Covid-19’s Wake: Bitcoin May Be The Last Chance For Freedom In Hong Kong

In the wake of Covid-19, many remember the Hong Kong protests in 2019 for their intensity and great energy. Thousands of individuals protested China’s disproportionate force and legislative takeover that violated Hong Kong’s Basic Law. The rallies began in March 2019 with a sit-in at government offices after an adjustment to the extradition policy to mainland China.

Hong Kong, long a paragon of free economic activity, a center of trade and commerce, and a democratic and free state, was quickly taken over by mainland China.

COVID-19 stopped the protests, and the west ignored Hong Kong’s predicament. A 2020 paper from Beijing stated that the Chinese Communist Party (CCP) will acquire “complete authority” over Hong Kong, with people’s observance of COVID-19 rules allowing China to easily wipe away dissent using force and without international involvement.
All forms of political dissent have been stifled in Hong Kong, including the right to demonstrate and free speech. The new National Security Law, approved in May 2020, bypassed the local legislative process and allowed China to exert unprecedented control on Hong Kong.

Hong Kong’s Basic Law, which granted it a “capitalist system and way of life” and “a high degree of autonomy” for 50 years, has been broken by the CCP.
Since then, Hong Kong has experienced a mass exodus as basic liberties have been removed. Hong Kong’s economy has weakened.
Hong Kong has a “zero-COVID” policy in response to the COVID-19 epidemic, although it had one of the highest Covid death rates in March 2022.

This Atlantic article highlighted how Hong Kong’s government utilized COVID-19 to demand ultimate population control. Hong Kong has had extreme shutdowns and continues to fail, while it defends a zero-covid policy.

Hong Kong’s rulers argued they could administer more effectively without opposing voices. In the local assembly, revamped last year to prize nationalism and obedience over ability and political know-how, recommendations on how to manage the epidemic have included the impracticable and stupid (using cruise ships as temporary isolation facilities) (dropping fresh food into Hong Kong by drone). Even politicians and the administration have a new feeling of urgency after Chinese President Xi Jinping talked last month of the “overriding task” to control the spread.
“Hong Kong’s pandemic reaction indicates the NSL new order extends beyond elections and activists,” Professor Ho-Fung Hung, author of City on the Edge: Hong Kong Under Chinese Rule, said so in an interview.
This technique reduced unemployment and city debt.
Hong Kong still has a dollar-pegged currency notwithstanding authoritarian developments. Hong Kong’s monetary authority wants the dollar to cost HK$7.75 to HK$7.85. Hong Kong lost significant liquidity as the U.S. raised interest rates, despite fighting to maintain its peg. The Hong Kong dollar balance decreased by more than half between May and July.

The difference between the Hong Kong Interbank Offered Rate (Hibor) and its US counterpart (dollar Libor) increased after the Fed began aggressive rate hikes because Hong Kong had sufficient liquidity. Hibor and Libor are daily averages of what banks would charge to lend to each other. This yield disparity encourages traders to borrow Hong Kong dollars to buy US dollars. This so-called carry trade can drive the local currency to HK$7.85, triggering HKMA intervention.

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Hong Kong is stuck between the CCP’s political rule and the U.S. dollar and fiscal policy. Hong Kong’s inflation rate for 2021 was 1.57%, a 1.32% increase from 2020, however borrowing prices rose due to this selloff. The combination of the population loss affecting real estate prices in Hong Kong due to a drop in demand and the rising borrowing rates to preserve the peg has hurt the economy severely. Hong Kong endured COVID-19 restrictions, therefore joblessness mirrors China’s.

George Magnus, an Oxford China Centre economist, told Bloomberg, “It’s China’s choice whether to preserve the peg.”

The CCP has soft power over Hong Kong’s local administration and could decide to take economic control. Hong Kong’s financial autonomy may be curtailed as China and Russia strive to build a new reserve currency and the Federal Reserve tries to manage inflation.
Hong Kong was rated as the most “crypto-ready” country in 2022, despite its financial and political precarity.

This number was established by “crypto ATM installations, pro-crypto policies, startup culture, and a fair tax regime.” A Forex Suggest study found Hong Kong as the best-prepared country for widespread cryptocurrency adoption, with an 8.6 crypto-readiness score,” via CoinTelegraph. Hong Kong observed an increase in bitcoin trading during the 2019 protests, highlighting the need for a peer-to-peer exchange not controlled by the government (now a pawn of the CCP).

Hong Kong residents call it home. As China extends its authority over the region, COVID-19 limitations seem never-ending, and even the city’s most basic freedoms are eliminated. Hong Kong’s future seems grim.

If China transfers Hong Kong to a yuan- or state-sponsored digital currency, this will become clearer. China has already tried to transfer Hong Kong under e-CNY, a controlled digital currency. According to Carnegie Endowment Scholar Robert Greene, experts close to the People’s Bank of China and state-owned bank executives believe e-CNY will contribute to the yuan’s long-term internationalization.
Hong Kong’s autonomy would cease.

Hong Kong has few choices for regional autonomy or individual liberty. Citizens can change course if they act promptly. If Hong Kongers use the Lightning Network to perform peer-to-peer Bitcoin exchanges, they might chart a challenging but hopeful road out of China’s authority.

Hong Kong’s current course loses regional autonomy, individual freedoms, and the ability to determine its own fate.

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