A letter from Hong Kong - Alastair Murray (73-78)

There are 3 issues dominating current affairs in Hong Kong at the moment and they are all somewhat intertwined. They are the National Security Law, the US response and the Protests, these are at the forefront of the current consciousness among the public and receiving more attention by local media in Hong Kong than are Covid and the BLM movement.

Today marks the start of a 3-day debate by the Chinese mainland’s National People’s Congress on the National Security Law, which is expected to be enacted in Hong Kong early next month. The content of this and international reaction to it will undoubtedly determine the future for Hong Kong. Notably, Hong Kong itself will have no or very little say in what it actually contains, yet it is possible that it will take precedence over Hong Kong’s existing laws when enacted.

The protests that plagued Hong Kong in the second half of last year are newsworthy because of their current absence. Yet none of the issues that the protests stood for have been resolved. People are asking will or when will the protests return? The gatherings last year brought together various groups demonstrating against a lack of democracy, dissatisfaction with the Hong Kong Government, interference by China and in turn the police’s handling of the protests themselves. The movement attracted large crowds of mainly young individuals dissatisfied with the growing gap between rich and poor, the unaffordability of housing and general frustration with the lack of opportunity for the sandwich class. Like many such movements they were no doubt infiltrated and led by a few hard-line individuals who turned the protests into pockets of violence, determined to upset daily life in Hong Kong to draw attention to their grievances, and the international media lapped it up. The protests did impact on daily life here; various shopping malls were closed, some of our underground train stations were burned and closed leading to a curfew on the much relied on underground train system. Establishments and even individuals with mainland connections were particularly targeted.

Covid certainly halted the protest momentum and we have seen very little since Hong Kong came out of its initial Covid scare. So far, the protests have not returned, at least with nothing like the impact as before Covid. It’s true that gatherings of more than 50 people have been barred due to Covid restrictions but some previous demonstrations had also been outlawed and that did not stop them from happening. Most recently a large and unlawful demonstration gathered illegally for the annual remembrance of the Tiananmen Square Incident on 4th June but passed on the whole part peacefully with both sides, the police and protestors, maintaining restraint. Similarly, calls for large scale protests against the introduction of the National Anthem Law which made it an offence in Hong Kong to insult the Chinese national anthem, went largely unheeded and the law was passed on 12th June. Is this a sign that the large-scale protests and the disruption of last year are a thing of the past? Commentators point to the facts that international media attention may have encouraged protestors but are now more focused on events at home and in any case unable to travel here, momentum has certainly been lost during the Covid restrictions, many of the hard-line protestors have been detained awaiting trial, but perhaps the public are just genuinely scared about repercussions from what they believe is a hardened stance against them. It does seem there is a new regime. It is widely believed that putting a stop to the protests is China’s number one priority when dealing with Hong Kong now.

So, what for the future of Hong Kong. What plans does China have for us?

It seems China is willing to sacrifice the future prosperity of Hong Kong if that is required to bring back control in Hong Kong and avoid a contagion of unrest spreading into the mainland. They have announced they will unilaterally impose a new national security law which makes it a criminal offence to act with subversion and sedition, against China. Perhaps China’s plan is working and fear has helped curb the protests. But today, China announced that it will also add “collusion with foreign forces” to the list of offences under the national security act. This change brings the legislation in line with mainland China’s Criminal Law.

The real threat to Hong Kong is its judicial independence, separate to China and any outside interference, without this, its financial infrastructure, its regulators and a place to hear disputes on business done in China collapses. If Hong Kong’s legal system can no longer be trusted and financial incentives to book business here disappear then foreign investors may as well bypass Hong Kong and do business directly on the mainland.

Opposition figures state that China is in breach of its promises under the Joint Declaration on the handover of Hong Kong with Britain and its mini-constitution, the Basic Law, agreed with Britain before the handover in 1997. They argue that China has given up on one country, two systems and its plan to entice Taiwan by using Hong Kong as a shining example of how such a system can work.

On the back of the announcement of the new national security law, the US responded shortly after with its own curbs on Hong Kong, announcing that it would no longer consider Hong Kong as sufficiently autonomous from China to warrant its special trading status with the US, meaning that such things as tariffs and quotas will be treated in the same way as China. Many people here feel Hong Kong is being used as a pawn in the current friction between US and China. What is clear is that Hong Kong is in real danger of becoming just another Chinese city unless China allows it to retain or create some sort of advantage that distinguishes it from the rest of China. So far, the US has had little support with its hard line on China, other countries preferring not to rock the boat. The UK’s response to help Hong Kong has been primarily to offer certain passport holders an extension of visa free access to the UK from 6 months to 12 months and an indication that this may lead at some time down the road to full citizenship. This never made big news in Hong Kong, it appears to most residents that this is less attractive than the full UK passports given to 50,000 Hong Kong households under the British Nationality Scheme to avoid the brain drain before the handover in 1997.

The price put on staying in China’s good books is illustrated by the announcement 2 weeks ago by HSBC and Standard Chartered, both headquartered in UK that they supported the introduction of the national security law. This did catch most people in Hong Kong by surprise. What was most surprising was that they did so without knowing what the final text of the law would actually say. One can only imagine the amount of pressure their boards must have been under to make such declarations. By doing so HSBC incurred the rebuke of one of their largest institutional investors, UK based Aviva, but perhaps somewhat surprisingly not, publicly at least, their principal regulator, the UK FSA. Is this another example of not wanting to rock the boat?

Amidst all this uncertainty, some relief was provided last week when the Hong Kong Government, among others bailed out Hong Kong’s defacto national carrier, the struggling airline Cathay Pacific. The Hong Kong Government itself committed more than GBP4bn and would have had the mainland’s blessing, if not direction, to such an intervention. If Hong Kong is to maintain any relevance in the future as a gateway in and out of China and avoid becoming just another Chinese city, then continuing to have its own airline is an important step in achieving that. The loss of Cathay Pacific to most Hong Kongers is unthinkable. The feeling among many here is that the mainland would have sanctioned or even pushed for Cathay’s survival and we are left guessing that China does support a role for the city in the future in some meaningful way.

Whatever lies ahead for Hong Kong, we shall know in the next few weeks. Matters are moving fast and not surprisingly, residents are feeling jittery.

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