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Propaganda war playing out as HK wrestles over reform
Publication Date : 06-08-2014
A high-stakes game of propaganda is playing out in Hong Kong, as the city struggles to forge consensus over constitutional reform.
E-mail of media baron Jimmy Lai was leaked to the local media by unidentified parties this week, showing that he spent millions advertising civil disobedience movement Occupy Central's unofficial democracy poll in June.
The owner of pro-democracy newspaper Apple Daily also donated to pan-democrat legislators, who failed to declare the funds in accordance with legislature rules.
With Lai portrayed as having close ties with American politicians and officials, the leaked information also lent traction to frequent accusations from establishment critics that he is fomenting anti-Beijing sentiments in Hong Kong with the help of the United States.
On the flip side, there have been charges that Beijing is waging its own "psychological war" by exerting pressure on business organisations and financial institutions here to sound dire warnings about the costs of Occupy Central to Hong Kong's economy.
It has been a particularly contentious topic, with wildly varied analyses from banks and economists. One reason is simply that forecasting is an inexact science.
Another is that the plans of Occupy Central which threatens to blockade the financial hub to press for "genuine" universal suffrage - such as its scale and length - are unclear for now.
But one key factor, believes political observer Willy Lam of the Chinese University of Hong Kong, is Beijing's "psychological war".
"It is very clear that the central government is pressuring organisations and companies in Hong Kong into opposing Occupy Central through the liaison office here," he said, referring to cases such as Hong Kong tycoon Lee Shau Kee's Towngas company distributing anti-Occupy petition forms to its employees.
He also noted the curious case of HSBC bank, which last month downgraded Hong Kong equities to "underweight" in a report, saying the Occupy Central movement "could sour relations with China and may hurt the economy".
Hours later, after this sparked criticism on social media, the bank changed the report citing other reasons such as weakening residential real estate prices, slowing mainland tourist arrivals and rising US interest rates - with Occupy Central as a lesser concern.
Barclays bank, meanwhile, sounded a warning about the impact of a "shock" on the property market, saying that any recovery would resemble its plight during the 1997 Asian financial crisis which took six years to overcome.
A coalition of five business groups including the Hong Kong General Chamber of Commerce (HKGCC) also issued a statement saying Occupy Central will "likely have a significant negative impact on third-quarter consumer spending".
It could also "deter foreign enterprises from investing in Hong Kong, potentially causing a tremendous ripple effect throughout the local economy".
It did not cite any studies. When contacted, the HKGCC said it did not have anything to add.
Economist Francis Lui of the Hong Kong University of Science and Technology, and a founder of the Silent Majority group that opposes Occupy Central, however, has done his calculations.
He estimates that the damage to Hong Kong could be at as much as HK$1.6 billion (US$205.9 million) a day, as Central represents one-fifth of the city's total gross domestic product of about HK$2 trillion (US$258 billion) a year or HK$8.1 billion (US$1.05 billion) each day.
And in the long term, it will sour Hong Kong's relationship with Beijing which will cost the city opportunities, he warned, saying that the decision to make Shanghai instead of Hong Kong the headquarters of the new Brics bank is an early manifestation of this.
"Beijing won't take the risk to place such important institutions here, given the possibility of occupying Central," he said.
But for other analysts, such warnings are exaggerated. Banks such as UBS and Credit Suisse have come out to downplay any impact of Occupy Central.
Said Kevin Lai, deputy head of regional economics at Daiwa bank: "To say the Occupy Central protest would bring devastating consequences to the city is far-fetched."
He argues that what is more key to Hong Kong's economic well-being are its core values like the rule of law, an incorrupt government and judicial independence. He said: "It is when we lose these, that we will lose the confidence of foreign investors."
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