Radical Overhaul of Hong Kong's Governance Regime: Likely Implications for Prosperity and Stability

Constitutional evolution is normally a steady process, with the prevailing equilibrium seldom punctuated. Sharp reversals periodically occur but they are uncommon, usually confined to low-income and lower middle-income countries. The introduction of a draconian national security law and its heavy-handed enforcement in the affluent Hong Kong capitalist enclave, serving as one of the world economy’s pivotal global metropolises, thus amounts to a historically unprecedented emasculation of a sound and well-thought-out governance architecture. The abrupt unraveling of a semi-democratic infrastructure, pulverizing of key components of a time-honored rule-of-law system, and erosion of international legal personality has been breathtaking and profoundly disconcerting.

Yet, the ramifications of this dramatic turn of events have so far been narrowly examined, with the impact on the twin strategic goals of prosperity and socio-political stability largely overlooked. This is an issue that deeply concerns Hong Kong’s many stakeholders, and insights derived from the law-and-economics and law-and-politics literature suggest that the agonizing revamp of the governance regime bodes ill for the territory and, by extension, those engaged with it economically and otherwise.