Chapter Three addresses Hong Kong’s economic function for China after 1997. Beijing’s challenge has been to perpetuate Hong Kong’s role as China’s offshore financial and trading center after the sovereignty handover. After 1997, the US-HK Policy Act allowed the US and the international community to continue treating Hong Kong as an independent trading entity separate from mainland China. Hong Kong maintained its separate membership in international organizations like the WTO, even after China joined those organizations. This continuous special status, conditional upon Hong Kong’s autonomy from Beijing under the One Country, Two Systems, made Hong Kong a conduit and stepping stone for Chinese capital and the elite who sought access to global capital or relocation to other parts of the world. It is also a key to Beijing’s plan to internationalize the Chinese currency Renminbi (RMB) without making RMB fully convertible in mainland China. Hong Kong’s unique offshore financial role for China led to increasing Chinese capital domination in Hong Kong.

Chapter Four looks at how Hong Kong’s local business elite and foreign businesses were gradually squeezed out from center stage of the financial market in Hong Kong by Chinese companies and the business elite. While local tycoons worked closely with the CCP to defend the city’s undemocratic status quo and advance their business interests on the mainland, they valued the legal and institutional autonomy of Hong Kong as safeguards of their wealth. Chinese tycoons with Hong Kong residency, some of whom are publicly known as CCP members, also value such autonomy and legal protection of their private wealth, though many see themselves as caretakers of Beijing’s interests in Hong Kong. The business elites’ contradictory character manifests itself amidst the fight over the extradition bill, when many local and mainland Chinese tycoons explicitly or implicitly acted against the bill. The US-China trade war that began in 2017 superimposed on the elite conflict in Hong Kong and cast a shadow on the offshore financial role of Hong Kong.