In December 2014, the Umbrella Movement, Hong Kong protests that had started on September 22, ended. Major roads, which had for three months been occupied by protesters, now were bustling again with traffic. Students returned to university empty-handed and suffrage-less. The protests, once lively with energy from the potential of tangible change, were extinguished without so much as an official statement from the Chinese government.
Why? The protest failed to hurt Hong Kong’s economy.
During the protests, as many as 100,000 Hong Kong residents, young and old, student and worker alike, took to the streets. They protested living conditions, rent prices and more, but most of all, they protested a new ruling by a committee of People’s Republic of China officials that reneged on previous promises of universal suffrage.
Throughout October and November, despite the threat of physical violence, the people stood fast and kept watch over the empty streets. By December, however, the protests unsuccessfully concluded; the government had made no policy concessions.
Protests in Hong Kong are infrequent but large affairs: while political protests may occur only a handful of times a year compared to the tens of thousands of times in mainland China, they are much more populated. The largest protest in Hong Kong since its transfer to China in 1997 was the 2003* political protests that attracted 500,000 people, roughly 7 percent of the total population. These protests shut down the economy and caused millions of dollars worth of damages. Confronted with the slipping economy and large number of protesters, the government granted democratic concessions.
Looking at previous protests in Hong Kong, many of the most successful have managed to impact the economy. This intuitively makes sense: Hong Kong’s stock index is one of the largest in Asia, and after last year’s Shanghai index collapse, it remains vitally important to China. Similarly, if a protest threatens to hurt Hong Kong’s economy, the government is more likely to concede policies to preserve economic prosperity and investor confidence.
By these standards, the 2014 Umbrella Movement had high potential. Public opinion was with the protesters, and even the international media picked up the palpable air of change on the streets. Even more, it appeared like the protest would impact Hong Kong’s economy, thus spurring the government into precipitating policy concessions. The beginning of the protests coincided with the peak shopping months of the year. The Shanghai stock index, and stocks indexes throughout Asia, were volatile, so the government had an incentive to preserve economic stability in Hong Kong. As the protest numbers and media coverage of the Umbrella Movement grew, an ever-increasing number of financial and economic advisers warned that the protest could have dire impacts on the Hong Kong economy.
Yet despite the hype that the Umbrella Movement protests had the potential to impact a third of the Hong Kong economy by GDP, nothing changed. The government made no concessions, and eventually by December, the protest subsided.
The Hang Seng Index value fell just 6 percent during the Hong Kong protests, not the drastic 15 percent or 20 percent some market watchers had predicted. And while some analysts have attempted to draw a link between the Umbrella Movement protests and falling stock prices, others point out that the Hong Kong Stock Exchange nevertheless outperformed exchanges in Japan, Italy, and many developing markets.
Most surprisingly, considering that the protests were largely centered in retail areas, retail sales were actually up a few percentage points over the previous year and fit the general seasonal patterns. Similarly, tourism numbers were actually significantly higher during the protests, counter to what many outside observers predicted. Hotels were about 90 percent full throughout Hong Kong during the protests, the same as the year before, demonstrating that visitors were still arriving en masse.
The crux of Hong Kong’s economy lies with its import and export economy, which in 2013 made up 25 percent of Hong Kong’s GDP. During the Umbrella Movement protests, total trade, a conglomeration of exports and imports, was up almost five percent over the previous year. Data also suggests that total trade during the 2014 protests was even slightly higher than during the same period of 2015. Less surprisingly, the unemployment and underemployment rates held constant at 3.3 percent and 1.5 percent during the protests.
The data indicates that Hong Kong’s economy during the protests was doing even better than a year before: simply put, the protests didn’t have a perceptible effect on the economy. Thus, the rampant speculation that Hong Kong’s service-sector economy would significantly suffer because of the protests was unfounded and false. Despite efforts by the Umbrella Movement to block off streets critical for Hong Kong’s retail base, protesters were ultimately unable to apply pressure to the Chinese government through the local economy.
Why didn’t the Umbrella Movement succeed?
The Umbrella Movement had two primary targets: the government and the economic sector. The government didn’t budge on its policies, demonstrating that the Chinese government was able and willing to sit out a three-month protest. So unlike previous protests in Hong Kong that affected the economy, the lack of an even marginal effect on the economy was the main reason that the 2014 protest didn’t succeed. Without affecting the retail and business sectors of Hong Kong’s economy, the protesters could not pressure the Chinese government to change its policies; as long as the economy remained stable, Beijing had little incentive to grant suffrage to Hong Kong residents.
In light of Shanghai’s massive June 2015 stock crash, during which the Chinese government was forced into a heavy-handed re-regulation of the market, the Chinese government will be even more loathe to give more independence to Hong Kong. Hong Kong’s economy has demonstrated itself to be too valuable to lose, given its track record of stability and economic progress. Thus, the 2014 Hong Kong protests may have been one of the last opportunities for more independence in many years.
For future protests or attempts for suffrage, the business sector is key. The Chinese government can afford not to care about a widespread protest by students and the general public. To shift government policy, then, future protestors need to shake investors’, visitors’, and private citizen’s confidence in the government’s ability to control the economy. By rattling business owners, protestors could reach and thereby pressure policy change at the government level through its economic leaders, who would invariably have more bargaining power. Should a future protest actually cut into Hong Kong’s economy, suffrage might finally be granted.
Tyler Y. Headley is at New York University Abu Dhabi, specializing in conflict and human rights. He has previously lived in Shanghai. Cole Tanigawa-Lau is an undergraduate and research assistant at NYU Abu Dhabi.
*Corrected from 2005. There were also protests in late 2005, but they were smaller in scale.