Geopolitics

Hong Kong Protests And Xi Jinping's First Big Failure

The Chinese leader may officially defend the idea of 'one country, two systems', but in fact his management of the crisis in the archipelago is in total contradiction with this principle. And the protests continue to grow.

Aug. 18 protests in Hong Kong
Frédéric Lemaître

-Analysis-

The demonstrations that have been taking place in Hong Kong for more than two months are Xi Jinping's first major failure since coming to power in 2012. It is difficult to hold the Chinese president responsible for the trade war triggered, for many reasons, by Donald Trump. But Beijing is clearly responsible for the events in the semi-autonomous territory.

At the last Communist Party Congress, in October 2017, the Chinese number one was very clear. "Since Hong Kong and Macao's return to the motherland, the practice of "one country, two systems' in both regions has been a resounding success," he explained. The leader went on to call it "the best solution" to the conundrum and "the best institutional guarantee for the long-term prosperity and stability of Hong Kong and Macao after their return."

And yet, less than two years later, it is precisely because they feel that this principle is not being respected that the people of Hong Kong are rebelling against Beijing. How did it come to this?

Clearly, neither Xi Jinping nor his local representatives were able to see the warning signs of this crisis. In March, Han Zheng, first deputy prime minister, expressed confidence: "The political atmosphere in Hong Kong is changing, and for the better." What he meant is that the memory of the 2014 umbrella revolution had faded, or so he thought.

How did it come to this?

In fact, the exact opposite has happened. For the people of Hong Kong, frustration and resentment against power is growing. Not only does Xi Jinping's China not grant them the universal suffrage to which they aspire, but it also curtails their freedoms at every opportunity, not hesitating to use subterfuge to invalidate the election of opposition deputies, abduct opponents in Hong Kong who are then found in Chinese prisons, or expel a British journalist who had the misfortune of chairing a press conference with an independence political leader.

Faced with a Chinese power bent on limiting freedom, and a local executive power that defends Hong Kong's interests less than it carries out Beijing's orders, a spark is enough for anger to explode.

A comedy of errors

The spark, as it turned out, was a controversial extradition bill that was quickly rolled out — an error on top of an error — and would allow extraditions to mainland China not only of Hongkongers, but also foreigners to mainland China.

For the Hong Kong people, this reform calls into question the very foundation of their city's identity: respect for the rule of law, meaning the famous British "rule of law," to which they are so attached. In their view, the proposed reform is the proof that Beijing, despite Xi Jinping's rhetoric, does not intend to wait until 2047 — as China agreed to do when the megalopolis was returned by London in 1997 — to impose its law and put an end to the principle of "one country, two systems'.

July 7 protest in Hong Kong — Photo: Geovien So/SOPA Images/ZUMA

Unless you are cynical and imagine that Xi Jinping caused the current crisis or intends to exploit it to accelerate the recovery of this rebel city, his handling of the crisis has been nothing less than sequence of absurd decisions.

After failing to achieve anything despite its obvious popular success, the protest movement became explicitly anti-Beijing. On top of that, the demand for universal suffrage — which did not appear during the first demonstrations in June — is now one of protestors' five official demands. As a result, in the span of just two months, a minor bill, probably drafted by a handful of short-sighted bureaucrats, turned into a major crisis for the world's second leading power.

Procrastination and propaganda

And it's not over yet. After a month of procrastination, Beijing presented its response the week of Aug. 5: It reiterated its support for Carrie Lam, Hong Kong's chief executive; called on businessmen, "patriots' and local politicians to step into line; green-lighted increased police repression; and issued explicit threats to companies and Hong Kong residents who participate or even simply support the anti-Beijing demonstrations.

Moreover, the propaganda that until then had reduced the protest now amplifies it. Chinese audiovisual media are even starting to produce "fake news' worthy of Russia Today. Above all, the Chinese must not be able to identify with the Hong Kong people. The focus is therefore on the violence (which is in fact minor), on the alleged desire of the Hong Kong people to proclaim independence, and on a supposed Western plot behind it all.

The gap between Beijing and Hong Kong continues to broaden, and quickly.

It doesn't matter that the American president, Donald Trump, has only contempt for those he calls "rioters." While this propaganda seems to be effective among the Chinese population, it only reinforces resentment towards China among the people of Hong Kong.

Not only is the gap between Beijing and Hong Kong wider now that at any point in memory, but it continues to broaden, and quickly. While Xi Jinping claims to want to "build a community of destiny for humanity," the Hong Kong crisis reveals, on the contrary, a leader unable of building bridges even among the Chinese.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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