China Brief: 25 June - 1 July 2019

A2 Global’s China Brief contains assessments of events and policies that may impact commercial interests, personnel, and assets throughout Greater China. This edition looks into developments concerning the extradition protests in Hong Kong, flight cancellations in Taiwan, and strained Sino-Canadian ties.

Hong Kong  – Travel risk: Low – Police move against protesters occupying territory’s Legislative Council using tear gas, baton charges

Taiwan – Travel risk: Low – Eva Air cancels hundreds of flights through to 10 July, as cabin crew strike continues

China & Canada – Ties further strained after Canadian warship transits Taiwan Strait

Hong Kong – Security risk: Low – Overnight protests focus on police HQ, minor unrest reported

China & Hong Kong – Political sensitivities over extradition protests disrupt business

China & Canada​ – China bans all Canadian meat imports over alleged contamination

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Hong Kong – Police move against protesters occupying territory’s Legislative Council using tear gas, baton charges

HONG KONG – Travel risk: Low

1 July: A large contingent of police moved against opponents of the government’s proposed extradition law occupying Hong Kong’s Legislative Council (LegCo) in the central business district after besieging the building for some hours. The police operation began at midnight local time and lasted for an hour.

Why it matters: A2 Global had warned of the threat of violent unrest on 1 July between those opposed to the extradition bill and more broadly the Chinese government and the police. A2 Global warns that the authorities’ tolerance towards the protesters is now close to being exhausted, creating the potential for further serious and sustained unrest over the coming days. We advise companies to ensure measures are in place to reflect this potential threat to their staff, premises, assets, and operations.

Taiwan – Eva Air cancels hundreds of flights through to 10 July, as cabin crew strike continues

TAIWAN – Travel risk: Low

28 June: Taiwanese international airline EVA Air on 28 June cancelled hundreds of flights up to and including 10 July, due to an ongoing strike by cabin crew. Members of the Taoyuan Flight Attendants Union (TFAU) began an indefinite strike on 20 June over pay and conditions. EVA Air’s website lists the vast majority of its flights between 29 June and 10 July as cancelled. The airline flies to more than 40 international destinations in Asia, Australia, Europe, and North America, mostly from its base in Taoyuan International Airport (TPE), which serves the capital Taipei. Eva Air had already cancelled 873 flights between 20-30 June, with 170,000 passengers affected.

Why it matters: Business travellers due to fly with Eva Air are advised to re-confirm their flight status and make alternative travel arrangements if their flights are affected. The latest updates on Eva Air flights can be found on the airline’s website.
 
China & Canada – Ties further strained after Canadian warship transits Taiwan Strait

28 June: The revelation that two Canadian vessels, a navy frigate and a supply ship, passed through the Taiwan Strait on 18 June has increased tensions between Canada and China. The transit by HMCS Regina and resupply ship MV Asterix became public on 27 June, at the start the G20 summit in Japan, attended by Canada’s Prime Minister Justin Trudeau and China’s President Xi Jinping. Media reports claim Chinese military aircraft flew within 300m of the vessels while in international waters, in what was interpreted as intimidating manoeuvres.

Why it matters: A2 Global notes Canada’s decision to send the ships through the Taiwan Strait appears to reflect a determination by Ottawa not to be intimidated by Beijing in their present dispute, centred on the detention of a senior executive of China’s Huawei technology corporation on a US extradition warrant. China can be expected to respond to the transit with moves against Canadian interests and individuals once the G20 summit concludes at the weekend. The Canadian vessels’ transit corresponds with a pattern of Western navies supporting the US as ‘freedom of navigation’ naval deployments in the South China Sea and Taiwan Strait.

Hong Kong – Overnight protests focus on police HQ, minor unrest reported

HONG KONG – Security risk: Low

27 June: Several thousand protesters surrounded the police headquarters in the territory’s Wanchai district on 26-27 June, following an earlier demonstration at nearby government offices against the local administration’s efforts to permit extradition to China. While there were limited clashes between the police and a few protestors outside the Wanchai HQ, the demonstrations were largely peaceful.

Why it matters: While the protests against the extradition bill have diminished in size, they now attract increasingly organised and dedicated activists. This is highly likely to lead to future direct confrontations between protesters and police, which at present remain constrained on both sides. The end of the 28-29 June G20 summit in Japan may mark a significant change in police tactics, as the Chinese government has been seen as seeking to avoid any incidents that may damage its image during the high-profile meeting. Companies and their staff in Hong Kong should be aware of the potential for more active protests in the territory.
 
China & Hong Kong – Political sensitivities over extradition protests disrupt business

27 June: A spokesperson for US sports brand Nike on 26 June confirmed the group had pulled a limited edition line of trainers from mainland China. The decision came after Undercover, the designer of the shoe line, posted a picture on Instagram showing protesters with signs saying ‘no extradition to China’. The post was interpreted by users in mainland China as a show of support for Hong Kong protesters against the local government’s plans to allow the extradition of nationals to China. Also related to the recent wave of protests, which have turned violent on several occasions, on 25 June the UK banned the issuing of export licences for crowd control equipment, such as tear gas, to Hong Kong. UK authorities also called for investigations into alleged police brutality over the past month’s rallies.

Why it matters: Both incidents underscore the increasingly complicated situation companies trading in or with China face, in terms of cultural sensitivities at home and abroad. This is in line with A2 Global’s forecast last June. Corporate communications departments should factor this into their China strategies, ensuring communications are based on a nuanced understanding of political issues and cultural practices in mainland China.
 
China & Canada​ – China bans all Canadian meat imports over alleged contamination

26 June: China has banned the import of all meat products from Canada with immediate effect, after alleging veterinary certificates relating to pork shipments were fraudulent. The decision was announced on the eve of Canada’s Prime Minister Justin Trudeau’s departure to the G20 summit in Japan, where he is expected to meet China’s President Xi Jinping. China is the second-largest market for Canadian pork, importing more than 283,000 tonnes of the meat in 2018.

Why it matters: The Canadian Department of Agriculture and Agri-Food has confirmed ‘inauthentic certificates’ relating to pork shipments have been detected and an investigation started. However, A2 Global assesses that the ban is a further example of Beijing’s efforts to apply pressure on Canada over the detention of a senior executive of China’s Huawei Technologies Co. Ltd, on a US extradition warrant. China can be expected to continue imposing economic sanctions on Canada, while also holding Canadian nationals on a variety of criminal charges, in a bid to secure the release of Huawei’s Meng Wanzhou.