The protracted protests in Hong Kong have now continued for about three months, and recently escalated to violent clashes. The protests first began when the Hong Kong government proposed a revision to the extradition bill, but now protestors are also calling for police accountability and greater democracy.

The move to revise the extradition bill sparked in 2018 when a man committed murder in Taiwan and then returned home to Hong Kong; because there is no extradition treaty between Hong Kong and Taiwan, he could not be extradited for trial in Taiwan. The Hong Kong government then proposed to revise the treaty to include Taiwan, Macau, and China. The proposal set off a storm of protests as the anti-government  factions, mainly the pro-democracy politicians, argued that the extradition of fugitives and criminals for trial in China is equivalent to applying Chinese law in Hong Kong. They interpret this as a violation of the “one country, two systems” framework, where China promised to allow Hong Kong to retain its market economy and way of life following the handover from the United Kingdom in 1997.

Traditionally, Hong Kong has served as a sanctuary for dissidents; now it is home to political dissidents as well as former government officials and businessmen accused of committing economic crimes in China. Part of the success of the protests has come because political opponents of the Hong Kong and Chinese governments—led by the pro-democracy camp, including mainly the Democratic Party, Civic Party and Labour Party—have exploited the fears of these groups, leading them to oppose the proposed revision.

The protests tend to be political in nature and conflict with mainland China’s position. However, many observers believe that the root cause of the current political turmoil is the pent-up frustration over the difficult living conditions of the masses in Hong Kong. The laissez-faire policy adopted by the British colonial government allowed big businesses and property developers to dominate major policy making with minimum government involvement and interference. It was characterized by “big market and small government.” The Hong Kong government inherited the laissez-faire economy and policy when Hong Kong was returned to China in 1997. Under the “one country, two systems” framework, Beijing allowed the original system to continue without major policy shifts. Instead, it was more concerned with bringing Hong Kong back to be a part of “one country.” On the other hand, vested interests have emphasized the importance of the “two systems” which retains the capitalist system for 50 years until 2047.

A culture of hard work that defined the previous generations in Hong Kong created high growth rates in recent decades. The fruits of growth, however, have largely been enjoyed by big businesses and developers. Ordinary citizens have seen few gains as they are confronted with rising living costs and poor housing conditions. The housing problem is particularly serious—public housing is grossly inadequate, and private properties are so expensive that they are mostly beyond the reach of ordinary wage earners.

Looking at the general profile of the younger generation in Hong Kong, born after the handover or later, could help illustrate why there is so much frustration and perhaps even confusion about identity. They are told they are Hong Kong residents and Chinese nationals, and yet are taught a school curriculum that remains largely unchanged since 1997, which teaches more about British and Western history than Chinese history. The languages of instruction are English and Cantonese—not Mandarin, which is much more common in China. This adds to the sense many have of being different from mainland Chinese.

Most live in tiny subdivided flats of 200-300 square feet with their parents and siblings, leaving them without adequate space or privacy. There is no cheap public housing available; private apartments are beyond their reach, and rents are high. Good jobs are also difficult to find, and the cost of living is one of the highest in the world, so they have little hope for the future. Meanwhile, many affluent mainland Chinese are buying properties in Hong Kong. Coupled with price manipulation by developers, this pushes property prices higher, creating resentment towards mainland Chinese, the Chinese government, and the Hong Kong government. At the agitation of the pro-democracy politicians, young people joined the protests with the hope for change in the socio-economic conditions in Hong Kong. Many of them believe that a more democratic political system, i.e., universal suffrage without control and influence from Beijing, will elect politicians who can push for real policy change.

The Hong Kong government has not been able to improve the socio-economic conditions significantly because of the opposition of vested interests and the commitment to retain the market economy under the “one country, two systems” framework. The first hurdle is that big businesses and developers have had a strong say in the development of Hong Kong and a strong influence in politics. Any major shift of policy requires approval by the Legislative Council. In accordance with the Basic Law, the Chief Executive cannot be a member of any political party. As a result, he or she cannot take support from political parties for granted. Even the pro-establishment parties may also vote against government policies for gaining votes in elections. The first Chief Executive, Tung Chee Hwa, vowed in 1997 to build 85,000 units of flats every year to solve the housing problem, but the developers banded against it following the property market crashed during the Asian financial crisis in the same year. Subsequent Chief Executives also encountered difficulties in their proposed housing programs. For instance, the environmental protection group opposed using lands designated for green belt and reclaimed lands from the sea for public housing development.

The second hurdle is that the government cannot make major policy shifts from the free market norm. Any policy deviation from it would be interpreted as violating the “one country, two systems” commitment. People’s demand for better housing and lower costs of living cannot be met, and this has created frustration, anxiety, and anger. The pro-democracy politicians have exploited the situation and egged them on to join the protests.

While the silent majority of the 7.5 million residents support the government, the vocal minority has called the tune. A small minority of protesters have been unreasonable and violent, attacking police stations, blocking major streets, disrupting public transport system and airport operations. The protests and violence have affected the normal operation of economic activities and may threaten the position of Hong Kong as an important financial center. The violent attack against two mainland Chinese travelers at the airport on August 13 poses a challenge to the movement that has successfully pushed a mantra of unity over the last three months.

If the situation continues to deteriorate, will Beijing act by mobilizing its troops stationed in Hong Kong to deal with the situation? The police have been extremely restrained to avoid major incidents so far, and Beijing has been restrained and careful not to fall into the trap of forcefully suppressing the unrest. It is likely that Beijing will deploy troops only when Chinese national sovereignty is violated or the social order in Hong Kong completely falls apart.

China is determined to show that the “one country, two systems” approach is the solution to unify with Taiwan. But the Taiwanese government, headed by the Democratic Progressive Party, is probably happy to see the deterioration of the Hong Kong situation, as it can be used to show the Taiwanese that the “one country, two systems” model could never work for Taiwan, as it has not worked well for Hong Kong, even though it unified with China in 1997.

If the Hong Kong government’s conservative approach does not work and the chaos escalates further, the economy may grind to a halt which will not be acceptable to the people, including the vested interests. The government should therefore take action to restore public order and handle the radical protesters with necessary measures, while reflecting on its policies and take the initiative to improve communication with the protesters. The government should also quickly take appropriate action to break the political gridlock and win back public trust.

Of course, any improvement in the socio-economic conditions of the masses will take time to achieve. For a long-term solution, the government should be prepared to confront the vested interests and implement policies that can improve living conditions for the people, especially for the working class in Hong Kong.

Dr. Li Hui is Assistant Professor and Dr. Ker Sin Tze is Adjunct Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore.