HONG KONG MONITOR 9 July 2021

9 July 2021

Over the monitoring cycle (2-8 July), there were some interesting developments that help define the operant realities (current and future) in Hong Kong. Mid-way through the information collection period, specifically on Tuesday (6 July), the government of Chief Executive Carrie Lam is set to pass a new anti-doxxing law that would hold companies and their respective employees criminally and civilly liable for online content created by their users that is deemed in violation of local laws. The proposed legislation, if passed, would widen the trust deficit between technology companies, especially foreign ones from countries deemed adversarial towards China, and the Beijing and Hong Kong governments, and undoubtedly force them to make major shifts in strategic and operational planning.

In US-Hong Kong developments, President Joe Biden extended emergency powers allowing his administration to impose wide-reaching economic sanctions against entities in Hong Kong. These powers are being kept in play for its utility but symbolically it is arguably a public relations win for Beijing and Hong Kong as it directly feeds into their strategic objectives of portraying the US as a hostile actor. Both are expected to respond accordingly, posing more risks to American companies. These powers will be extended from 14 July with a one-year term. 

Of a more serious security-related development were separate arrests related to an arson attack attempt and bomb-making. On Monday (5 July), police arrested a pro-democracy activist who has been linked to the 1 July arson attack attempt against Government House, Central district, Hong Kong Island. The first arrest of another suspect was made on Friday (2 July). Then on Tuesday (6 July), police arrested nine suspects on charges related to the manufacturing of TATP-laced improvised explosive devices (IEDs). Police claim that the suspects intended to use the IEDs for mass-casualty attacks.

The arson attempt occurred during a period of significant dates, namely the centenary anniversary of the Communist Party of China (CPC) and anniversary of the 1997 handover, suggesting it was intended to be a performative act rather than causing significant harm. The development of more potent devices by hardcore elements within the pro-democracy movement does not necessarily indicate a broader shift in tactics, but should raise concerns over the direct and collateral ramifications from a successful attack.


Billboard of the National Security Law in Hong Kong. US President Joe Biden has renewed an emergency designation for Hong Kong put in place by his predecessor in response to Hong Kong’s national security law, 8 July 2021 / SCMP / Felix Wong


GEOPOLITICS AND LOCAL IMPLICATIONS

On 6 July, Chief Executive Carrie Lam dismissed a warning by major technology companies Google, Facebook, and Twitter that they may exit the territory if the Hong Kong government implemented a new privacy law that targets ‘doxxing’. This is the act of publicising someone’s private information online so that they can be targeted with harassment.

The proposed law’s broad wording, however, could pose certain liabilities that may translate into prosecutorial measures against employees prosecuted for users’ content. The Asia Internet Coalition (AIC), which includes multinational tech companies such as Google, Facebook, Twitter, LinkedIn and Apple, among others, sent a letter to the Hong Kong government stating their concerns. Lam insisted that the law is simply aimed at illicit doxxing and enabling privacy commissioners to conduct probes. However, the AIC argues that the vague language and broad scope of the legislation could allow the authorities to target relatively ‘innocent acts of sharing information online.’

If passed, Hong Kong’s censorship controls will closely align with that of mainland China’s. Couple this with the national security law (NSL), and any online content deemed critical or a threat to national stability would be exposed to criminal and civil liabilities. Removal of popular services such as Google, Facebook, and Twitter, which are already blocked in mainland China, would likely also impede communications via Hong Kong and force businesses and staff to use alternatives.

Increased use of mainland-controlled services such as Weibo and WeChat would be a possible outcome, exposing staff communications to government surveillance risks by mainland authorities. Withdrawal of major services will likely also prompt other foreign technology firms to reconsider their Hong Kong operations.

On Wednesday (7 July), a report by UK MPs on the Home Affairs Committee said a loophole in the country’s Hong Kong British National (Overseas) (BNO) visa scheme meant that 18 to 23-year-olds who had joined pro-democracy protests are unable to apply for the right to come to the UK. Approximately 36,000 Hong Kongers have already applied under the scheme. Only those born before the 1 July 1997 handover of Hong Kong from the UK to China are eligible for BNO passports. The government said that those not eligible may come to the UK via other paths.

Pressure on the UK Home Office to expand the provisions of the scheme will be significant, given that a considerable number of pro-democracy activists fall within younger age brackets. Relocation from Hong Kong to the UK is likely to accelerate over the coming months, given that a law enabling de facto ‘exit bans’ will become effective from 1 August 2021. Long queues for UK-bound flights, presumably for Hong Kongers intending to emigrate, have been reported in recent weeks. Overall, current trending indicates that well-educated Hong Kongers with highly desirable employment skills will accelerate their departures from the territory in the medium term (<6-9 months).

In US-Hong Kong relations, President Joe Biden extended emergency powers introduced by his predecessor, giving his administration wide-ranging powers to impose economic sanctions on individuals and entities in Hong Kong deemed to pose ‘an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.’ The extension will take effect on 14 July 2021 and remain in effect for at least one year. The renewal of the emergency powers reflects Washington’s mounting concerns over Beijing’s actions that it contends fundamentally ‘undermine Hong Kong’s autonomy.’

To date, US measures have largely sanctioned individuals, notably senior Hong Kong politicians and administrators, viewed as complicit in supporting Beijing’s policies in the territory, and there are no indications further similar action is planned.  However, the US renewal of sanctions will coincide with a non-binding motion by legislators in the EU parliament next week that is expected to call for ‘targeted sanctions’ against senior Hong Kong leaders, including Chief Executive Lam, as well demanding no EU diplomats attend the 2022 Winter Olympics in Beijing.

Beijing is certain to view these largely symbolic actions as coordinated and intended to signal wider Western antipathy towards its policies and actions in Hong Kong. It is also probable that the ruling communist party, amidst celebrations to mark the 100th anniversary of its foundation, will respond in kind. The most obvious targets will be national and commercial interests in Hong Kong, possibly using administrative or bureaucratic measures that could add costs or further complicate the ability of foreign companies to conduct business in the territory. Managers should assess whether and how their corporate interests may be affected by such actions.


PUBLIC HEALTH AND SAFETY: COVID-19

Chief Executive Lam said on Tuesday (6 July) that Hong Kong will assess Singapore’s new COVID-19 strategy as the two sides attempt to resume a quarantine-free travel corridor initially planned to open in November 2020. CE Lam’s remarks come after Hong Kong on Monday (5 July) reclassified a hotel cleaner’s COVID-19 infection as linked to an imported case, meaning that the territory’s record of zero local cases for 28 days remains unbroken.

On Wednesday (7 July), health authorities reported no local coronavirus (COVID-19) cases, continuing a 31-day stretch. There were three imported cases from the Philippines, Russia and the UK. One of the imported cases is a 15-year-old student who recently returned from the London and tested positive for the pathogen. He is currently in quarantine at the Lan Kwai Fong Hotel in Central district, Hong Kong Island. A Russian crew member on Royal Flight airline (RL9933) from Moscow tested positive upon arriving in Hong Kong on Tuesday (6 July). He claimed that he had two dosages of the Russian-made Sputnik V vaccine. The third imported case is a Philippine national who arrived in the city on 6 July.


Hong Kong Police give a news conference on the arrest of nine Hong Kongers on terrorism-related charges, 6 July 2021 / NPR 


LOCAL POLITICAL AND SECURITY DEVELOPMENTS

On 5 July, police arrested a 19-year-old student over a suspected arson attack during the previous reporting cycle near Government House, the official residence of Hong Kong’s chief executive. She is the second suspect to be detained in relation to the incident. The first was a 24-year-old male arrested on Friday (2 July). There were gas canisters and bottles containing petrol in the grassy area leading to the residence on Lower Albert Road in Central district, Hong Kong Island, at approximately 0130 on Thursday (1 July). There were no injuries and investigations are ongoing. The incident coincided with the double anniversary of Hong Kong’s hand-over to China and the Chinese Communist Party centenary. The alleged arson attempt further underscores the potential for violent acts by hard-line elements of the pro-democracy movement, particularly in and around politically sensitive and symbolically-laden anniversaries. Flashpoint locations include government buildings.

Then on 6 July, the Hong Kong police said nine people have been arrested on charges linked to an alleged plot to manufacture improvised explosive devices (IED) that could be used against targets in the territory. According to the police the suspects, including six secondary school pupils, had sought to manufacture triacetone triperoxide (TATP), an explosive mixture that can be assembled from readily available products based on instructions easily accessed on the Internet. The police claim the suspects had planned to target the territory’s cross-harbour tunnels, rail networks as well as random locations in order to ‘maximize damage caused to the society.’ The arrests were announced days after a police officer was attacked and seriously injured by an individual using a bladed weapon in what the authorities called a terrorist incident they linked to the anti-local and central government movement.

The arrests follow a number of similar discoveries of TATP or other explosive materials linked to the widespread unrest in 2019-20. A number of small IEDs detonated during this period causing minor damage to police assets and the mass transit rail infrastructure but no casualties. While many Hong Kong residents are likely to be sceptical of the police account given the high level of antipathy towards the force particularly among younger people, the threat from small groups such as those detained – who the authorities say used the name ‘Returning Valiant’ – cannot be discounted. Companies should review their security protocols and audit premises in order to identify areas that could be targeted by any potential attacker using IEDs. These include rubbish bins, largely unsupervised areas such as car parks and utility and staff areas.

In matters illustrating the implications to a company seen being politically outspoken or critical of Beijing, shares in Vitasoy International, a Hong Kong-based beverage company, lost almost 15 per cent of their value in trading on 5 July following calls in China to boycott the firm’s products. The call followed the release of an internal memo expressing condolences to the family of an employee who attacked and wounded a local police officer on 1 July before taking his own life. Hong Kong’s security officials and police have described the attack a ‘terrorist’ incident, although the motive for the assault remains unclear. Vitasoy has sought to distance the company from the memo by apologising and blaming an individual staff member for its sentiments and release.

The case again highlights the commercial consequences all companies face if they express opinions deemed unfavourable to China. Vitasoy is the latest company to be affected by the almost instant online response among millions of Chinese consumers to such events that may be triggered by corporate or individual actions. While the former can to a large extent be controlled through adherence to established policy at the managerial level, the latter is virtually impossible to prevent. Past experience indicates the impact of such boycotts or other actions can quickly fade, but other factors may also prolong the issue. In the case of Vitasoy, whose popular soy-based drinks are ubiquitous in Hong Kong, its products now risk being associated with opponents of the local and central government much in the same way that wearing black or yellow have become markers for dissent. Foreign companies should recognise that while they may be unable to prevent their products, brands or services being ‘politicised’ they should develop strategies intended to mitigate the impact in the event this occurs.

Pivoting towards cyber-fraud threats, police arrested two men who allegedly scammed more than 19 Hong Kong residents out of HKD330,000 via phishing text messages and emails impersonating local couriers. The police said that many of the fraudulent messages told victims they had a parcel delivery pending but the recipient address was not complete or the messages would ask victims to pay the postal fee. The fraudsters then used credit card details provided by the victims to purchase pricey items including clothing, electronic appliances, or virtual point cards and reload cards. The victims typically became aware of the scam when they received messages from their banks regarding the transactions, according to police, who said that they had since November 2020 received reports from 183 victims that had suffered losses totalling HKD3.2 million.

Police warned people to exercise vigilance, especially when receiving texts or emails that request payment or bank details. Consider choice of courier and postal fee payment method when making online purchases and contact online platforms to verify purchases in case of a suspected scam, police added. Scam operations have proliferated and grown over the course of the COVID-19 pandemic, given economic damage incentivising criminality and cybersecurity vulnerabilities raised by increased remote work. Operations managers should warn staff of such frauds to mitigate financial and security risks.


THE WEEK AHEAD

The EU is set to take up discussion on the possibility of imposing targeted sanctions against Hong Kong leaders next week. Previous sanctions attempts have focussed on China, especially levying prohibitions related to human rights abuses in Xinjiang. The European Parliament used this same argument to freeze ratification of the EU-China investment accord, severely damaging ties. While the European Parliament voted overwhelmingly to condemn human rights abuses in Hong Kong on 8 July, there are very slim possibilities of this translating into sanctions.

The past monitoring period has been a relatively lean period of demonstration activities by the pro-democracy movement. However, there is one event scheduled for 15 July. See below.


UPCOMING PROTESTS 9 – 15 July

Upcoming significant dates in the pro-democracy calendar are likely to draw out small numbers of activists for memorial gatherings, including of deceased pro-democracy activists:

  • 15 July: Memorial for Marco Ling-kit Leung


PROTEST CHRONOLOGY 2 – 8 July

Thursday 8 July

2009: There was a gathering to commemorate the deceased protester Tsz-lok Chow at the Sheung Tak car park, Tseung Kwan O, New Territories. There were no reports of any arrests or disruption to local area travel. This is a monthly gathering with participant numbers varying. Police are always present to enforce COVID-19 related social distancing measures. We anticipate a similar gathering over the next 30-day monitoring cycle.