This was a strategic failure of the first order, since Hong Kong elites should have mapped out different scenarios and pathways to 2047, rather than hoping that two systems can be maintained or extended beyond 2047, like a renewed lease. 

Part, but not all of the strategic failure, lay in the philosophy of “Positive Non-Interventionism”, that became a mantra of the Hong Kong Civil Service. Coined by Sir John Cowperthwaite in 1971, then Hong Kong financial secretary, the mindset fitted British colonial policy which saw Hong Kong as a lucrative outpost in the Far East, where non-interventionism meant minimal burden on the British Treasury, maximum freedom for business and also least likely to provoke the Chinese Dragon.  

Hong Kong residents were free to develop business, provided they did not interfere in politics. Hong Kong civil servants were trained to execute policies essentially formed by the British governor, who referred to London every day. What Milton Friedman praised as “laissez-faire” made economic sense with political reality, as Hong Kong was a borrowed place on borrowed time. 

From a server economy to the British mainframe, Hong Kong politicians and civil servants had to switch to autonomy under the Basic Law in 1997, but true sovereignty rested in Beijing. The Hong Kong-US dollar link fitted everyone’s strategic and political goals, because US-China were on the same side since the 1972 rapprochement. But this was where Hong Kong democrats and liberals forgot political realism.

What happens if there is a US-China rift in which Hong Kong is caught in the middle?

In 1997, Hong Kong was an economic and financial asset to China, but a potential political liability. Anyone who did simple projections of Chinese growth would have known that by 2047, China would be at least a major, if not the top, economic power, in which Hong Kong would play an important but lesser role relative to Mainland centers such as Shanghai or Guangdong/Shenzhen.

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