Hong Kong: Fighting in the Streets, Troops Massing on the Border, Airport Swarmed by Protesters

28 July 2019—China’s woes multiply as demonstrations in the streets of the Hong Kong ‘special zone’ continue for 8 weeks in a row. In the former British Colony residents have grown uneasy that the Communist government in Beijing will reneg on their promises of freedom and human rights for Hong Kong citizens.


In what began as demonstrations to stop an extradition bill, concerns have now seen as engulfing the core ‘one country, two systems’ rule that will see Hong Kong joining China in 2047 without ‘special concessions.’ People of Hong Kong have taken to the streets to protest the sky-high housing prices and to make a show for free & elected government.

Letters to the editor are exposing the cracks in Hong Kong’s glossy image:

• Nowhere in the world is housing as unaffordable and nowhere has it made property developers as wealthy. [Vancouver is often cited as #2]

• A low-tax regime mostly benefits the landlord class and big business.

• The current society is not the society we want. It is a society whose inequality and power imbalance have been painfully and perpetually exposed, yet also continually ignored.

A 13th consecutive weekend of demonstration is planned for the last days of August.


K Lam:Bloomberg
In June Demonstrations Bring 2 Million People Out to the Streets

25 August—Updates

Reports are of escalating violence. A gun shot in the air, and use of water canon from armoured trucks by police. Fire bombs and pavers were thrown at police by demonstrators. However, the more important development is the open discussion in the media that this is now the staunchest challenge to Chinese authority in decades.

Ten-plus weeks of protests, have exposed Beijing as intransigent and propagandizing. “Acts of Terrorism” would seem to be reaching too far to describe actions of young people dressed in casual sports wear.

[For past updates, scroll to the bottom of this post]

MTR — Hong Kong Metro System Map



A crisis in Hong Kong is mounting pressure against the China’s communist regime. So far turmoil has been managed, or successfully hidden away. That ended when Fighting In The Streets of Hong Kong broke out this summer. For 12 consecutive weekends in July and August people of all stripes have taken to the streets of Hong Kong in the tens of thousands, hundreds of thousands and millions.

Violent clashes between police and demonstrators in the streets of Hong Kong—now THAT is new. Add to the turmoil in Hong Kong the Trump trade war, and the sophistication of the Beijing regime is being severely tested.

The economic warning lights are flashing for China and Hong Kong. The Financial Times reported the internally traded on-shore Renminbi falling past 7 Rmb to the dollar for the first time in 11 years. Meanwhile, the Hong Kong financial indexes are testing lows reached during the 2008 financial crisis and the 1997 handover.

The New York Times reported in mid-July that China’s economy had hit a 27-year low. The Trump trade war could not come at a more critical moment. Cracking down on the Hong Kong protests by Beijing might make the U.S. withdraw special trade privileges for Hong Kong erasing China’s chief avenue for trading US dollars. China’s steady economic decline is seen as an indicator of internal structural problems, even as most acknowledge that the performance numbers are cooked:

Economic conditions are still severe both at home and abroad, the global economic growth is slowing down, the external instabilities and uncertainties are increasing, the unbalanced and inadequate development at home is still acute, and the economy is under new downward pressure.
Mao Shengyong, China’s National Bureau of Statistics


Append to the ‘unbalanced and inadequate development at home’  the Potemkin Villages dotting China’s countryside. These empty places are made from residential towers piled high in efforts to stimulate the command economy side of China’s bizarre communist-capitalist hybrid. The units are all unoccupied. Yet, when talk of stimulus emanates from Beijing these are the wheels that start turning. The continued massive injections of capital will trigger hyperinflation sooner or later and the entire Chinese Communist system will implode.

It is very likely that China weathered an economic crisis in 2015-2016 following the stock market rout in the summer of 2015. Some observers see that crisis reflected in the falling GDP rate that scored 6.4 points at the end of last year. The GDP growth rate dipped below 7% for the first time in 2015-2016 amid  an exodus in capital flight:

Between 2015 and 2016, Beijing spent about $800 billion, or 20% of its foreign-exchange reserves, to stabilize the currency. Back then, banks, financial conglomerates and wealthy individuals raced to pull money out of the country, buying up luxury hotels, insurance products and any other overseas assets they could lay their hands on.

At the end of July 2019 the State Administration of Foreign Exchange (Safe) reported for the first time ever on China’s holdings of foreign currency. China’s holdings of foreign currency generated an annual average return of 3.68 per cent from 2005 to 2014. Over the same period, US dollar foreign exchange reserves had dropped 21% from 79 to 58%.

Given the coincidence between the two figures, it is safe to assume that the market sell-off was caused by capital flight: selling stocks in China to buy real estate in the West. It is less certain whether Beijing would tolerate a repeat performance. Meanwhile the Yuan has dropped 3.9% in August alone. A rapid depreciation of the currency would also trigger selling and further capital outflows.


The protests in Hong Kong began with demands for gentle reform:

  Full withdrawal of the proposed extradition bill;

  Retraction of the characterization of the movement as a ‘riot;’

  Retraction of the charges against anti-extradition protesters;

  An independent investigation of use of force by Hong Kong Police; and

  Implementation of universal suffrage for the city’s chief executive officer role and legislature by 2020.

However, by the end of summer the mood has changed and the discussion has turned to structural reforms in Hong Kong’s government. Should these demands rise to the fore transforming into a push for liberation, then 1989 Tianamen Square stands as the precedent. Government officials have put down three conditions that would bring in the People’s Liberation Army:

• Harm to national security,

• Challenge to the central government’s authority, and

• Using Hong Kong as a base to undermine China.

Parsing Lam’s statements in early August , all three eventualities are seen to be in play as demonstrations escalate into general strikes.

In late August Director Lam offered a process of ‘dialogue’ with the people.

  “We understand  some people want to express their view but we regret that their actions affected train services and other passengers,” said Alan Cheng, Hong Kong Metro-MRT Chief of Operations.

  MTR Chairman Rex Auyeung Pak-kuen has endorsed an inquiry into police action.

• Billionaire Michael Kadoorie, in an open letter in the South China Morning Post and the Hong Kong Economic Times: I have spoken many times of how our young people are Hong Kong’s future,” Kadoorie wrote. “We cannot leave them in desperation or despair. It is the responsibility of us all to rebuild trust in the community and create hope for the younger generation.

• Hong Kong General Chamber of Commerce called for the extradition bill to be withdrawn, ministers to be made accountable for the mishandling of the protests, and an independent commission of inquiry to probe “the root of the tensions”.

  The American Chamber of Commerce, Hong Kong chapter, called for an independent inquiry into all aspects of the protest movement by a body with ‘international credibility.’ 

• David Li, executive chairman of the city’s last family-owned lender Bank of East Asia, told local media in July that he supported an independent investigation into the actions of the police.

 Beijing warned that political unrest had gone “far beyond” peaceful protest, ominously expressing concern of more direct intervention.

This warning appeared in the state-run Global Times: 

• China will not allow extremists and external forces to take down Hong Kong’s legal system and drive the city into a vicious cycle. If Hong Kong loses its rule of law and becomes a political battle ground, it will have an uncertain future. That is against the wishes of Hong Kong residents, and China will not allow it to happen.

• Hong Kong and Macau Affairs Office, “Hong Kong cannot afford to have instability. Should the chaos continue, it is the entire Hong Kong society that will suffer.”

• The Chinese foreign ministry, through a spokeswoman, responded to the US Secretary of State Mike Pompeo by saying, “[Pompeo] might think that violent activities in Hong Kong are reasonable because after all, this is the creation of the US.”


By the end of August the demonstrations were taking on the character of Hong Kong’s last ‘hurrah.’ It’s now or never for islanders who are under dual pressures: housing prices in the clouds and the pending Communist take-over. A warning calling for self-imposed restrictions on travel makes clear what’s at stake:

Hong Kongers should be cautious about travelling to the mainland, where police have sweeping powers to detain individuals suspected of political activity on arbitrary grounds and with fewer safeguards against torture and mistreatment.

Frances Eve, deputy director of research at Chinese Human Rights Defenders (CHRD), an NGO based in Washington, DC (Bloomberg).

If this is really the beginning of the end, then first question is whether it is the end of something in Hong Kong, in China, or in the west.

• Hong Kong fall under communist domination, losing all its cherished special rights decades ahead of 2047.

• The Communist regime will implode, in a process similar to the USSR.

• Financial shocks will be felt in the west, in Vancouver for example, as a tsunami of off-shore capital makes landfall on western shores.

Meanwhile, back in Washington, one could not be faulted for reading the actions of the American President as reading weakness in Beijing. It is the writing on the wall that matters now.


China is slowly but methodically eroding specially designated rights and freedoms granted to Hong Kong at the time of the hand-over in 1997. Two decades later, Beijing may well take the position that this was the ‘long game’ all along. Legally, Hong Kong’s special concessions sunset in 2047. Cited among the most prominent changes are the disappearance of independent booksellers, censoring of chat platforms, disqualification of pro-democracy candidates fairly elected in local elections, arrests of pro-democracy activists and two university professors. Here is another: About one million of Hong Kong’s 7.5 million population are reported as mainland arrivals speaking Mandarin, rather than the local Cantonese.

The report points to another instigator for the demonstrations. Real estate prices have pushed up 170% in the last ten years and are today the highest in the world. Its a safe bet that the middle class has disappeared and the working class is stuck in place, seeing its future soaking into the Communist mainland for lacking the resources to relocate to the West.

The best path forward for Beijing is for Shenzheng to out strip Hong Kong as the financial centre for communist China, then allow Hong Kong to become a fading centre of commerce and power. To achieve this transition smoothly, the Communist Party must resist overreaching. In turn, that may depend on the extent to which rival centres of power have set up in Beijing and Hong Kong, and whether such rivalries can be managed peacefully.



The “one country, two systems” framework with an independent judiciary and a free press in Hong Kong, was conjured up before the 1 July 1997 hand-over. Needless to say it has always garnered suspicion abroad. The better outcome for Beijing is “one country, one system.” That will be the law in 2047, fifty years after the handover.

China’s economic modernization would not have been possible without Hong Kong’s participation. However, while in 1997 Hong Kong’s economy amounted to 18 per cent of the mainland’s gross domestic product, it now accounts for less than 3 per cent of China’s economy.  The Mainland has another financial centre in Shanghai, and a hi-tech hub in Shenzhen. Poised on Hong Kong’s northern border, two subway lines stop just short of a connection with Shenzhen. Thus, China can either go it alone running its economy from somewhere else, or it can expand Shenzhen’s borders to include Hong Kong.

However, Marshall Law, or the Peoples Liberation Army (PLA) marching into the territory, ultimately threatens Hong Kong’s standing as a global financial centre along with China’s standing internationally.

On the mainland, those in opposition to the ‘ruler for life’ would see the events unfolding in Hong Kong as a possible opening. Unseating the Communist Party in China could well begin with turmoil at their ‘central bank,’ the territory of Hong Kong.


Hong Kong moguls have been readying to move their wealth at the first signs of trouble. The concern here is that the unrest will spur capital flight, drive up interest rates and force the abandonment of a currency policy—the peg on the Hong Kong dollar—that has underpinned Hong Kong’s economy for more than three decades. The only way to understand what this one time mass evacuation of Chinese wealth through Hong Kong may look like, is to gauge what has been taking place in the west for these past three decades.


House Bubble



In the west all major population centres, and a few minor ones like Vancouver, are experiencing a housing crisis with land values growing well over 10-times in the three decades of the ‘China Miracle.’

The root cause is the massive trade deficit all western nations are running with China. That imbalance in money trading was taken off-shore, and was spent by Hong Kong impresarios in the west. Investing in large real estate projects is a simple way to safeguard earnings made in the two-system country where human rights are not in play.

The gargantuan deficits resulted from western corporations moving their production to China in an effort to exploit dirt-cheap wages. All without any thought that exploiting cheap labor amounted to exploiting people: the families and the children of the Asian giant. Global corporations felt liberated from all social responsibility and constraints as their boards of directors focused blindly on market capitalizations and returning profits to investors. Of course, their customer base is made up of the same ordinary citizens that for thirty years have seen their cherished democratic rights floating away beyond their reach. Only a handful hold stocks.

Bloomberg has charted China’s effect on global real estate markets as an expanding spiral. In one of the two most impacted nations, seeming to be standing on the threshold of spiralling out of control, the government of New Zealand has banned off-shore buyers. Meanwhile, in the other nation, the Canadian governments have taken a more Neo-Liberal approach: they have raised new taxes in a pretence to correct the housing market. This is all taking place at the same time that economists anticipate a Federal Reserve interest rate cut of as much as two basis points. Meanwhile, European Central Banks continue making negative interest rates seem like the new normal.


Within days of the first demonstration Vancouver newspapers were focused on fears of a flood of Hong Kong residents with dual citizenship returning to Canada. As many as 300,000 Canadian citizens live and work in Hong Kong. They have been sending their children to school overseas since the 1970s. Many hold family homes, as well as sizeable real estate portfolios, not only in Vancouver and Toronto, but throughout the west. What was once a hedge against Hong Kong being swallowed up by its Communist masters may be converting into a chip that gets cashed in before the next Chinese New Year.

In a worst-case scenario the 30 direct flights arriving weekly at Vancouver international airport would be chuck-full with wealthy refugees. That is, assuming protests don’t continue to disrupt airport operations. Such influx would place significant stress on local resources, while boosting the sale of super cars, hi-rise condominiums and multi-million dollar houses.

Thus, the more worrisome development is the Tsunami of Chinese capital crossing the Pacific in search of safe heaven. With house prices inflating to 12-times over Canadian household incomes by 2016, a run on the Hong Kong and China banks could bring dangerously destabilizing pressures to the local economies.

Meanwhile, Beijing has been playing hard-ball with Canada. Canadians Michael Kovrig and Michael Spavor were arrested on 10 December 2018 in a transparent quit-pro-quo for Canada detaining senior Huawei executive Meng Wanzhou on 1 December. Though Ms. Wanzhou’s movements have been curtailed, she is enjoying house arrest in her multi-million dollar Vancouver residence. Meanwhile Kovrig and Spavor are facing the threat of death by execution. Both in Hong Kong, and internationally, there is a general distrust for China’s justice system.


Speaking with CNBC, Sydney, Australia Think tank director Ben Bland posed three possible outcomes:

• Officials wait out the protests, then make arrests after the momentum slows bringing the city back to order.

• Direct Mainland intervention by the PLA.

• Hong Kong obtains “real concessions” and full democracy.

More and more, signs on the ground point the second option. The extradition law was not a chance move by a Beijing-backed Hong Kong government. Weeks of demonstrations would have been anticipated as one of the possible outcomes. The entire situation is really a test of strength for the Xi regime. So far, they are holding fast and retaining the upper hand. This strategy will win out as long as they have time on their side. It would seem as if only festering opposition lurking within the Communist Party could turn it around.

Martial law in Hong Kong would make it “one country, one system.” Then, passing the extradition law would provide a simple mechanism to rid Hong Kong of trouble makers and party opposition. Even if the practical and financial implications prove disastrous, Beijing may already be moving along a charted path.

The most worrying sign is that the ‘big picture’ appears untenable. The trade war with the US is taking a toll on China. Factories are empty, space for rent is reported going looking for tenants in Europe. The ghost cities have been making news for over 5 years. The urbanism is horrible. The pollution worse. In this rubric, Hong Kong may be the least of Xi’s problems.

Surprisingly, “concessions to Hong Kong” would be the enlightened choice for China to make. That is complicated by the fact that it was the democratizing measures introduced by Gorbachev that led to the eventual collapse of the Soviet Union. The fall of the Berlin Wall could well be equated to a crash in the Hong Kong markets. As the demonstrations gather momentum, and Chief Lam continues to make hard-line remarks in public, the “deep path” appears to be aiming for Hong Kong liberation. Beijing will not stand for that, and there have never been any enlightened signs coming from China’s Communist Party. Of course, turning out millionaires by the thousands was never really Communist dogma. And many see the rise of the oligarchs as the background for developments that ultimately brought down the USSR.

Given that Beijing does not appear ready to relinquish anything, a putsch in China remains the only alternative. Beijing’s resolve will be tested by the American President, not the crowds in the streets of Hong Kong. Yet, it is the demonstrators that are leading the publicity offensive.



12 August updates

The crowds of black-clad youth that snarled traffic and clashed with police in Hong Kong this weekend came equipped with gas masks, shin guards and shields, but few placards.

The protests showed no sign of abating Sunday with a police officer burned by a Molotov cocktail and protesters bloodied by batons and rubber bullets, with some police firing at head level.

Airport Sit-In

Hong Kong’s airport cancelled all flights on Monday, blaming demonstrators for the disruptions, while China said the anti-government protests that have roiled the city through two summer months had begun to show “sprouts of terrorism.”

10 August updates

China orders Cathay Pacific to ban all employees who supported or joined the recent protests from flying to the mainland. The language is suitably ambiguous to put added pressures on the UK based operator. The government denies demonstration permits forcing protestors into the streets. On the first day of the weekend a sit-in occupies Hong Kong airport.

4 August updates—Hong Kong leader Carrie Lam warned of a “very dangerous situation, ” she said, “We have seen some behavior from protesters that is challenging ‘one country, two systems’ and threatening national sovereignty,” Lam told reporters on Monday. “And I could even dare to say some are trying to ruin Hong Kong and completely destroy the livelihood of seven million citizens.” Her remarks were generally received as disappointing.

Bloomberg reported:

[The first weekend in August saw] non-stop demonstrations that began with a “flash mob” protest by financial professionals on Thursday, followed by a gathering of civil servants on Friday and a march in the crowded Mong Kok shopping district on Saturday. On Sunday, police fired off tear gas volleys at protesters in the crowded shopping district of Causeway Bay as activists jammed traffic by blocking the Cross Harbor Tunnel that connects Hong Kong Island with Kowloon.

“I’d like to see a peaceful way to engage with the government, but the government is forcing this way onto people,” said Danny Yuen, a 61-year-old church secretary who attended a rally on Sunday.


The year 2019 will be remembered in China’s history for the tumults in Hong Kong that began almost as soon as the Lunar New Year celebrations were over.

February 2019 — Hong Kong’s Security Bureau proposes amendments to extradition laws that would allow the extradition of Hong Kong people to mainland China.

March 2019 — Thousands take to the streets protesting against the proposed extradition bill. The American Chamber of Commerce expresses serious reservations to Hong Kong’s Secretary for Security, John Lee.

April 3, 2019 — The Beijing-appointed Hong Kong Chief Executive Carrie Lam introduces amendments to the extradition laws.

A boiling point is reached when the amendments are seen as a refusal to withdraw the bill.

Sunday, April 28, 2019 – Tens of thousands of people march on Hong Kong’s parliament to demand scrapping of the proposed extradition laws.

Monday, June 6, 2019 – More than 3,000 Hong Kong lawyers take to the streets dressed in black to protest the extradition law.

(1) Sunday, June 9, 2019

Protest organizers claim one million people marched to government headquarters to demand both the withdrall of the bill, and Lam’s resignation. Violent skirmishes broke out between activists and police after the midnight dispersal deadline passed. Police put the protest numbers at 240,000.

June 12, 2019 – Police fire rubber bullets and 150 canisters of tear gas at the city’s largest and most violent protests in decades. As many as 2 million people are said to have participated. Police estimated crowd size at 338,000.The Hong Kong population numbers 7.5 million.

June 13, 2019 – Government offices shut down after a day of violence.

June 14, 2019 – In a dramatic retreat, Lam indefinitely delays the proposed extradition law.

(2) Sunday, June 16, 2019

Second consecutive weekly massive protest. Organizers peg it at around 2 million people.

Lam issues a written apology. Two days later she reads the apology before TV cameras.

(3) Friday, June 21, 2019 

Thousands of demonstrators blockade police headquarters

Monday, June 24, 2019 – Beijing says it will not allow leaders at the G20 meeting in Japan to discuss the Hong Kong issue.

Meanwhile, the Communist government could be seen flexing its muscles at home. The Wall Street Journal reports that commercial real estate trends for Hong Kong buyers in the US having reversed for the first time in a decade. According to the Journal investors were staying away from making purchases in response to “pressure from Beijing.” Clearly, the pressure would be exponentially greater should the extradition laws be put in place.

(4) Thursday, June 27, 2019 – Monday, July 1, 2019 

On Thursday — Fresh protests hit Hong Kong as activists seek a voice at the G20.

On Friday — Anti-extradition protesters rally again near government headquarters.

On Saturday — At the meeting with the American president, in the lead up to the G-20 meeting, China’s Xi struck a defensive pose. The official statement warned against ‘Bullying Practices’ that would prove detrimental for international order:

All leaders in the meeting stressed that unilateralism, protectionism, and bullying practices are on the rise, posing severe threats to economic globalization and international order.

Dai Bing, Chinese Foreign Ministry

On Sunday — fresh protests erupt as Hong Kong marks the 22nd anniversary of the handover from British to Chinese rule. Crowds vandalize the Legislative building.

(5) Sunday, July 7

Thousands march in location popular with Mainland tourists.

July 9 — Lam declares the extradition bill ‘dead’ (still not ‘withdrawn’).

(6) Sunday, July 14

Protesters clash with police at a suburban mall.

(7) Sunday, July 21

After clashing with police downtown, protesters are attacked by a mob at a suburban metro station. Police arrive late on the scene.

The Guardian reported seven consecutive weekends of unrest in Hong Kong’s streets, quoting calls for a “revolution of the century,” opinions that “the Chinese Communist party brings chaos to Hong Kong,” and elderly protesters holding flowers as a sign of peace.

(8) Sunday, July 28

Police tear gas protesters. Questions circulate about the ability of the Hong Kong government to contain its police forces.

With the number of consecutive Sundays of street protests reaching the culturally significant ‘Lucky Number 8,’ tensions have reached a nadir. How long can Xi and his ruling circle tolerate the protests before they appear weak?

July 30thBloomberg reports troops massing on the Hong Kong border.

Update: the first weekend in August saw demonstrations lasting from Thursday through Monday. On Monday about 137 flights in and out of Hong Kong international Airport were cancelled or rescheduled. One airport runway was closed.


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