In the past week, the world has been gripped by the images of protesters paralyzing Hong Kong’s already congested streets to protest the proposed extradition law that would draw the city’s legal system closer to Beijing’s orbit. While the vociferous public reaction was enough to force Chief Executive Carrie Lam to suspend the bill indefinitely, the yawning gap between Beijing and Hong Kong looks to widen in the years to come.

The reality is that the extreme emotions expressed in the protests have less to do with the details of the bill itself than with the complex economic, societal and cultural issues facing Hong Kong’s citizens. Staggering costs of living, dimming career prospects for the city’s youth, distrust of Beijing and an ongoing identity crisis all guarantee to exacerbate growing unhappiness if let unresolved.

Exorbitant economic pressures

The extradition bill, which was primarily crafted and promoted more by Carrie Lam’s administration than by Beijing, was not unreasonable on its face. However, what it does is open more integration between Hong Kong’s independent judicial system with the mainland’s legal system, which has a poor reputation as an arm of the Communist Party. When one sees how regularly individual rights and dignity are swept aside brusquely in the name of national development or security, which we see unfolding right now with the detention of large numbers of Uighurs in Xinjiang, Hongkongers are justified in fearing increasing influence from Beijing, especially as the city’s judicial independence remains one of its last remaining core advantages over rising competition from mainland cities.

However, the extradition bill by itself could not have brought out the million protesters who choked the city into paralysis. That deep underlying resentment and anger are signs of desperation due in large part to widespread frustration at being hemmed in by exorbitant living costs and an obscene divide between rich and poor, where Bentleys and Rolls-Royces regularly prowl the streets while impoverished elderly folk live in rented cage apartments.

Like many cities such as London, Vancouver, Sydney, San Francisco and New York, Hong Kong has experienced a massive increase in already sky-high real-estate prices. Prices have skyrocketed 126% over the last 22 years from an already high base, making it the world’s most expensive property market. Homes average US$1.2 million and feature ever-decreasing living spaces, hitting average prices of US$6.9 million for prime properties. For those securing their own homes, mortgage costs often consume up to 70% of their incomes. Many young people are priced out of the market and have lost hope of owning their own homes if they want to stay in the territory, while those who manage to purchase property often become slaves to their housing debt.

In the past, Hong Kong was rich and the mainland was poor. Investment typically went in one direction, with Hongkongers purchasing properties and homes in neighboring Guangdong province. However, today Guangdong is an economic powerhouse and buyers from the mainland are helping to push an already competitive housing market in Hong Kong to absurd highs.

Meanwhile, the Hong Kong government is sitting on a massive reserve of more than HK$1 trillion (US$127 billion) and has proved to be quite inept in responding to the housing crisis as waiting lists for affordable housing can take years. Plans for large reclamation projects to build satellite towns with the promise of filling this need are decades from fulfillment. At the same time, developers continue to game the system by hoarding land and introducing increasingly tiny condos with absurd price tags, some as small as 200 square feet (18.5 square meters).

To this author, a native of the San Francisco Bay Area, a place suffering from a similar housing crisis and with local governments similarly incompetent at responding effectively to the basic human necessity for affordable housing, Hong Kong’s situation is very relatable. However, whereas residents of the Bay Area have the option to relocate to far more affordable destinations in the rest of our 50 states, much of Hong Kong’s youth are far more reluctant to relocate to mainland China because of a large cultural gap between the two societies and a deep distrust of the mainland’s government.

Hong Kong’s deepening identity crisis

Economics is one thing. Politics is another. But one issue that is rarely discussed is how Hong Kong people’s identity and, in particular, its fast-changing relationship with mainland Chinese plays a massive role in the simmering discontent. Despite the city’s commitment to Western liberalism and institutions, the ugly truth is that Hong Kong society is hardly a paragon of Western liberal values. In many measures, the city ranks as among the most xenophobic in the world, with Hongkongers’ general attitudes toward outsiders often far less tolerant than their mainland neighbors. It is quite the irony that one of the world’s most cosmopolitan cities suffers from such extreme provincialism.

Westerners, particularly whites, are often afforded far better treatment because of the deep colonial mentality that pervades Hong Kong culture, which places them at the top of the status hierarchy. However, darker-skinned foreigners routinely suffer from widespread prejudice and disrespect.

This colonial mentality, along with current resentment toward Beijing, often breeds a nostalgia for British rule that is neither accurate nor well deserved. While the British certainly did introduce political stability and the rule of law that allowed the city to prosper, Hong Kong’s colonial history was also marked by brutality, racism and a lack of democracy. This type of delusional nostalgia leads to curious displays on the part of certain Hong Kong activists in vulgar rejections of their Chinese identity, even though they are ethnically no different from the Cantonese population across the border. The reaction from mainlanders to these displays would be akin to Americans from the heartland seeing the US flag being burned by leftists in large cities, but this gulf is writ large precisely because of Hong Kong’s colonial history and political separation and this feeds into a wider level of resentment between the two sides.

When it comes to racism, Hong Kong’s attitudes toward the mainland become many times more complex. Although most Hongkongers are ethnically Cantonese and have recent ancestors rooted in neighboring regions in Guangdong province, the city’s enmeshment in global trade and finance while mainland China rotted away from the ravages of Mao Zedong’s disastrous rule meant that by the time Deng Xiaoping started to open China’s doors, Hong Kong boasted a standard of living and wealth that was undreamed of in the mainland. This gap in wealth bred a superiority complex and contempt on the part of Hongkongers toward mainland Chinese. This mentality was so ingrained that it approached belief that their superiority was somehow innate, even though the mainland’s backwardness was primarily artificial because of a communist system that denied them opportunity.

Many in Hong Kong fail to recognize that the city’s rise in prominence was primarily due to a special time when mainland China was closed off, and the city served as a valuable conduit. If we existed on an alternative historic timeline where the Nationalists never lost China and managed to squash Mao’s Red Army, Hong Kong would have likely stayed a quaint British colony while Shanghai’s reign as Asia’s financial center would have never been interrupted. It was because the mainland was closed and depended on Hong Kong as a conduit for its dealings with the outside world that the city was able to reach its prominence.

The situation in which Hong Kong was far richer than its mainland counterparts was always going to be temporary. Four decades after Deng’s opening, Hong Kong now finds itself in stiff competition with many mainland cities that boast greater resources, a wealth of talent and powerful ambitions. Guangzhou and Shenzhen both recently surpassed Hong Kong in gross domestic product. Undoubtedly, this change in the balance of power has been a major cause of self-doubt for Hong Kong and is a cause of public frustration. Hong Kong’s aging infrastructure and often poorly maintained properties look depressingly antiquated compared with the massive and shining development across the border in Guangdong.

This racist attitude toward mainlanders often expresses itself in the overreaction and ferocity of criticism toward the occasional misbehaving mainland tourist, ignoring the fact that millions of mainlanders visit the city each year, with the vast majority behaving themselves pretty well while spending good money in the city. The prejudice that many Hongkongers harbor against mainlanders not only fails to recognize the massive diversity in China’s population of 1.4 billion but is increasingly out of date considering the rising sophistication and wealth of many young Chinese urbanites.

I personally recall a few times when I’ve experienced disdain and rudeness from retail staff in Hong Kong simply from speaking to them in Mandarin, only to see their attitude completely switch to a more pleasant disposition after I am joined by my biracial Caucasian-African-American wife, which made it clear that I was not from the mainland but was undoubtedly American.

While a healthy distrust of the People’s Republic of China is warranted, this racism and xenophobia toward the Mainland will only serve to hinder Hong Kong’s prospects. Whether its residents like it or not, the city’s future is indefinitely tied to the mainland. This does not mean that the city should lose its unique identity or values, which are core assets, but it does need to face some of its own ugliness that often tips the balance from a justified suspicion of Beijing toward illogical hysteria against mainland Chinese.

Where does Hong Kong go from here?

The explosive public anger that has manifested itself in Hong Kong is a powerful statement. It is rooted in deep grievances that at their core reflect frustration at worsening economic prospects, government ineptitude at fixing those issues and also simmering resentment wrought by Hong Kong’s identity politics and its relationship with the mainland.

Governing a city long ingrained in Western ways was never going to be easy for China’s authoritarian government. While the PRC government has proved itself extremely competent in bringing about massive economic development and reducing poverty, its continuing lack of respect for individual human rights breeds distrust, and rightfully so, from the people of Hong Kong.

In addition, Beijing is notorious for its clumsy propaganda and its incompetence at managing a positive image, especially among societies that value free expression. One would think that with China’s obsession with catching up to all things Western, that Beijing would be able to grasp the importance of manufacturing public opinion that is the norm in Western societies, yet its attempts at public relations remain deservedly an object of ridicule. Because of this distrust, any attempt by the PRC to leverage its core strengths in building infrastructure and promoting development in the resolution of Hong Kong’s economic maladies will only be met with vociferous opposition. Therefore, the chances of Beijing being able to enhance its image among the Hong Kong populace remain dismal at best.

The other side of the issue is an ongoing paralysis in the local government of Hong Kong, which has failed to deliver meaningful solutions to the urgent issues of housing and living costs that are choking the populace. The issue of government paralysis and ineptitude has also become the norm in many Western democracies, but it became a powder keg in Hong Kong within the context of the city’s relationship with mainland China. Carrie Lam’s perceived prioritizing of an extradition bill over the more urgent and desperate issues of housing and economy is a major cause of the public anger we have witnessed.

Ongoing identity issues and a pervasive prejudice against mainland China will likely continue to deliver increasing estrangement and resentment between the two sides. Unfortunately, there has been too little focus in the Hong Kong public consciousness on examining its own ugliness in terms of widespread prejudice against mainlanders and the unfairness it entails. With growing discontent in the economic and political dimensions, this resentment will likely continue to brew instead of being tempered down.

Hong Kong’s future prosperity is going to be a tightrope between managing an economic integration with the mainland while continuing to negotiate its political and judicial independence that is so important to the city’s core strength as a global financial center. Hong Kong’s future prosperity necessitates a growing economic integration with the rest of the Pearl River Delta (PRD), which is emerging as a global mega-city powerhouse with a combined GDP rivaling Italy.

At the same time, the city’s Westernized society and its independent judicial and political system are among Hong Kong’s last advantages against its mainland rivals and are necessary components that will allow the city to leverage its status as an international financial hub to benefit from the PRD region’s ascent. Whether the city manages to walk this tightrope toward a brighter future is up in the air. Currently, the lack of wisdom coming from Beijing, Carrie Lam’s administration and Hong Kong’s activist class does not inspire much confidence.