Hong Kong has been surrounded by demonstrations in recent weeks. The protest was triggered by chaos by the opposition to the Extradition Draft Law (RUU) that Hong Kong submitted to China, which until now has not found a bright spot. The majority of Hong Kong people who disagree with the proposed bill, as evidenced by ongoing demonstrations.
The demonstrators targeted the Hong Kong international airport as their place to voice their opinions, resulting in Hong Kong Airport authorities delaying all remaining flights. Problems with the bill have actually occurred since the beginning of the year, but lately it has increasingly been mounting.
Problems began in February 2019, when Hong Kong Security Bureau submitted a draft document containing proposed changes Extradition Draft Law. This draft amendment proposes amending the extradition treaty in the form of permitting criminals caught in Hong Kong to be extradited to China. Many Hong Kong residents are counter to the proposed changes to this law.
The disagreement led to the first demonstration in March 2019. Hundreds of Hong Kong residents took to the streets to protest Extradition Draft Law. Trade Unions of the United States also voiced their disapproval to John Lee, the Hong Kong Security Secretary. They considered that the draft law would disrupt the image of Hong Kong as a safe country for doing business.
With this demonstration, the economy in Hong Kong was reportedly paralyzed. As we know, Hong Kong is one of the main economic centers in the world. Not only that, the demonstration has an impact on the performance of a number of large global companies.
This condition added to geopolitical concerns because at the same time the trade war between the US and China continued. As quoted by CNBC, the management team at several multinational companies held a meeting to discuss performance and warn of dire consequences if the demonstration continues.
There will be potential for loss of income and impeded business investment. Many companies have felt the pressure of rising US taxes and the weakening of the Chinese currency. Traders also punished the Hong Kong stock exchange by sending the Hong Kong stock index to the lowest level in seven months.
Hong Kong shares have reportedly fallen by 10% in the past six months. This index is now 16% below the highest level created in early April.
Hong Kong officials have also given warnings that the protracted tension could cause continuing damage to the local economy. Hong Kong is home to seven global companies included in the Fortune 500, including technology giant Lenovo.
Currently Hong Kong’s economic growth is the weakest since 2009 in the first quarter. Although Hong Kong’s economy has risen in the second quarter, its achievements are still far from analysts’ expectations. The growth rate is only 0.6%.
If the demonstration in Hong Kong is not handled properly, the impact will affect the regional economy. Will to damage the economic stability, especially in the region and the world in general. It is not impossible that it would be like the 1998 monetary crisis that had befallen Indonesia.