Auburn political science lecturer: Hong Kong situation could have ‘exponential impact’ on trade

Published: November 20, 2019
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Matthew Clary, a lecturer in Auburn University’s Department of Political Science, teaches undergraduate and graduate courses in international relations and comparative politics, specializing in courses on national and international security and foreign policy. He has been closely following the situation in Hong Kong and offers insight into how this will impact Americans.

  1. What is the current situation in Hong Kong?

The situation in Hong Kong remains generally the same as it has for the past 5-6 months since the large-scale protests against the Hong Kong municipal government began, with the noted exception of a recent uptick in violence and the long-term effects of the protests beginning to be felt by the Hong Kong economy. Recently, protesters have begun creating more roadblocks and disruptions around the city, sometimes with violence involved, in order to create the most chaos by disrupting the normal functioning of this very busy and congested city. In response, the city’s police have escalated their response to some degree as well, with some protesters being shot, one of which was captured on video, and others being beaten and attacked. Perhaps the biggest development of late has been the growing impact upon the Hong Kong economy, which constitutes the 34th largest economy in the world. The frequent disruption to day-to-day business in the city has begun to have a lasting impact on the city’s economy, with the city entering into its second quarter of negative economic growth, with the economy expected to shrink by as much as 1.3 percent this year alone, and thus beginning its first recession since the Global Recession in 2008. So it is clear that the protests are having their anticipated impact on the city and so far have not been slowed. The question becomes, how long can the Hong Kong municipal government continue to allow the protests to create chaos and economic disruption without responding in some fashion: either to give into some or all of the demands of the protesters, which include things like investigations into the city police’s use of excessive force and a more defined boundary between the city government and any political influence from the Chinese mainland or to begin to crack down against the protesters more violently. The Hong Kong government is frankly running out of both time and options. As it is pushed further into a corner from pressure by the protests and by the Chinese central government, it may determine that the costs associated with a more violent response are less than costs associated with any further economic disruption. Additionally, there is the question of whether the Chinese central government in Beijing will determine to intervene militarily on its own following much the same logic. Such an intervention would be perceived as even more extreme, with much higher reputational and political costs. But with the costs of the protests continuing to stack up, the prospect of some type of forceful intervention by either the Hong Kong police or the People’s Liberation Army, or PLA, or both, becomes slightly more likely.

  1. How does this impact Americans?

In terms of impact to Americans, the most direct impacts would come from the economic disruptions produced by the protests. In 2018 for example, the United States traded around $67 billion with the city, with about $50 billion of that being exports from the US. Hong Kong is the United States’ 10th largest goods export market (as of 2018), so obviously any economic downturn in Hong Kong would likely have at least a small impact on the US economy and industries that export to Hong Kong, which include electrical machinery, precious metal and stone, art and antiques, meat (beef) and agricultural products. Given the pressures placed upon producers and employees in these industries from the trade war with China already, any additional pressures will have an exponential impact.

Beyond the economic impact, there is also the relationship shared between Hong Kong and the United States that is based around the fact that both possess democratic forms of government that strive to define and protect a range of civil liberties. For many of the protesters, their protests are a fight to protect their civil liberties and democratic form of government that they have possessed for more than a century and that is being challenged by the One China, Two Governments model that attempts to reconcile the differences between the authoritarian government of mainland China with the democratic government of Hong Kong. For Americans, this situation poses a particularly important dilemma, which is how to protect and promote democracy and the freedoms that it offers and protects while not further harming our relationship with China more broadly.

  1. Why should a person in Alabama be concerned about the ongoing situation in Hong Kong?

For a person in Alabama, I would say that the impacts are very much the same for the average American, but perhaps more pronounced for anyone who works for or is somehow dependent on exports either to China or Hong Kong. In Alabama, Hong Kong represents about 0.6 percent of all exports, which comes to about $129 million (in 2018) and China represents just over 14 percent of all exports, which comes to $3 billion (in 2018). The reality is that the events happening in Hong Kong or China will ultimately have an economic impact on most citizens of Alabama since the state’s economy, not to mention that of the United States, is deeply interdependent upon the economies of China and Hong Kong. Additionally, I think that for most Alabamians, there would be concerns related to wanting to defend democracy and human rights for the people in a place like Hong Kong. While that might not mean that the events in Hong Kong require any formal American action, it does likely mean that we may want to both stay aware of the events unfolding there as well as to provide a bit more vocal support for the pro-democratic elements of the protests in the territory.

 

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To arrange an interview with our expert, please contact Preston Sparks, Auburn University director of communications, at 334-844-9999 or preston.sparks@auburn.edu.