The Umbrella Revolution

The courage and tenacity of the demonstrators in Hong Kong must both inspire and frighten informed observers watching events unfold from afar. The drama is inspiring because the proponents of the Umbrella Revolution are fighting for reforms that are both profoundly just and sorely needed, not only in Hong Kong but in the People's Republic of China more generally. It is frightening because anyone who remembers the events of June 4, 1989 can not help but fear for the lives and safety of the young people protesting today.

Because the peril is so real, it was a relief to see the government deadline this morning pass without violence. The stakes are very high for the government in Beijing. The pressures pulling China' s leaders in both directions- toward a peaceful resolution of the conflict on the one hand and a violent suppression of the movement on the other- are so intense that it is very difficult to predict how Beijing will respond or how the situation will ultimately be resolved.

Economic incentives drive Beijing toward non-violent means. The hard currency that flows into China through Hong Kong's financial markets is a major driver of growth and prosperity. Violence and instability that undermines investor confidence would kill the goose that lays the golden eggs.

Some political factors also constrain Beijing. The people of Taiwan see a mirror in the current crisis that they quite naturally assume reflects their own potential future. Taiwan already has its own autonomous and democratically elected government. Any Taiwanese wondering how much of that institutional structure the island would be able to retain in any hypothetical reunification with Beijing could be forgiven for concluding that the answer will soon come from Hong Kong. Why would Beijing tolerate more democracy and self rule in Taibei than in Kowloon?  A violent repression of the Umbrella Revolution will undoubtedly strengthen the hand of independence advocates in Taiwan, a development that could lead to a cross-straits crisis with broad international repercussions.

But other factors drive Beijing in the opposite direction, toward intransigence and, perhaps, violence. Where Beijing might want to project a face of tolerance and accommodation to the people of Taiwan, it has every interest in sending a contrary message to political activists in Xinjiang and Tibet. After sentencing Ilham Tohti, a Uighur scholar, to life in prison for having the temerity to promote the study of his own language and literature, Beijing's leaders can have no illusion about the dangerously mixed signals they will send by compromising with any movement promoting regional empowerment.

Economic conditions also complicate the pressures shaping Beijing's response to the Umbrella Revolution. Hong Kong enjoys a vastly greater per capita GDP than the rest of mainland China ($52,700 US as opposed to $9,800), thus one of the issues at stake is how much control the people of Hong Kong will have over the revenue that is extracted from them in the form of taxes. If Beijing controls the political leadership of Hong Kong, it retains power over the pipeline redistributing wealth from Hong Kong to the rest of China (of which Beijing is a prime beneficiary), and can dictate the rate at which that stream flows.

This might not be enough to move Beijing to violence, were it not for the fact that Hong Kong's fiscal relationship to Beijing, though exceptional in degree, is far from unique in kind. The per capita GDP of ALL of China's coastal cities, especially those south of the Yangtze River, is vastly higher than that of the interior and northern regions of the PRC. The one exception to this rule is Beijing, which has the highest per capita GDP of any region of China outside of Hong Kong: a situation created and sustained by the steady flow of tax revenue from the south and coast to the capital.  Any compromise with the people of Hong Kong could be the match that sets off a powder keg of resentments fostered by the forcible transfer of wealth from the south and coast to the north and interior.

Beyond these considerations, it is lost on no one that many of the demands of the Occupy Central movement echo those of the Tiananmen protesters twenty-five years ago. If the CCP accommodates the aspirations of the young activists in Hong Kong, it might open a Pandora's box that reveals similar hopes still alive among students in Guangzhou, Shanghai, and Beijing itself. China's leaders can not feel sanguine about that possibility.

However this crisis plays out, it has presaged the eventual demise of the Faustian bargain at the heart of the current Chinese social contract. Beijing has operated under the assumption that demands for political reform can be forestalled by continued economic growth and increasing prosperity. Hong Kong demonstrates that this assumption is false. Hong Kong's people already enjoy vastly greater prosperity than the majority of China's citizens, yet the prospect of losing that wealth has not deterred them from demanding democracy and autonomy. Indeed, it is the desire to protect and sustain their economic good fortune that drives them to agitate so urgently for democratic reform. However compliant the people of the rest of the PRC may be for the time being, eventually (after however many years or decades) they will arrive at the same place the people of Hong Kong are at right now: viewing political reform as a non-negotiable necessity.

For this reason (among others) the leaders of the PRC should be very cautious and circumspect in their response to the Umbrella Revolution. They face a choice that may well determine whether the inevitable evolution of the Chinese state and polity unfolds peacefully and progressively or violently and tragically. As they weigh their options they should know that the world, and history, are watching.