A brutal Chinese military response has been predictable since mass demonstrations began in June, particularly given the remarkable stamina of the demonstrators to date.
However, what the Chinese Communist Party (CCP) may intentionally ignore or not fully comprehend is that the CCP and China’s economy would pay a terrible price for a brutal assault.
Avoiding a RevolutionBeijing, of course, is terrified that Hong Kong citizens freely rallying to protect their liberty will give the Chinese people the idea that they, too, can demand their innate human rights.
The principle of "rising expectations" helped destroy the Berlin Wall and the Soviet empire 30 years ago, but there’s a corollary principle of "crushed expectations" that is similarly powerful in sparking popular revolutions.
A sudden loss of freedom or the expectation that things will get much worse is what sparked the current Hong Kong protests, set off the 2009 Iranian demonstrations following their stolen presidential election, and brought together millions to help end Mohammed Morsi’s Islamist regime in Egypt.
- The destruction of Hong Kong’s reputation as a safe and free haven for business. The “Hong Kong miracle” will become tarnished with a loss of foreign investment and tourism. Killing the golden goose that is Hong Kong would harm the entire Chinese economy.
- Capital flight by the wealthy and middle-class, already at high levels, would go to afterburners, as they and foreigners scramble to get their assets to safety. The 2015 Shanghai stock market crash was met with bans on selling stocks and other drastic actions that would suggest the CCP may ban exporting capital in a greater crisis. Therefore, Hong Kong citizens and foreigners alike should get their assets out now. Much of that capital may end up being invested in the United States to our great benefit.
- The United States and other countries may enact economic sanctions, and proclaim their outrage.
- Foreign companies will accelerate their exit from the Chinese market by moving to safer manufacturing countries, including the United States and India. The benefits of operating in other countries will make abandoning China so attractive that once they leave, they won’t return. These include safeguarding their intellectual property, full ownership, avoiding sweatshop, prison and child labor, stronger labor and environmental laws, less bribery and corruption, and higher quality control.
- China’s international and business reputations will suffer greatly.
- Foreign investments in China will slow or cease, at least for a few years.
- Chinese companies will lose stock market value around the world, as happened following the imposition of tariffs by President Donald Trump on Chinese products.
- Unemployment in China would rise with the loss of manufacturing and tourism, which will further contribute to a post-massacre recession or depression. The CCP should understand that 100 million unemployed Chinese would create the conditions for a revolution.
- Tourism to China will drop, perhaps tremendously, for a year or more. Who wouldn’t be afraid to visit a country that butchered peaceful demonstrators?
- Countries that dispute China's territorial claims, particularly in the “first” and “second island chains” surrounding and beyond the South China and East China seas, will dramatically increase their defenses and their activities to protect the freedom of the seas and airways in the region.
- The Philippines may become a stronger U.S. ally against Chinese expansionism, and the United States will be better able to unite the region against China.
- China and human rights will become 2020 campaign issues in the United States.
- China’s “One Belt, One Road" initiative could be at risk from host countries, as anti-China feelings arise worldwide.
- Chinese citizens will see their incomes fall as the economy drifts to recession and perhaps depression.
- Chinese products may be deemed “blood products” by some consumers, offering U.S. and other manufacturers a greater advantage, resulting in a loss of market share by Chinese companies, and furthering the manufacturing exit.
- China’s "buying" of developing countries via extreme debt may come under greater scrutiny, and limit China’s ability to ensnare additional countries into debt traps.
The butchers in Beijing will mop up the bloodstains and assure investors that the "panda" image is still intact. But it’s tough to erase the memory of a massacre from even the most inhumane investors, much less socially conscious consumers.
The Chinese people, so far silently, have been hoping and praying that Hongkongers will succeed. Perhaps they will move from silent support to follow the Hongkongers to overwhelm the CCP with millions of people holding the streets in support of freedom and democracy. After all, the Soviet empire dissolved at the height of its power. That’s the lesson of the fall of the Berlin Wall.
President Trump can help protect the liberty and lives of the brave Hongkongers with a public message of support for the demonstrators and their universal right to enjoy liberty. The side benefits would be greater leverage against China on trade negotiations, and sufficient pressure may force the CCP to practice restraint and offer concessions to protect liberty in Hong Kong.