The West’s fragmented geopolitics offer little reprieve for Hong Kong

Given the UK, France election results and coming US vote, geopolitical challenges will persist with Hong Kong’s traditional trading partners

Bernard Chan

Published: 9:30am, 12 Jul 2024

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In the late 20th and early 21st centuries, globalisation drove the interconnectedness and interdependence of the world’s economies, cultures and populations, leading to significant growth and proliferation.

But since 2010, escalating geopolitical tensions between major powers, trade disputes and the ascent of nationalism have shadowed globalisation’s progress, steering countries towards greater introspection.

Covid-19 exposed the vulnerabilities of our interconnected global systems, disrupting supply chains and travel. The world has become more fragmented, with a significant slowdown in cross-border flows, including in goods, services and capital, compared to the rapid growth seen in the preceding decades.

Geopolitical competition and the shift away from globalisation have compounded the problem, contributing to this fragmentation as countries and regions focus more on protecting their interests than pursuing deeper global integration.

Geopolitical fragmentation is particularly relevant in light of recent and coming elections in several countries. Many people ask if or how some electoral results will affect Hong Kong and whether the changes in governments will result in a different stance in their foreign policies.

In last week’s United Kingdom elections, we saw the Labour Party win overwhelmingly, ushering out a Conservative Party that had governed for 14 years. But the voter turnout was low, and the remarkable results achieved by the smaller political parties suggest that voters’ main ambition was to remove the Conservatives, rather than express great support for a new Labour government, which has little new to offer other than higher moral standards and a more ethical approach to governing a country that has diminished under Conservative rule and Brexit.

Labour Party leader Keir Starmer addresses the nation after his general election victory, outside 10 Downing Street in London on July 5, a day after Britain held a general election. Starmer became Britain’s new prime minister, as his centre-left party swept to a landslide victory, ending 14 years of right-wing Conservative rule. Photo: AFP

In the United States, the coming presidential election is expected to come down to a handful of swing states. In the traditional Democratic and Republican states, voter preferences are not likely to shift significantly.

Critical issues for the undecided voters in the swing states include the Israeli-Palestinian conflict, with young voters unhappy with President Joe Biden’s policies. But young voters also dislike Donald Trump’s policy on women’s issues. Immigration, inflation and the rising cost of living are all vital concerns.

Within the Democratic Party and among the electorate, there is increasing concern over the president’s mental faculties and ability to run for another term in office. Swing states will be the critical determinant of the election. The uncertainty rests with whether undecided voters will turn out and vote.

In France, legislative elections have resulted in a hung parliament, with no party or bloc securing an outright majority. This is a surprise as projections had pointed to a stronger performance by the far-right National Rally party. Instead, the leftist New Popular Front coalition surged ahead and gained 188 seats, a remarkable feat considering the alliance was only formed last month to prevent the far-right from gaining power.

The fragmented election result means France faces political uncertainty and gridlock just as many people are grappling with issues like high inflation and concerns over immigration. The surprising strength of the leftist coalition has upended the political landscape, setting the stage for an extended period of uncertainty and bargaining before a stable government can emerge. The path for France is far from clear.

In recent years, far-right European political parties have become more prominent, often on platforms emphasising anti-immigrant policies and opposition to globalism and a deeper European integration. Their rhetoric and proposals have stoked fears and resentment, contributing to a more polarised political landscape and making compromise and consensus-building more challenging.

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Could a far-right shift in the EU parliament change its relations with China?

According to London-based independent policy institute Chatham House, “centrist parties have tried to adopt far-right narratives on immigration at both national and EU level, hoping to retain voters who might otherwise consider defecting to far-right parties”.

The ability of European Union members to navigate this political landscape and maintain democratic stability poses a complex set of challenges for the future of Europe.

From a Hong Kong perspective, geopolitical challenges will persist with several of the city’s traditional trading partners. The situation is arguably the most challenging in recent memory; international business sentiment towards Hong Kong and mainland China remains very low. Many are concerned about the Chinese economy and the pace of policy reforms.

The outcome of the Communist Party’s third plenum next week will be paramount. It will determine policy direction and potentially calm markets, a matter of utmost importance for many in the business community.

Hong Kong has long benefited from Chinese growth. But the need for long-overdue reforms to reignite the local economy and achieve a good vision has never been more pressing.

Bernard Chan is a Hong Kong businessman and former Executive Council convenor