HONG KONG MONITOR 14 May 2021

14 may 2021

Developments over the monitoring period (7-13 May) maintained previous trends regarding coronavirus (COVID-19) reporting. The territory is gradually lifting restrictions as case numbers remain relatively low. However, external COVID-19 threat will likely derail the air corridor between the two regional financial hubs. Singapore authorities will reimpose another lockdown on Sunday (16 May) in response to a recent spike in infections. A decision on the air corridor will be made early during the next reporting period (14-20 May).

This reporting period also saw the re-emergence of a potential terrorism threat after three leading political and law enforcement officials received letters containing a suspicious white powder. Chief Executive Carrie Lam was one of the targets. Though the powders were later assessed as non-hazardous, the letters were reminiscent of similar attacks of intimidation against pro-government officials and organisations in 2020. No arrests have been made in this latest incident, but it sends a stark reminder of the extreme forms of intimidation by anti-government agents. As pro-democracy protest activities continue to regress due to COVID-19 related restrictions and the national security law (NSL), some of the more hardline elements within the movement are likely to feel compelled to ramp up this provocation campaign in the coming weeks, posing direct risks to the government and pro-government businesses, and collateral risks to agencies occupying the moderate to liberal ends of the political spectrum.

Foreign business should take heed of a recent American Chamber of Commerce (AmCham) in Hong Kong survey, which revealed that 42 per cent of its members are planning to or considering divesting from the territory. The NSL was cited as a major driver in their motivations. An outgoing senior Canadian diplomat expressed similar sentiments in an interview with the Ming Pao Daily, warning that foreign businesses are under threat of losing legal protections based on the current trajectory of political risks.


GEOPOLITICS AND LOCAL IMPLICATIONS

Numerous multinational firms are developing contingency plans for relocating from Hong Kong, according to outgoing Canadian Consul General in Hong Kong and Macao, Jeff Nankivell, during an interview with the Ming Pao Daily newspaper. Nankivell said that the NSL has harmed the ‘one country, two systems’ framework, reminding corporations that the NSL will undermine the legal protections of foreign businesses. The envoy also said that a number of Canadian organisations are studying how they can transfer information that is not directly linked to Hong Kong, including customer data, out of the territory. However, Nankivell praised Hong Kong’s judiciary and expressed hope that it would preserve high standards crucial to the territory’s status as an international business hub.

Nankivell’s remarks come as Hong Kong police on Monday (10 May) said that over the past six months more than 100,000 tips from the public have been lodged with the police’s national security unit’s reporting hotline for potential NSL breaches. Since the intelligence-sharing platform was launched in November, the unit has received a daily average of 550 messages. Last week, the police arrested five people after receiving tip-offs over allegedly subversive messages posted on social media by a student group.

The outgoing Canadian envoy’s comments and NSL-related developments further underscore how the NSL has since its imposition lowered business confidence and sentiment in Hong Kong. Nankivell was likely referring to many international businesses’ consideration of omitting Hong Kong from legal contracts, including governing law and arbitration clauses, over threats to the territory’s judicial independence. Canada’s immigration initiative for Hong Kong residents will likely increase political tensions between Ottawa and the China and Hong Kong governments as application volumes increase. Applications and relocation will probably accelerate ahead of the enforcement of Hong Kong’s ‘exit ban’ law on 1 August 2021, in tandem with easing of COVID-19 pandemic outbreaks and attendant restrictions in Canada and Hong Kong. Increasing political tensions will likely also subject Canadian businesses and staff in Hong Kong to heightened scrutiny and threat of commercial retaliation.

On 10 May, German foreign minister Heiko Maas condemned Hungary for an ‘absolutely incomprehensible’ decision to block an EU statement accusing Beijing of infringing on Hong Kong’s democracy. EU foreign ministers have not been able to adopt the text even though it has already been moderated to gain Hungary’s support.

Hungary’s blocking of the measure demonstrates the impact of a lack of internal EU cohesion regarding China and Hong Kong. In practice, this means that potential diplomatic and commercial retaliation by Chinese and Hong Kong authorities targeting EU companies and staff is averted.

A survey published by the American Chamber of Commerce in Hong Kong (AmCham) on Wednesday (12 May) revealed that 42 per cent of its members plan to or are considering to leave the territory, with 62 per cent citing concerns over China’s imposed national security law (NSL). Around 25 per cent, or 325, of AmCham’s business members responded to the anonymised survey. Of this total, 3 per cent said they would seek to leave immediately, 10 per cent within the next four months, 15 per cent by end-2021 and the remainder within three to five years. More than 60 per cent said concerns over the NSL are a major factor in their decision to want to leave, with 36 per cent citing what they viewed as the threat the law posed to their children’s education and future.

The AmCham survey offers the first systemic, if narrow, indicator of foreign business attitudes towards Hong Kong since China imposed the NSL in mid-2020. The organisation serves to reflect the commercial interests of hundreds of US-linked companies and its views are widely considered to broadly represent those of the territory’s Western expatriate business community. The survey concludes by calling on the local administration to recognise the foreign business communities’ concerns, while warning that failure to do so could undermine Hong Kong’s competitiveness and benefit other regional business hubs. However, as the NSL and wider foreign policy issues of concern to the international business community are beyond the local government’s remit, it is Beijing’s attitude towards the territory that remains crucial to determining whether the outflow of overseas companies and their expatriate staff increases or declines over the 12-month outlook.

Hong Kong Police Chief Chris Tang outside police headquarters providing details of the 'white powder' incident, 14 May / Studio Incendo 

 

PUBLIC HEALTH AND SAFETY: COVID-19

On 12 May, the Hong Kong Ministry of Health released a list of 10 approved COVID-19 vaccines for incoming travellers, including ones produced by AstraZeneca, Ahui Zhifei Longcom Biopharmaceuticals, Pfizer-BioNTech, CanSinoBIO, Janssen, Moderna, Serum Institute of India, Sinopharm, and Sinovac. On the same day, the ministry relaxed its 21-day hotel quarantine for incoming arrivals who arrived from ‘low risk’ countries, such as Australia and New Zealand. While Singapore was also added to the list, a recent surge in case numbers there means there is a near-certainty that the planned air corridor between Hong Kong and Singapore, due to commence on 26 May, will be delayed.

Inoculated travellers from medium- and high-risk countries, including Canada, France, Germany, United Arab Emirates and United States, among others, will be required to quarantine at a hotel for 14 days, and then released for seven days of self-quarantine. Those individuals will also be required to appear at a testing centre on the 16th and 19th day for COVID-19 screening.

On Thursday (13 May), the Centre for Health Protection (CHP) reported that it had registered two imported and one local case of COVID-19. The two imported cases were a Hong Kong national who had recently returned from France, while the other was of an Indonesian who arrived from her home country. The variants of those cases were not disclosed. Meanwhile, an epidemiologist at the Hong Kong’s Polytechnic University said that it had detected the origin of a mutant strain that began circulating throughout Hong Kong from March.

According to the expert, an Indian national arrived from Dubai and quarantined at the Ramada by Wyndham Hotel for 21 days. After being released he showed symptoms of the Indian mutant strain, which was traced back to a Philippine citizen who stayed in the next room at the Ramada during the same period. The expert believes that the Indian national contracted the mutant strain then.


LOCAL POLITICAL AND SECURITY DEVELOPMENTS

Leung Zhen, a reporter for the Epoch Times was attacked on the street outside of her home in Ho Man Tin, Kowloon by an unidentified assailant wielding a baseball bat on Tuesday (11 May). Leung was injured and hospitalised. She accused the Communist Party of China of orchestrating the attack. The Hong Kong Journalists Association (HKJA) voiced serious concerns about the attack and ‘condemn[ed] violence against the media’.

The attack came weeks after four men wielding sledgehammers attacked the Epoch Times’ printing presses. Overall, the developments indicate the potential for scrutiny, hostile surveillance, and attacks on independent and critical news organisations amid increased pressure on media organisations to comply with the NSL. Such pressure also extends to foreign media organisations. Chief Executive Carrie Lam on 11 May criticised foreign media outlets over their reporting on ‘so-called peaceful’ demonstrations in the territory.

The Hong Kong Alliance, the organisers of Hong Kong’s annual 1989 Tiananmen Incident vigil, have called for territory-wide commemorative events at 2000 local time on 4 June. The announcement comes after the government imposed a de facto ban on a rally in Victoria Park for a second year in a row citing COVID-19 concerns.

Meanwhile, the Hong Kong Monetary Authority (HKMA) issued an alert on 13 May about a phishing email campaign that was brought to light by the Bank of China (Hong Kong, BOCHK). The phishing email has targeted bank customers from a BOCHK domain name (bochkprivatebank.com). The HKMA, BOCHK and Hong Police have called on the public to verify emails claiming to be from the BOCHK, report any suspicious emails to the police and not to reply or open any attachments. BOCHK Customer Service Hotline is (852) 3988 2388, and for the Hong Kong Police’s Cyber Security and Technology Crime Bureau, it is (852) 2860 5012. There were no further details on this phishing campaign.

Letters filled with a white powder were sent to Chief Executive Carrie Lam, Secretary of Security Li Jiachao and Director of Police Deng Pingqiang on 13 May, triggering a security alert. The letters were transferred to the police and subsequent investigations revealed that the powders were inert and non-toxic agents. Police have not made any arrests or released any information on potential suspects.

The posting of suspicious powders to these high-ranking government officials is a worrying development and there is potential for it to continue in the coming weeks. There is currently no evidence to suggest the perpetrators have access to hazardous substances and the risk to the general population is very low. Nevertheless, it is likely that the increasing pressure to clamp down on certain liberties via the NSL and the trials against pro-democracy activists amid the strain of COVID-19 related economic downturn has forced an anti-government actor or actors to lash out against the government. Letters with suspicious white powder were sent to law enforcement and political leadership as well as a pro-government media outlet in April 2020.

Though these substances were also assessed as non-hazardous, the incidents certainly sent a clear message of provocation to the government. As the political pressure mounts against the pro-democracy movement, there is a credible risk that the more extreme elements within the movement would be prepared to deploy hazardous chemicals against individuals associated with the police, government, pro-government media and pro-government businesses if they obtained the capability. This would significantly increase the collateral risk to the public.


Hong Kong Monetary Authority building at International Finance Centre, Central District, 14 May 2021 / Bloomberg


THE WEEK AHEAD

This current reporting period will likely see further relaxations in COVID-19 related measures as case numbers remain consistently low and the government tries to ramp up economic activity. Next week will see a decision on the immediate viability of the air corridor with Singapore, but there is mounting consensus that the opening is likely to be postponed as Singapore deals with spiking case numbers there. Relatedly, countries assessed as ‘high’ and ‘medium’ could be downgraded to lower risk tiers, depending on the Hong Kong government’s continual re-evaluations of those countries.

Territory-wide reporting still indicates continual regression of overall pro-democracy related protests, and there are no significant dates that would generate a shift in the coming week. The NSL and COVID-19 related measures have been instrumental in restraining such activities, but the local security environment is prone to sudden spikes, albeit of low order, dependent on local political developments, such as the trials of pro-democracy activists and figures as well as the further clamping down on democratic freedoms. Those in the media, particularly ones that are deemed as anti-Hong Kong and anti-Beijing, should take the attack on the Epoch Times journalist as a warning. Relatedly, terroristic attacks against government figures and organisations, such as the recent ones involving the mailing of letters with suspicious substances, are meant to intimidate and as such can impact day-to-day operations and the health and safety of staff. Additional attacks, likely aimed at the government, cannot be ruled out in the coming week.


UPCOMING PROTESTS 14 – 20 May

Nothing significant to report.

 

PROTEST CHRONOLOGY 7 – 13 May

Nothing significant to report.