South China Sea crisis: Why Hong Kong protests could damage Xi’s military ambitions


CHINA is struggling to grab a hold of the situation in Hong Kong as protests overshadow the 70th China Anniversary celebrations on Tuesday in Beijing, and the unrest could have a negative effect on Xi Jinping’s military ambitions.
The People’s Liberation Army of China is set to show off 15,000 soldiers tomorrow in the country’s biggest ever military parade as they unveil a host of new weapons. The Ministry of National Defence has reported that 59 different elements of the military will be present, while 580 pieces of military equipment will roll through the streets and 160 aircraft will fly overhead. The latest road-mobile DF-41 intercontinental ballistic missile, which Chinese analysts say is able to target any part of the globe, will be unveiled. As will two unmanned aircraft, one a supersonic surveillance and targeting drone called the DR-8 and the other a stealthy batwing-shaped drone named Sharp Sword, designed to be launched from aircraft carriers.

The heavy weaponry is be chilling and impressive in equal measure and it comes as Beijing takes an increasingly aggressive stance on its South China Sea claims.

However, headlines in the West have been focused on protests in Hong Kong where citizens are resisting against the proposed extradition law that would have seen Hong Kongers stand trial in mainland China, contradicting their right to an independent judiciary.

The protests have served to undermine Xi Jinping’s repressive administration, something Beijing is concerned about as the Chinese government looks to maintain conformity and obedience.

However, the clashes between police have coincided with an economic hit for the Chinese government.

The ongoing trade war with the US has been a longstanding detriment to the Chinese economy with increased tariffs and trade barriers inflicting economic harm on both sides.

More recently, Hong Kong’s status as a stable, open economic hub has been put in doubt as the prospect of Chinese military intervention grows.

China needs Hong Kong to remain attractive to foreign investors, because it uses Hong Kong’s currency, equity and debt markets to attract foreign funds, while international companies use Hong Kong as a launchpad to expand into mainland China.

The bulk of foreign direct investment in China continues to be channeled through the city.

Most of China’s biggest firms, from state-owned Industrial and Commercial Bank of China to private firms like Tencent Holdings, have listed in Hong Kong, often as a springboard to global expansion.

Last year, Chinese companies raised £52billion globally, almost a third of the global total, via initial public offerings.
Just £15billion of that figure came from listings in Shanghai or Shenzhen, according to data from Refinitiv, compared with £28billion in Hong Kong.

Losing such a lucrative channel risks destabilising the already slowing Chinese economy, hurting confidence that the Communist Party can continue to deliver prosperity after a strong decade of growth.