HONG KONG MONITOR 26 February 2021

26 february 2021

GEOPOLITICS AND LOCAL IMPLICATIONS

Issues with the Chinese and Hong Kong governments imposing staunch patriotism within the latter’s bureaucratic ranks came to the fore during the monitoring cycle (19 -25 February). This has caused deep concern among foreign governments, particularly those condemning the move as another attempt at eroding Hong Kong’s democratic principles that underpin judicial and legislative practices.

On Monday (22 February), Beijing’s most senior official in Hong Kong reportedly emphasised the Chinese government’s requirement that all key positions in the territory’s executive, legislative and judicial systems be composed of what he termed ‘staunch patriots.’ Hong Kong and Macau Affairs Office (HKMAO) head Xia Baolong also said that those who 'oppose China and disrupt Hong Kong’ could not occupy positions of authority, further noting that ‘there should be effective methods to ensure that members of the administrative, legislative, and judicial bodies, as well as the heads of important statutory bodies are all held by true patriots.’

Xia’s remarks reinforce earlier demands from both the Chinese government and Hong Kong’s pro-Beijing political and business leaders for more visible demonstrations of ‘patriotism’ within all institutions and among the territory’s residents. For foreign companies and individuals operating and working in Hong Kong the term ‘true patriots’ is set to raise legal as well as ethical and even moral issues. The legal profession, still rooted in English Common Law, has many non-Chinese practitioners including those employed by the government and working as senior members of the judiciary. These individuals are unlikely to plausibly identify as ‘patriots’ in terms the Chinese Communist Party, or indeed their own national governments, would accept. Xia’s remarks should also be viewed by foreign companies as a direct threat to their present status in Hong Kong, not least because of the response they are likely to generate within many Western governments already concerned over China’s assertive policies and growing domestic antipathy towards Beijing.

Then on Tuesday (23 February), Secretary for Constitutional and Mainland Affairs Erick Tsang announced that Hong Kong district councillors will need to swear an oath of allegiance to the Hong Kong government and the Basic Law. Those that fail to do so will be disqualified and banned from participating in any elections for five years. Additionally, pro-Beijing legislators in Legislative Council (LegCO) proposed a ban on filibustering and the suspension of any member who uses the strategy to disrupt the territory’s legislature. The proposal marks the first attempt to reform the legislature’s rules since mass resignations by pro-democracy lawmakers in November 2020. Pro-democracy lawmakers had frequently used filibustering to impede the government’s agenda. The measure could be enacted as early as 24 March, according to committee chair Paul Tse.

Additional moves by Beijing and its proxies in Hong Kong to expunge any semblance of political opposition in the territory and enforce ‘patriotism’ will likely be met with diplomatic and commercial retaliation by foreign governments. The top European Union (EU) diplomat Josep Borrell in a meeting on Monday confirmed agreement on a ‘two-step process’ that will come in addition to a past response package to the NSL imposed by Beijing in July 2020.

One measure includes provision of more aid for civil society, and there is scope to expand similar activities, including sanctions, in the event that the situation in Hong Kong worsens. Potential triggers for an EU escalation include radical changes to the territory’s electoral process and further erosion of judicial independence, according to Borrell. The meeting also involved plans for co-operation between the US and the EU on shared concerns, such as China and Russia.

The EU’s China and Hong Kong policy approach of disaggregating human rights concerns from other possible areas for co-operation signals a continued pursuit of so-called ‘strategic autonomy’ by the bloc. The approach and its potential pitfalls regarding China were most recently highlighted in Brussels’ signing of the EU-China Comprehensive Agreement on Investment with Beijing, which shortly after was followed by mass arrests of Hong Kong pro-democracy activists. As of 25 February, the EU has halted progression of implementation of the accord in response to human rights issues related to China.

Countries such as Australia, the US, and the UK continue to adopt a more hard-line approach towards China. On 22 February, UK foreign secretary Dominic Raab and US House Speaker Nancy Pelosi’s criticised Beijing’s political suppression in Hong Kong. Foreign businesses with home governments in EU and ally countries should factor divergences in Hong Kong and China policy and possible diplomatic and commercial repercussions into their strategic and operational planning.


Witnessed by Chief Executive Carrie Lam Cheng Yuet-ngor, permanent secretaries, heads of department and directorate civil servants swear to uphold Hong Kong's Basic Law, bear allegiance to the HKSAR during a ceremony at the Central Government Offices, Hong Kong, 18 December 2020 / HKSAR Government

 

PUBLIC HEALTH AND SAFETY: COVID-19

On Sunday (21 February), Hong Kong recorded at least 20 new coronavirus cases, including 19 assessed as foreign origin, on the third day of rising infections. The rise was attributable to relaxed social distancing practices of individuals ahead of the recent Lunar New Year holidays.

Meanwhile, one million Chinese-manufactured Sinovac COVID-19 vaccine doses arrived in Hong Kong on Friday, with inoculations due to begin this week, while talks have resumed with Singapore over creating an air travel corridor to permit quarantine-free movement. However, it remains unlikely that the local government will permit any increase in international travel before the border with mainland China is fully opened, which remains unlikely until most residents have been inoculated during the next few months. Chief Executive Carrie Lam and other senior Hong Kong officials had the Sinovac COVID-19 vaccine (‘CoronaVac’) administered, which was broadcast live to boost public confidence ahead of the mass rollout.

Lam and other officials’ public inoculations with the Sinovac’s CoronaVac came ahead of the 26 February rollout. However, there is widespread scepticism towards the efficacy of CoronaVac, which demonstrated 50.4 per cent efficacy in results released in Brazil. A January survey by the University of Hong Kong found that less than 30 per cent of respondents said they would be willing to take the Sinovac vaccine. Reluctance to take CoronaVac may also stem from mistrust of Chinese-made vaccines in general due to past scandals, such as with DPT and polio vaccines in 2018 and 2019, respectively. There are also likely political insinuations related to growing anti-Beijing sentiments connected to the imposition of the national security law (NSL). Local trust is likely to be higher in vaccines produced by foreign organisations such as Pfizer/BioNTech, Moderna, and Oxford-AstraZeneca.

On Thursday (25 February), the Centre for Health Protection (CHP) recorded 13 new coronavirus (COVID-19) cases, including one assessed as imported. No details were provided on the foreign-origin case at the time of compiling this report. Of the domestic cases, the CHP said that up to 11 have been traced back to an infection case at Mr. Ming’s Chinese Dining in Victoria Dockside, Tsim Sha Tsui, Kowloon. Six have been confirmed and the rest are under investigation. Investigators believe that staff and patrons may have contracted the pathogen between 18 and 19 February. If anyone has visited the restaurant during this period, they are being advised to contact the CHP hotline at 2125 1111 or 2125 1122.


Patients waiting for vaccines, 26 February 2021 / Associated Press


LOCAL POLITICAL AND SECURITY DEVELOPMENTS

On 23 Tuesday, a Hong Kong court said that its denial of bail for Apple Daily-owner Jimmy Lai was due to the risk of him committing more offences. The announcement comes after High Court judge Anthea Pang rejected Lai’s bail application last week.

Lai’s case is being closely monitored, as the NSL –  under which he has been charged –  places the onus on the defendant to provide evidence that they would not be a threat to national security if they are released on bail. Under Hong Kong’s Common Law-based legal system, conversely, the onus has typically been on the prosecution. The publicly stated reasons for the denial of bail to Lai suggest that the NSL has taken precedence over the Common Law system. Such an outcome further bolsters concerns around the erosion of Hong Kong’s judicial independence under the NSL.

The development adds to concerns following the apparent overriding of the presumption of bail for non-violent offences, a further feature of the Common Law system, in Lai’s case. Multinational businesses have already begun considering the exclusion Hong Kong from legal contracts, including governing law and arbitration clauses. Such considerations are likely to increase as the NSL increasingly appears to supersede aspects of the Common Law system.

Hong Kong Financial Secretary Paul Chan said on 24 February the territory is planning to run a far lower budget deficit in the coming fiscal year as the economy is anticipated to recover from its longest recession on record. GDP contracted by 6.1 per cent, the worst annual performance recorded since 1962. Spending in the coming year includes HKD5,000 vouchers to residents, profits and salaries tax cuts, and a waiver on business registration fees. Some aid will also be directed towards the tourism and technology industries.

With Hong Kong’s economic recovery now dependent on COVID-19 vaccinations, any issues in the territory’s immunisation programme are likely to dampen business prospects over 2021. Prior to the pandemic, Hong Kong’s economy was already reeling from the combined impact of unrest and the US-China trade war. Vaccine hesitancy among Hong Kongers, particularly towards the CoronaVac jab, will likely frustrate efforts to achieve herd immunity and possibly impede economic recovery.

 

THE WEEK AHEAD

Hong Kong’s pull into Beijing’s orbit has always been inevitable. However, what is generating a significant amount concern and anxiety is the accelerated pace of assimilation through efforts to marginalise the political opposition, indoctrinate a form of patriotism and dilute a traditionally independent judicial system. As these efforts continue, foreign governments are weighing their diplomatic options and international businesses will be forced to accelerate scenario-planning exercises that factor-in a relatively rapidly changing political risk landscape. For those businesses, options to stay the course, diversify the investment or divorce themselves from the territory are all viable considerations over the course of the year.

What is taking precedence during this cycle is the government’s COVID-19 vaccine rollout and the relaxation of related public safety measures. The Sinovac vaccine will be followed by the introduction of vaccines from Pfizer/BioNTech, Moderna and Oxford-AstraZeneca, with Pfizer expected to roll out its vaccines during the first half of March or possibly sooner. This will undoubtedly boost public and business confidence, and accelerate further repeal of restrictions even during the upcoming week. Reported daily case numbers are still relatively low, and should this trend continue, then the government is likely to relax more measures.

While there have been no publicly announced protests among activist circles, another significant date in the pro-democracy calendar (‘31 August 2019 Prince Edward Station Attack’) will likely compel some activists to mobilise over the early phase of the current reporting period (26 February – 4 March). Recent events have been relatively subdued, usually spearheaded by high-profile pro-democracy activists that operate on their own. Prince Edward MTR Station in Mong Kok district, Kowloon, is likely going to be the centre of gravity for any gatherings. Police are usually deployed around the station on the day, dissuading public gatherings and enforcing COVID-19 social distancing measures. Those non-participants transiting through the station may also be subject to questioning by the police. We do not anticipate any large and disruptive rallies over the weekend. In the current monitoring period, the protest incident volumes are likely going to stay consistent with previous reporting cycles.

See details of upcoming protests below.

 

UPCOMING PROTESTS 26 February-4 March

No protests have been announced.


PROTEST CHRONOLOGY 19-25 February

Sunday 21 February

1900: There was a small protest at Tsing Yi MTR Station, in Tsing Yi Island, New Territories to commemorate the so-called ‘721 incident’. There were no reports of any arrests or disruption to local area business and travel.

Varied: Numerous activists participated in the ‘#39MRUNFOR721’ throughout the territory. The event is held regularly to commemorate a sensitive anniversary during which police were accused of inaction as a triad mob violently attacked civilians and protesters at the Yuen Long MTR station on 21-22 July 2019. Participants run for 39 minutes in areas across Hong Kong to mark the time that activists accuse police of delaying intervention against the triads.

Monday 22 February

1900: There was a small protest in Sheung Tak village, Tseung Kwan O, New Territories, to commemorate the death of Chan Yin-lam, whose corpse was found on 22 September 2019. Some demonstrators accuse Hong Kong authorities of murdering her for her taking part in demonstrations in 2019. Around ten police officers cordoned off her protest and arrested her on suspicion of misconduct in a public place, and she is being detained for investigation. No other protests were reported.

Wednesday 24 February

1330: A local pro-democracy activist held a sit-in and ‘hunger strike’ outside the Central Government Complex, Tamar, Admiralty, Hong Kong Island to demand cash rather than consumption coupons from the government. David was later joined by another activist known as ‘Man Shek Fong Yau’. There was no significant disruption to local area businesses and travel.

Thursday 25 February

1315: A local pro-democracy activist held a demonstration at the Landmark shopping mall, Central district, Hong Kong Island. There were no reports of any arrests or significant disruption to businesses and area travel. The event was titled ‘Farewell Lunch with You’ and was aimed at letting the public know that he may be banned from protesting at the Landmark in the future. He is due to appear in court on Friday (26 February), where a judge may impose an ‘interim injunction’ to enter the Landmark. While shopping malls are frequently used for protests, the courts may begin to target specific individuals and organisations and impose similar restrictions. This will bode well for retail operations as it ostensibly removes protest actors and their activities from the environment; however, bans such as these also fuel the government-suppression narrative propagandised by the local pro-democracy movement.