After many months of rioting and unrest in Hong Kong, it was patently obvious that the Chinese government would have to introduce national security legislation. The Basic Law required its introduction, and the SAR government had sought to do this in 2003, but large-scale opposition scuppered those plans. Its absence left the authorities badly exposed in 2019. Every modern country has such laws. No Western country would tolerate the kind of violence and rioting that scarred Hong Kong in 2019. Given the failure of the SAR government to introduce national security legislation, it became essential for the Chinese government to do so. The outcry in the West reeks of hypocrisy. The British, after all, enjoyed sweeping draconian powers in colonial Hong Kong.

Already, it would seem, the law has had the effect of deterring the kind of violent behaviour that was all too common last year. The point of such a law is not mass arrests but the exemplary punishment of the worst offenders in order to persuade others to desist from such action. So far this seems to be working.

It has been argued in the West that the new law signals the end of one country two systems. This is quite wrong. Hong Kong will remain quite different from the mainland in key respects. One country two systems was a brilliant solution to the problem of Hong Kong. It had nothing to do with the British: it was a Chinese idea derived from China’s history as a civilization-state. Such an approach was anathema in the nation-state tradition which holds to the principle of one country, one system. The British, in practice, never accepted, either in spirit or deed, the idea of one country two systems. After the handover the UK continued to believe that somehow it was the guardian of Hong Kong’s future. After 155 years of colonial rule it could not let go. At heart it never really accepted Chinese sovereignty over Hong Kong. The result was continual interference in Hong Kong’s affairs. Rather than being supportive of the handover, as it should have, it continuously sought to undermine it.

China was presented with a formidable challenge after 1997. Hong Kong may be overwhelmingly Chinese in composition but its population had lived under British rule for a century and a half. Unsurprisingly they thought very differently from those on the mainland. Western values and modes of thinking were dominant in the education system, the universities and the media. This has been exacerbated by a problem that has received too little attention: the Hong Kong Chinese have long looked down on their counterparts from the mainland as poor, inferior, uneducated and uncivilized. In fact they knew far more about the West than they did about the country to their north. Several years ago, I debated with Anson Chan, the head of Hong Kong’s civil service before the handover, and was shocked by her ignorance about China. The picture she painted of China was stuck in the Maoist era.

Which brings me to the nub of the problem. The national security legislation will, in all likelihood, ensure order and stability, but it will not solve the biggest challenge of all facing China in Hong Kong: winning the hearts and minds of the people. We must be honest. China has made very little progress on this score; indeed, since 2014, there appears to have been a significant regression. I measure this not by the rioters, who were a very small minority, but, for example, by the huge demonstrations against the extradition bill last year. There is a sense of malaise, a lack of conviction about the future of Hong Kong, which appears to be most marked amongst the young, and is reinforced by the fact that most people have experienced stagnant real incomes.

The long-term task is nothing less than the reinvention of Hong Kong. For the great part, Hong Kong remains unreformed. At the core of this problem is the economy. The British bequeathed a colonial-style economy which far from being highly competitive, as claimed in the West, was an oligopoly, dominated by a relative handful of tycoons that had been historically privileged by the British. The outstanding example was land. The fact that property prices are amongst the highest in the world is usually explained in terms of the density of the population. This is not true. Apart from certain areas like Wan Chai and parts of Kowloon, Hong Kong is not that densely populated; the New Territories, for example, are relatively sparsely populated. The overriding reason for the sky-high prices is the fact that the tycoons control the supply of land and restrict that supply in order to limit new building and thereby keep property prices artificially high. As a result, most young people rightly believe that they will never be able to afford to buy a home.

At the heart of a strategy to win the hearts and minds of the Hong Kong population must be a far-reaching programme of socio-economic reform that parallels China’s own extraordinary achievements over the last four decades. Such an ambitious programme has hitherto been singularly lacking. Hong Kong’s colonial legacy remains an oligopolistic and anti-competitive economy that has encouraged a casino and speculative mentality and produced one of the most unequal countries in the world. Its three main pillars are financial services, property and tourism. Compare that with the economic dynamism of Shenzhen or Guangdong province. There are many different aspects to Hong Kong’s reinvention but the most important of all will be its economic transformation, with integration in the Great Bay Area playing a crucial role.

Click here for the Chinese edition.