Hong Kong Protestors Face Dilemma of Demonstration Fatigue

Hong Kong demonstration July 1, 2019. Reuters: Tyrone Liu

Yellow-hatted protestors took to the streets of Hong Kong on July 1st, with some marching to the Legislative Council (LegCo) building and breaking in. With windows smashed and graffiti sprayed on the walls the young remained until Hong Kong police announced they were coming.

Tear gas followed the protestors as they emptied into the streets and riot police built human barricades around the building. News reports show footage of the protestors facing off with them late into the night.

Hong Kong demonstrators clash with police early morning July 2nd. Photo: Anthony Wallace AFP/Getty images

After tempers calm the protest movement will be faced with the same dilemma that all social movements face – demonstration fatigue. Without another inciting incident — this time it was the anniversary of the British handover to China and a continuing fight to eliminate a proposed extradition bill with Beijing, the protest movement may have a hard time maintaining momentum.

Source: Bloomberg

The Hong Kong movement galvanized around opposition to a proposed extradition bill on June 12th with an estimated over one million people taking to the streets. That bill has been temporarily suspended from consideration in the legislature, but not withdrawn. Other long standing grievances include China’s heavy hand in limiting voter choices during Hong Kong election and stacking the legislature with Beijing appointees.

Carrie Lam, Chief Executive of Hong Kong is at risk of losing her position if demonstrations continue, though what substantial gains come next remains an open question. More freedom for the island seems unlikely as the the “One Country, Two Systems” formula post UK-hand-over has already been weakened.

China is playing the long game and demonstrations mainly add short-term pressure in a system tilting more and more towards Beijing.

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“Brand America” Falls Out of Favor With Foreign Investment

Trump understands that brand matters, and the latest version of brand America is failing badly. At this year’s World Economic Forum in Davos, business executives expressed not only concern, but outright dismay, over the investment climate in the U.S. And they aren’t just sitting on their capital waiting for better days.

Investors are voting with their money and heading for other countries. The statistics for Foreign Direct Investment in the U.S. (FDIUS) show a troubling trend. In the second quarter of last year FDI turned negative, a reversal of fortune not seen in years. That followed a drop of 41% year-on-year to $277 Billon in 2017, after peaking at nearly $472 billion 2016, according to U.S. government data.

Cyclical Decline in Foreign Direct Investment to the U.S.

Companies including Tesla, Unilever, and Foxconn are looking elsewhere to invest due in part to the uncertainty around the U.S.-China trade war. Imports and exports have been hit along with supply chain disruptions. While the upcoming trade talks in Washington were bathed in a positive light from governments on both sides of the Pacific, the outcome has been thrown into serious doubt after the Department of Justice announced criminal charges against Huawei and its CFO Meng Wanzhou. 

She is currently detained in Canada on an extradition request that is now sure to move forward. Trump has said he may intervene in her case if it serves the trade talks and U.S. national security. What he can actually do, politically or legally, remains unclear.

Trump Has Few Options
on Huawei Sanctions Trouble

The souring on brand America isn’t just about China trade disruptions. Trump’s immigration policies, his tacit acceptance of jingoistic and racist dog whistling by his most ardent supporters, and the perception that the U.S. is retreating from global affairs is turning away international students that might otherwise invest in a coveted U.S. education.

Enrollment in undergraduate programs dropped for the second year in a row with a 6.6% fall for 2017-2018. That’s putting new strains on colleges and universities that have grown accustomed to full-tuition paying foreign students.

The longer term cost to the U.S. will show up in worker shortages, primarily in science, technology, engineering, and math disciplines. These professions are already woefully short on trained graduates and unfilled jobs create a drag on economic growth.

While the administration touted $1.5 trillion dollars in corporate tax reductions that began in 2018, a survey by the National Association of Business Economics shows that companies are not in fact spending more. Trickle-down economics didn’t work under Reagan and it certainly isn’t working now even with a new, slick cover promising to make America great again.

A brand is only as good as what it delivers and so far Trump’s promises made continue to be promises broken. The U.S. accumulated a lot of good will over the decades. That hard-earned reputation is now at risk of being destroyed in only a few years.

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