Xi hails Hong Kong's autonomy but with a major caveat: Beijing has final say

HONG KONG -- In a speech celebrating the 25th anniversary of Hong Kong’s return to China, Chinese President Xi Jinping strongly reaffirmed the territory’s autonomy under the promise of “One Country, Two Systems” but with one very strong caveat: Beijing has full jurisdiction and Hong Kong must respect that.

“One Country, Two Systems is an unprecedented great initiative of historical significance,” Xi declared in a victory lap of a speech now that the opposition in the city has either been silenced or behind bars. “There is no reason to change such a good system, and it must be maintained for a long time.”

Xi’s words run counter to the view of many in the city who supported the now-silenced pro-democracy activists and Western politicians around the world who view Beijing’s increasing direct influence in the city as reneging on the agreement made between the United Kingdom and China that led to the handover on July 1, 1997.

Also marking the occasion, U.K. Prime Minister Boris Johnson issued a video statement on Twitter saying, "We made a promise to the territory and its people and we intend to keep it, doing all we can to hold China to its commitment”

"We simply cannot avoid the fact that for some time now, Beijing has been failing to comply with its obligations. It's a state of affairs that threatens both the rights and freedoms of Hong Kongers and the continued progress and prosperity of their home.”

U.S. Secretary of State Antony Blinken added, “it is now evident that Hong Kong and Beijing authorities no longer view democratic participation, fundamental freedoms, and an independent media” as a part of its promise.

In Xi’s view, the Chinese government is fulfilling its obligations in allowing the former British colony to choose its path and thrive economically, if not politically, over the past quarter century.

“Hong Kong will maintain the original capitalist system unchanged for a long time and enjoy a high degree of autonomy” Xi, who is on a two-day visit to the city, told a 1,300-strong gathering of Hong Kong’s political and business elite at the Hong Kong Exhibition and Convention Center. But he warned that residents must “consciously respect” the rule of Chinese Communist Party and its socialist system in the mainland.

Having implemented a far-reaching security law two years ago to silence dissent, Xi mostly sidestepped security and political concerns and focused on Hong Kong’s economic development, signaling an intention to turn the page on the turmoil of the last decade.

The Chinese government has long believed that the vast chasm of economic inequality in the city, exacerbated by unaffordable housing costs, was the chief reason for popular discontent which, in Beijing's telling of events, were then exploited by “foreign forces” to foment anti-government protests.

“Hong Kong cannot afford more chaos,” Xi told the newly inaugurated administration led by Hong Kong’s former security official John Lee.

“The public has good expectations to have better livelihoods, that they can live in a wider and bigger home, with more job opportunities, better education for the children, and can be better taken care of when they are old,” Xi continued.

“The new government should not disappoint them and should place these expectations as top priorities," stressed the Chinese leader.

“The major issue for John Lee is to deliver better housing and relieve economic inequality and poverty and if possible, find new engines for economic growth,” David Zweig, Professor Emeritus at the Hong Kong University of Science and Technology, told ABC News.

“Economic problems that Hong Kong has faced for past 20 years were due largely to the [real estate] tycoons who would not allow [the Hong Kong leader and legislature] to resolve these core issues,” Zweig explained, which led to the younger generation insisting on a more representative system which, in Beijing’s eyes, threatened to shift the power in the legislature.

In the wake of the 2019 protests, Zweig believed that when the popular opposition was positioned to take over the legislature and replace Beijing’s "executive-led government" with a de-facto parliamentary one, the Chinese government was unwilling to take that risk.

In response, Beijing reformed the electoral system to ensure “only patriots can govern Hong Kong.”

“Our mistake as observers was not to realize that, while China could support a more open system, under ‘One country, Two systems’ it would never let the opposition take over,” said Zweig.

At an event earlier this week, the last British governor of Hong Kong Chris Patten recalled a pro-Beijing businessman explaining this dynamic to him as the two governments were hashing out the final details before the handover. “You don't understand the Chinese,” Patten remembered the individual telling him, “they don't want to rig the elections, they just want to know the result in advance. Well, yes, I see that, but it's not what's called democracy.”

“John Lee and Beijing, having established an authoritarian regime, must deliver on the core economic issues,” Zweig told ABC News.

After spending less than 10 hours in the city over two days, Xi and his wife left Hong Kong via the high speed rail link that physically ties the center of Hong Kong to the mainland.

The new Hong Kong chief executive has his work cut for him. Hong Kong’s strict COVID measures and sealed borders over the past two years has endangered Hong Kong’s status as an aviation hub and international financial center. Its economy contracted 4% in the first quarter of this year -- one of the worst performances in 30 years.

Coupled with the security crackdown, Hong Kong residents have been voting with their feet. Since the beginning the year there has been 154,000 net departures from the city, the highest rate since Hong Kong returned to China.

“We won’t let President Xi down,” Lee told the press after the Chinese president’s departure. “We won’t let the people down.”