Carrots, not sticks: a historical analysis of Beijing's economic statecraft towards Hong Kong

Abstract

This analysis offers a historical assessment of "economic statecraft" in Beijing's approach to Hong Kong from 1997 to 2020. It discusses how the concept of "economic statecraft" can be applied to Beijing-Hong Kong relations given the nature of the "one country, two systems" framework, and looks at some differing perceptions about economic statecraft in Hong Kong. It argues that, during this period, economic tools were in general used by Beijing relatively sparingly, and in the form of inducements rather than coercion. In conclusion, the analysis suggests that the contested interpretations of Beijing-Hong Kong economic relations demonstrate that "economic statecraft" is to a certain extent in the eye of the beholder.