the “Student Number Statistics Report,” a yearly publication by the Hong Kong Education Bureau. Over the span of three years, from September 2019 to September 2022, the region lost nearly 68,000 primary and secondary school students.

Further, the region lost 27,000 students in a single year, between September 2021 and September 2022. By comparison, in the year period between September 2018 and September 2019, Hong Kong lost only 2,429 students.

For Wendy Wang, a Hong Kong resident set to immigrate to Canada with her child at the month’s end, the decision is clear-cut. She told The Epoch Times on Aug. 21: “Thinking about my child having to wear a red scarf and wave a red flag in the future, I have to leave Hong Kong.”

Hu Kangbang, who represents a Hong Kong immigration consulting firm, told BBC that the peak period of the emigration wave, spanning 2019 to 2020, has most likely subsided.

Nevertheless, the present year continues to witness a sustained influx of immigration inquiries, he said, averaging between 450 to 500 per month. Out of these, about 30 to 40 culminate in signed agreements.

Mr. Hu forecasts that the wave of emigration will persist for an additional three to five years. Reflecting on the situation, he remarks, “I also wish that things would get better, that we could tell a positive story about Hong Kong. But the reality is that Hong Kong’s economic data is poor, with around five hundred thousand people net emigrating. Our company’s immigration contract volume hasn’t significantly decreased, the numbers are stable.”

A survey conducted by Hang Seng University’s Gary Tang and Hong Kong Baptist University’s Samson Yuen provided further insights.

Among the survey’s 1,977 respondents in Hong Kong, almost 70 percent were contemplating emigration.

Of this cohort, 44.2 percent were “considering emigration but [had] no date yet,” 11.1 percent had plans for emigration within 5 years, and 14 percent were considering emigration within 2 years. An additional 30.8 percent indicated they had “no plans to emigrate” at all.

Gutting Hong Kong

For many years, the “one country, two systems” framework was the cornerstone to ensure that foreign capital remained in Hong Kong. However, China’s implementation of the Hong Kong national security law in 2020 shattered this foundation. Analysts believe that the Chinese Communist Party (CCP) is not concerned about the exodus of foreign capital and the mass emigration of Hong Kong people. They have already budgeted for this in their plan to forcibly take control of Hong Kong.

Political commentator and Epoch Times contributor Ji Da, who resides in the United States, said on Aug. 22 that the CCP is following a strategy that observers call “keeping Hong Kong but not its people.”

The implementation of the national security law in Hong Kong, the re-writing of schoolbooks, the relaxation of listing restrictions to allow significant Chinese capital inflow, and the disruption of Hong Kong’s investment environment are all part of this plan.

From the CCP’s perspective, Hong Kong’s people are akin to dissidents from various periods in China’s history, such as the Cultural Revolution and the 1989 Tiananmen Square protests. The CCP views them as destabilizing elements. Its strategy employs the twisted rationale of “destroying to rebuild,” Mr. Ji said.

Everything happening in Hong Kong now, and the events still unfolding, can be understood in light of “keeping Hong Kong but not its people,” he added.

According to Mr. Ji, the policy took shape in 2019 and began to be actively implemented in 2020. It has played out starting with the forceful suppression of the “Anti-Extradition Law Amendment Bill movement” in 2019—the largest series of protests in Hong Kong’s history.

It is seen in the national security law, in China’s attempt to “decolonize” Hong Kong, its control of education, pseudo-universal suffrage, and lowered thresholds for mainland Chinese to invest and work in Hong Kong.

All these phenomena manifest the CCP’s scene-by-scene destruction of Hong Kong, he said.

A Blueprint for Destruction

In 2021, veteran Hong Kong media figure and political commentator Cheng Xiang wrote a series of articles entitled “Chronicles of Hong Kong’s Fall.” The Chinese language articles tracked the ways in which the policy has destroyed the island city over the course of two short years.

Mr. Cheng’s articles pointed out that events in Hong Kong have closely followed the blueprint of “keep Hong Kong but not its people.”  He traced the development of the strategy.

In June 2019, millions of Hong Kongers protested against the CCP’s Extradition Law Amendment Bill. The next month, Red Flag—a Chinese communist journal devoted to political theory—published a lengthy article entitled, in part, “A Warning to the Anti-China and Turmoil Forces in Hong Kong.” The article proposed ten suggestions, which were subsequently carried out by the CCP in its efforts to dismantle the rule of law and democracy in Hong Kong.

Among the ten measures proposed by the article, the fifth was the suspension of “one country, two systems,” until a thorough decolonization of Hong Kong had been achieved.

The article was a synthesis of academic reports and proposals on the Hong Kong situation that had been submitted to China’s central government.  Mr. Cheng said that it essentially set the “bottom line thinking” for a policy that was willing to gut the old Hong Kong and abandon its people in order to remake the city in the mainland’s image.

On May 23, 2020, the pro-CCP newspaper Oriental Daily News published a commentary entitled “The Sword of the National Security Law is Now Ready—Keeping Hong Kong but Not Its Rioters.”

“The central government is determined to keep Hong Kong but not its people,” the article admitted frankly of the plan, which, it said, would signal “doomsday” for the opposition camp.

The article suggested that the two million Hong Kongers who do not support the CCP should “take their elderly and children and emigrate.” Having shed its rebellious element, the CCP could then take advantage of the opportunity to reform all aspects of the city’s government.

Fanning the Flames of Chaos

Journalist and Epoch Times contributor Wang Youqun believes that China actively manipulated the 2019 turmoil in Hong Kong.

A former CCP insider, Mr. Wang points to former Chinese vice president Zeng Qinghong, a confidant and “brain trust” of former president Jiang Zemin. Mr. Zeng was behind the scenes in Hong Kong, he said, using the chaos to China’s advantage.

Mr. Zeng is a“Second Generation Red” and a princeling—the terms refer to the children of veteran communist elites, many of whom hold high offices today. He is considered to be the mastermind behind the CCP’s intelligence and espionage system.

In 2003, while serving as China’s vice president, Mr. Zeng also headed the Central Hong Kong and Macau Affairs Leading Group, which coordinates Beijing’s policy toward the two regions.

In this role, Mr. Zeng’s control over the intelligence apparatus made him the most powerful man in Hong Kong.

In 2003, Jiang Zemin and Mr. Zeng attempted to pass the controversial Hong Kong Basic Law Article 23. A massive street protest—numbering over 500,000 participants—forced the government to withdraw the bill. It was widely feared that it would endanger national security and lead to the persecution of Falun Gong adherents.

In March 2019, the Hong Kong government was tasked with proposing amendments to the city’s extradition bill. Around the same time, Hong Kong media published several articles urging Chief Executive Carrie Lam to finally legislate Article 23.

As the year wore on, the city was engulfed in chaos as hundreds of thousands of Hong Kongers took to the streets in protest, meeting with violence from security forces.

Astute observers might have remembered a quote from Mr. Zeng, reported by the now defunct journal Cheng Ming: “The root cause of political chaos in Hong Kong is the ’struggle for power,‘ the establishment of a ’politically independent body' ... the more chaotic it gets, the easier it is to solve, following the established strategy.”

Despite Disaster, Praise for ‘One Country, Two Systems’

According to the Sino-British Joint Declaration, after the transfer of sovereignty from the UK to China on July 1, 1997, under the “one country, two systems” principle, Beijing pledged to maintain Hong Kong’s capitalist system for 50 years.

Until 2047, Hong Kong’s high degree of autonomy and the rights and freedoms of its residents would be safeguarded, according to the declaration, which stated that “the laws currently in force in Hong Kong will remain basically unchanged.”

Nonetheless, in May 2020—less than 25 years after the handover—the national security law was implemented. Hong Kong’s freedoms were replaced by the heavy hand of CCP censorship. Its status as the world’s third-largest financial center was tarnished as the CCP relabeled it as part of the Greater Bay Area economy, centered around China’s tech mega city Shenzhen.

Despite this, voices in China and Hong Kong continue to promote investment by emphasizing the advantages of “one country, two systems.”

Those voices include that of property tycoon Raymond Kwok, who was quoted in the South China Morning Post this week praising long-term development opportunities afforded by “one country, two systems,” even as he announced that profits had plummeted.

Mr. Kwok is the chairman of Hong Kong’s largest developer, Sun Hung Kai Properties, which reported Thursday that its profits were down 17 percent from last year.