The international community has recently been rocked by the Hong Kong government’s chilling decision to place bounties on eight exiled activists, two of whom are currently residing in Australia. This show of transnational repression, a disturbing extension of law enforcement beyond territorial borders, is a brazen violation of human rights, personal freedoms and national sovereignty.

While it may seem like a drastic manoeuvre to silence dissidents, thereby accelerating Hong Kong’s metamorphosis into an autocratic society, this move prompts us to delve deeper into the real motives. A majority of these activists have been living in exile for two to three years. Their international advocacy against China’s restrictive policies is a matter of public record—and, more importantly, many of them had already been wanted by authorities prior to the bounty announcements. So why the sudden decision to put a price on their heads in front of the world?

The answer may lie in a critical event that transpired just two days before the bounty hunt was announced. On 1 July, the new Law on Foreign Relations of the People’s Republic of China came into effect after it was ratified by the National People’s Congress. The legislation anchors President Xi Jinping’s control over all of China’s diplomatic and national security affairs, marking a significant shift in the country’s global orientation.

The timing of these arrests suggests an attempt by the Hong Kong government to signal its unwavering alignment with Beijing. By placing a bounty on the heads of these exiled activists, the Hong Kong authorities are demonstrating that the days of foreign influence and ‘collusion’ are unequivocally over.

Hong Kong, long viewed as an Achilles’ heel by Beijing, has been a symbol of pro-democracy sentiment and the fight for universal suffrage for decades. The region’s civic tenacity was most clearly demonstrated during the anti-extradition bill protests of 2019, when around two million people took to the streets in a powerful display of civic dissent. The protests severely embarrassed Xi and the Chinese Communist Party, leading them to label the movement a ‘colour revolution’ and accelerate their efforts to repress such dissent.

Likewise, the influence of the Hong Kong activists reached well beyond their city to help reshape international relations and foreign policy during the movement. A particularly powerful achievement was the successful push for the Hong Kong Human Rights and Democracy Act in 2019 in the US Congress. The bipartisan and bicameral legislation marked a major turning point in relations between the US and China, unprecedentedly authorising the US administration to sanction Hong Kong and Chinese officials in response to the clash. That move further inspired Hong Kong activists to push for similar bills across the globe, including the ratification of a global Magnitsky-style act in Australia.

This, of course, unsettled Beijing. By transforming Hong Kong from an alleged domestic issue into a global concern, the activists have put pressure on China and forced it to deal with an international audience.

The sequence of legislation and action by Beijing should therefore not come as a surprise. With the introduction of the national security law in Hong Kong in 2020, followed by the anti-foreign sanctions law in 2021, the anti-espionage law in April 2023 and the latest foreign relations law in China, Xi’s growing intolerance for international intervention and sanctions has become increasingly apparent. These laws are both silencing the very nationals who dare to voice their dissent and building a line of defence against the West’s economic and military statecraft.

To have a closer look, Article 7 of China’s anti-espionage law vaguely but pointedly states that all citizens bear the obligation to protect the country and its national security, honour and interests. Article 8 of the new foreign relations law and Article 10 of the anti-espionage law both state that ‘anyone or any organisation that violates this law and relevant laws, and engages in activities harming national interests in foreign relations, shall be held legally responsible’. Notably, these laws don’t only target foreigners but extend to everyone residing in the country, making it clear that anyone aiding foreign actions contrary to Beijing’s interests could face severe legal consequences.

The new laws vest local authorities with sweeping powers to neutralise anyone suspected of aiding, abetting or encouraging foreign sanctions or actions deemed adversarial to Beijing and Xi. After the decision to place bounties on the activists, the Hong Kong National Security Police took away for questioning two family members of one of the wanted activists. That action also fits right into the narrative, serving as a form of relational repression aimed at isolating and intimidating dissidents—a strategy consistently adopted by the CCP in mainland China.

Coincidentally, a day after the widely publicised bounty announcement, China said that it would impose export restrictions on gallium and germanium products—critical components in computer chips—purportedly to protect national security interests. This will have an adverse impact on global supply chains and is a reminder to the world that China is gearing up to take a stand and unwilling to be passive in the face of perceived foreign hostilities and sanctions. China understands well that its biggest asymmetric advantage comes from its economic strength, surveillance capabilities and transnational repression.

In light of China’s increasing defiance, it is imperative that the international community rally behind these activists, ensuring their safety and continuing to uphold the values of freedom and democracy. Most importantly, countries such as Australia, the US and the UK should get ready for the resurgence of Chinese ‘wolf-warrior diplomacy’ and growing statecraft capabilities. As we witness a surge in China’s destabilising actions, it is essential to have coordinated and assertive responses to address this emerging global challenge.

A year after Beijing imposed its national security law on Hong Kong, many residents are leaving the city or are contemplating departing. Since 2020, close to 90,000 people, or 1.2% of the population, have gone. Scenes of hundreds of people tearfully sending off their loved ones have become common at the city’s international airport. Most of those leaving are not expected to return.

The concerns of those wanting to leave are not unfounded. A new law passed in August last year without scrutiny or public consultation has given the head of immigration the power to stop anyone leaving the city without needing to seek a court order. The Hong Kong Bar Association raised concern about the ‘apparently unfettered power’ this new law gives to the government. The association has since been silent on political issues after being targeted by pro-Beijing politicians.

The exit-ban law fits the pattern of how China targets dissent and unwelcome business figures. It could render meaningless the efforts of any country offering Hongkongers immigration opportunities as anyone can be barred from leaving. That’s not just active dissenters, but also journalists and businesspeople.

Not too long ago, Hong Kong’s financial sector felt relief as an anti-sanctions law decreed by Beijing’s National People’s Congress was shelved at the last minute. Observers believe the sudden about-face was to salvage foreign investors’ confidence in Hong Kong and China after recent crackdowns on the Chinese tech and educational sectors.

This law, if implemented, would extend China’s tough anti-sanctions regulations to Hong Kong, barring companies from enacting US sanctions on Chinese entities. It would essentially upend the city’s status since it would then be impossible for it to stay in the US-led international economic system.

Nonetheless, financial regulatory changes are making departure from Hong Kong more challenging. Regulators have issued a statement restricting residents who hold British national (overseas), or BNO, passports from extracting their retirement funds after soaring early withdrawals by leavers. Their funds could be locked within the city until they reach the legal retirement age or receive citizenship in their host country.

Despite obstacles, the emigration wave continues. But the possibility of being barred from leaving is always around for some. Authorities have prevented members of the University of Hong Kong’s student union from leaving and then arrested them for incitement after they staged a commemoration for a man who stabbed a policeman before killing himself. Police also temporarily seized the passport of a reporter who covered the episode.

At least for now, Beijing and Hong Kong have not placed a blanket ban on movements into or out of the city even though Australia, the US, Canada and Britain have pledged to provide a haven for those who wish to exit. Immigration schemes targeting young professionals are becoming increasingly popular measures for countries like these.

Tensions between China and the US could always worsen but, for Hong Kong, total isolation from the rest of the world is unlikely at this stage. Beijing’s ‘greater bay area’ vision, a multi-city development spanning across the border from Hong Kong to several cities in Guangdong province, has become a focal point of China’s plan to integrate Hong Kong and Macau—two former Western colonies—with the mainland. Beijing’s vision, if fully realised, would ‘facilitate in-depth integration’ and transform these cities into an ‘international first-class bay area ideal for living, working and travelling’.

Hong Kong’s longstanding position as Asia’s financial hub is intended to link China with global investors under its promise of ‘one country, two systems’. The Hong Kong’s government’s policy push suggests the city will be further integrated with China but its global connections will play a strategic role. Keeping the city under its control, but with its access to the world intact, allows Beijing to exploit the financial hub to fulfil its economic goals. Despite, or perhaps because of, geopolitical tensions with other countries, a window for foreign investment is essential for China.

However, it remains to be seen how the world will respond to Beijing’s tightening controls over Hong Kong. The city’s harsh Covid-19 border measures are already chipping away at its attractiveness. Chief Executive Carrie Lam has cancelled most exemptions from the city’s mandatory and self-funded quarantine periods despite the city’s global business community lobbying for an easing of restrictions.

The tighter restrictions bring Hong Kong closer to China’s zero-Covid policy while most of the world is opening back up. The city is retreating into isolation as many expatriates and travellers, like those fleeing the national security law, have decided to depart.

New laws and financial regulations have not so far closed Hong Kong’s doors but, despite the grand greater bay area plan, its ongoing status as a global financial centre may be in question. Foreign companies have begun to relocate to other financial hubs like Singapore which are more business-friendly and where it’s easier for companies to attract talent and make long-term decisions.

Despite the drain, Lam has made opening the border with China her main priority, saying: ‘Of course, international travel is important, international business is important to us. But by comparison, the mainland is more important.’

After Chief Executive Carrie Lam cancelled the Hong Kong Legislative Council election scheduled for September 2020, Beijing’s National People’s Congress decreed that all council members would stay in their posts for ‘no less than one more year’.

Of the 70 incumbents, 21 were from the opposition pan-democrat camp. Four of them had been disqualified from running in the 2020 election. Eighteen of the 21 eventually decided to stay, citing a deadlocked opinion poll on the issue. But the decision to stay could undermine cooperation between the pan-democrat and localist factions of the democracy movement and stall its momentum.

Since their emergence in the mid-1980s, Hong Kong’s pan-democrats have opted for an approach centred on negotiating and compromising with Beijing. Their initial goal was to slowly secure full suffrage for the chief executive and the Legislative Council as part of the terms of the 1997 handover of the territory from the UK to China.

These strategies looked successful in the earlier days of the handover, when China was more liberal and opted for a more laissez-faire approach to the city’s affairs. But as Beijing took a more assertive grip after the 500,000-people demonstration against a proposed national security law in 2003, the pan-democrats’ approach became largely ineffectual.

Their decades-long campaign for universal suffrage finally collapsed on 31 August 2014 when Beijing decreed that it would allow no more than three pre-screened candidates to run for chief executive.

This decree led to a split within the 2014 Umbrella Movement. Younger activists pushed for more radical solutions but found themselves disavowed by the veterans.

The divide widened in the 2016 Legislative Council election, when the younger and more radical elements splintered from the pro-democratic camp. Known as localists, this group made a breakthrough in the polls, although their candidatures were later disqualified by the government. The pan-democrats’ loss in the 2018 by-election to a pro-Beijing novice amid low voter turnout only further illustrated their impotence in the eyes of their critics.

Pan-democrats and localists put their differences aside as the 2019 anti-extradition protest erupted. The two factions stayed robustly united against the acute pressures from Beijing and intense police brutality. The goodwill continued through to the local district council elections where both factions worked together and earned a landslide victory.

Fast-forward to 2020 and the dilemma over whether to stay in the Legislative Council seems to have fragmented the pro-democrat coalition, though there had already been signs of this.

In the unofficial democratic primaries in June, localists won a landslide victory over traditional pan-democrats. The localist momentum never materialised as 12 popular candidates were disqualified and then election was cancelled. But the primary results nonetheless accentuated the returning divide in the movement.

Two online polls pointed to overwhelming support for a mass resignation, but many of the incumbent pan-democrats were eager to stay, hoping to retain what was left of the once-vibrant and revered pan-democratic presence in the legislature.

They argued that retaining a voice of opposition, despite being unable to make changes or block controversial laws, still had value in slowing down Beijing’s encroachment through parliamentary tactics like filibustering.

In reality, though, many of them have delivered lots of slogans but few results, and scenes of pan-democratic politicians being forcibly removed from the chamber are common. Voters have become disillusioned as these politicians—marketing themselves as the ‘key seat’ or ‘last hope of democracy’ —have had little effect in the legislature.

The situation is now even bleaker. Lam has outlined plans to soon allow Hongkongers living in key areas in southern China to vote in Hong Kong elections. While some argue that this will open doors to fraud, it’s not clear whether pan-democratic candidates will be able to campaign on the mainland at all.

Pan-democrats are in danger of losing their mandate as representatives of the broader pro-democracy movement. Though a mass resignation in protest might be too bold a move for these centrists, staying would signify a recognition of Beijing’s National People’s Congress’s authority over Hong Kong’s parliamentary matters, which itself is a violation of Hong Kong’s Basic Law.

Staying can also be seen as appeasement or even collaboration, since it gives Beijing much-needed legitimacy for the interim term. Just as in the National People’s Congress, where a dozen ‘democratic’ parties serve as political props for China’s rubber-stamp parliament, Hong Kong’s pan-democrats could easily find themselves playing a similar role in the Legislative Council.

Pan-democrats are also being eclipsed by prominent activists and exiles who are bringing the fight from abroad. As opposition in the legislature and on the streets has dwindled, Nathan Law and Agnes Chow—both once lawmakers but disqualified in the 2016 Legislative Council elections—have roused much public and political support.

Law has met and petitioned high-profile officials and politicians globally during his exiles, and Chow’s enormous Twitter presence in Japan has secured much awareness of Hong Kong’s situation, which also boomed after her high-profile arrest in August.

Traditional pan-democrats must be willing to make bolder moves rather than simply react to circumstances. They need to answer two questions: How will they preserve momentum and galvanise support? And how can they contribute in new ways and convince the pro-democratic camp they won’t merely repeat their mistakes?

There are many figures out there who could help amplify the cause. Reaching out to these people, rather than merely focusing on their chamber, could give much-needed momentum to the movement.

Locally, they need to show courage to work with and support the younger generations of the movement in continuing the cause, and to mentor future leaders.

And, given the erosion of so much of Hong Kong’s freedom under Beijing’s new national security law, a bold breakthrough and substantial actions are probably the only way to get past the current deadlock.

The status quo is a dead end for the pro-democracy movement. It also sends an unhelpful signal abroad. If Hong Kong democrats signal that they are content to try to work within the increasingly oppressive system, there’s not much the rest of the world can do. Beijing’s dream for Hong Kong’s Legislative Council will then be complete: a true rubber-stamp parliament with a dozen quixotic figures shouting in the background, and the voiceless majority alienated and powerless.

US tech giants drew a line in the sand earlier this week when they announced that they would suspend cooperation with requests from Hong Kong law enforcement for access to user data. In so doing, however, they may have also effectively drawn a line under the period of relatively free and open internet in Hong Kong.

In a seemingly coordinated move, Google, Facebook and Twitter made similarly worded announcements that they are temporarily stopping the processing of requests from Hong Kong authorities, as they assess the implications of the national security law. Microsoft and a number of smaller companies including LinkedIn and Zoom have also said they will suspend or halt cooperation with Hong Kong authorities. The tech companies have cited concerns about freedom of expression, surveillance and censorship under the new legal regime. Although the companies have phrased this as a temporary measure, it’s hard to see how those concerns can be resolved—and, therefore, it’s hard to see how or when the companies will be able to operate again in Hong Kong.

The companies’ decisions are likely to reflect a combination of political judgement and pragmatic calculation that the day is coming when they and others will be forced to choose between operating in the Chinese domestic market, now including Hong Kong, or in major Western markets, particularly the Five Eyes countries (Australia, Canada, New Zealand, the United Kingdom and the United States).

The recent scandal surrounding Zoom’s decision to cut off Chinese human rights activists’ access to its services, in compliance with Chinese law but to the outrage of many in the West, is no doubt fresh in the minds of many tech executives. The episode underscores the shrinking space for tech companies seeking to walk on both sides of the fence, by obeying Chinese law in China while purporting to uphold democratic rights and values in other jurisdictions.

The national security law is likely to speed up this process of technological bifurcation, driving deeper cracks through the splinternet. For tech companies, the new law has forced a grim recognition: the Great Firewall is coming for Hong Kong, and tech companies which cannot or will not flourish inside that walled garden will be weeded out sooner or later.

For some, particularly those with relatively little to lose, taking a swift moral stand and walking out with their heads held high is clearly seen as preferable to trying to cling on. For others, the situation is more complex. Pressure is building on Apple, which has both a bigger proportion of its supply chain and a far larger market presence in mainland China than companies like Facebook or Twitter. Historically Apple has often sided with Hong Kong’s authorities over democracy protesters, including removing their apps from its App Store.

In contrast to other platforms, Reddit—which received a US$150 million investment from Chinese tech giant Tencent last year—has said that it will continue to comply with data requests from Hong Kong authorities.

It’s not just Western companies which sense the grinding foundations of the Great Firewall expanding to encompass Hong Kong. The swift announcement from ByteDance’s TikTok that it will be leaving Hong Kong entirely ‘within days’ implies a recognition that Hong Kong is now effectively the territory of its sister app Douyin, which serves the Chinese mainland market, and that continuing to operate in Hong Kong would pose a risk to TikTok’s already imperiled future overseas.

The implications of the national security law will also spread beyond communications platforms. Companies with physical internet infrastructure based in Hong Kong are now faced with difficult decisions. A Telstra spokesperson told the Sydney Morning Herald that the company is considering the future of its data centre in Hong Kong, given that the law compels it to hand over data to the Chinese government if requested.

Likewise, the ability of Hong Kong–based tech companies to continue to promote themselves to international consumers as providing privacy or security, at least from the Chinese government, is also very much in doubt. Non-Chinese customers of these companies will have to factor in the risk that their data could end up in the hands of Chinese authorities.

For the democracy protestors of Hong Kong, the decision taken by the US tech platforms to protect their data from law enforcement is a Pyrrhic victory. In practice, and despite the efforts of many to retrospectively scrub their online footprints, there is likely to be more than enough digital evidence available to Hong Kong law enforcement from other sources to wield against protestors should it choose to do so. The seemingly inevitable retreat of Western internet platforms and technology companies marks the end of an era as, brick by brick, the Great Firewall is built up around Hong Kong.

Two competing narratives might explain why China’s authoritarian communist rulers have so far displayed a relatively hands-off attitude towards the increasingly violent protests in Hong Kong, now in their sixth straight month and entering a deadly new phase. Whichever explanation proves correct will determine how long Beijing will remain patient if the impasse drags on as the violence continues to escalate.

The answer may also likely decide whether the ‘one country, two systems‘ formula can survive intact.

One narrative says that China has remained largely on the sidelines, leaving it to local police and authorities to find or force a resolution, because Hong Kong is really no longer important to China. Hong Kong’s days as the mainland’s key financial base are long over, this theory goes, and the territory can simply be left alone to clean up its own mess.

The other says just the opposite; Beijing is hesitant to intervene directly—militarily or by scrapping the territory’s autonomy—because Hong Kong remains too important, as a financial centre and as an international symbol. Any direct intervention—for example, by sending in the People’s Armed Police—would be devastating to China’s international image while it is already dealing with a slowing economy and a trade war with the United States.

Which holds truer? Is Hong Kong too irrelevant or too important for China to directly intervene? There is evidence to support both sides.

At the time the territory was handed back to China in 1997, after a century and a half as a British colony, Hong Kong accounted for nearly 20% of China’s GDP. Today that figure is less than 3%. The neighbouring Chinese city of Shenzhen, just across the border, has surpassed Hong Kong in the size of its economy and its still-soaring annual growth rate. Shenzhen and Guangzhou are already besting Hong Kong when it comes to dynamic start-ups and new technologies.

Hong Kong saw its role as the entrepôt for trade with China shrink once the mainland joined the World Trade Organization after 2001. Chinese cities now have their own stock markets, and more than 150 Chinese companies have bypassed Hong Kong to list on major American stock exchanges.

According to this view, China’s communist leaders under hardline ruler Xi Jinping might be content to let Hong Kong burn, as long as the contagion doesn’t spread north. With its liberal values and British colonial holdovers, Hong Kong was always a troublesome source of suspicion and mistrust.

If Hong Kong’s internal conflagration hastens its replacement by Shenzhen or Shanghai as China’s most important city, Xi might actually see that as a long-term benefit. If the protests eventually lead to an exodus of local elites with overseas passports, as well as foreigners, multinationals and foreign media outfits that make Hong Kong their headquarters, so much the better.

But the competing view holds that while Hong Kong’s importance to China’s overall GDP has diminished, the territory remains crucial to the mainland’s economic health, and no other Chinese city is even close to replacing it.

Hong Kong still accounts for more than 60% of all foreign direct investment flowing into the mainland, and that number has grown despite the months of protests. Hong Kong’s stock exchange is still the fourth largest behind New York and Tokyo, and ahead of London, and China’s markets remain closed to foreign investors. Hong Kong’s credit rating is higher, its legal system is respected internationally, and money can be freely exchanged, unlike in China with strict capital controls.

US President Donald Trump’s trade war has heightened the importance of Hong Kong’s being treated globally as a legal and economic entity distinct from China. Chinese officials have warned Washington that the Hong Kong Human Rights and Democracy Act of 2019, which unanimously passed the House of Representatives last month and enjoys bipartisan support in the Senate, is an ‘attempt to use Hong Kong to contain China’s development’, in the words of Yang Guang, a spokesman for the Hong Kong and Macau Affairs Office which handles the territory’s affairs in Beijing.

There are even conflicting theories on whether the continuing unrest in Hong Kong poses the threat of contagion to the mainland.

One view holds that Beijing’s rulers fear that pro-democracy protests in Hong Kong might spark copycat demonstrations in Guangdong and other Chinese cities. They are loath to make even common-sense concessions—for example, allowing an independent commission to probe police brutality or restarting the stalled political reform process—for fear of sparking similar demands at home.

Yet the opposite view also holds currency. That is, with its strict control of the mainland media and the internet, China’s propagandists have succeeded in painting the Hong Kong protests as anti-China secessionist movement launched and financed by nefarious ‘black hand’ foreign forces, namely the CIA. Instead of sympathy, many mainland Chinese express only disdain for Hongkongers, whom they see as wealthy, spoiled and insufficiently loving of the motherland.

Chinese officials lately seem to be signalling more repression and no reform as the path to resolving Hong Kong’s crisis. Vice-Premier Han Zheng told Hong Kong CEO Carrie Lam during a meeting in Beijing that ‘extreme, violent and destructive activities‘ would not be tolerated. Mainland officials have called for strengthening China’s supervision over the territory, imposing more ‘patriotic education’ in Hong Kong schools, introducing stricter vetting of civil servants to ensure loyalty to Beijing, and implementing a long-delayed national security law.

Those calls are only likely to grow louder after the violence on 11 November, which included widespread vandalism, the forced closure of university campuses, and the police shooting of a protester in the stomach.

My view is that China’s leadership is caught somewhere in between—fearful of letting the unrest continue, but paralysed from intervening out of concern over making a fatal mistake.

China’s communist rulers are now facing the most serious political unrest on their soil since the 1989 pro-democracy protests at Tiananmen Square. The massacre by People’s Liberation Army troops cost China nearly a decade of sanctions, international isolation, and restrictions on technology transfers.

The Tiananmen massacre remains a stain on China’s communist party. An intervention now in Hong Kong, particularly if it turns bloody, could once again set back the leadership’s efforts to promote China’s ‘soft power’, as through its widely touted Belt and Road Initiative.

Hong Kong may not matter enough to China to risk a bloody intervention. It may also matter too much to risk making a mistake.