How Hong Kong is challenging the world’s biggest power

Goldex Team

Editorial content

Few could have predicted earlier this year that the proposed passing of a rather dry-sounding legal text in Hong Kong would result in a real challenge to China’s authority. But the enormous protests sparked by the proposed passing of the Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019 are following their own script – and the long-term consequences are just as unpredictable.

What caused the protests?

The Bill allowed suspects in criminal cases to be extradited to mainland China. This could have huge consequences not just for those who live in the former British colony, but also those who travel to and through it. And it was a challenge to the judicial independence enshrined in the agreement China made with Hong Kong, when Britain relinquished the former colony in 1997.

Numerous groups – lawyers, business leaders, the media – spoke out against the Bill. They were concerned that China could use the law to extradite political activists, or significant business or commercial figures. And Amnesty International pointed to China’s long record of human rights abuses.

Following the biggest protests since the handover to China in 1997, city leader Carrie Lam suspended the bill, then finally withdrew it altogether in September. But demonstrations have continued and gone beyond their original remit, directly challenging the authority of the world’s biggest economic power.

Now, activists have new demands, including an amnesty for arrested protesters and universal suffrage for elections to the chief executive and the Legislative Council. As the stakes have escalated, so has the level of violence, with frequent clashes between demonstrators and the security forces.

New weapons

The authorities are also finding new ways to identify protestors using facial recognition technology: on October 4, the Hong Kong government banned them from wearing masks or makeup. Protestors quickly wised up, and began attacking and disabling the towers that used the technology. China itself has been heavily criticised for its use of facial recognition technology to identify members of the oppressed Uyghur minority, as well as monitor the general population.

As Steve Mollman recently reported for Quartz: “On September 27, the nation’s information-technology ministry announced that telecom carriers, from December, must scan the face of anyone applying for mobile and internet service.” He commented: “As China seeks ever more control over its population, it’s turning to one tool of particular note: people’s faces.”

Chinese reaction

At first, China didn’t comment on the unrest, but has now come out and criticised the protests. In August, government spokesman Yang Guang said: “In recent days, Hong Kong’s radical protesters have repeatedly attacked police with highly dangerous tools, which constitute serious violent crimes and have started to show signs of terrorism. This type of violent criminal activity must be resolutely combated according to the law, with no hesitation or mercy.”

There’s little practical support for the protesters internationally. When the UK called for ‘calm on both sides’, China’s ambassador Liu Xiaoming slapped down potential interference, warning that the UK should, “refrain from saying or doing anything that interferes or undermines the rule of law in Hong Kong”.

Gold prices

What impact will all this rising geopolitical tension have on gold prices? Chances are that they’ll remain steady. China may seem impregnable, but its economic slowdown, Trump’s trade war and the challenge from Hong Kong means that, more than ever, gold is likely to be seen as a safe haven in turbulent waters, pushing prices up.

Right now, the situation remains tense: the demonstrations are by no means over. Professor Jean-Pierre Cabestan, who heads the Hong Kong Baptist University’s Department of Government and International Studies, told CNN in September: “Some people are going to leave, but most young people are, I think, going to stay and try to fight,” he says. “That’s my prediction.”

Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, it does not give rise to rights to claim compensation under the Financial Services Compensation Scheme.