Opinion | Extradition law won’t be worth the resultant loss of market confidence in Hong Kong

As long as Hong Kong’s status as China’s premier international financial centre is valuable to Beijing, local officials should be mindful that they will be making a grave mistake in pushing through the legislation

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Hong Kong Chief Executive Carrie Lam and Secretary for Justice Teresa Cheng on their way to a media briefing a day after a massive protest against the extradition bill on Sunday. Photo: Sam Tsang

Published: 6:35am, 12 Jun 2019Updated: 6:51am, 12 Jun 2019

“People are concerned about the possible withdrawal of foreign capital from Hong Kong. But so long as our policies are appropriate, capital that leaves Hong Kong will return … China will courageously face this catastrophe.” Deng Xiaoping said these words in September 1982, just before Hong Kong’s markets took a dive amid jitters over Sino-British talks regarding the territory's future.

Today, a similar loss of market confidence would be far more damaging. Hong Kong, China’s largest centre for international finance and services, and its fourth-largest trading partner (after the US, Japan and South Korea), is considering revisions to its extradition law that could see fugitives transferred to mainland China for trial. If passed, these amendments could threaten confidence in Hong Kong’s values and business. This could, in turn, negatively affect China’s stability and economic growth, which are important sources for the central government’s continued hold on power.

In spite of the challenges Hong Kong has sometimes faced from Beijing, it remains autonomous. In fact, Hong Kong has such a degree of autonomy that outside institutions, like the World Bank, view its norms, such as the rule of law and low levels of corruption, as being on par with places like Sweden and Canada. This precious condition is what makes the territory a magnet for business.

Protecting the autonomous systems that deliver such advantages is in China’s vital national interests. Hong Kong is by far the largest source of foreign direct investment into the mainland. For the first 10 months of 2018, for example, Hong Kong contributed (or channelled) about 69.3 per cent of FDI inflows into China.

It is widely known that mainland authorities use repression to maintain authority. But more than repression, their hold on power (and China’s rise as an economic superpower) has been facilitated by making economic growth and stability the centrepiece of the country’s post-1979 reform-era strategy.

There have been cases in China where leaders who made policy errors were purged or forced to resign. Hong Kong’s first chief executive Tung Chee-hwa, for example, was forced to step down after a series missteps, including the debacle over Article 23 national security legislation.