Hong Kong's new 'Basic Law' is that whatever China says, goes

Ben Bland is a Research Fellow at the Lowy Institute in Sydney. He is the author of "Generation HK: Seeking Identity in China's Shadow."

On July 1 last year, pro-democracy protesters broke into Hong Kong's Legislative Council and symbolically defiled the chamber, tearing up a copy of the Chinese territory's vaunted Basic Law. It was more than an expression of anger and defiance. They were sending a message that the promise of democracy, autonomy and freedom contained in Hong Kong's mini-constitution, as the Basic Law is often called, was empty.

Nearly a year later, lawyers and government officials are still debating the finer points of the Basic Law after the latest roundup of democracy activists and a spate of threats from Beijing about the need for more central government supervision in Hong Kong.

However, the legal dispute overlooks the much more important political dynamics. The future of this global financial center will not be determined by splitting hairs over the wording of the city's mini-constitution. It will be determined by how far the Chinese Communist Party is willing and able to exert its growing power. The real Basic Law will become: what Beijing says, goes.

Fitch Ratings, the credit rating agency, acknowledged this in April when it downgraded Hong Kong on the basis of its accelerating integration into China's political and economic system, as well as the city's "deep-rooted sociopolitical cleavages."

The CCP has always seen the One Country, Two Systems arrangement, underpinned by the Basic Law, as an uneasy compromise necessary to smooth the handover from British rule in 1997 and prepare the city for eventual integration into mainland China. Despite the hopes of the democracy movement, and the wording of the Basic Law itself, One Country, Two Systems was never intended as a long-term basis for political freedoms and real autonomy for Hong Kong.

Under Xi Jinping's watch, the CCP has intensified its squeeze on Hong Kong, prompting a spiraling counter-reaction that has united the democracy movement despite the violence of last year's rolling protests.

The crackdown has progressed in part through "lawfare," with the Hong Kong government using vague colonial laws and administrative measures to prosecute peaceful protesters and block activists from running for elections. It has been predicated on impunity for illegal actions in pro-mainland causes, from the abductions of booksellers and a businessman by Beijing's agents to well-documented abuses by police suppressing the street demonstrations of the last year.

The clampdown was reinforced by the appointment in January of a hard-line CCP enforcer to head Beijing's office in Hong Kong. In just a few months, Luo Huining has shown a sharper edge than his predecessors, who acted more as messengers and ambassadors for the Party. He has warned Hong Kong to urgently implement a long-delayed national security law to destroy the "anthill" of activists and thwart the CCP's perennial boogeyman of foreign interference.

Faced with this uncompromising situation, Hong Kong's judges, in whom so many outsiders place their trust, cannot possibly hope to maintain the city's freedoms and autonomy. The rule of law requires political leaders and bureaucrats who seek to uphold it, not just independent judges.

Democracy activists argue that the eradication of Hong Kong's autonomy and rights will be disastrous for international business. But that is not necessarily the case, sadly. Investors do not like change, but they can live well enough with authoritarian governments.

The challenge for Beijing is to "flatten the curve" of the reintegration of Hong Kong so investors are not overwhelmed by the pace of change. That will not be easy. Multinational executives were shaken last year when Beijing pressured Swire Pacific, the British-controlled conglomerate, to defenestrate the chairman and the chief executive of subsidiary Cathay Pacific Airways because it was unhappy with the pro-democracy views of some Cathay employees.

Beijing's firmer hand will be particularly bad news for the media industry, and those in the technology and financial services industries who rely on the media's flow of information. The unprecedented expulsion of a Financial Times editor in late 2018 was a sign of things to come.

When Beijing kicked out a group of U.S. journalists in March, it also banned them from working in Hong Kong, which has historically been the perch for reporters ousted from the mainland. The city's role as a rare beacon of press freedom in Asia is fading fast.

As Beijing becomes more brazen about its exertion of power over Hong Kong, it will become more difficult for Western governments to fall back on their standard line that One Country, Two Systems is mostly working well, apart from some blips. Activists and China hawks will push them to justify why they are still treating Hong Kong as a separate customs territory.

In the U.S., pressure is already growing to implement sanctions against the Hong Kong government using last year's Hong Kong Human Rights and Democracy Act. Derecognising Hong Kong's special status would be the nuclear option because it will likely leave Hong Kong even more at Beijing's mercy. But at some point, if Beijing keeps telling Hong Kongers that it is calling the shots, the rest of the world will have to confront that fact.