How Britain held onto Hong Kong’s economic elite

When the Liberal Democrat MP Wera Hobhouse was denied entry to Hong Kong in April, British journalists dusted off their usual line on the territory. Hong Kong used to be British, which means free, democratic and good, the trope goes. Now, it’s becoming evermore Chinese, which means authoritarian, unfree, and bad.

The second half is reasonable: Chinese state capitalism is authoritarian. But the first half should be challenged: Hong Kong wasn’t democratic when it was under British rule, it remains remarkably British, and that’s not necessarily good.

I’m not talking about the British idiosyncrasies widely discussed in travellers’ videos: Hongkongers have red double-decker buses; drive on the left; play cricket, rugby and bowls; and have streets named after British aristocrats.

I’m talking about the web of elite connections between Britain and Hong Kong, and what they’re for. While Indonesia – population 281 million – appears four times in the House of Lords register of interests, Hong Kong – with 7.5 million people – appears 40 times. It’s not surprising that a British MP has family in Hong Kong. She probably isn’t the only one.

Two of the three banks licensed to print Hong Kong dollars – HSBC and Standard Chartered – are London-based. HSBC is the biggest bank in both Hong Kong and Britain.

Hong Kong dollars are fully tradable, where Chinese yuan are strictly regulated. Just as London made itself the hub for offshore trading of US dollars outside the purview of US regulators (known as ‘eurodollars’), Hong Kong is the centre for offshore renminbi trading.

Cryptocurrency exchanges are banned on mainland China, but common on Hong Kong, just as (British) Gibraltar is becoming a centre for crypto trading.

The Hong Kong elite is particularly culturally British: 29 Hong Kong schools follow the British curriculum, including campuses of Harrow and Wycombe Abbey, while 8,000 Hongkonger children go to boarding schools in Britain – indeed, Hong Kong is the most common home for foreign students at British public schools.

The (formerly ‘Royal’) Hong Kong Jockey Club was founded by 19th century British colonists and quickly grew to become the city’s main civil society organisation – where senior staff of British businesses met and formed a governing class.

It started allowing Chinese businessmen to join in the 1920s in order to integrate them into this establishment and embed British power, and remains the biggest charitable donor and biggest taxpayer in Hong Kong. A profoundly British institution, it plays a vital role in reproducing Hong Kong’s elite.

There are 2.9 million Hong Kongers with “British National Overseas” legal status and, in 2021, Boris Johnson was moved by these elite ties to grant them residency rights in Britain, offering a pathway to citizenship.

British values

Hong Kong uses English-style common law – the system preferred by capital, because it empowers courts, and so whoever can afford better lawyers. Two British judges – and Lords – still sit as non-permanent members of Hong Kong’s final court of appeal.

Like many British jurisdictions, taxes are low: 17% for income over £20,000, while Chinese tax progresses up to 45% for income over £100,000. Corporation tax is 16.5%, compared to the mainland’s 25% and, crucially, foreign sources of income are exempt from tax, making the city a tax haven.

In other words, despite formally being passed to China in 1997, Hong Kong is – still – something that’s very British indeed. Like the Cayman Islands, Jersey, Gibraltar, or the City of London – it’s an offshore haven.

Specifically, it is the semi-British offshore space next to China, like the Cayman Islands are a British offshore space beside the US, and the Channel Islands leach off the EU. Unlike the others, it’s no longer under Whitehall’s constitutional umbrella. Unlike Singapore, its regime isn’t defended by British-recruited gurkhas. But it retains British characteristics, and elite ties.

This sort of Britishness, allied with Beijing’s authoritarianism but without its welfare system, makes it one of the most unequal territories on earth.

In Forbes’ list of cities with the most billionaires in 2024, it came second alongside Moscow, behind only New York, while around 8% of Hongkongers live below the poverty line. As a journalist who lived there for years told me, “you see little old ladies picking up cardboard off the street and living off the money they get for it at the recycling centre”.

There are around 400,000 Filipino, Indonesian, Indian, Nepalese or Pakistani migrants, mostly living in horrendous conditions. Over 220,000 people live in 4 x 4 x 6 feet ‘cage homes’. Many domestic workers sleep on the floor in their employers’ kitchen.

“We had friends who had three household staff,” says my contact, “one to look after their dog”. The cleaner had been in Hong Kong for decades, with rolling visas, but no chance of permanent residency, he said.

One of the employing couple had moved from South Africa, growing up in one cultural hangover from the British empire, and bringing its assumptions to another – a common phenomenon.

Wiring global finance

For Western capital, Hong Kong still serves the purpose it did when Britain first nabbed it in order to force opium into China – a gateway into the world’s second biggest economy.

As a trader at a major US bank told me, they don’t tend to invest directly in China. They “tend to go through Hong Kong or Singapore”. Chinese regulations make it relatively harder for investors to buy shares, for example, through the Shanghai stock exchange.

As a result, Hong Kong intermediates around two thirds of both China’s inward foreign investment, and its outward direct investment, meaning it’s closely bound into the global markets.

When Trump announced tariffs against China, the main Shanghai stock market index fell by 8%. Hong Kong’s collapsed by nearly 14%. Alicia Garcia-Herrero, chief economist for the Hong Kong based investment bank Natixis told Al Jazeera that: “you cannot trade freely in China. You cannot short Chinese stocks. You can do all of that in Hong Kong”.

Most of the wiring of globalised finance capital is provided by British territories. For my forthcoming book, Abolish Westminster, I calculated that, in 2023, 21% of all US foreign debt was bought through British territories. The second most common foreign purchaser of US debt – Japan – only bought 9%.

While Hong Kong isn’t constitutionally British, it remains British enough to be a key node in this circuit. And that system of global finance capital – driving inequality; investment in fossil fuels, the arms industry, rent-seeking speculation; and the feelings of alienation pushing people to fascism – is killing the planet. Traders being able to short stock isn’t inherently good.

Hong Kong – like Singapore – shows it’s easy to superimpose an authoritarian state on top of essentially British institutions; the conviviality between the inequality produced by Anglosphere-style free markets and dictatorship.

If, as former Greek finance minister Yanis Varoufakis has outlined, China responds to Trump’s tariffs by breaking the global dominance of the dollar, and establishing renminbi as the primary trading currency among BRICS countries, then Hong Kong – still with many British characteristics, likely still with HSBC as its biggest bank – will sit at the centre of this new order.

With inequality booming, it’s already a vital node in a global archipelago of offshore spaces where the super-wealthy are protected by authoritarian regimes – Singapore, UAE, Hong Kong – a dystopic vision for an element of the emerging authoritarian capitalism.

It’s no coincidence that these are all former British colonies, with close and ongoing ties to Britain – indeed, the UK is on a path to join them, London, after all, has more CCTV cameras per capita than Hong Kong.

Britain’s elite has made itself butler to the world, and will perfectly happily switch from serving neoliberalism to serving authoritarian capitalism. British people need to think about how we are going to challenge that.