HONG KONG PROTEST MONITOR 24 July 2020
THE SITUATION NOW
Over the previous monitoring period (17-23 July), there were several activities carried out by pro-democracy activists to commemorate the 2019 Yuen Long attacks. During these activities, a mob of alleged triad members dressed in white shirts assaulted dozens of anti-extradition protesters and non-participant commuters at the Yuen Long MTR Station. In geopolitical developments, tensions have escalated between Beijing and the US, UK and The European Union (EU).
Prior to the events for the Yuen Long anniversary (21 July), there was a march on Sunday (19 July) to commemorate that significant day in the pro-democracy activist calendar. The march began at Yuen Long MTR Station and concluded at Shui Pin Tsuen Playground in Yuen Long, New Territories.
An activist dressed in black holding a placard calling for Hong Kong independence at YOHO mall, Yuen Long, 21 July 2020/Holmes Chan
Prior to the 21 July protests, there were calls for activists and the general public to boycott so-called ‘blue’ businesses and support ‘yellow’ businesses. It is uncertain whether any significant rallies took place outside ‘blue’ businesses on the day. Pro-democracy events on 21 July constituted the bulk of incident reporting for the monitoring cycle, while the remainder of the period was relatively subdued with no significant street-level demonstrations.
Geopolitics and the local implications
There were a series of retaliatory events that translated into Beijing likely sponsoring a protest outside the British Consulate (20 July). This response has become another tool to instil unease across targeted nationalities of the expatriate communities in Hong Kong. Similar demonstrations have occurred outside the diplomatic missions of the US (28 June, 2 July), Canada (5, 9 July), UK (6 July) and Germany (14 July). Though these events have been rather small in scale and conducted peacefully, their occurrence is effective from a propaganda perspective and serves to ratchet up diplomatic tensions. More severe, however, has been Beijing’s most recent order to have the US Consulate in Chengdu in the southwestern province of Sichuan to shutter in response to the US government’s order to close the Chinese consulate in Houston, Texas over espionage allegations. Similar closures are unlikely (at this juncture) in Hong Kong given the economic importance of the US.
On Monday (20 July), the UK government announced it was suspending its extradition treaty with Hong Kong. The announcement followed UK Foreign Secretary Dominic Raab’s accusation against Beijing on Sunday (19 July) of ‘gross’ human rights violations regarding the Uighurs in China’s Xinjiang region.
The US State Department on Tuesday (21 July) said that US Secretary of State Mike Pompeo during his visit in London met with well-known pro-democracy activist Nathan Law, who had fled Hong Kong after the national security law was implemented. Pompeo also met with Chris Patten, the last British governor of Hong Kong.
On Wednesday (22 July), The European Union (EU) expressed concern over the implications of the Beijing-imposed national security law on Hong Kong, namely its impact on democratic freedoms. EU foreign affairs minister Joseph Borrell said: ‘We will not simply stand back and watch as China attempts to curtail these freedoms even more.’
On Thursday (23 July), the Chinese government promised retaliation against the UK government in response to London’s efforts to provide a pathway towards British citizenship via the British National Overseas (BNO) scheme. Beijing released a statement through its embassy in London, where a spokesman accused the British government of interfering in the internal affairs of China.
Operational implications from COVID-19
Authorities are tightening restrictions as the territory faces a surge in COVID-19 infections amid its third wave of outbreaks. Chief Executive Carrie Lam on Sunday said the outbreaks were at a ‘really critical’ juncture, with more than 500 confirmed cases over the past two weeks. Hong Kong now has a total of 1,885 recorded cases and 12 related deaths. Lam announced measures including the requirement for civil servants work remotely for a week, as well as the compulsory wearing of face masks at indoor venues such as wet markets and supermarkets. Experts are calling for further stringent measures to be implemented within a week, which is likely.
Eleven banks, including Bank of East Asia, HSBC, and Standard Chartered, are partially or fully shutting down their operations at 50 branches from Monday and Tuesday (20-21 July) in an effort to curb the spread of COVID-19.
Hong Kong’s health authorities reported 61 more confirmed infections on Tuesday. From these cases, 58 were locally transmitted and the remainder imported. The figure is far below Sunday’s 100 reported cases, the highest daily number recorded since the pandemic was declared in February. However, 25 new infections could not be sourced through Hong Kong’s sophisticated track and trace system leading to concerns the virus may spread from its present epicenters in care homes and among groups such as taxi drivers and health workers. Hong Kong’s Chief Executive Carrie Lam described the latest surge in cases as ‘critical and there is no sign the situation is being brought under control.’ The government has imposed a series of restrictive measures across the territory to contain the outbreaks.
Mask-wearing is now mandatory in all indoor public areas, most civil servants have been instructed to work from home, a number of bank branches have been closed with many other private companies likely to suspend or curtail operations in the coming days. Some public health specialists have called for a curfew, without offering details as to how this may be applied. Schools are already closed and tighter social-distancing measures are in place, including ending in-house service at all food outlets after 1800 hours; numerous other venues, including bars and gyms, have already be shut. The surge in new cases has already affected the territory’s current status as a low-risk area, with Singapore requiring all arrivals from Hong Kong to enter a 14-day period of quarantine in government-run facilities.
THE WEEK AHEAD
At this juncture, there are no planned demonstrations for the upcoming week largely due to the resurgence of coronavirus. Spontaneous gatherings triggered by domestic and international developments cannot be ruled out.
The UK’s suspension of its extradition treaty with Hong Kong is almost certain to be met with reprisal measures by Beijing, which on Sunday threatened to retaliate against the UK should any sanctions be imposed on Chinese officials over the national security law. It comes amid escalating China-UK tensions over the UK’s offer of a route to citizenship for Hong Kong BNO passport holders fleeing or considering leaving the territory, the COVID-19 pandemic, and the UK’s reversal of its decision to allow Huawei some level of participation in the UK’s 5G telecommunications network. The suspension would follow similar actions by Australia and Canada.
Reprisals may include heightened scrutiny over UK firms in China, as well as retaliations impacting operations in Hong Kong, including boycotts of British goods and services, demonstrations by pro-Beijing groups, targeting of personalities of interest, increased cyber-attacks, and delayed cross-border trade, among other hostile actions. One retaliatory measure that Beijing is currently considering is not recognising the BNO passport as a valid travel document. UK firms with interests in China should assess the impact of very likely diplomatic and commercial retaliation by Beijing and factor this into their strategic and operational planning.
As more foreign governments officially join the international ‘coalition’ against the Chinese and Hong Kong governments, their respective diplomatic missions, companies and citizens will likely be under heightened threat of retaliation. There are multiple avenues that Beijing can retaliate with varying scope and severity. Another potential is the specific targeting of UK companies similar to Beijing’s threats against two European telecommunications companies, Nokia and Ericsson.
On Tuesday (21 July), China’s Ministry of Commerce announced that it was imposing export controls on Nokia and Ericsson in response to EU threats to cut Huawei from their network infrastructure. Both companies have gradually been reducing their dependencies on Chinese manufacturing since 2018, when the US-China trade war escalated; however, with the enactment of the national security law as well as intense lobbying from the US government, these two companies are considering reducing their presence in the Chinese market. Should Nokia and/or Ericsson decide to accelerate their respective moves away from China, this will potentially place around 30,000 jobs under threat. Such mass layoffs pose increased risks of labour friction and unrest. There are additional political risks that could be incurred by these two companies as well as other foreign organisations considering moving out, there are also considerations for market entry into other foreign jurisdictions.
Multinational wealth managers including Credit Suisse, HSBC, Julius Baer, and UBS are screening their clients for ties to the pro-democracy movement in order to avoid potential national security law violations. The designation of politically exposed persons complicates the targeted individuals access to banking services or bars them from the system entirely. The checks include probing statements made by clients in media, social media, and in the public domain for potential breaches of the national security law. Chinese and Hong Kong officials involved with the national security law were also subject to enhanced scrutiny due to potential US sanctions targeting them. The development indicates heightened legal, reputational, financial, and regulatory risks for financial institutions due to the dual threats of the national security law and potential US sanctions.
Major South Korean technology firm Naver is relocating its data back-up centre from Hong Kong to Singapore as other technology companies – including Facebook, Google, and Twitter – have suspended data requests while they reassess their operations in Hong Kong in response to privacy concerns. Additionally, at least one NGO in Hong Kong has relocated personnel out of the territory while others are planning to move some of their operations elsewhere over the national security law. Other foreign entities in Hong Kong, especially those in the technology, media, and NGO sectors, that are exposed to increased business risks under the national security law are likely to follow.
In general, companies or organisations looking to leave or reduce their operational footprint in China are likely going to face increased political risks, mainly in the form of regulatory barriers, and likely elevated labour force friction during exit. Contractual obligations with existing partners, vendors and suppliers will likely have to be renegotiated with the understanding that penalties will be incurred, including possible forfeiture or transfer of assets. Partners/vendors/suppliers with Chinese state or organised crime connections could pose additional risks to organisations. In terms of personnel, there are likely challenges with relocation due to efforts required for transition being planned, staged, transparent and smooth. If the situation is urgent, then relocation will have to take the form of an evacuation or done such that it can occur without attracting scrutiny.
See details of upcoming protests below.
Friday 31 July
Time TBC: A demonstration is scheduled to commemorate the Prince Edward station attack, which occurred on 31 August 2019. The sensitive anniversary refers to alleged acts of police brutality on demonstrators in the Prince Edward MTR station.No other demonstrations for the upcoming week are scheduled largely due to the resurgence of coronavirus. Spontaneous gatherings triggered by domestic and international developments cannot be ruled out.
PROTEST CHRONOLOGY 17 July – 23 July
Sunday 19 July
1430: Activists participated in a protest march from Yuen Long MTR Station to Shui Pine Tsuen Playground, Yuen Long, New Territories.
Monday 20 July
1500: Members of a pro-Beijing Hong Kong NGO held a rally at the gate of the British Consulate General in Admiralty, Central district, Hong Kong Island.
Tuesday 21 July
All day: Multiple protest activities took place, including boycotts against pro-Beijing ‘blue’ businesses across areas such as Central, Kwai Tsing, Kwun Tong, and Wan Chai districts.
1400: Activists held a ‘Lunch with You’ rally at Landmark Shopping Mall, Central district, Hong Kong Island.
1400-1600: A small group of activists gathered at Fung Yao Street North Sitting-out Area, Yuen Long, New Territories, where they distributed hand sanitisers to people.
1900: Activists held a rally against so-called ‘White Terror’ attacks, referring to the July 2019 triad mob violence against anti-extradition treaty protesters and non-participant bystanders. The rally took place at YOHO Mall, Yuen Long, New Territories.