Tensions are high in Hong Kong after Chinese military vehicles were seen crossing the border in what the People’s Liberation Army described as a routine rotation of troops. Despite that, unease is rising in the city amid fears China is preparing to launch a crackdown on protestors who have been demonstrating on the streets for weeks. Beijing has remained respectful of Hong Kong’s unique status since the handover in 1997, particularly its regional economic power and identity, especially its legal independence and freedom of expression. There are growing concerns that Beijing’s cautious stance could change given Hong Kong’s declining economic relevance in comparison with China’s booming megacities.

Infographic: How China's Economic Boom Eclipsed Hong Kong | StatistaIn 1993, Hong Kong’s economy was 27 percent the size of China’s with GDP amounting to $120 billion and $445 billion respectively according to the World Bank. By 2018, things had changed dramatically with megacities such as Chongqing, Shanghai, Shenzhen, Beijing, Chengdu and Harbin powering Chinese GDP to $13.6 trillion. Hong Kong’s GDP has increased to $364 billion, now 2.7 percent the size of China’s economy. After years of rapid growth, the Chinese economy is now starting to slow down and that has also caused Hong Kong’s to stutter, though it does remain a key Asian economic powerhouse. The slackening pace of growth in Hong Kong has been exacerbated by the protests which have paralyzed the city while retail sales and tourism are falling. Some economists have now predicted that a recession is on the cards for the next quarter.

Despite the dramatic economic eclipse since 1993, a move to deploy the military to the streets of Hong Kong could prove riskly for Beijing. Observers believe that this could cause the city’s stock market and housing sector to collapse, which would prompt an exodus. That would send economic shockwaves across mainland China at a time when its economy is vulnerable due to an ongoing trade war with the United States. Any military crackdown by the PLA would also result in a considerable diplomatic fallout given Hong Kong’s large population of expatriates and its status as a global financial hub.