THE BLOG
09/30/2014 06:42 pm ET Updated Nov 30, 2014

It Is in Beijing's Interest to Respect Its Commitment to Hong Kong

Historically, China has considered opposition as a form of crime of lese-majeste. The circumstances surrounding the Hong Kong recent opposition might be worth a better treatment than refusing a dialogue with the demonstrators.

Sticking to its word creates trust.

The last thing the new regime in Beijing needs is a crisis of confidence. President Xi Jinping is a forceful leader: is he building a new cult of personality, as The Economist alludes to?

Even if China has decided to play hard ball in the Southern China Sea, fight corruption to the point of threatening former Presidents, in supporting Syria and many other fronts, the respect for the President will lie in his ability to demonstrate the value of its commitments by sticking to them.

Pay attention to the rhetoric: the memories of Tiananmen Square are still fresh.

"Hong Kong is not a country; it neither has the conditions for a 'color revolution,' nor are the forces on the street influential enough to mobilize its entire populace," wrote the China Daily. "Street movements can evolve into revolution when more demonstrators become embroiled in them" Business Week adds. Beware of self-fulfilling prophecy. President Xi knows it: his respected father, Xi Zhongxun was a revolutionary Communist party leader who opposed violence at that time.

Such statements escalate the rhetoric of the Chinese leadership. There is no need to go that far: Hong Kong knows it belongs to China, but would rather see its representatives freely elected. In any event, as a Special Administrative Region, it does enjoy some privileges, even though it does not have the powers of an independent State.

It is important that the solution to this situation be different from the way the Chinese leadership reacted to the Tiananmen Square crisis. The opening of China has become essential to its future and its development is the direct fruit of its opening.

A laboratory of democratic experience? Need for a Dialogue!

Over the next decades, the Chinese regime will evolve as it did in the past. Hong Kong presents an opportunity for Beijing to test on a small scale some democratic experiences.

The first step is the dialogue. For the Hong Kong leadership to refuse to even receive and talk to the demonstrators is a double mistake. Refusing to meet is typical of the mainland way of handling crises: does the current Hong Kong leadership want its citizens to believe that their leaders are acting exactly like Beijing? What are the risks associated with a strong, even confrontational dialogue.

The second mistake is to take the responsibility to make the situation worse. If those problems could be resolved among Hong Kong citizens, it would be infinitely better for everybody, and first and foremost, for the Beijing leadership.

Hong Kong is key to China's economy and financial markets

Over the past years, Hong Kong has been a major actor in the internationalization of the so-called Dim-Sun bonds, denominated in Yuans, but issued outside of the PRC. It has been a major source of financing of foreign ad domestic investors in China. It has sent a powerful message of increased international confidence in the Chinese currency.

Most State Owned Enterprises (SOE) of China are listed in Hong Kong in the form of H shares. The wealth that came out of these IPOs both for the Government and for citizens of Hong Kong and China is immeasurable. Trust in economy and finance implies trust in the political structures that support those markets.

Mainland China would be the first to lose from a confidence crisis in Hong Kong. How many times have we heard the rumors of the replacement of Zhou Xiaochuan, the long serving governor of China's central bank? asks Forbes.

It is because of the remarkable development of China and its people that the Hong Kong events became quickly a serious source of international concern. Nobody has anything to win, in today's difficult world, to see another source of political disruption. Hopefully, reason will prevail and those issues will be handled through communication rather than riot police.