Following the 1997 handover, the economic relationship between mainland China and Hong Kong significantly changed. In the 1980s, Hong Kong’s economy always exceeded ten percent of the total Chinese economy, reaching twenty percent in 1993. However, as the Chinese economy expanded, the percentage fell, reaching less than 3% in 2014. This tendency had an effect on Hong Kong’s negotiating power with mainland China.
Shortly following the handover in 1997, the Asian financial crisis of 1998 emerged, having a significant impact on Hong Kong dollars, which are linked to US dollars. Interest rates have soared, while stock and property prices have plummeted, resulting in negative growth. From March to June 2003, SARS had a devastating effect on tourism, retail, the food industry, and the amusement industry. The unemployment rate was the lowest on record. In 2003, the Chinese central government and Hong Kong’s administration signed a “Closer Economic Partnership Arrangement” to find a way out. This refers to the economic integration of China and Hong Kong. Individual travel to Hong Kong was permitted by the Chinese central government for residents of a few designated localities, and multiple visas were provided to residents of Shenzen, a city near Hong Kong. This is especially beneficial for the growth of tourists from mainland China. Since 2007, the number of visitors visiting Hong Kong from mainland China has been estimated at more than 70 million per year. The increased number of visitors generated enormous interest in Hong Kong’s retail sector. Hong Kong’s investment in China has also expanded. According to the Hong Kong Stock Exchange’s status, the number has increased by more than 40% since 2006.
The National Security (Legislative Provisions) Bill 2003, which the Hong Kong government introduced during the economic downturn, was met with fierce criticism from Hong Kong residents. The measure was abolished when half a million citizens joined the march. Beijing concluded that the opposition was motivated by economic concerns and accelerated economic integration. The Chinese government took supportive measures, including the elimination of tariffs on Hong Kong products exported to mainland China and the increase of private tourism in Hong Kong. These actions resulted in an increase in employment and a return to economic growth. Around the time of the 2008 Beijing Olympics and the Sichuan disaster, Hong Kong residents paid a lot of attention to mainland China and maintained positive relations with the country.
However, the negative consequences of economic integration have accelerated.
To begin with, population pressure on Hong Kong’s infrastructure increased. As the number of mainland Chinese tourists surged, the transportation system and shopping districts grew increasingly congested, and the infrastructure for social services such as health care and education became insufficient. As the number of Chinese mothers giving birth in Hong Kong increases in order to evade the country’s one-child policy, a shortage of maternity ward beds has arisen.
Additionally, the residents of Hong Kong’s quality of life has degraded. Property prices, in particular, skyrocketed. Hong Kong has a long history of real estate speculation due to its dense population. After the limitation on private tours was abolished, wealthy mainland Chinese citizens began purchasing real estate in Hong Kong, and the Hong Kong government adopted the Capital Investment Entrant Scheme. This program provides residence in Hong Kong to individuals who invest a specified sum of money. Eventually, real estate prices climbed more than fivefold in ten years, and higher rent costs influenced the prices of restaurants and retail businesses, placing residents under pressure.
Moreover, emotional conflicts arise between mainlanders and Hong Kong residents. Many mainland visitors are carriers who purchase large quantities of everyday necessities in order to sell them exclusively in mainland China. Some Hong Kong residents derisively refer to these types of merchants as “locusts.” An emotional confrontation erupts over tourists’ public demeanor. This sentiment sparks rallies in Hong Kong against “locusts.”
The situation poses the question, “Whose streets are these?” to Hong Kong residents. Stores that close due to increasing rent are replaced by mainland tourist-only jewelry and cosmetics boutiques. The massive influx of tourists transforms the streets into those of mainland China. The situation in which tourist-oriented enterprises drive out local businesses creates a sense of loss among Hong Kong residents of their community’s diversity, autonomy, independence, and democracy.
Due to the relocation of manufacturing businesses to regions near mainland China, the northeast industrial sector was redeveloped as a commercial district in the mid-2010s. Cultural art spaces and small retail businesses are uprooted as part of this “urban regeneration” process. Several activists imprisoned for anti-redevelopment activities in the northeast district received harsher sentences than those jailed for the umbrella movement. This reveals that entrenchment of economic profit is regarded as a more serious offense than causing political disturbance.
These economic contradictions gave great effect to the umbrella movement and the 2019 democracy movement.