HONG KONG MONITOR 19 February 2021

19 february 2021

GEOPOLITICS AND LOCAL IMPLICATIONS

The reporting period (12-19 February) began with continued emphasis on immigration issues, focussing on foreign governments’ facilitating the exodus of Hongkongers, and the rising business risks for UK companies operating in the territory.

The Canadian government will implement new immigration rules for Hong Kong students, who graduated from a Canadian university or a similar overseas institution in the last five year, paving an easier pathway to apply for a three-year work permit. Work permit holders can then apply to become permanent residents and eventually Canadian citizens. The rules apply to Hong Kong citizens within and outside Canada. The new rules will come into force this month.

This is a significant development for Hongkongers seeking to leave the territory amid major paradigmatic changes to the political system in the territory. Amid protracted disputes with Beijing over Hong Kong’s evolving political status, as well as other bilateral and international issues, several Western countries have announced policies facilitating immigration from Hong Kong in the past year.

The UK, for example, has created a pathway to citizenship for almost three million Hong Kong residents holding British National Overseas (BNO) passports, while a bipartisan group of US senators has introduced a bill facilitating Hong Kong protesters’ right to claim US refugee status. Ottawa’s new immigration policy is in line with similar moves from other Western countries, and comes at a low point in bilateral ties with China. Beijing has repeatedly called on Canada to release detained Huawei CFO Meng Wanzhou, arrested in December 2018 on fraud charges linked to the alleged circumvention of US sanctions on Iran. Meanwhile, Canada has demanded the release of two Canadians held in China on espionage charges since December 2019.

For businesses in Canada, the new immigration policy facilitates the hiring of eligible recent graduates from Hong Kong. More broadly, however, the policy highlights the poor state of diplomatic ties between China and Western powers, and is likely to be followed by further measures from Western countries to facilitate immigration from Hong Kong.

On Tuesday (16 February), the British government issued an updated version of its ‘guidance’ on business risk in Hong Kong that appeared to downgrade ties between the territory and its former colonial power. The most evident indicator in the report is the omission of a phrase that had previously noted the UK ‘enjoys a positive, forward-looking relationship with the Hong Kong SAR government and mutually beneficial cooperation in a wide range of areas.’ The report also highlights concerns over the erosion of rights and freedoms and the increased use of the police to enforce compliance.

The report did not offer any views on the future of economic ties between Hong Kong and Britain, other than note the territory was the UK’s third-largest market for goods in the Asia-Pacific region. In 2019 Britain’s exports of goods and services to Hong Kong valued at GBP13.6 billion (USD18.87 billion), while the territory’s exports to the UK reached almost GBP10 billion.

The release of the latest British government guidance coincides with increased tension between London and Beijing over the Chinese administration’s treatment of Hong Kong. The UK government’s offer to permit holders of the British National Overseas (BNO) passports, affecting around 50 per cent of the Hong Kong population, to potentially settle in Britain has further soured already frayed ties. These can be expected to be further exacerbated if the British government echoes US President Biden’s warning on Tuesday that China should expect to face consequences over its domestic human right abuses. China’s response is likely to involve Hong Kong, where Beijing may view that it has leverage against critical foreign countries’ commercial interests. All international companies whose governments openly confront China over human rights or other alleged abuses are vulnerable to some form of retaliation, a threat that should be factored into planning for at least the medium-term outlook.


Myanmar anti-coup solidarity protest in Ma On Shan Promenade, 16 February 2021/Stand News

PUBLIC HEALTH AND SAFETY: COVID-19

On Sunday (14 February), Hong Kong recorded at least 12 new coronavirus cases, all but two locally transmitted and the same number as Saturday. These are the lowest totals recorded over the previous three months. Officials cautioned that this may reflect the ongoing Lunar New Holiday period, when people have resorted to limiting their public activities and staying at home, and possibly unwillingness of some individuals to seek treatment until the coming week.

Then on 16 February, the Centre for Health Protection (CHP) recorded eight confirmed new coronavirus (COVID-19) cases and are assessing at least 20 other preliminary cases. There were two imported cases, however, neither their sources of origin nor the identifies of the patients were publicly disclosed. As case numbers continue to stabilise, the government is preparing for the launch of its territory-wide vaccination programme which will commence from 1 March. There will be 20 vaccination centres, including seven operated by the Hospital Authority. The government is re-employing retired healthcare workers as they anticipate a major surge in people getting vaccinated when rollout begins.

In related developments, the Secretary for Food and Health, Dr. Sophia Chan, announced (on 16 February) the relaxation of opening hours for ‘evening dine-in services’. Hours have been extended to 2200 local time and parties are allowed to gather with a maximum of four patrons. Fitness centres, beauty salons and massage parlours, cinemas and theme parks, among other indoor and outdoor entertainment and fitness centres will be allowed to reopen. These new measures took effect from Thursday (18 February).

The Centre for Health Protection (CHP) confirmed eight new COVID-19 cases, bringing the total number of cases in the territory to 10,821. No foreign origin or new variants were reported among the eight.

There have also been reports of a surge in the purchase of ‘burner phones’ due to customers’ concerns over government surveillance via the ‘Leave Home Safe’ track and trace app. Despite government assurances that all personal data will remain on mobile phones and not get transmitted and stored by security agencies, there is still a deep level of mistrust with the government’s app. Some of this fear and frustration was also the likely cause of an outbreak of violence at a local McDonald’s branch in Choi Wan Estate, Hammer Hill, Kowloon, on 18 February.

A male suspect attacked a 26-year-old employee with his mobile phone after the server assisted him with using the app. It is now mandatory that customers with the contact-tracing app scan a QR code of visited establishments as part of COVID-19 tracking efforts. There is a strong likelihood of seeing more incidents similar to this, especially involving citizens and pro-democracy activists fearful of government surveillance, in the coming days and weeks. Demonstrations also cannot be ruled out, especially at establishments identified as ‘yellow businesses’ or those alleged to be supporting the Hong Kong and Beijing governments.


Myanmar anti-coup solidarity protest in Ma On Shan Promenade, 16 February 2021/社區前線媒體 - Community U media

LOCAL POLITICAL AND SECURITY DEVELOPMENTS

Hong Kong’s Bar Association (HKBA) on Friday (12 February) submitted a paper to the Legislative Council expressing deep concern over a legal amendment proposed in late January. The amendment could confer on the immigration director the power to ban any individual from leaving the territory without first going through a court. The HKBA also questioned the necessity of the amendment given existing provisions under the national security law (NSL) that can require the handover of travel documents in specific situations. The proposed law notably comes amid a growing exodus of Hong Kongers, including pro-democracy activists seeking asylum, to Canada, Taiwan, the US and the UK.

Expanded powers to ban individuals from exiting Hong Kong are likely being considered to discourage Hong Kongers from leaving the territory. Authorities are probably seeking to reduce the exodus, which is likely eroding the local talent pool of highly-skilled workers. The amendment may also be a response to increasing provisions easing immigration for Hong Kongers by Canada, the US and UK. The proposed measure mirrors exit bans that have in recent years been used against Chinese citizens and foreigners attempting to leave mainland China. Exit bans have attracted widespread criticism from the international community and calls for sanctions against officials deemed responsible. The proposed amendment will likely be closely followed by many that are already considering leaving Hong Kong, potentially accelerating their emigration.  

On 17 February, Hong Kong’s Joint Financial Intelligence Unit (JFIU) proposed amending anti-money laundering (AML) regulations with the express intent of focussing on Chinese mainland officials. The financial corruption watchdog suggested widening the list of entities, especially of politically exposed persons (PEPs), to include all organisations and individuals outside of the territory’s jurisdiction subject to AML compliance. Previously, individuals and China-based entities had been exempt from certain AML rules.

The JFIU’s proposal is another step in complying with 2019 recommendations from the Financial Action Task Force (JATF), which found the Hong Kong government’s AML regulations were exposed to loopholes that allowed ill-gotten wealth from Chinese PEPs to flow into the Hong Kong financial system for laundering. Beijing has also been trying to curb illegal monies leaving China via Hong Kong as part of a broader anti-corruption campaign targeting high-ranking public officials to low-level bureaucrats. However, application of anti-corruption laws and regulations have been inconsistent, mainly due to political influences impacting the independence of monitoring and enforcement bodies. While the JFUI’s recommendations are welcome, similar inferences can be made about enforcement in the context of Hong Kong’s anti-corruption efforts. Foreign financial services bodies, legal firms and accountancies, among others, are advised to closely monitor these developments for any changes to AML statutes and regulations.    


THE WEEK AHEAD

There will be a significant amount of attention on US President Joe Biden’s first (virtual) meeting of the Group of Seven (G7) on Friday (19 February), when he is expected to layout the US administration’s plans to rein in the COVID-19 pandemic, resuscitate the global economy and counter the challenges posed by China. The UK holds the chair of the G7 this year, and Prime Minister Boris Johnson is also expected to articulate his government’s plans on addressing China.

President Biden has remained relatively consistent on his China policies, continuing with the previous administration’s efforts to hold Beijing accountable for its human rights abuses, political suppression, unfair and illicit trade practices, and increasingly aggressive military posturing. Biden’s policies, however, are demonstrably different from his predecessors in the sense that he will push for a more collaborative and consensual approach with allies. A multilateral approach will provide greater leverage for the G7 and allies; however, Beijing’s reactions, particularly if it feels threatened, will likely have significant implications for foreign companies operating in Greater China and Hong Kong. We anticipate retaliatory statements and possible harmful actions directly from Beijing or by proxy through Hong Kong that will escalate the level of risk to businesses, the expatriate community and Hong Kong citizens in the short- to medium-terms. 

In public health and safety matters, the relaxation of COVID-19 measures bodes well for the local economy, particularly those in health and fitness, beauty and restaurant sectors, and the mental well-being of the general public. However, there are justifiable concerns among the citizenry and pro-democracy activists over the government’s ‘Leave Home Safe’ track and trace app. It is intended to monitor for outbreaks but fears of government surveillance have become very apparent as the surge in the sales of ‘burner phones’ have indicated. Public fear and frustration also widen the potential for isolated incidents of violence, particularly against ‘yellow businesses’, and for activists to reinvigorate street level demonstrations.

This situation is still fluid and the government’s action’s on containment will still be determined by fluctuations in case numbers. ‘Ambush lockdowns’ are still occurring and this will remain a viable option for the government in the foreseeable future.

The local pro-democracy activist, David, continues to spearhead public protest efforts, and this dynamic is unlikely to change during this current monitoring cycle. Another significant date is also approaching (21 February), when activists commemorate the ‘721’ Yuen Long attacks of 2019. There is already one event planned, and more are likely over the weekend.

See details of upcoming protests below.


UPCOMING PROTESTS 19 – 25 February

Sunday 21 February

TBC: Activists will hold the #39MRUNFOR721 running event to commemorate the ‘721’ incident, when alleged white-clad triad members attacked protesters and non-activist commuters at the Yuen Long MTR station on 21-22 July 2019. Participants will run for 39 minutes in areas across Hong Kong to mark the time that activists accuse police of delaying intervention against the triads. The significant date in the pro-democracy calendar may also trigger flash mob protests, particularly around relevant venues such as the Yuen Long MTR station in Yuen Long Town, New Territories.


PROTEST CHRONOLOGY 12 – 18 February

Sunday 14 February

2000: David appeared at the Maritime Square shopping centre atrium, Tsing Yi, New Territories, for a protest called ‘Valentine's Day and Dinner with You’. There were no reports of any arrests or major disruption to local area businesses and traffic. David likely chose the venue out of convenience, as he lives in Tsing Yi. David often protests in shopping malls due to the visibility such venues provide for the activist community and wider public. His protests are generally peaceful and symbolic, posing minimal threats to local area businesses and mobility.

Tuesday 16 February

1225: David did not appear at his planned demonstration at the Central Government Complex in the Tamar area of Hong Kong Island for a protest dubbed ‘Urging the Government to Provide iPhone 11 to all HK Residents for using ‘Leave Home Safe’ mobile App’. Reasons for David’s no-show are unclear. David’s protests have, for reasons that remain unclear, in recent weeks included an increasing number of no-shows. His protest was planned over the potential for the government to use the app as a surveillance device, despite the administration of Carrie Lam refuting such claims. The government will launch the ‘Leave Home Safe’ app on 18 February and require citizens and permanent residents to use the app to track and trace their potential exposure to coronavirus.

1240: David appeared at the police HQ for this Lunar New Year-themed protest for an event called ‘New Year Greetings with You at the Hong Kong Police Headquarters’. Police stations are frequent venue for David’s protests. They are likely to continue to feature in his demonstrations, given tensions between the pro-democracy movement and local law enforcement. David’s protest did not cause significant disruption to local area businesses and travel.

1430: David appeared outside the West Kowloon Magistrates’ Courts, Sham Shui Po, Hong Kong Island, to advocate for the release of Apple Daily owner Jimmy Lai and eight other pro-democracy activists remanded in custody on charges of violating the NSL. Demonstrations outside Hong Kong’s courts, often in solidarity with activists appearing inside them, are a recurring theme in David’s protest activities. They are likely to continue to feature prominently as venues, given continuing legal action against pro-democracy activists and the legal and political implications of such court cases against the wider backdrop of the pro-democracy movement. David’s protest did not cause significant disruption to local area businesses and travel.

2100-2130: Fewer than 20 activists gathered at the Ma On Shan Promenade, Ma On Shan, New Territories, for a solidarity protest to support pro-democracy activists in Myanmar. There were no reports of any arrests or significant disruption to local area travel and businesses. Protests in solidarity with the anti-coup movement in Myanmar follow a trend of previous street-level activities linked to pro-democracy movements in the region, including Thailand. Hong Kong’s pro-democracy movement forms part of a regional grouping called the Milk Tea Alliance, along with similar movements in Taiwan, Thailand, and Myanmar. There were less than 20 participants in this activity, which did not cause significant disruption to local area businesses and travel. Nonetheless, the turnout stands in contrast to overall muted street-level protests in recent months. The attendance suggests that activists have a somewhat higher tolerance of repercussions by local authorities in protests ostensibly only directed against foreign government such as Myanmar. Further such solidarity rallies are likely, particularly in the event that demonstrations in Myanmar escalate and/or involve lethal use of force by security forces against protesters.

Wednesday 17 February

0900: David appeared at the West Kowloon Magistrates’ Courts, Sham Shui Po, Kowloon, where Jimmy Lai and eight other jailed pro-democracy activists were on trial for alleged violations of the NSL. The West Kowloon Magistrates’ Court has become a focal point for David’s protests in recent weeks, and likely continue to do so for the foreseeable future. There were no reports of any arrests or significant disruption to travel or local area businesses.

1030: David then appeared outside the Liaison Office where he held a solidarity protest for the pro-democracy activists in Myanmar. He called on the Hong Kong government to provide assistance to the activist movement. Similar to the pro-democracy unrest in Thailand, David has taken up this cause in similar vein. The Liaison Office is likely going to feature prominently in the coming weeks for similar protests by David and other similar activists. There were no reports of any arrests or significant disruption to travel or local area businesses.

1200: David appeared at Pacific Place mall, Admiralty, Hong Kong Island, for a ‘Lunch with You in Admiralty’ where he read a copy of the Apple Daily. This event passed off peacefully without any arrests or significant disruption to local businesses and area travel. Pacific Place has also become a frequent venue of David’s protests.

1430: Dave returned to the West Kowloon Magistrates’ Courts, Sham Shui Po, Kowloon, for the trial of Chan Tze Wah, who has been remanded in custody for alleged violations of the NSL. There were no reports of any arrests or significant disruption to travel or local area businesses.

1730: David visited Langham Place, Mong Kok district, Kowloon and Maritime Square, Tsing Yi Island, for protests in solidarity with pro-democracy activists in Myanmar. It is uncertain why David chose these two venues as they broke within recent patterns of activities related to solidarity protests for Myanmese activists. It is likely he will appear again. There were no reports of any arrests or significant disruption to travel or local area businesses.