In my review of Kroeber’s book on The Chinese Economy, I identified why the CPC was treating the Hong Kongers with kid gloves (relatively speaking):
Another facet of the FDI strategy was that much “foreign” investment was not really foreign. Nearly half of inbound direct investment has come from Hong Kong, and while much of that may simply reflect the activities of Hong Kong–based subsidiaries of American or European firms, it is clear that Hong Kong firms have been major investors in the mainland… Moreover, as much as a third of China’s reported FDI may in fact be “round-tripping”—investments by Chinese individuals and companies that are routed through companies in other jurisdictions, especially Hong Kong.
Now it appears that China has taken the decision to reintegrate Hong Kong ahead of schedule; in the process, it will lose its position as a privileged entrepot within the “Chimerica” world system, effectively eliminating it as China’s pipeline to Western capital and knowhow.
Given the Corona-accelerated drive towards the “Great Bifurcation” of the world economy between the American Blue Empire and the Sinosphere, I suppose the CPC sees the benefits as justifying the costs.
I am inclined to agree but YMMV.
As for Hong Kong itself, it was already in rapid, inexorable decline. It only arose to prominence by virtue of its unique legal regime and will now fade away into just another second-tier large Chinese city over the next decades.