Hong Kong Protests Could Make Beijing Choose Between Prosperity, Control
MELISSA BLOCK, HOST:
Hong Kong's economy is one of the most vibrant in the world. Over the past 17 years, Beijing has allowed the city a certain level of economic independence. And Hong Kong has grown richer. Today, it has one of the highest per-capita incomes in the world. But the recent unrest could force the Chinese government to choose between prosperity and control. NPR's Jim Zarroli explains.
JIM ZARROLI, BYLINE: When China assumed control of Hong Kong in 1997, there was widespread fear that life would change in the former British colony. But in most ways, Hong Kong has remained the same kind of crowded, cosmopolitan and very entrepreneurial city it's always been. Fred Teng heads the Hong Kong Association of New York.
FRED TENG: It's a small city with a lot of people. You have to be very fast, very adapting, you know, just to survive. If they didn't, they would not be where they are today.
ZARROLI: Hong Kong became important in part because of its big natural port which made it a center of trade, and it still is today. Forty percent of all the goods exported from China go through Hong Kong. And the growth of China has cemented Hong Kong's position as a big, rich, financial capital in a league with New York and London. When a Chinese manufacturing company needs a letter of credit to export products to the United States, it usually turns to a Hong Kong bank to get it. And when a U.S. company needs Chinese currency to invest in Shanghai it goes through Hong Kong. Gareth Leather of Capital Economics says for a lot of reasons, Westerners feel comfortable doing business in Hong Kong, an English-speaking city that was long under British rule.
GARETH LEATHER: It's kind of rule of law. It's transparent legal systems, free press and so on. They're all the kind of software, if you like, that you need for a successful financial sector which, you know, Shanghai just can't offer at the moment.
ZARROLI: And Leather says China uses Hong Kong as a test laboratory for new economic ideas. This month, he says a new program called Hong Kong-China Connect will get underway. That uses Hong Kong stock exchange to funnel foreign investment dollars into the Shanghai market. Sung Won Sohn, professor of economics at California State University Channel Islands, says Beijing officials well understand the significance of Hong Kong.
SUNG WON SOHN: Hong Kong is an extremely important gateway for China. And if anything happens to Hong Kong, that will affect the economy of China. And I think the Beijing government is very well-aware of that.
ZARROLI: So far, the financial sector seems to be shrugging off the street protests. The stock market is down around 5 percent. But Sohn says if things escalate, Beijing is bound to step in to assert control.
SOHN: If the government feels that security has to be sacrificed, compromised because of economics, then there's no choice. They will always go for security.
ZARROLI: And that's a problem, he says, because if conditions get too turbulent, a lot of Western investors could pull up stakes and go elsewhere. And there are other big Asian cities, such as Tokyo and Singapore, that are ready to compete for Hong Kong's financial business. Chinese officials know this, and they're willing to tolerate a certain amount of unrest. But in the long run, China's tolerance will only go so far. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.