An era in HK is ending

“Many Hong Kong people used to feel more superior than mainlanders because of the rule of law and freedom of speech” that characterized the city, said Yeung Ke-cheong, 35 years old, a candidate disqualified from recent elections for Hong Kong’s 70-member Legislative Council. Nearly half its seats are reserved for constituencies that represent largely pro-Beijing and business interests. “Hong Kongers are more like second-class citizens” in China now, he said.

Zhang Dejiang, the Communist Party’s No. 3 official, has said that Hong Kong has unique advantages that can’t be replicated by other Chinese cities and criticized “a very small minority of people” for advocating independence.

Keeping Hong Kong in line is a major test for President Xi Jinping, the country’s most powerful leader in decades, as he consolidates control amid factional opposition. In Beijing’s view, China faces threats along its perimeter, from Uighur militants in the far western Xinjiang region, separatists in Tibet and Taiwanese leery of the mainland’s embrace. Allowing Hong Kongers to push for independence would set a troubling precedent and possibly inspire more calls for autonomy or political reform elsewhere. It could embolden Mr. Xi’s opponents within the Communist Party, which next year anoints a new leadership that Mr. Xi wants to dominate.

Anson Chan, a former Hong Kong chief secretary—the city’s No. 2 official—said in a recent speech that challenges to Hong Kong’s rule of law and civil liberties are coming “so thick and fast they no longer even seem to cause surprise.”

She cited threats to academic freedom at local universities, a series of violent attacks on local journalists and the disappearances of several book publishers who reappeared in the custody of mainland authorities.

Frustrated by a lack of progress on what they saw as Beijing’s promise that Hong Kong’s chief would be elected by popular vote, not selected by a 1,200-member committee stacked with Beijing loyalists and business people as it is currently done, some young people now advocate independence. That is a leap from 2014, when student-led protesters occupied central Hong Kong and demanded democracy but not an outright break with China. Several candidates calling for more self-determination, including a 23-year-old college student who helped lead the protests, won seats in the Sept. 4 elections amid record turnout.

The Chinese government’s Hong Kong and Macau Affairs Office warned after the vote that independence violates China’s constitution and Hong Kong laws and harms the territory’s “prosperity and stability.” It said it supports the Hong Kong government in legally punishing “‘Hong Kong independence’ activities.”

China denies any stepped-up pressure on Hong Kong. Mainland officials routinely call for strict adherence to the Basic Law, Hong Kong’s post-handover constitution, and to the principle of “One Country, Two Systems,” which guarantees Hong Kong’s different way of life.

Hong Kong’s leaders say the territory continues to enjoy a high degree of autonomy. It remains a bastion of freedom compared with the mainland, with street protests, open access to the internet and some newspapers that can be critical of mainland policies. China’s attempt to introduce an antisedition law in Hong Kong was shelved in 2003 after a half-million people took to the streets in protest.

Hong Kong was hardly a model of democracy under British rule, and China has provided benefits. Strapped to the rocket ship of China’s economy, the city’s gross domestic product has grown substantially since the handover.

Yet Hong Kong’s role in the Chinese economy has diminished. In 1997, its GDP was 18.5% of China’s. In 2015, it was just 2.9%. Hong Kong now overwhelmingly relies on China for its food supply, and 80% of tourism spending there in 2015 was by mainlanders.

The city’s status as a “special administrative region cannot last forever—this is impractical,” said Kingsley Sit, who directs a research office for the Heung Yee Kuk, an advisory group that represents rural interests outside central Hong Kong and has long backed Beijing. “The major trend is gradual integration into China. If Hong Kong became independent, how feasible would that be? Let’s do something wise.”

In a sign of worries in the territory, the film “Ten Years,” a collection of vignettes that envisioned a politically circumscribed Hong Kong one decade from now, was a surprise success over the past year. In one vignette, mainland officials stage an assassination attempt to spur passage of a national-security law in Hong Kong. In another, a taxi driver who can’t speak Mandarin struggles to find business as the city’s native Cantonese language is relegated to second-class status.

Banned in the mainland, the movie won best film at the Hong Kong Film Awards. Many Hong Kong cinemas either didn’t screen it or didn’t add showings to meet demand. State broadcaster CCTV and Tencent Holdings Ltd. , the Chinese internet firm, pulled out of agreements to broadcast the awards in the mainland. CCTV, Tencent and the award organizers didn’t respond to requests for comment.

The worries about Beijing interference coincide with questions about Hong Kong’s viability as a top financial, business and trading center. Hong Kong’s container port, the world’s busiest as recently as a decade ago, slid to No. 5 last year as mainland ports such as Shanghai expand.HSBC Holdings PLC decided this year not to relocate its London headquarters to Hong Kong, citing London’s talent pool and international status.

Hong Kong has been a bone of contention as far back as the 1840s, when an insubordinate British captain took possession of the island in the First Opium War. The colony, with low taxes, free-market policies and Western rule of law, later bloomed into a major trade entrepôt and financial center and is now home to more than seven million people.

In the 1980s, London and Beijing negotiated a handover deal that gave China control of foreign affairs and defense. Hong Kong kept the right to maintain its own judiciary, manage its currency and set social policies for another 50 years.

Exactly what happens in 2047 wasn’t spelled out. Many locals hoped China would democratize and that its political system would converge with Hong Kong’s over time, rather than the other way around, although China’s crackdown on Tiananmen Square protests in 1989 damped those expectations.

Beijing, by contrast, thought that pulling Hong Kong closer into China’s economic orbit would win people over. It offered preferential treatment on the mainland for Hong Kong businesses, encouraged Chinese companies to invest in the territory and allowed millions of Chinese to travel there, creating a boom for Hong Kong hotels and shops. China made Hong Kong the key international center of trading for its currency, the yuan.

In many ways, the strategy backfired. Some middle-class Hong Kong residents complained about overcrowding from mainlanders and worried that locals were being squeezed by higher real-estate prices. Amid the tourism boom, some Hong Kongers began calling mainlanders “locusts” who swarm the city and drain its resources.

Faced with mounting opposition, Beijing decided that doling out economic favors had run its course and that it had to get more visibly involved in Hong Kong, Chinese political scholars say.

“They gave out a lot of candy, a lot of sugar,” said Ding Xueliang, a social scientist at the Hong Kong University of Science and Technology. “Finally they realized they’d given so much, and they still hadn’t fixed things. So they have to take stronger measures.”

Beijing issued a policy paper in 2014 emphasizing limits to Hong Kong’s autonomy. It has brought Hong Kong legislators to Shenzhen for talks on the territory’s political system, led by high-level mainland officials. During the mass street protests of 2014, Shenzhen became a command center, run by security and political officials from Beijing.

Mr. Ding estimates that China likely has more than 100,000 people in Hong Kong who help it monitor the city.

An official at the central Chinese government’s liaison office in Hong Kong declined to comment for this article.

Hong Kongers are sensitive about encroachment by mainland law enforcement. Last year, several Hong Kong booksellers disappeared after publishing thinly sourced, salacious tell-alls about China’s leaders. They turned up later in detention in mainland China.

In a June press conference after his release, one of the booksellers, Lam Wing-kee, alleged that he was abducted at a Shenzhen border crossing and held by a special task force of the central Chinese government for eight months, without charges. Previous statements that Mr. Lam and four similarly detained colleagues had made from China were scripted and made under duress, he said.

Mr. Lam said one colleague, Lee Bo, was spirited away directly from Hong Kong, even though Chinese law enforcement is prohibited from operating there under the city’s autonomy arrangement.

Hong Kong’s top official, Chief Executive Leung Chun-ying, said he would write a letter to the mainland government to express concern and called for tweaks to the system for notifying the government when a Hong Kong resident is detained in the mainland—gestures pro-democracy lawmakers and activists criticized as underwhelming.

The Chinese Ministry of Public Security acknowledged “inadequacy” in the notification mechanism between Hong Kong and China.

Mr. Lee has said he visited the mainland of his own free will to aid in an investigation. He couldn’t be reached for comment.

The Chinese government or mainland corporations now have direct control or stakes in eight of Hong Kong’s 26 mainstream media outlets, according to the Hong Kong Journalists Association. That has contributed to a steady erosion of press freedom, the association said.

It cited the purchase of the South China Morning Post by Chinese internet giant Alibaba Group Holding Ltd. late last year. Alibaba Executive Vice Chairman Joseph Tsai said editorial independence would be respected.

He also said in an interview with a Hong Kong news website that coverage of China was “neither complete nor healthy” because newspapers tended to “carry the Western angle.” The Post, he said, would put out “another angle.”

Mainland Chinese companies such as China Mobile Ltd. and Tencent dominate Hong Kong’s Hang Seng Index. At the time of the handover, the top 10 listed companies by market capitalization were almost all old-line British colonial firms such as HSBC or conglomerates owned by local tycoons.

Chinese developers, many with government backing, are outbidding Hong Kong counterparts for public land, which is sold periodically by Hong Kong’s government. In one instance, an arm of China Minmetals Corp. bid 4 billion Hong Kong dollars ($515 million), far exceeding market expectations, to win a 10,530-square-meter waterfront plot in Hong Kong’s Kowloon section for luxury housing.

Mainlanders now make up 12% of the students in Hong Kong’s university system, compared with less than 1% in the 1996-97 school year.

In August, Hong Kong’s education department said that secondary-school teachers advocating Hong Kong independence could have their licenses revoked. Mr. Leung, the Hong Kong chief executive, compared teenagers’ interest in independence to drug use.

Many of Hong Kong’s newly elected legislators disagree.

“We Hong Kong people need to seize the opportunity to decide our own future,” said 25-year-old Yau Wai-ching, one of the new legislators, suggesting the tension is unlikely to dissipate soon. “Self-determination is our inherent right.”

—Alex Frangos, Te-Ping Chen, Anjie Zheng and Gregor Stuart Hunter contributed to this article.