The dramatic events taking place on the streets of Hong Kong are sending an unequivocal message to the world: capitalism doesn’t work without a modicum of freedom. The former Crown colony has become the Achilles heel of mighty China, Claude Baumann writes on finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
Thirty years ago, when the Berlin Wall came down, when the Velvet Revolution succeeded in Czechoslovakia a few weeks later, when the evil dictatorship of Nicolae Ceaușescu in Romania came to a grisly but swift end, I thought that the world was about to become a better place, at least from a liberal point of view. I was wrong – and I wasn’t the only one to be wrong.
We may have been blind on one eye. Because in June of 1989, the Tiananmen Square Massacre took place in Beijing, which was everything but a step in the direction of freedom and democracy. It should have served as our wake-up call.
«We weren’t much deterred by the fact that any sense of democracy and freedom was left behind»
Instead, we dreamt of a magical world inspired by technological progress, a world that worshipped the rediscovered globalization and promised a better future for us – primarily in economic terms. If you look at it this way, you can also give your blessing to the phenomenal development of China which turned into an economic superpower. It is the biggest and also most successful experiment of how to lift millions out of poverty.
We weren’t much deterred by the fact that any sense of democracy and freedom was left behind, not least because such considerations aren’t generally particularly deep-rooted in Asia and because we remained convinced that it was only a question of time before freedom and democracy would prevail.
But now we receive the bill for the impressive economic success of China: the world is helplessly onlooking as a civil war is taking shape on the streets of Hong Kong. Helpless not so much because we wouldn’t know what to do about it, but because China is so utterly implacable. In essence, this is the situation we have seen during the Cold War of the 1980s and with the Berlin Wall symbolically dividing the East from the West.
«The developments in Hong Kong remind us of the era of the Berlin Wall»
Then as now large parts of the population were convinced that the situation was untenable. But the criticism and bids to change the situation were rather scarce. People put up with the inhumane regimes in the Warsaw Pact member states, not least because it was hard to see how the situation might be changed in the short to mid-term. This remained the case until 1989 when the Hungarian government decided to remove the iron curtain. The rest is history.
In this sense, the developments in Hong Kong remind us of the era of the Berlin Wall, but so far there are no signs of a positive outcome. Quite the opposite. For too long the West has paid homage to the economic progress achieved by the dictatorship – shutting its eyes vis-a-vis all other criteria of a mature society. But, over the past three decades, China has also fallen victim to a miscalculation, namely that (state-)capitalism can flourish without freedom.
«Nobody wants that to happen»
But the recent events in Hong Kong are proof of the opposite. They pose a threat to the accomplishments of the past three decades. Because if China were to use brute force in Hong Kong, it would have dire consequences for the whole country. Nobody wants that to happen.
And hence, the former British Crown colony has turned into the Achilles heel of mighty China, the spot in other words where the highly authoritarian system is vulnerable. It is situations such as these – when stability is fragile – that in the past have often led with extraordinary speed to surprising outcomes – for instance, the fall of the Berlin Wall thirty years ago.
Claude Baumann is the co-founder and CEO of finews.ch and finews.asia, which is based in Singapore. Previously, he wrote for «Weltwoche» and «Finanz und Wirtschaft». He also co-founded the publisher Nagel & Kimche and launched business travel magazine «Arrivals». He is the author of several books on the banking industry.
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