Crushing Hong Kong will end Chinese globalisation

Via Epoch Times:

Elements of the immediate and long-term aftermath of a Hong Kong massacre may include the following catastrophic results for the CCP:

  • 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.

In short, the CCP loses no matter what it does. Do nothing and the symbolic umbrellas may appear on Chinese streets. A mild crackdown may only invite future uprisings. Commit a massacre and face the above punishments on a worldwide scale.

This is basically right, in my view. Even if authorities kow tow, the fallout at the individual level will be vast with the two worst likely to be worldwide consumer boycotts and business people valuing their skins enough to not invest anywhere in China, as well as shift supply chains anywhere else. It would end China’s globalisation period.

This is why focusing solely on a trade deal to drive an earnings recovery is profoundly obtuse stuff.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. I think that’s been the protestors game. Incite the CPP into committing an atrocity that cannot be ignored by the global community outside mainland China. The death of a few for the benefit of the whole. But I’m guessing China is wise to this and is playing the low, slow sick game trying to slowly smother the place with their blanket of media darkness and control so they can do whatever they like as if it were mainland China.

    Dawkins help them.

  2. Nothing will happen with Hong Kong – the longer the protests continue the more the overall population will turn against the students.

    What began with a million people on the streets with wide support amongst the population is now down to pockets protesters in Universities – they totally lost the people.

    It was done weeks ago when they turned violent and attacked the peoples shops, businesses, transport, destroyed tourism etc.

    Now the CCP and Hong Kong just has to wait. Who cares if the students don’t go to class ? No one.

    • Really?
      Did you not catch the elections in HK last 24 hrs?
      Record number of your so called “overall population” came out to vote and voted for pro-democracy candidates. Landslide.
      I dont see this as them “losing the people”.
      Quite the opposite in fact. Record turnout to vote…
      Where is this overall population turning against students you talk about?

      Nothing more plain than an election that shows what the overall population support.. and CCP cant hide this.

    • Rene you are much more interesting when you are ranting against the Aussie housing bubble. Can you stick to that? Your side gig shilling CCP propaganda is pretty boring and far too obvious.

  3. They have already massacred democracy protesters and are openly carrying out genocide on an ethnic minority combined with harvesting organs on an industrial scale. If the world has not done anything by now a massacre in Hong Kong won’t change things.

    • I’m inclined to agree. I mean, just look at their difference between the Wests reaction to the apartheid South African government, they did less evil than the CCP and yet there were trade bans & embargoes yet China (who’s actions in Xinjang, Tibet etc is apartheid or worse as they are trying to eradicate whole cultures) get away with it.

  4. The widely held belief that the CPP could do another Beijing type massacre is enough to see most of the above list come to fruition, its just the pace of it coming to fruition that will vary.

    The CPP China is dangerous where ever its influence is permitted.