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The people of Hong Kong this week have been making it difficult for Xi Jinping and other Chinese leaders to ignore their will. (Source photos by AP and Getty Images)
China up close

Xi's next steps on Hong Kong will be hindered by US-China summit

Demonstrators and Washington both oppose Chinese-style rule of law

KATSUJI NAKAZAWA, Nikkei senior staff writer | China

TOKYO -- Hong Kong has seen the largest demonstrations since the former British colony was returned to Chinese rule in 1997. At issue is a highly controversial bill that would allow the extradition of criminal suspects to mainland China.

What happens in Hong Kong will have implications on the global economy, as the developments this week shake the foundations of Asia's financial hub.

"It will also impact the atmosphere leading up to the U.S.-China summit in Japan," said a source familiar with bilateral ties.

Whether Chinese President Xi Jinping decides to meet with U.S. President Donald Trump on the sidelines of the Group of 20 summit in Osaka, Japan, at the end of June, will likely decide the fate of the U.S.-China trade war. 

And what happened this week in Hong Kong is likely to weigh heavily on those talks.

When an estimated 1.03 million demonstrators took to the streets on Sunday, a 50-something man who lives near where the protesters were conglomerating attempted to join in.

"I thought about taking part," he said. "But I gave up because there were so many people that I couldn't even get off a subway train and go above ground."

While the police tried to downplay the size of the throng by saying fewer than 240,000 people took part, it was clear that the march was held on a scale unprecedented in the territory.

The man said that although he has so far not been interested in politics, this time is different. He pulled an all-nighter, watching the clash between some protesters and police on television until the early hours of the following day.

His interest in the protest reflects his fears over the future of Hong Kong. If the controversial bill passes, people deemed problematic by mainland China could be subject to extradition. As a result, Hong Kongers' freedom to criticize mainland China would disappear.

This would directly impact the lives of the people of Hong Kong and foreign nationals that call the territory home.

Hong Kong was handed over to China 22 years ago under a "one country, two systems" formula that was to guarantee a high degree of autonomy, except in foreign and defense affairs, for 50 years.

The U.S. government recognizes Hong Kong as a customs territory separate from mainland China and has made many U.S.-bound exports exempt from punitive import tariffs.

But the situation could change if confidence in the "one country, two systems" formula is shaken. There could be an increase in the number of foreign businesspeople who shy away from working in the territory.

For decades, Hong Kong has attracted talent and capital from around the world because it was "free and safe."  Now that reputation is at risk.

In 2014, the Umbrella Movement lasted 79 days. This week, Hong Kongers feel even more urgency to safeguard their "one country, two systems" autonomy. (Photo by Ken Kobayashi)

Back in 2014, student-led pro-democracy protests dubbed the Umbrella Movement broke out. Those taking part in the two-months-plus act of civil disobedience called for "true universal suffrage" in connection with the election of the territory's top official.

This time there is more urgency. Quite a few middle-class people, those previously slow to take part in acts of resistance, marched on Sunday as individuals. There is also strong opposition to the extradition bill within the business community, which usually finds it difficult to act against Beijing's wishes.

Concerns about China's opaque rule of law and governance system being applied to Hong Kong are already becoming a reality.

The Causeway Bay Books case remains fresh in people's memories. Around four years ago, several persons related to a small Hong Kong bookseller known for carrying works critical of the Chinese government disappeared one after another.

Last year, West Kowloon Station opened for business on Hong Kong's Kowloon Peninsula as the terminus of a high-speed rail line connecting Hong Kong with the Guangdong Province cities of Shenzhen and Guangzhou. A through train that departs from the station directly carries passengers to Beijing, China's capital 2,400 km away. But the Hong Kong-mainland connection is stronger than that: West Kowloon Station houses Chinese immigration, customs and quarantine facilities.

This gives Beijing jurisdiction in a stretch of Hong Kong. Criminal offenses committed on high-speed trains are punishable under mainland laws even if the train remains in Hong Kong.

For this, West Kowloon Station has come under criticism from Hong Kong pro-democracy advocates who say the arrangement infringes on the territory's "one country, two systems" autonomy.

Concerns over China's opaque system are also closely related to talks aimed at ending the U.S.-China trade war.

China's judicial system is fundamentally different from those in democratic nations. One big difference is that the Chinese Communist Party is constitutionally positioned atop the entire legal structure.

The party can provide guidance to all organizations in China, to legislative bodies, to courts, to administrative institutions and to private-sector companies as well.

Furthermore, party branches have been set up at all large organizations. Huawei Technologies -- China's smartphone giant that also appears to be well-positioned to supply the world with crucial equipment for 5G infrastructure -- is no exception.

This unique power structure explains why foreign nationals and companies that mount legal challenges against business misconduct in China have difficulty winning fair judgments.

And this goes to the crux of the U.S.-China trade battle. The U.S. is demanding legal safeguards for the intellectual property of American companies as well as legal recourse for companies that feel they are being forced to transfer proprietary technologies. China is adamantly refusing to provide such measures.

Washington, which claims Beijing has broken past promises, does not trust Chinese-style rule of law or the governance system associated with it.

This is why the U.S. is demanding that any agreement include legal measures which are clearly binding under international law.

After five months of negotiations, the two adversaries appeared to have a 150-page deal that satisfied all of their concerns. But at the beginning of May, China sent a heavily edited and abridged draft back to the U.S. It was missing 45 pages.

The editing was carried out after party higher-ups harshly criticized the text's legally binding clauses, calling them tantamount to "an unequal treaty."

From's China's standpoint, the party was protecting China's opaque governance system, ensuring that it would maintain its constitutional prerogative to guide all other organizations in the country.

This week's events in Hong Kong ensure there will be added drama at the Intex Osaka convention hall later this month when G-20 leaders gather.   © Kyodo

Hong Kong citizens and the U.S. government share a common distrust of and concern with Chinese-style rule of law and governance. The Washington-Beijing-Hong Kong triangle, with interests connected in an intricate way, makes it difficult for Xi to decide on his next steps.  

Hong Kong's government wants the extradition bill enacted before the territory's legislature goes into recess in July. This means the political crisis that the bill has triggered will reach a critical point at the end of June.

Hong Kong on July 1 marks the 22nd anniversary of its return to Chinese rule. Since July 1 is a public holiday, a demonstration calling for the protection of the "one country, two systems" formula is likely to take place that day.

History tells us that Chinese authorities dislike any situation that could humiliate Xi while he is on the global stage, like he will be in Osaka.

Perhaps that is why China's Foreign Ministry spokesman is repeatedly warning Western nations that Beijing is "firmly opposed" to any outside interference in the legislative affairs of Hong Kong.

Will China be able to carry on with its high-handedness, ignoring the will of Hong Kong citizens? How it handles the situation will affect U.S.-China trade talks, including the Xi-Trump meeting in Japan a little more than two weeks from now.

Katsuji Nakazawa is a Tokyo-based senior staff writer and editorial writer at Nikkei. He has spent seven years in China as a correspondent and later as China bureau chief. He is the 2014 recipient of the Vaughn-Ueda International Journalist prize for international reporting.

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