Analytic Guidance: What to watch for in the Hong Kong protests

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[Editor’s Note: The following is an internal Stratfor document produced to provide high-level guidance regarding the ongoing protests in Hong Kong. This document is not a forecast but rather a series of guidelines for understanding and evaluating events, as well as suggestions for areas of focus.]

International factors
Hong Kong’s pro-democracy protests have provoked reactions from the United States, United Kingdom and the United Nations pressuring Beijing to respond to Hong Kong’s democratic aspirations. Reports suggest that some Occupy Central leaders, student groups and pan-democratic lawmakers are maintaining contact with politicians from the United Kingdom and the United States, including US Vice President Joe Biden and British Deputy Prime Minister Nick Clegg. There is little indication that such contacts have translated into monetary support. Stratfor has also not seen any concrete evidence that foreign non-governmental organizations have sponsored the movement, despite Beijing’s claims to the contrary. Stratfor will keep a close eye on communications between movement leaders and foreign governments, non-governmental organizations and humanitarian groups to assess the movement’s external connections, as well as possible responses from Beijing.

The Hong Kong protests could also offer an opportunity for the largely subdued overseas dissident movement to regain ground. Falun Gong and Jasmine protesters, for example, have voiced an intention to capitalize on the movement and spark a showdown with Chinese authorities. While these groups are unlikely to garner much attention internationally or at home, Stratfor will watch for any coordination between these groups and elements within Hong Kong’s pro-democracy movement. More important, the student movement in Hong Kong resonates with Taiwanese activists, so Stratfor will continue to monitor for the rise of a similar civil disobedience movement across the Taiwanese Strait.


Business reaction
One of the most crucial determining factors to the future of the Occupy Central movement is the reaction from Hong Kong’s business community. Over the past several decades, the city-state has built its reputation as a world-leading financial center and investment destination because of its business-friendly culture and stable environment. Hong Kong’s business magnates hold considerable influence over the city-state’s affairs and have generally allowed the Chinese central government to exercise its policies in Hong Kong. While the Occupy Central movement has managed to avoid violence, the protests have inevitably had a significant effect on business continuity, particularly through the shutdown of banks and shops, as well as traffic disruptions. Businesses will open again next week after the end of the National Day holiday, and a backlash from the business community could grow. The influence of business leaders over the protest movement will be important to watch next week.

Beijing’s options
For the governments in Beijing and Hong Kong, the ideal strategy has been essentially to wait for the movement’s leadership to fragment and the protests to wane of their own accord. Indeed, this outcome is likely. Beijing may expect that disruptions to daily life or violent tactics from the movement would provoke opposition from the broader Hong Kong public. But Beijing’s vulnerability is time — the longer the protest movement maintains momentum while becoming more organized, the less the central government will be able to contain it.

If Occupy Central manages to sustain itself for a few more weeks, Beijing’s next best option would be providing a limited political concession. The central government has made clear that public nomination of Hong Kong chief executive candidates is not an option. Beijing also cannot afford to be seen as bending to the will of the protesters — something that could create a nationwide perception that mass movement is a viable means to achieving political objectives. It is quite likely that Beijing will temporarily delay the current reform proposals and allow negotiations with protest groups over specific terms. These could include increasing the number of candidates put forward by the nominating committee, the composition of the committee, or even aspects of the methodology of nomination. Beijing’s goal, however, is to maintain ultimate authority over the appointment of chief executive. With this in mind, Stratfor is closely monitoring Beijing’s receptivity to student group requests for political dialogue. Meanwhile, with local resentment toward Leung Chun-ying mounting, Beijing’s attitude toward Leung may change as it navigates options to ease the democratic demand.

Stratfor cannot completely rule out the possibility of violent intervention or military crackdown on par with the Tiananmen protests in 1989. However, the likelihood of this worst-case scenario is extremely low — the political and diplomatic costs would be simply too great for Beijing. Instead, Beijing would rather keep its role in containing the movement hidden, instead allowing the Hong Kong government and local police to shoulder most of the responsibility. Nonetheless, Stratfor will continue to monitor for signs of any military deployment in Hong Kong, as well as in Shenzhen and other parts of mainland.

2014 STRATFOR

Publishing by The Manila Times of this analysis is with the express permission of Stratfor.

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