Hong Kong firms need to stay strong

Li Ka-shing, the 91-year-old Hong Kong tycoon, is a veteran of communicating with symbols
and allusions. So when his propertycompany CK Asset Holdings acquires Greene King, the
largest listed UK pub company, for £4.6bn, we should take note.

The deal followed weekend protests by an estimated 1.7m people in Hong Kong against China’s
grip on the former UK colony. Mr Li, who has been excoriated in the People’s Daily for
diversifying out of property in mainland China and Hong Kong into economies including
theUK,is clearly unbowed.

The same cannot be said of Swire, the trading company established in Hong Kong by a
Liverpool textile firm in 1870. Chinese pressure on Cathay Pacific, the airline it controls, over
the role of employees in protests, last week forced the replacement of Rupert Hogg, Cathay’s
chief executive.

Neither does it apply to auditors such as PwC, whose Hong Kong partners issued a contrite
statement after Chinese outrage at employees of large accounting firms publicly backing the
protests. Nor to the luxury companies Coach and Versace, which hadto apologise for suggesting
that Hong Kong is a country, and not a part of China. “I aim to be strong enough to be respected,
if not beloved,”declared John
Samuel Swire, who brought his family’s firm to Shanghai and Hong Kong in the 19th century.
But China’s use of multinationals to enforce party discipline on rebellious Hong Kongers is in
danger of making them neither.

Companies such as Cathay Pacific, 70 per cent of whose flights overfly the mainland, feel unable
to resist China’s intolerance of any challenge to sovereignty. But it is humiliating — one point of
the open obeisance that China requires—and will hurt elsewhere.

The protests, which started in opposition to an ill-judged extradition law and have become a
wider call for greater democracy and civil rights, are a turning point for businesses. Hong Kong’s
“one country, two systems” offered both freedom and access to China; in future, they may have
to choose.

“It is a very dangerous precedent, and shareholders may ask why they are kowtowing to
Beijing,”says WillyLam, a scholar at the Chinese University of Hong Kong. It is hard to
proclaim a social conscience in one place and fail to stand up for staff in another.

China and its state media have made little effort to distinguish between violence and peaceful
protest. The Global Times, an offshoot of People’s Daily, last week relayed calls for the big four
Hong Kong auditors to “fire employees found to have the wrong stance”. Deloitte showed some
pluck by specifying that “we respect the right of individuals to peacefully express their views”.
Mr Li artfully straddled the line by placing advertisementsin papers last week, signed “a Hong
Kong citizen”. One included a line from a Tang dynasty poem about an empress who killed her
children: “The melon of Huangtai can not bear the picking again.”

That could be taken either as an admonishment against violence, or as a jab at China; the latter
interpretation made Mr Li popular among protesters. He can afford ambiguity: having taken
control in 1979 of Hutchison, Swire’s old rival, he has hedged his bets. Nearly half of the
revenues of CK Hutchison Holdings, another Li family holding company, come from Europe.

It helps to be Chinese; history is an obstacle to defying China for groups such as Swire and
HSBC, whose original prospectus promised a Hong Kong bank “run on sound Scottish banking
principles”. A UK company that makes trouble is liable to be dismissed as colonialist, although
rights such as freedom of
Assembly are in Hong Kong’s basic law.

China’s government and media are also practised at encouraging outcries on social media against
foreign slights and consumer boycotts. Liu Wen, a Chinese model, resigned as a brand
ambassador for Coach last week after it labelled Taiwan and Hong Kong as countries on T-shirts.
“I love my motherland and resolutely safeguard China’s sovereignty!” she wrote.

It is fair for companies to condemn violence and call for order and negotiations to settle the
dispute. The outbreak of brutality among protesters at Hong Kong’s airport last week damaged
the cause and increased the danger of China intervening by sending military police across the
border. But businesses have collective strength. David Webb, a Hong Kong corporate
governance activist, says Cathay could have “called China’s bluff” after it threatened to block
flights over the mainland. That might have
deterred foreign investment in Hong Kong and scared the wealthy Chinesewho keep family
offices there.

Those with a big stake in Hong Kong’s future need to do more than fall meekly in line with
China and become Beijing’s enforcers. John Slosar, Cathay chairman, was right to insist (before
Merlin Swire, Swire’s chief executive, was reprimanded by China’s aviation regulator) that the
airline “wouldn’t dream of telling [staff] what they have to think”.

Hong Kong was always a balancing act and its equilibrium requires financial and corporate
independence, married to China’s market. Its business leaders should learn from Mr Li.
China spins Hong Kong to a skeptical world

Images of masked thugs massing in Hong Kong’s streets. Unproven allegations that protesters
are being led by the C.I.A. Comparisons between activists and Nazis.

As protests continue to roil Hong Kong, China’s state-led propaganda machine has gone into
overdrive to persuade the world that radical Hong Kong protesters have put the city in peril.

Through social media and other digital arenas, English-language messages from China have
painted a picture of a tiny minority of foreign-influenced ruffians intimidating a silent majority
of law-and-order residents.

But instead of making China’s case, Beijing’s ham-handed international efforts have largely
failed to sway world public opinion. They took a further blow on Monday, when Facebook and
Twitter — which are blocked in mainland China — removed hundreds of accounts that they said
appeared to be state-backed efforts to sow disinformation and discord in Hong Kong.

Perhaps more significant, Twitter took the further step of forbidding Chinese state-run media
outlets from paying to get their tweets promoted so that they appear prominently in users’
timelines. State-run outlets like the English-language newspaper China Daily and the official
news agency, Xinhua, have used promoted tweets to put their spin on Hong Kong’s turmoil.

Call it a failure of Chinese soft power — what the political scientist Joseph S. Nye Jr., who
coined the term, defined as getting others to do want what you want. China wants soft power but,
judging by Beijing’s propaganda, doesn’t know how to get it.

The contrast has been stark. On Sunday, hundreds of thousands of peaceful demonstrators
clogged Hong Kong’s streets to call once again for the city’s leaders to give the people greater
say in a political system controlled by Beijing. The protesters — organizers put their number at
1.7 million — offered a more sympathetic narrative than what the world saw the week before,
when violent clashes broke out
in protests at Hong Kong’s airport.

The Chinese state media, on the other hand, has recently shown Chinese paramilitary police
across the border in the mainland engaged in crowd-clearing exercises. The Twitter account of
Global Times, a nationalist tabloid controlled by the Chinese Com munist Party, posted a video
on Monday calling four pro-democracy Hong Kong figures the “Gang of Four,” referring to the
Chinese leaders who were blamed for plunging the country into the disastrous Cultural
Revolution. (The tweet has disappeared).

Pro-China activists have also appeared in Australia, Canada and Europe. In Toronto on Sunday,
pro-mainland protesters shouted words like “traitor” and “loser” as well as crude epithets at a
crowd of Hong Kong supporters.
While China’s tactics may ultimately work in Hong Kong, so far protesters appear unbowed by
threats of a crackdown.

But on the mainland, where independent news sources like The New York Times are blocked,
China’s propaganda appears to be astonishingly effective. Many internet users there reacted with
outrage to the images of a Global Times reporter being beaten by protesters at the airport.
Chinese social media is awash with the bloodied faces of police officers and shaky images of
foreigners whom the state media have claimed — often wrongly — are secret protest leaders.

China is using the same tactics outside the mainland, but in most cases, they don’t play well.
These include comparing protesters to cockroaches and some cringe-inducing anti-democracy
rapping. “Who are you?/Who’s hiding behind the scenes?,” go the lyrics to a rap disseminated by
the foreign arm of China Central Television, the state broadcaster. “All I see is a beautiful dream
turning to nightmare.”

China, since 2010 the world’s second-largest economy after the United States, has been
determined to build its soft power. It envies the sway that the United States enjoys simply
through its economic and cultural heft. President Trump isn’t going to win any trade wars
because people in China love the “Transformers” movies or watch “Game of Thrones,” but the
American mass media and other cultural exports increase people’s familiarity and warmth with
the country’s ideas.

China could use some of that sway. Its credibility and legitimacy are under assault in
Washington and elsewhere as China hawks rise in prominence.

China under Xi Jinping, its top leader, has come up with a wide range of initiatives to woo the
world with its ideas and its wallet. The “China Dream” as outlined by Mr. Xi envisions a
peaceful world in which China plays a leading role. Projects like the Belt and Road Initiative and
the Asian Infrastructure Investment Bank are intended to show the benefits of China’s growing
wealth.

“It is easy to dismiss such talk as ‘slogan diplomacy,’” wrote David Shambaugh of George
Washington University in 2015. “But Beijing nonetheless attaches great importance to it.”

“We should increase China’s soft power, give a good Chinese narrative and better communicate
China’s messages to the world,” Mr. Xi said not long after he became president in 2013.

In his most important media policy speech, in 2016, Mr. Xi instructed the top official media
organizations to learn to tell compelling Chinese stories and build flagship foreign-language
media outlets that project global influence. Xinhua, CCTV, Global Times and others have
bolstered their presence in the United States and elsewhere and taken to social media outlets like
Facebook and Twitter that Beijing blocks at home. Some accounts have amassed over 10 million
followers.
However, the Hong Kong protests have suggested that Beijing still knows hard power better than
soft. Instead of offering a competing narrative of a Hong Kong that could prosper under Chinese
rule, it has made itself look like a bully.

Though security forces haven’t crossed into Hong Kong, images distributed around the world by
Chinese media outlets show heavily armed personnel preparing for urban conflict. Beijing is
forcing businesses, both global and local, to keep their Hong Kong employees in line or risk
getting cut off from the vast Chinese market. On Sunday, Beijing announced a new policy that
will buff up the socialist city of Shenzhen just across the border so it can compete head-to-head
with capitalist Hong Kong.

Some young mainlanders are so worked up with nationalist fervor that they are using software to
bypass
Chinese censors to log into Facebook, Twitter and Instagram to blast and shame those who
support Hong Kong.

Contrast China’s approach with Russia’s: Groups tied to Moscow have used social media to
tremendously disruptive effect in the United States, Europe and elsewhere. But China needs to
build a positive image for itself, not tear down the reputation of others.

That is in part why a recent CCTV tweet, comparing the Hong Kong protests to the Nazis’ rise in
Germany
in the 1930s, undermines Beijing more than it helps. The post quotes a rewritten version of the
poem by Martin Niemöller, a church leader who opposed Hitler, which ends with, “Then they
came for me — and there was no one left to speak for me.”

The People’s Daily version compares the persecution of Jews, socialists and trade unionists with
protesters storming Hong Kong’s main legislative building, blocking roads and attacking
reporters, including an accusation that demonstrators “trampled the freedom of the press.”

Should it continue down the same rhetorical path, China risks eroding what little soft power it
has. As Mr. Nye once explained to Chinese university students, “the best propaganda is not
propaganda,” because during the Information Age, “credibility is the scarcest resource.”
Turmoil in Hong Kong
Airport mayhem
HONG KONG
Is Hong Kong moving closer to the abyss that its leaders warn about?

A ten-week-old political crisis in Hong Kong has taken a lurch for the worse. Flash-mob protests
across the territory have led to a sharp increase in violence, with hardball tactics employed both
by anti-government demonstrators and police. In an unprecedented move for Asia’s pre-eminent
financial centre, the authorities shut down Hong Kong’s airport for two days in a row in response
to large demonstrations there. The protests in the terminal culminated in ugly scenes that China
was quick to describe as “terrorism”.

The escalation has fuelled speculation about how China might respond. “If the situation gets
worse, and turmoil occurs that the Hong Kong government is unable to control, the central
government will not sit idly by,” the head of China’s Hong Kong affairs office, Zhang Xiaoming,
had warned the previous week. The unrest does not yet appear impossible to contain using Hong
Kong’s police, but China’s state media have broadcast footage of the mainland’s anti-riot forces
manoeuvring on the border with the territory. The threat is clear.

After three days of low-key protests at the airport, the mood changed on August 12th. Huge
numbers massed at the terminal following an alleged case of police brutality, when a young
woman appeared to have been shot in the eye with a beanbag round during a separate
demonstration. The airport responded by cancelling outgoing flights and telling airlines not to
take off for Hong Kong. Fearing that police were about to move in, most protesters left.

The following day demonstrators returned, and flights were again cancelled. As the evening
wore on, the mood grew nastier. Protesters cornered a man who they claimed was an undercover
police officer from the mainland. The man fainted, yet protesters refused to give access to
medics. Riot police eventually rescued him. During the operation one officer came under
frenzied attack and drew his pistol. Demonstrators also assaulted another man, claiming he too
was a mainland agent. Global Times, a mainland newspaper, said he was one of its reporters.

During the second day of airport closure Carrie Lam, the territory’s chief executive, said the
unrest had taken Hong Kong to the edge of an “abyss”. Yet she offered no guidance as to how
she intends to walk the territory back, other than a reliance on police force to overawe the
agitators.

Protesters too show no sign of willingness to compromise. Their demonstrations were at first
about a bill that would have allowed suspects in Hong Kong to be extradited to China. Now they
want a complete withdrawal of the bill, not just the shelving of it that Mrs Lam has announced.
They also demand an independent inquiry into the whole affair, including the police response.
But they have set their sights much higher: Mrs Lam’s resignation and fully democratic
elections—something China says it will not allow.
Activists have called for another large-scale rally in central Hong Kong on August 18th. This
will be a test of whether the public is growing weary of the violence and fearful of the
Communist Party’s warnings. These have been growing ever more shrill. Party-controlled media
have been churning out what they describe as evidence that the unrest has become a “colour
revolution” and that foreign “black hands” are behind it (see Chaguan).

All this smacks of an attempt by the central government to make a case for intervention by the
Chinese army, which Hong Kong’s constitution allows. The party is surely mindful of the
approach of an important date: October 1st, the 70th anniversary of Communist rule. For months
it has been reminding officials around the country of the supreme importance of maintaining
social stability in the build-up to this occasion—the party has been clamping down on dissent
harder than ever. China’s leader, Xi Jinping, would be horrified by a massive protest in Hong
Kong on that hallowed day. He may be wondering whether intervention sooner rather than
later would be the best way of preventing one. In practice it has to be assumed that he is not
itching to send in troops: doing so would have huge diplomatic and economic repercussions. For
now, the threats are intended to intimidate. The order to loyal groups in Hong Kong is still to
express confidence in Mrs Lam’s ability to handle this.

One prong of China’s approach has become clearer: stern demands for business to fall into line.
Cathay Pacific, Hong Kong’s home-grown airline, is the most obvious victim. Its parent, Swire
Pacific, has roots in Hong Kong’s early colonial history. Many of its ground staff and cabin crew
have taken part enthusiastically in marches; one pilot was even arrested for rioting. Only
last week Cathay’s chairman said of the firm’s employees: “We certainly wouldn’t dream of
telling them what they have to think about something.”

The group’s tune has changed following relentless attacks by the Chinese government and state
media for allegedly supporting the protesters. An online boycotting campaign against Cathay has
garnered over 17m views. China has banned Cathay planes flying into the mainland from taking
crew members who have joined illegal protests or “overly radical activities”. Since August 11th
Cathay has had to submit the names of all crew before getting permission to fly. Now
management says that any staff found to be participating in illegal protests will be fired (two
pilots have been). A Swire statement condemning illegal actions and resolutely supporting Hong
Kong’s government reads like a Communist Party declamation. Poor Cathay, its shares buffeted,
now faces a possible boycott from angry Hong Kong democrats too. It is yet one more example
of a hardening of lines. People in Hong Kong are coming under pressure to take sides.

The hardening is evident on the front lines of the territory’s young demonstrators. For weeks, a
legislator and social worker, Fernando Cheung, has acted as a mediator, attempting to de-escalate
confrontations between protesters and police. He has had some success. But at the airport
this week, Mr Cheung admits, both sides, swearing and yelling, “wanted to get rid of me as soon
as possible”. The next steps in the crisis, he adds, “do not look pretty”.
The “black hands” conspiracy
Why Communist officials imagine that America is behind unrest in Hong Kong

There is something depressing about the Chinese government’s claim that foreign “black hands”
are behind the protests in Hong Kong. For the claim is both nonsensical and, in mainland China,
widely believed. It is a fresh lesson in the power of disinformation to see decent, patriotic
Chinese sharing tales of the cia paying gullible Hong Kongers to join marches or smuggling in
foreign rioters on late-night flights (a rumour sourced to a driver at Hong Kong airport, in the
version that Chaguan heard).

There is something positively alarming about signs that, at some level, Communist Party bosses
believe the black-hands story. Neither evidence nor common sense supports the tale’s central
charge that outsiders tricked or provoked as many as 2m Hong Kongers into joining marches.
The accusations began while the protesters were still overwhelmingly peaceful, focused on a
planned law that would send suspects from their city’s Western-style justice system into
Communist-controlled mainland courts. To propagandists in Beijing, no free will has been
marshalling those students and pensioners, doctors in hospital scrubs and black-suited lawyers,
off-duty civil servants and parents with pushchairs. Instead the protesters are at best dupes, and
at worst foreigner-loving race traitors, ashamed of being Chinese.

The drumbeat has intensified as the demonstrations have grown more violent. Police and at least
one mainland reporter have endured beatings by young radicals gripped by nihilistic rage. To
objective analysts, the causes include protesters’ paranoia after days of police infiltration and
brutality, and the lack of any further concessions by the government as rewards for pragmatism
other than the shelving of the extradition bill. But grim-faced government spokesmen in Hong
Kong and Beijing have another explanation. They accuse foreign forces, meaning America, of
fomenting a Ukraine-style “colour revolution” to keep a rising China down.

In late July Tung Chee-hwa, a shipping magnate and Hong Kong’s first chief executive under
Chinese rule, called the “well-or-ganised” protests evidence of “masterminds behind the storm”,
with “various signs” pointing to America and Taiwan. Communist-controlled newspapers have
made much of the handful of protesters who insist on carrying American and colonial-era Hong
Kong flags on marches (which is arguably more foolish than sinister). They have shared images
of a “foreign commander” directing protests by smartphone, who turned out to be a New York
Times journalist texting colleagues. They have also published photographs of a meeting between
pro-democracy leaders and Julie Eadeh, a diplomat at America’s consulate whose job is to talk to
local politicians. One such newspaper, Takungpao, called Ms Eadeh “a person of mysterious
status and an expert in low-key acts of subversion”. Given that Ms Eadeh met Hong Kong’s most
famous democracy activists in a hotel lobby in broad daylight, either the tradecraft of American
super-spies is slipping, or the party’s media define the term “mysterious” pretty loosely.

Those accusing America of funding revolution in Hong Kong must also grapple with some
logical objections. For one thing, the protests do not need much funding. Ordinary Hong
Kongers have donated spare t-shirts to replace clothes soaked in pepper spray, and money to buy
hard hats, face masks and McDonald’s vouchers for hungry youngsters. For another, stability and
the status quo in Hong Kong serve American interests profitably and well. More American
businesses operate in Hong Kong today than in 1997, when British colonial rule ended. Some of
America’s largest corporations rely on the city’s open markets, transparent legal system,
uncensored internet, modern transport links and business-friendly governance as they access
China’s vast markets. It is true that congressional leaders have urged rulers in Beijing to avoid
sending in troops to crush protests, and that senior American officials have recently hosted pro-
democracy Hong Kongers. But America’s long-standing policy has been to lobby China to
preserve the territory’s freedoms, not to seek a democratic revolution. As for President Donald
Trump, he has dubbed the protests “riots”—the term used by Chinese officials—and said he has
“ZERO doubt” that China’s leader, Xi Jinping, can “humanely solve the Hong Kong problem.”

The world seen from Beijing: greedy, hypocritical and cruel

There are reasons why propagandists peddle the black-hands myth. For one thing, it works. After
initially censoring news from Hong Kong, official outlets are full of videos showing protesters
attacking police or hurling petrol bombs, over captions calling them splittists who want formal
independence from China (in reality, a fringe position in Hong Kong). Many ordinary folk have
heard little about the extradition law that sparked the protests. Chinese opinion is hardly
monolithic, but it is not hard to find netizens impatient to see snooty, ungrateful Hong Kongers
crushed.

Most worrying, China’s rulers are betraying a bleak and cynical worldview in which might is
right and the big always dominate the small. To them, it is not conceivable that 7.3m Hong
Kongers could believe that their individual, universal rights trump the will of 1.4bn compatriots.
If tiny Hong Kong is defying its mighty Motherland, another great power must be egging it on.

When the British government defends Hong Kong’s freedoms, Chinese officials are sure that
Britain is still sulking about its loss of empire—and will pipe down once Brexit renders it
friendless. Other Western envoys in Beijing have been lectured that their support for Hong Kong
must be part of a concerted push by American hawks to hurt China. Suggest that Western
countries might occasionally be guided by principle and Chinese officials scoff.

Their cynicism is self-serving, of course, as it handily shifts blame for the mistrust the party
inspires in Hong Kong. But it also clouds China’s vision of the world at a perilous moment.
Some propaganda is laughable and tragic at the same time.
Hong Kong
Property and protest
HONG KONG
The link between the unrest and the unbearable expense of housing

When Britain returned Hong Kong to China in 1997, the Communist Party promised two things
to the anxious people of a territory with political and economic systems very different from the
mainland’s. The first was political autonomy: in time Hong Kongers would even be able to
choose their own leaders. The second was to preserve Hong Kong’s swashbuckling capitalism
and light-touch government.

China has not lived up to the political promise. Especially since Xi Jinping came to power in
2012, China has undermined Hong Kong’s autonomy and strangled political life. For nearly
three months the consequences have played out, with the world looking on, on Hong Kong’s
streets in the form of anti-government protests that have sometimes tipped into violence. For
the past week the territory has been relatively calm, with a rare lull in the barrages of tear-gas.
The airport, following a sit-in and an unprecedented two-day shutdown, is up and running again.
Yet pro-democracy feelings run no less high. Under monsoon rains on August 18th crowds in
signature black t-shirts called for universal suffrage in central Hong Kong’s biggest park. The
organisers claimed 1.7m people attended, over a fifth of the population. Another big march is
planned for August 31st and a general strike on September 2nd.

Yet while breaking its political promises, China has hewed closely to its economic ones. That,
too, has fed popular resentment. By preserving Hong Kong’s economic system in aspic, China
has helped to generate extreme inequality, due largely to the extraordinary expense of housing. A
coterie of tycoons with a lock on the property market continue to enrich themselves at the
expense of others. Many young protesters say they have lost hope of a prosperous future. Being
able to afford a decent home appears inconceivable. The latest “nano” flats are not much bigger
than a large car.

Thanks to light regulation, independent courts and a torrent of money from China, Hong Kong
has long been a global financial centre. But many of the resulting jobs are filled by outsiders on
high salaries, who help push up property prices. Mainlanders seeking boltholes do too. And then
there is the contorted market for housing. The government artificially limits the supply of land
for development, auctioning off just a little bit each year. Most of it is bought by wealthy
developers, who by now are sitting on land banks of their own. They have little incentive to
flood the market with new homes, let alone build lots of affordable housing. The average Hong
Kong salary is less than HK$17,000 ($2,170) a month, hardly more than the average rent. The
median annual salary buys just 12 square feet, an eighth as much as in New York or Tokyo.

The patriarchs of the main business families—for instance, Peter Woo of Whee-lock, Lee Shau-
kee of Henderson Land and the Kwok brothers of Sun Hung Kai—were already at the top when
Britain ruled Hong Kong. In addition to property, such families dominate industries with limited
competition such as ports, utilities and supermarkets. Before the handover, China assiduously
cultivated the oligarchs with a view to securing their loyalty—not least by offering them juicy
land deals on the mainland. They duly fell into line.

Since the handover the tycoons have come to dominate not just the economy but also
government, opposing calls for more democratic representation, a more generous welfare state
and, of course, a programme to build mass, cheap housing of the kind that Singapore has long
promoted (and used to keep voters quiescent). Part of the tycoons’ clout comes from their
contribution to Hong Kong’s finances: 27% of government revenues come from land
sales. Since the start of the crisis Hong Kong’s chief executive, Carrie Lam, has not
met any democracy activists, but she has consulted with several plutocrats.

In public, however, the normally voluble tycoons have fallen silent. They are presumably hoping
to avoid offending both their patrons in Beijing and their customers in Hong Kong. For a
Chinese government demanding that business bow down (see Business section), that is no longer
good enough.

Chinese media have taken to attacking Hong Kong’s oligarchs for insufficient displays of
loyalty. Over the weekend several showed up at a pro-government rally. Li Ka-shing, Hong
Kong’s richest man, has placed full-page advertisements in the local press, calling for restraint.
But his message—some enigmatic quotes from classical literature—was ambiguous. Was it
aimed at the protesters, the local government or the authorities in Beijing?

In a recent meeting with visiting Western dignitaries, a senior Chinese official complained about
Hong Kong’s tycoons. The crisis was exposing the shortcomings of Hong Kong’s capitalist
system, the official said: it was not spreading wealth around as much as the central government
had hoped.

That realisation, if it is widely shared in Beijing, is a welcome development. Just as a political

solution to the crisis has to involve a less rigged system of political representation, so an
economic dimension has to involve a less rigged property market. Perhaps leaders in Beijing
think such a reform would be a substitute for democracy. Either way, they appear to be starting
to appreciate that Hong Kong’s property cartel needs to be challenged by policies that see
much more land released for low-cost housing.

The potential, says Johnny Kember of KplusK Associates, an architectural practice, is vast. Over
1,000 hectares of brownfield sites could quickly be developed, he notes. There is also the 170-
hectare golf course in Fanling, whose lease comes up next year. Many of Hong Kong’s fat cats
would surely resent giving up their weekends there to help the very people who are out making
trouble. But given the souring mood in Beijing, that is what they may yet be forced to do.
Macau
Betting on red
MACAU
The former Portuguese territory shrugs off the turmoil in Hong Kong

On the evening of August 19th at least two dozen police officers could be seenloitering at the
entrances to Senado Square, a narrow, busy plaza in the heart of old Macau. They took down the
names of passing youngsters, especially anyone in black or white clothing. Some were led to a
nearby car park to be searched. A few were taken away for further questioning.

The cops were there to discourage people from participating in a silent rally that had been
advertised online a few days earlier, and to intercept people who had talked of confronting them.
The rally organisers, who have not been named, hoped people in Macau would come out to
condemn the way police in nearby Hong Kong have dealt with anti-government protests there.
Local authorities, unusually, disallowed the event; police warned that attendees risked up to two
years in jail. Around the same time the city began renovating a famous fountain protesters had
planned to gather around. It will be hidden behind blue hoardings for a month.

Leaders in Macau seem anxious about contagion from Hong Kong, which lies 65km to the east
along China’s southern coast. The former Portuguese colony has been allowed to run its own
affairs since it was handed back to the mainland in 1999. But like Hong Kong, its institutions are
flawed. Only 14 out of the 33 legislative assembly seats are directly elected, the rest being doled
out to interest groups. The city’s chief executive is elected every five years by a committee of
400 bigwigs. At a meeting on August 25th they will ask Ho Iat Seng (pictured), a businessman,
to take up the job in December. It is the fourth time in a row that the Communist Party’s
preferred candidate has run unopposed.

Macau is very unlikely to develop an anti-government movement of the sort seen in Hong Kong.
With only about 600,000 residents, its economy is heavily reliant on money and visitors from the
mainland, and its small political class is loyal to the party. Although its laws guarantee rights to
speech and assembly, Macau has plenty of tools for dampening dissent, including stern national-
security legislation of a type that does not yet exist in Hong Kong. People associated with pro-
democracy movements in Hong Kong sometimes get stopped at Macau’s borders. That is
more common than being denied entry to the mainland, says one.

Although youngsters are growing more politically aware, Macau’s people are “largely apolitical
and pragmatic”, says Sonny Lo of Hong Kong University. The city’s GDP per person is among
the highest in the world. Some government revenue, derived primarily from the territory’s
enormous casinos, is distributed to residents as an annual cash handout. This year the give-away
is 10,000 patacas ($1,250) per adult. Macau has a more generous welfare system than Hong
Kong, including better provision of social housing. Beneficiaries are loth to rock the boat.

Elections in 2017 brought fresh faces to the legislature, most notably Sulu Sou, a pro-democracy
lawmaker who, at 26, was the youngest to ever join the body. But the pro-reform bloc grabbed
only about a quarter of votes, not much changed from the previous election. Mr Sou thinks that
media coverage of protests in Hong Kong has hardened pre-existing views in Macau. He says
that in recent weeks conservative voters who have long been suspicious of calls for fuller
democracy seem to have become much more vehement.

At a meeting with officials and journalists on August 10th Mr Ho said that his new
administration would aim to make Macau’s youth more patriotic, including through the
education system. That has its perils: a few years ago ham-fisted efforts to tinker with Hong
Kong’s curriculum caused a backlash that presaged the more recent unrest. In the nearer term
nervous authorities will have to resist overreacting to locals inspired by Hong Kong’s protests.
No one wants police to keep interrupting people’s evening strolls.