Twenty years ago, at midnight on June 30, the Union flag was hauled down in Hong Kong after a century and a half of British rule, and China took over. But the territory was not simply incorporated into the People’s Republic.

Under Deng Xiaoping’s pledge of ‘one country, two systems’, Beijing had agreed that Hong Kong would be designated a ‘Special Administrative Region’ (SAR), with its own freedoms and system of government, for 50 years after the handover. During that period Britain would retain an interest in the territory’s welfare. Now that two-fifths of the time has passed, how is Hong Kong faring?

Carrie Lam is taking office as the first female Chief Executive of a territory whose economy, defying gloomy economic forecasts, is expected to grow between 2.5 and 3 per cent this year. In the past two decades, growth has averaged 3.3 per cent. Politically, however, Hong Kong has gone backwards, and sooner or later Beijing’s increasingly heavy-handed interference will have an impact on the SAR’s prosperity.

There is little doubt that China expected democratic fervour in Hong Kong to drain away over the course of 50 years. Well before 2047, Beijing’s rulers must have calculated, the memory of personal security and freedom of expression in the decades before the handover would have begun to fade, reducing dissent to a whisper. That could not be more wrong: instead China finds itself faced by a younger generation willing to call openly for Hong Kong to become independent, a taboo even the most radical democracy campaigners of a generation before would not have dared violate.

China has reacted with characteristic crudeness, deploying the flimsiest of excuses to deny two popularly-elected young activists their seats in Hong Kong’s legislature. Chinese security agents operate with impunity – Hong Kong booksellers who stockedworks critical of the Beijing leadership were kidnapped to the mainland, where one remains in detention. The media is increasingly under pro-Beijing control, judicial independence is being undermined, and there are moves to reintroduce legislation against ‘subversion’, withdrawn after mass protests in 2003.

British assumptions about the future of Hong Kong have also proved wide of the mark, however. The hope and belief in 1997 was that the openness of the SAR, both economic and political, would benefit an expanding Chinese economy and serve as a model to Beijing. Over time, it was thought, an increasingly prosperous, confident and relaxed China might grow more like Hong Kong, but the opposite has happened.

The Chinese economy has boomed, certainly, but this has simply bred a loud assertiveness in Beijing, as can be seen in its approach to such issues as control of the South China Sea. The explosive growth of Shanghai, meanwhile, has convinced many Chinese that they do not need Hong Kong, especially when it is the only city that holds annual commemorations of the 1989 Tiananmen slaughter in Beijing.

If Britain has had anything to say about these developments, it has done so only behind closed doors. Even before the Brexit referendum left the British government in dire need of a trade deal with the world’s second largest economy, the former Prime Minister, David Cameron, and his Chancellor, George Osborne, were assiduously courting investment from China and avoiding any mention of human rights. As for Theresa May’s minority administration, it is unlikely that it can find a moment’s time to contemplate the issue as it struggles to stay in office.

For Hong Kong to retain some degree of autonomy, it has to look elsewhere – principally toTaiwan, that other territory that China yearns to incorporate. It has always been assumed that the ‘one country, two systems’ approach was designed to show Taiwan, a far greater prize than Hong Kong in Beijing’s eyes, a possible path to reintegration. Too heavy a crackdown in Hong Kong could cause an upheaval in Taipei, already at odds with China since electing an independence-minded government 18 months ago.

Hong Kong’s other hope is that the Chinese economy needs to change direction. Earnings from its export-fuelled growth are being lavished on the kind of over-ambitious investment, such as its Belt and Road Initiative, that has in the past hobbled other Asian economies. One day Beijing may need the SAR’s openness, as long it has not been destroyed in the meantime.

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