HONG KONG MONITOR 26 March 2021

26 March 2021

Geopolitical rivalry and its implications on foreign operations in Hong Kong featured prominently over the reporting period (19 – 25 March). One development that is likely to have longer-term implications on the sustainability of foreign companies operating within the territory is the rate of emigration of Hong Kongers. While this has been a relatively long-standing issue, it came to the fore recently, when the local government requested its foreign counterparts to ignore the validity of the British National Overseas (BNO) passports.

The recent halting of the rollout of the Pfizer/BioNTech vaccine has also potential geopolitical dimensions attached. Distribution was temporarily halted after defects were reportedly detected in some of the packaging. Though the authorities acknowledged that these defects did not compromise the vaccine, the timing of the incident is curious, especially as the situation arose after the European Union (EU) imposed sanctions on a number of Chinese officials.

In terms of on-the-ground protests, incident volumes kept within the preceding week’s tally of significant events occurring in the low single-digit figures. Four protests took place, where activists were driven to mobilise by the ‘721 incident’ as well as to show solidarity with jailed pro-democracy activists. Each of the events took place and ended peacefully. See details below.

GEOPOLITICS AND LOCAL IMPLICATIONS

On Thursday (25 March), Reuters news agency reported that the Hong Kong government had called on a number of foreign governments not to treat BNO passports held by many of the territory’s residents as valid travel documents. Reuters said it had viewed a letter sent to at least 12 locally-based foreign consulates that reiterated the administration’s 31 January edict that the BNO was not a valid travel document. At least three million Hong Kong residents are believed to possess or be eligible for a BNO, originally issued by the UK government ahead of the territory’s return to Chinese sovereignty in 1997, which under recent legislation permits them to travel and work in Britain for up to five years. According to the report, foreign envoys have dismissed the demand, pointing out that it is up to receiving countries what travel documents they accept to facilitate entry.

The decision to call on consulates to bar entry to BNO passport holders appears to exceed the Hong Kong administration’s remit as the territory has no formal foreign policy function beyond control over its own borders, with Beijing assuming overall responsibility for managing diplomatic relations. Nevertheless, for many local residents holding BNOs the implications of the letter may well serve to accelerate any plans to leave the territory before further attempts to restrict travel or the movement of assets are introduced by the local and central governments. An increase in the rate of emigration among Hong Kong’s highly-educated, experienced and skilled workforce will have an immediate impact on foreign companies in the territory and further undermine its utility as a key financial and commercial centre within the 12-month outlook.


Hong Kong citizen with BNO passport, 1 February 2021 / Getty Images


PUBLIC HEALTH AND SAFETY: COVID-19

On Tuesday (23 March), Hong Kong’s Centre for Health Protection (CHP) confirmed 12 new COVID-19 cases, bringing the total number of infections in the territory to 11,410. Eight of the new cases are imported, while one was a local case with the source of infection unknown. Three of the cases are related to the URSUS Fitness gym cluster from the Sai Ying Pun area in Western district, Hong Kong Island. As of Friday (26 March), the CHP has registered 11,440 ‘confirmed/probable’ cases with the addition of 11 new ones.

Continuing cases linked to the Sai Ying Pun gym cluster prolong concerns around infections linked to the foreign expatriate community, as well as attendant COVID-19 strictures that are widely viewed as incommensurate and are reportedly factoring into expatriates’ considerations as to whether to remain in Hong Kong.

Meanwhile, the Hong Kong authorities announced on Wednesday (24 March) that inoculations using the Pfizer/BioNTech vaccine had been suspended following the detection of defects in packaging containing the dosage vials. The territory’s government emphasised that while there was no indication that the safety of the German-developed vaccine, usually referred to in Hong Kong as Fosun after the Chinese company responsible for its distribution, was compromised, the inoculation programme has been halted as a precaution until further notice. Government data shows that as of 22 March a total of 376,800 people have been inoculated, 242,600 with China’s Sinovac and 134,200 with the Pfizer/Fosun vaccines, or around five per cent of the population.

The withdrawal of the Pfizer vaccine, coupled with a low rate of public acceptance of the Sinovac product, will hamper efforts to inoculate the territory’s 7.5 million residents. It will also slow down return of domestic commercial activity and the resumption of international travel. There are also concerns among some local residents that the order to ban the Pfizer vaccine may reflect political rather public concerns as it came within 24 hours of the EU joining the US, UK and Canada in imposing sanctions on a number of Chinese officials and entities over their alleged roles in supressing the Muslim Uighur community in western China. In light of this, foreign companies should assess the implications for their staff and operations of the impact of ‘vaccine resistance’ on the local government’s ability to restore confidence and reopen the economy in the three-month outlook.


Local pro-democracy activist outside Hong Kong Government House, 25 March 2021


LOCAL POLITICAL AND SECURITY DEVELOPMENTS

An individual pro-democracy activist on Monday (22 March) held demonstrations in solidarity with the 12 activists that had been detained in mainland China. Eight of the twelve were returned to Hong Kong at the Shenzhen Bay Port on 22 March after completing a seven-month sentence in the city of Shenzhen for illegally entering the mainland and will face trial for demonstration-linked charges in the territory. They are being detained in Tin Shui Wai Division Police Station for further investigation and afterwards will be subject to COVID-19 quarantine measures. Protests in solidarity with the 12 were held at the Shenzhen Bay Port (Hong Kong side) and the Tin Shui Wai Division Police Station, New Territories. The activist failed to appear at a protest at the IFC mall. See details below.

Small-scale street-level protest activity commemorating the 2019 Yuen Long attack or so-called ‘721 incident’ took place in the vicinity of Yuen Long MTR station, Yuen Long, New Territories, on Sunday (21 March) night. The 721 incident has been commemorated on a monthly basis since 2019, after a mob of white-clad triad members on 21-22 July 2019 attacked pro-democracy activists and non-activist commuters at the Yuen Long MTR Station. Police were present at the 21 March protest and a small number of activists held cardboard signs with propaganda such as  ‘Don’t forget 721, don’t forget Ng Kin Wai’. Ng Kin Wai is a local activist and member of Yuen Long District Council, who is currently remanded in custody for participating in the 2020 Hong Kong pro-democracy primaries.

Also on 23 March, Andrew Wan, one of the 47 activists and politicians charged with subversion under the national security law (NSL), was remanded back in custody after the territory’s High Court denied him bail. Dozens of police officers were deployed in the vicinity of the High Court before the hearing began. Wan, a Kwai Tsing district councillor, has been held in the Lai Chi Kok Reception Centre for nearly three weeks after Chief Magistrate Victor So denied him bail on 4 March. So has allowed the release of 15 other defendants on bail pending trial. However, after government prosecutors challenged his ruling, only 11 were released. Those denied bail will remain in detention for three months until a further hearing on 31 May. The High Court will hear another four applications for bail on Monday (29 March).

Denial of bail to Wan further underscores the changes imposed by the NSL on Hong Kong’s Common Law-based legal system, including on the presumption of bail for non-violent offences. Wan’s case suggests that exceptions are made on bail applications where the case pertains to charges under the NSL. A shifting threshold for such applications is likely to deepen concerns around the erosion of the legal and political environment in Hong Kong under the NSL, with additional hearings over the coming days and weeks serving as further indicators. Businesses should monitor the court hearings against those charged under the NSL and assess legal ramifications for local operations.


THE WEEK AHEAD

Developments concerning the 12 Hong Kongers detained in mainland China are likely to remain closely monitored by the international community and local activists. Legal proceedings against them may continue to inspire street-level protests over the coming week, with areas in the vicinity of court hearings serving as likely flashpoints. Their treatment by Hong Kong authorities will likely also further underscore diminished freedoms in Hong Kong. Legal actions against them deemed excessively harsh may be met with diplomatic and commercial retaliation by foreign governments. Retaliation, in turn, may invite unwanted scrutiny by local authorities of businesses whose home governments have imposed measures.

Escalation of this issue may also surpass a threshold level for foreign governments prompting them to either threaten or issue additional sanctions against Beijing, and in turn politicise entry of vaccines manufactured by foreign pharmaceutical companies. Any additional slowdowns of distribution compromise the health of the public as well as undermine efforts to reboot the economy.

In the coming week, there is one notable date that will trigger activist mobilisations, and that is the ‘831 Prince Edward station attack’. The anniversary is memorialised to remember the victims of a police assault on pro-democracy activists at Prince Edward MTR Station on 31 August 2019. Though no announcements have been made about a public demonstration, activists usually gather at the station peacefully. Hong Kong police will more than likely be deployed at the station on the day, dissuading passers-by from participating by enforcing COVID-19 social distancing rules. Police will also routinely screen and question suspected activists, but these incidents rarely cause any significant disruption. Spontaneous and/or short-notice protests driven by local political developments cannot be ruled out in the coming week.


UPCOMING PROTESTS 26 March – 1 April

No protests have been announced.

 

PROTEST CHRONOLOGY 19 – 25 March

Monday 22 March

2000: A small number of activists gathered at Hong Kong Design Institute (HKDI) and Sheung Tak car park, Tseung Kwan O, New Territories, to commemorate the death of Chan Yin-lam, whose corpse was found on 22 September 2019 during the mass anti-government unrest. Activists accuse Hong Kong authorities of murdering her for her taking part in mass anti-extradition bill protests in 2019. No significant disruption to local area business and travel was recorded in relation to this protest.

1000 and 1145: An individual pro-democracy activist held demonstrations at the Shenzhen Bay Port (Hong Kong side), and Tin Shui Wai Division Police Station, New Territories, in solidarity with the 12 activists that had been detained in mainland China. Eight of the twelve were returned to Hong Kong on 22 March after completing a seven-month sentence in the city of Shenzhen for illegally crossing the border and will face trial for demonstration-linked charges in the territory. The activist did not appear at a protest at the IFC mall. There were no reports of any arrests or any significant disruption to local area businesses and travel.

Wednesday 24 March

1300 and 1430: An individual pro-democracy activist held a demonstration at the Eastern Magistrates’ Courts, Sai Wan Ho, Hong Kong Island, in solidarity with a jailed actor for local TV broadcaster TVB. There were no reports of any arrests or any significant disruption to local area businesses and travel.

Thursday 25 March

1145: A lone activist delivered a petition to the Secretary for Food and Health, Professor Sophia Chan, at the Hong Kong Government Office, Tamar, Hong Kong Island. There were no reports of any arrests or any significant disruption to local area businesses and travel.