Special Report – Understanding Hong Kong – A to Z (P – T)

‘Peg’ – Felix Chung, leader of the pro-Beijing Liberal Party, warned: If the United States includes the Hong Kong’ dollar’s 36-year-old currency ‘peg’ with the US dollar in sanctions related to the national security bill, thereby denying Hong Kong access to the U.S. dollar, “this will be the end of Hong Kong.” As is known, the Macau pataca is indexed to the neighbouring region’s currency.

MB September 2020 Special Report | Understanding Hong Kong – A to Z


And what if China responds in kind? Macau economist Albano Martins told the Portuguese-language newspaper Ponto Final: “If there is such retaliation, Macau will simply disappear from the map”.

The truth is that, as has been reported more than once, some of President Donald Trump’s top advisers want Washington to weaken the indexation of the Hong Kong dollar to the U.S. currency.

The idea would be to achieve the indexation, limiting the ability of Hong Kong banks to buy US dollars.

But the United States must think twice before making this decision — not only because of the inevitable retaliation by Beijing, but also because the proposal would end up harming Hong Kong’s banks as well as the United States, rather than China. And what about U.S. gambling companies in Macau?

Eddie Yue, president of the Hong Kong Monetary Authority, said a few months ago that any move to deny Hong Kong access to the US dollar clearing system would be an “apocalyptic” scenario that “would also send shock waves to global financial markets, including the USA.”

More recently, Yue argued that the peg “will remain the bedrock” of Hong Kong’s financial system. “This is underpinned by a strong foreign reserves position of over US$440 billion, which is more than two times our monetary base”, he stressed. 

As is known, via ‘peg’, Hong Kong offers U.S. companies a relatively safe way to access the Chinese market, preserving the link with the U.S. financial system.

If such a scenario were to unfold, China would retaliate — and there would be no winners in this financial war: “This will, indeed, also be the end of the Chinese economy as we know it,” wrote the editor of Resonate in Guangzhou, quoted by The Diplomat.

In the meantime, other developments may change the rules of the game. A digital renminbi trial is set to start in Hong Kong, alongside other areas in the mainland such as Shanghai, Macau, Beijing, Tianjin and the province of Hebei, in what is being described by experts as the most significant expansion anywhere of a prototype of cash that will reside entirely online”. Bloomberg expert Andy Mukherjee speculated about the impact of a successful digital Chinese currency in an article called “China’s Crypto Currency May Challenge U.S. Dollar Peg in Hong Kong”.


Question, the – In 1984, China and the United Kingdom signed the “Sino-British Joint Declaration on the Question of Hong Kong.” 

In Hong Kong, to ask someone “Between Beijing and Hong Kong, which side are you on?” can be seen as an “impossible question”, paraphrasing philosopher Jiddu Krishnamurti.

At the heart of the question is a structural tension between a capitalist system with Western-modeled institutions and a rule of law inherited from British colonialism and a socialist, Communist Party-led system with ‘Chinese characteristics’ ruling the nation, the so-called two systems in one country. 

The role of the Hong Kong Chief Executive is a case in point in this intersection. Singapore’s founding father, Lee Kwan Yew, bluntly described the task as “a thankless job.” 

“You have a master in China. You have subsidiary masters in Hong Kong,” he said in a 2005 luncheon during which Lee gave another prescient assertion: “Beijing has no intention of allowing Hong Kong to be a pacesetter or a Trojan horse.”

President Xi Jinping, who is also secretary-general of the Communist Party of China (CPC), underlined the Central Government’s view of the question while addressing the 19th CPC Congress in 2017: “We must ensure both the central government’s overall jurisdiction over the Hong Kong and Macao special administrative regions and a high degree of autonomy in the two regions. We should ensure that the principle of ‘one country, two systems’ remains unchanged, is unwaveringly upheld, and in practice is not bent or distorted”. 

The Hong Kong question is set to continue ranking high on the international and domestic Chinese agendas. As foreign countries, namely the ‘Five Eyes’ (US, UK, Canada, Australia, and New Zealand) keep on issuing statements, suspending agreements, and in some cases even imposing sanctions, the Central Government has been reiterating that the Hong Kong question is an internal matter of China, strongly rejecting those countries’ “gross interference in China’s domestic affairs.”

The national security law has surely changed the terms of the equation, but the divide remains in Hong Kong, even though the noisy protests fell silent, hinting at the deterrent effect of the new legislation.  

Looking ahead, we come across additional questions: would Hong Kong citizens wholeheartedly and pragmatically embrace Chinese patriotism, paving the way to full integration with the Mainland? Or will the 2019 protests lead to cementing a localist, autonomous identity? How vibrant will the city be in the future as an international financial hub? How successful will the Greater Bay Area development plan be, and which new opportunities will regional integration bring for Hong Kong?

The view from the bridge shows us another question over the horizon: What will Hong Kong look like by 2047?


Regina Ip –  The pro-Beijing block in Hong Kong, inside and outside Legco, has several names, but few with Regina Ip’s track record and notoriety.

The fact that she was re-elected to the Legislative Council in 2016, with the highest vote of 60,760 in Hong Kong Island, says a lot about the public image of the first woman to be appointed Secretary for Security, (she had to resign from the administration of Chief Executive Tung Chee-hwa, after advocating the passage of the national security legislation to implement Hong Kong Basic Law Article 23, and after this legislation was withdrawn).

After that failure, she returned as leader of the New People’s Party (2008) and since then has always secured a seat in the local parliament, but that was not her main goal: Regina Ip had the dream of becoming the first female Chief Executive of Hong Kong.

She tried twice in 2012 and 2017, but in both situations she received the number of nominations “far behind what was needed”.

Has she given up?

Regina Ip did not return to the subject, but perhaps her 70 years are not a problem.

When she criticized Carrie Lam’s government last year (“The government has failed miserably in countering all the misinformation,” she said), many saw a sign that she was in the running.

Until that moment, she remained one of the closest voices to Beijing, as her most recent statements on the National Security Law attest: “Beijing authorities have no option but to get on with introducing a set of laws that will protect national security and discourage separatist activities” and “the motherland has nothing but good intentions” for Hong Kong.

But Ms. Ip also knows how to speak to the heart of the Hongkonger who is not radicalized.

When she says that, “the worries about the possibility of arbitrary arrest, trial in mainland China, and diminution of the freedoms of expression, association and of the press, are understandable. But once promulgated and applied in Hong Kong, the well-established common law safeguards of judicial review, habeas corpus, presumption of innocence and proof of guilt beyond reasonable doubt will kick in,” Regina Ip is making a difference to other well-known faces in the pro-Beijing bloc.


Sino-British Joint Declaration –  Last June, the European Parliament voted in favour of taking China to the International Court of Justice over its decision to adopt the national security law in Hong Kong. 

Main allegation from European deputies: China’s decision “violates” the Sino-British Joint Declaration and the International Covenant on Civil and Political Rights.

A few days later, G7 representatives released a statement saying that “China’s decision is not in conformity with the Hong Kong Basic Law and its international commitments under the principles of the legally binding UN-registered Sino-British Joint Declaration.”

The Joint Declaration, signed in Beijing in 1984, has been the main legal argument in recent months.

“If the declaration is really broken unilaterally, will Britain fulfil its self-claimed moral responsibility to the people of Hong Kong?”, asked Simon Shen, a well-known professor at several Hong Kong universities.

The Chinese response is based on two arguments: on the one hand, “the Joint Declaration is not relevant to the national security law in Hong Kong. As long as the law is enacted and promulgated pursuant to the Constitution of the PRC and the Basic Law of the HKSAR, its legitimacy cannot be challenged. Foreign countries are not entitled to interfere with China’s decision to impose the national security law on the HKSAR”, according to Huo Zhengxin, Professor of Law at the China University of Political Science and Law. These are arguments that have been repeated by the Chinese government.

On the other hand, “the Sino-British Joint Declaration, as a historical document, no longer has any practical significance, and it is not at all binding for the central government’s management over Hong Kong.” These words by Lu Kang, Chinese Foreign Ministry spokesman, are more relevant if it is added that they were said in 2017.


Taiwan – The Hong Kong-Taiwan connect is no novelty. However it seems that the political intertwinement of both sides has never been stronger than over the past year. 

Political developments on both sides have been influencing reciprocally at an unprecedented pace. 

One may argue that the when Deng Xiaoping devised the One Country Two Systems policy, some four decades ago, the political fate of both sides would be intrinsically linked. In addition to solving the Hong Kong Question, the policy aimed at paving the way for peaceful reunification with Taiwan. 

However, opinion polls show that only a small percentage of the Taiwanese citizens support One Country Two Systems at this stage. Also, all major political parties in Taiwan reject the model. As a result, this has surely become a serious problem for China and Hong Kong. Some observers stress that the approach of a Beijing-imposed national security bill would not see the light of day if Beijing were still committed to peaceful integration with the island. 

Critics also quote the fact that in the latest National People’s Congress address, premier Li Keqiang left out the word “peaceful“ when referring to Beijing’s aim of reunification with Taiwan. 

However, just days after Li’s speech, the head of China’s Taiwan Affairs Office, Liu Jieyi, reiterated that, “One Country Two Systems” and, “peaceful reunification” are the best ways to bring China and Taiwan together.

This is in line with Xi Jinping’s repeated statements, namely last October: “Forging ahead, we must remain committed to the strategy of peaceful reunification, and ’One Country, Two Systems,” adding that that China would “advance peaceful development of cross-strait relations, unite the whole country and continue to strive forward the complete unification of our country.”

As Chinese authorities tighten their grip on Hong Kong protest leaders, what will Taiwan do? 

Does it become neutral or will it ‘radicalize’ its position, by further stepping up its support to Hong Kong opposition groups and activists? 

The answer began to appear when it was announced that the administration of Taiwan president Tsai Ing-wen, had established a new office aimed to help Hong Kong citizens seek, “humanitarian assistance” in Taiwan last April. The Hong Kong Humanitarian Aid office would assist Hong Kong residents with study, investment and entrepreneurial interests, seeking employment or emigrating to Taiwan.

A Chinese mainland spokesperson slammed Tsai’s Democratic Progressive Party (DPP) interference in Hong Kong affairs, saying its motive is to create chaos in Hong Kong and seek “Taiwan independence.”

Even in domestic electoral politics, Hong Kong is a key factor. Analysts point out that last year’s anti-extradition movement was instrumental in independence leaning incumbent leader Tsai Ing-wen’s climb back from poor opinion polls, to securing a landslide win against the until then popular Kuomintang (KMT) candidate Han Kuo-yu – seen as China-friendly – early this year. Han’s woes didn’t stop there, as he was defeated in a “recall” vote for the position of Kaoshiung Mayor. Han was crushed at the polls and KMT has moved to distance itself from mainland China.

On the other hand, in light of the new law, “Taiwan and foreign activities in the HKSAR will be increasingly sensitive and under tighter surveillance,” argues political scientist Sonny Lo.

Beijing’s political direction has been spelled out several times by the top leadership.

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