Hong Kong Is Caught in the Middle of the Great U.S.-China Power Struggle

The protesters didn’t expect to be back on the streets so soon.

Life in Hong Kong had only just started to resemble a new normal after the threat of the pandemic subsided. But there they were again on May 24, dressed in black, ready for the storm brewing. “This is a fresh hell,” says Sukie, 25, who asked to use only her nickname for safety reasons.

After almost a year of widespread, sometimes violent pro-democracy protests in the former British colony, China had announced sweeping new security measures that will prevent and punish any secession, subversion, terrorism or foreign interference in Hong Kong. Successive city leaders refrained from passing such a law in fear of demonstrations, and so Beijing bypassed the legislature to impose the bill itself. In the rest of China, these kinds of measures are regularly leveled to stifle dissent. The intent is clear, says Willy Lam, a political analyst at the Chinese University of Hong Kong. “Control is the No. 1 consideration.”

The law, which could be enacted by late June, is poised to curtail the liberties that set Hong Kong–long a conduit between East and West–apart from the mainland; its free speech, free assembly and independent judiciary. It also opened another front in China’s ongoing conflict with the U.S., after three years of bruising disputes on trade, espionage and intellectual property.

In response, the Trump Administration announced Hong Kong was no longer a free city, and pledged to revoke its preferable exemptions on trading, customs, travel and more. The world once had a “sense of optimism that Hong Kong was a glimpse into China’s future,” President Donald Trump said on May 29, “not that Hong Kong would grow into a reflection of China’s past.”

In the past few months, tensions between the U.S. and China have dramatically worsened. A relationship that has swung between outbreaks of hostility and grudging collaboration is now settling into long-term estrangement. At the end of May, Trump signed a major China policy document that argues 40 years of U.S. engagement with China has failed to produce the “citizencentric, free and open rules-based order” the U.S. hoped it would. The following week, the Chinese Foreign Minister Wang Yi fired back that it was “wishful thinking for the U.S. to change China,” and accused Washington of attempting to foment a “new cold war.”

The pandemic is the backdrop to these tensions. While China’s President Xi Jinping hopes to rile up nationalism at home to distract from the economic wreckage wrought by the coronavirus, Trump is turning to anti-China sentiment to shift focus from his own response to the outbreak. Hong Kong, about which the U.S. President has previously said little, offers a new line of attack. “Trump is hardly a crusader for liberal democratic values,” Orville Schell, the director of the Center on U.S.-China Relations at the Asia Society, tells TIME. “But he is dedicated to blaming China as a way to escape the burdens of his own irresponsibility.”

On one side is the world’s leading superpower, and on the other its rising challenger. Caught in the middle is Hong Kong, whose mostly young protesters have come to symbolize resistance to the Communist Party. The week Beijing announced plans to rein in the city, thousands defied social-distancing rules and police orders to disperse to take to the streets once again. Their chants of “stand with Hong Kong” and the answering cloud of bitter tear gas recalled the upheaval of last year. But no one could deny the stakes have dramatically increased. “There is no middle ground anymore,” says Chloe, 25, a teacher. “Either we accept being integrated into China now, or we become independent.”

For more than half a century, observers have been pronouncing the end of Hong Kong–most recently, U.S. Secretary of State Mike Pompeo, who on May 22 called the national-security law a “death knell” for the city. Local activists marked the handover from Britain with funeral rites back in 1997, when Hong Kong was grafted back onto China under a “one country, two systems” formula designed to preserve its legal and political systems within an authoritarian state.

This arrangement was forged by the reform-minded leader Deng Xiaoping at a time when many believed China would eventually embrace democracy. The West has long seen Hong Kong, where English is widely spoken and Western ideals embraced, as “a catalyst of democratic values” in China, as President Bill Clinton put it in 1993.

Hong Kong flourished as a gateway to China’s growing economic engine, becoming a base for international and local companies wanting access to the world’s top trading nation without the party-controlled courts and bureaucratic red tape. By 2001, around a quarter of China’s imports and 40% of its exports were handled through Hong Kong.

Politically, Beijing promised the city a “high degree of autonomy” for 50 years after the handover, until 2047. But the city has always been uneasy under the Communist Party’s rule. Promised democratic reforms, including direct elections for the city’s leader, were never realized, while the Hong Kong government aligned itself ever more closely with Beijing. An attempt to insert a “national education” into the school curriculum was jettisoned only after hunger strikes and demonstrations in 2012. Booksellers who published salacious tomes about the party leadership vanished in 2015, reappearing on staterun television issuing confessions.

Things came to a head in 2019, when an extradition bill perceived to hand authority to Beijing inspired massive popular protests that flared into several months of violent unrest. The national-security law is just the latest “milestone” in a long erosion of freedoms, says Bao Pu, a Hong Kong–based publisher and political commentator. “At present, even if they don’t pass the security law, the old way of life, it’s over, it’s long been over,” he says.

Disillusionment with Beijing has calcified a distinct identity among Hong Kongers. This is particularly galling to Xi, who has pursued the “great rejuvenation of the Chinese nation.” Hong Kong protesters have not only rejected this vision but also solicited assistance from the U.S. and the U.K. Few believe independence is feasible, but they see calling for it as a way to express their angst about the national-security law.

The legislation will permit the mainland’s feared security agencies to establish permanent operations in Hong Kong for the first time, instead of working secretly. Prominent protesters fear arrest by secret police and trial and imprisonment in Beijing. Many have started scouring their social-media accounts, deleting posts they fear could be incriminating once the law comes into force.

Some in the city are eyeing the exits. Migration consultancies say they are overwhelmed by the sudden volume of inquiries. Taiwan has promised “rescue and possibly residency” for Hong Kongers escaping political oppression, while the U.K. has offered 2.9 million of its former subjects safe harbor. “We will honor our obligations,” Prime Minister Boris Johnson wrote in an oped on June 3.

The Trump Administration’s move was designed to hurt Chinese business. The enclave’s special status allows Beijing to attract foreign funds. In the first eight months of 2019, China received $62.9 billion in foreign direct investment via Hong Kong, accounting for 70% of the total inflows. Any threat to such a vital financing channel risks destabilizing China’s already slowing economy.

But removing the city’s special status could also diminish its attraction as a global hub. Analysts say companies may uproot from Hong Kong to Singapore or Vietnam. Sources within two major law firms and an international media company told TIME the situation has accelerated contingency planning to relocate, though executives at other firms voiced hopes the national-security law would return stability to Hong Kong and thus to inward investment. A survey of 180 companies by the American Chamber of Commerce in Hong Kong in early June found that almost 30% were considering moving business operations, capital or assets, but a majority of correspondents said they had no personal plans to leave the city.

Experts say the Trump Administration’s actions could ultimately accelerate Beijing’s ability to consolidate control over Hong Kong, while also hurting U.S. business interests. According to the U.S. Consulate in Hong Kong, 1,300 U.S. companies have offices in the city. “Paradoxically, if we eliminate our special relationship with Hong Kong, it makes Hong Kong more integrated into the Chinese system, not less,” says Susan Shirk, a former State Department official who chairs the 21st Century China Center at University of California, San Diego.

For some of the more hawkish figures in Washington, that appears to be a regrettable side effect. Republican Senator Marco Rubio, acting chair of the powerful Senate Intelligence Committee, urged U.S. businesses to leave the territory, and said eventually China’s interference will make it imperative. “Alternatives exist all over the world from Taiwan and Malaysia to Ireland and Mexico. Supply chains can adjust,” he said in a statement to TIME. “When the [Communist Party of China’s] vision of security is implemented, Hong Kong can no longer serve as a trusted intermediary between China and the world.”

While Beijing’s harder line toward Hong Kong reflects its impatience with the protest movement, it is also part of a pattern of aggression in the weeks after China’s apparent recovery from the coronavirus. Chinese troops repeatedly crossed the contested border with India in May, and clashed with Indian troops. The Chinese navy has stepped up patrols in the South China Sea, and sank a fishing boat off the coast of Vietnam in April.

The U.S. has responded in kind, deploying warships off China’s southern coast and increasing naval exercises in disputed waters. The two powers have also engaged in a war of words over Taiwan, the self-ruled island Beijing claims is part of its territory. China’s Ministry of Defense expressed “strong dissatisfaction” after Pompeo congratulated Taiwanese President Tsai Ingwen on her inauguration last month, and days later one of the country’s most senior generals explicitly threatened to absorb the island by force. “Chinese aggression is not always just rhetorical,” Alice Wells, a senior U.S. diplomat, said during a recent press briefing. “We continue to see provocations and disturbing behavior by China that raises questions about how China seeks to use its growing power.”

The 2020 U.S. election threatens to compound this new environment of uncertainty and belligerence, as President Trump and Democratic candidate Joe Biden trade attacks over who has been softer on China. Still, the talk of a new cold war, with its implication of a conventional or nuclear military confrontation, is overblown, current and former U.S. and other officials say. Today’s battlefields are not literal but technological, its front lines 5G, AI and the supply chains along which trade and investment flow. The balance of power between Washington and Beijing today is also more level than the one between a booming U.S. and a fading USSR that had only military power.

Another comparison might be the Great Game, the 19th century trade-oriented rivalry between Britain and Russia, the two superpowers at the time. The legacy of that dispute is still visible today in war-plagued Afghanistan and in the continuously disputed region of Kashmir. Whenever and however great powers clash, there are victims left behind.

Hong Kong may yet be one of them. The pro-democracy activists here are trying to figure out their next moves. Years of peaceful demonstrations were ignored by the city’s government. The increasingly violent iterations over the past year drew Beijing’s ire. Now, dissenters will have to shift to new tactics as they contend with the unyielding Chinese government rather than its local proxies. Many hope the U.S. and its allies will help them push back.

“I hope Western countries can see that sooner or later conflict with China is inevitable,” says Cheung, a 50-year-old broadcast employee whose Sunday shopping was interrupted by police clearing a protest. “Hong Kong stood up … The rest of the world will have to stand up too at some point.”

–With reporting by KIMBERLY DOZIER and JOHN WALCOTT/WASHINGTON; AMY GUNIA/HONG KONG; and CHARLIE CAMPBELL/SHANGHAI