| Under British rule, Hong Kong was such a bastion of liberty and free-market prosperity that it had to be sealed off from the People's Republic of China by a 25-mile stretch of barbed wire double fence to prevent a refugee stampede. Floodlights, watchtowers and a strip of no-man's land made getting across the border all but impossible. Since Beijing took over in 1997, no expense has been spared to render that border almost irrelevant, with investment pouring into transport infrastructure to connect Hong Kong to the surrounding cities of the Pearl River delta. An $18 billion sea bridge—the world's longest—opened in 2018, along with a $10 billion high-speed rail link. The airport in adjacent Shenzhen has become a Hong Kong gateway, sending swarms of travelers across the border in fleets of minibuses and ferries. Large numbers of mainland Chinese have emigrated to the territory, too. So the passage last week by China's captive legislature of a national security law for Hong Kong actually just completes the inevitable integration. The last vestige of Hong Kong's separateness—its rule of law—has been decisively breached.  A demonstrator waves a flag reading "Free Hong Kong, Revolution Now" during a lunchtime protest at the International Finance Center shopping mall in Hong Kong on May 29. Photographer: Lam Yik/Bloomberg This week in the New Economy In response to China's gambit, U.S. Secretary of State Mike Pompeo declared that Hong Kong had lost its autonomy. And on Friday, President Donald Trump said he would end Hong Kong's special relationship with the U.S., though it was unclear how, and his earlier threats on a range of matters have gone unfulfilled. Trump did not, however, pull back from a partial deal to end the trade war he started three years ago. It is unlikely China will be intimidated by Pompeo or Trump. Hu Xijin, the editor of the nationalistic Global Times, recently taunted the U.S. president on Twitter. "Will you really send U.S. troops to land on Hong Kong?" Hu asked. "If you don't, your 'powerful' response is nothing but bluffing, isn't it?"  Hu Xijin, editor-in-chief of the Global Times. Photographer: Gilles Sabrie/Bloomberg Although Chinese Premier Li Keqiang insisted this week that "one country, two systems" remains the model for Hong Kong's absorption into the mainland, the national security law completely bypassed the territory's own legislature. Soon, the Chinese secret police will set up bureaus in the city, potentially a prelude to a broad crackdown on pro-democracy protests that have engulfed the city for almost two years. The crimes enumerated in the new law—secessionism, sedition, terrorism, collusion with foreign forces—are precisely those Beijing has used to crush resistance in Xinjiang and Tibet, and to lock up journalists, civil rights lawyers and dissidents. Beijing will likely insist on "patriotic education" in Hong Kong schools, aligning with Beijing's faith in the ability of ideology to mold human minds and behavior. This is the end-game. Hong Kong is now fully part of the so-called Greater Bay Area, one component of a colossal urban cluster with a population of around 60 million. There are possibly worse fates. Hong Kong's sprawling Pearl River hinterland, an industrial powerhouse with a rapidly developing services sector, might be an answer to its chronic housing and unemployment problems. Shenzhen has become an aspirational city, as Hong Kong once was, with a larger economy, a busier port and a more active stock market. It's also more innovative: Tech giants like Huawei and Tencent have turned Shenzhen into the electronics hardware capital of the world—and they offer better pay than many of Hong Kong's most prestigious firms. Entry-level salaries for college graduates in Hong Kong have hardly budged since the British handover; 20% of the population lives in poverty.  Protesters attend a demonstration in Hong Kong on Dec. 22 in support of the Uighur minority in China. Riot police broke up the rally. Photographer: Dale de la Rey/AFP Nor does it follow that the national security law will kill Hong Kong as a global financial center. For all the alarm about its loss of legal autonomy, the courts are still operating. Foreign investment bankers will stick around so long as personal taxes remain low, even if they face the risk of falling afoul the new legal code. Besides, they're tired of the street violence. Hong Kong's stock market may even pick up business if the U.S. follows through on its threat to kick Chinese companies off American exchanges. The bigger question is whether Hong Kong citizens themselves can come to terms with their new place in the world. If they can't, they can expect no mercy from members of the Ministry of State Security sent to reinforce the local police. The Chinese state doesn't engage in dialogue with its critics. And Hong Kong is now just another Chinese city. Bloomberg New Economy Conversations In a pandemic, every nation is only as safe as its most vulnerable neighbor. A global approach to eradicating Covid-19 is in every country's best interest, but who will lead it? Join Andy Browne for Bloomberg New Economy Conversations: Emerging Markets on the Brink, on Wednesday, June 3, at 10 a.m. EDT. Click here to register. Follow Bloomberg New Economy on Twitter @neweconforum . __________________________________________________________ Like Turning Points? Subscribe to Bloomberg All Access and get much, much more. You'll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. 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