Hong Kong’s Rage is the Harbinger of a Multi-Decade U.S.-China Cold War

By: TradeSmith Research Team

Nov 18, 2019 | News

On June 4, 1989, the Tiananmen Square Massacre occurred. On that dark day, the Chinese government declared martial law and sent in tanks and troops to put down student-led demonstrations.

Westerners recall the iconic image of “tank man,” the lone protester standing in front of a line of tanks. What is less well-known is that, in the massacre that occurred less than 24 hours earlier, somewhere between several hundred and several thousand protesters were killed (and thousands more wounded).

Three decades later, in 2019, Hong Kong is headed for a possible repeat of Tiananmen Square. It hasn’t happened yet, but it becomes more likely by the day. Events on the ground are spiraling out of control.

If China’s forces crack down in Hong Kong as they did in Tiananmen 30 years go — causing hundreds or even thousands of protester deaths — U.S.-China trade talks could become untenable.

Worse still, a brutal suppression of the Hong Kong protesters would be the harbinger of a new U.S.-China cold war — a conflict that could last decades and be more dangerous, on more fronts than the prior Cold War with the former Soviet Union.

Hong Kong’s streets are on fire right now — literally. That is not an analogy or metaphor. It is the result of gasoline bombs and Molotov cocktails hurled by protesters in an effort to fight back against police. The protesters are also using umbrellas as shields, to deflect tear gas projectiles and the spray of blue dye water cannons.

On Nov. 8, a 22-year-old student protester died from his injuries after falling from a parking garage. Three days later, on Nov. 11, a protester was shot in the chest at point blank range. Also, on Nov. 11, a 57-year-old man criticizing the protests was doused in fluid and set ablaze.

The Hong Kong police are also taking injuries, as protesters rain down bricks, bottles, and Molotov cocktails on their vehicles and troops. One police official was shot in the calf with an arrow.

The police have mostly used rubber bullets and tear gas, but Chinese officials are threatening to escalate to live rounds. Voices in Chinese state media, with general approval from the mainland public, are calling for snipers to be brought in. Meanwhile the protesters have accused the Chinese government of hiring Triad thugs to beat them with clubs, sending dozens of protesters to the hospital.

At Hong Kong Polytechnic University, the recent scene was like something out of an apocalyptic movie. Fires raged through the night, set by the protestors to try to hold back the police. After the police sealed the exits, more than five hundred demonstrators found themselves trapped inside the university.

A letter of defiance from the trapped protesters was posted online. Among other things it read: “No freedom, no life. We won’t be afraid of arrest or death…”

As the letter suggests, Hong Kong is burning because Hong Kongers fear for their democracy, their freedom, and possibly their lives. To understand why, we have to go back to 1997.

Hong Kong was administered by British colonial rule for 156 years. On midnight of July 1, 1997, the control of Hong Kong as a territory was officially returned to China.

Part of the deal with the 1997 handover was the 50-year implementation of “one country, two systems,” an arrangement designed to let Hong Kong maintain the democratic freedoms it enjoyed.

The idea was that, until the year 2047 — 50 years from the 1997 hand-off — Hong Kong would have a measure of independence.

In June 2019, Hong Kongers reacted with alarm to an extradition bill that would have allowed anyone arrested in Hong Kong to be extradited to the mainland. This extradition policy would have been a violation of Hong Kong’s civil rights, as China’s court system is known for brutality and torture.

Worse still, such a bill would potentially let China’s authorities make Hong Kong political dissidents “disappear” at will — whisked away to the mainland on dubious criminal charges, never to return.

Earlier this year, the protests started big and then quickly grew bigger. In early June, hundreds of thousands of Hong Kongers took to the streets. Later that same month, an estimated two million took to the streets — the largest protest in the history of Hong Kong.

By July, protesters were storming the Hong Kong airport and disrupting air travel. By August, strikes were shutting down the city, and the Hong Kong subway system had become a battleground. In September, the protests grew violent — and matters have since escalated even more.

On Sept. 4, the authorities dropped the hated extradition bill in the hopes of ending the violence. But the protesters were no longer satisfied. They responded with new demands, including investigations into police brutality and the establishment of “universal suffrage,” which would give Hong Kongers the democratic ability to pick their leaders directly, rather than with China’s approval. 

The result is a violent stand-off that is seemingly without end.

As mentioned, the Hong Kong protesters believe they are fighting for their democracy, their freedom, and possibly even their lives. They see themselves in an existential battle with an encroaching authoritarian state — and they may well be right.

China, meanwhile, is rapidly losing patience, and it is only the spotlight that holds China back. The U.S.-China trade talks have likely prevented a brutal crackdown and a switch to live rounds. China knows it can’t afford a repeat of Tiananmen, in real-time streaming, on the world stage for all the West to see.

A brutal crackdown in Hong Kong, like the one in Tiananmen three decades earlier, would potentially make negotiations with the West impossible, or at minimum severely threaten China’s trade ties. And yet, it is also hard to see how China avoids a Tiananmen-like outcome if the protesters don’t back down.

If President Xi Jinping gives in to the protesters’ demands, and allows Hong Kong to have full-scale political freedom, he would invite a hunger for true political freedom on the mainland, which would ultimately lead to the end of 70-year one-party rule. There is no way the Chinese Communist Party can let that happen.

The whole Hong Kong episode, meanwhile, is the harbinger of a new U.S.-China cold war that could last for decades. China is becoming increasingly authoritarian, and the Chinese Communist Party is using the tools of artificial intelligence, surveillance, and machine learning to construct the world’s first digital authoritarian state.

As these efforts progress, the West will increasingly find itself clashing with China not just over tariffs and market access, but core matters of human rights and freedom. We are already seeing this via private company skirmishes with organizations like the National Basketball Association (NBA). This “new cold war” is likely to expand and play out on multiple fronts: Economic, geopolitical, technological, and cultural.

We need to be prepared for market impacts — and keep an eye on Hong Kong.

TradeSmith Research Team

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