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Chris Patten said Chinese President Xi Jinping is so nervous about the position of the Communist Party that he is risking a new Cold War and imperiling Hong Kong’s position as Asia’s preeminent financial hub. Lord Patten said Xi’s “thuggish” crackdown in Hong Kong could trigger an outflow of capital and people from the city which funnels the bulk of foreign direct investment into mainland China.

“What does it mean? It means serious question marks not just about Hong Kong’s future as a free society but also about Hong Kong’s ability to continue as probably the premier international financial hub in Asia,” Lord Patten said in an interview.

“A lot of people will try to leave Hong Kong,” Lord Patten said, adding he feared capital would also flow out of the territory which Britain handed back to China in 1997.

The West, he said, should stop being naive about Xi.

“We have long since passed the stage where, without wanting another Cold War, we have to react to the fact Xi seems to want one himself, seems to want to be able to bully his way to whatever he thinks China wants,” Patten said.

Patten, now 76, watched as the British flag was lowered over Hong Kong when the colony was handed back to China in 1997 after more than 150 years of British rule – imposed after Britain defeated China in the First Opium War.

Hong Kong’s autonomy was guaranteed under the “one country, two systems” agreement enshrined in the 1984 Sino-British Joint Declaration signed by then Chinese Premier Zhao Ziyang and British Prime Minister Margaret Thatcher.

In some of his toughest rhetoric yet, this week US President Donald Trump said Beijing had broken its word over Hong Kong’s high degree of autonomy by proposing new national security legislation and the territory no longer warranted US economic privileges.

“We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China,” Mr Trump said, adding that Washington would also impose sanctions on individuals seen as responsible for “smothering – absolutely smothering – Hong Kong’s freedom.”

Mr Trump told reporters at the White House that China’s move on Hong Kong was a tragedy for the world, but he gave no timetable for the moves, leaving Hong Kong residents, businesses and officials to ponder just how far his administration will go.

The American Chamber of Commerce in Hong Kong said Saturday marked “a sad day” for China’s freest city.

“This is an emotional moment for Americans in Hong Kong and it will take companies and families a while to digest the ramifications,” AmCham President Tara Joseph said in a statement.

“Many of us … have deep ties to this city and with Hong Kong people. We love Hong Kong and it’s a sad day,” she said, adding the chamber would continue to work with its members to maintain Hong Kong’s status as a vital business centre.

China’s parliament this week approved a decision to create laws for Hong Kong to curb sedition, secession, terrorism and foreign interference. 

Mainland security and intelligence agents may be stationed in the city for the first time, with critics saying these moves put the city’s extensive freedoms at risk.

Authorities in Beijing and Hong Kong insist the legislation will target only a small number of “troublemakers” who threaten China’s national security. 

They say such action is urgently needed after months of sometimes violent anti-government protests rocked the city last year.

Protests are simmering again as Hong Kong emerges from its coronavirus shutdown, with demonstrators expected to take to the streets on Sunday.

Trump did not name any sanctions targets but said the announcement would “affect the full range of agreements we have with Hong Kong”, including the US-Hong Kong extradition treaty to export controls on dual-use technologies and more “with few exceptions”.

China’s Global Times, published by the People’s Daily, the official newspaper of China’s ruling Communist Party, said Trump’s decision was a “recklessly arbitrary” step.

The Hong Kong government has had a long history of working ties with US counterparts, distinct from Beijing, with cooperation on counter-terrorism, trade and money laundering.

More than 1,300 US firms have offices in Hong Kong and provide about 100,000 jobs. 

In the past decade, the US trade surplus with Hong Kong has been the biggest among all its trading partners, totalling $297 billion from 2009 to 2018.

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