Month: May 2020

What has Happened:

On May 21^st, it was announced that the Chinese government would move to pass new national security legislation that would be the most significant action against Hong Kong’s civil liberties since the transition to Chinese rule in 1997. The proposed law by Beijing will likely fuel additional protests throughout Hong Kong, which saw demonstrations last year due to an extradition law proposed by China. The new measure will outlaw “treason, secession, sedition, and subversion” and is designed to circumvent Hong Kong’s laws.

Why it Matters:

If this law is passed, the Hong Kong we once knew will be changed forever.  Article 4 of the draft decision (which will be rubber stamped into law by the National People’s Congress), will set up Chinese agencies in HK to “safeguard” national security in accordance with the law. China will also establish “sound legal systems and enforcement mechanisms”. What this will end up doing to foreign investment and the location of corporate offices in HK is yet to be seen, but with the general feeling that the “one country, two systems” framework will not work in the long run, there has been some recent movement into alternative financial centers such as Singapore.

We start off with General (ret.) Marks, who is concerned that the new law should be viewed as a wakeup call to the world, especially Taiwan.

“The current moves by China, specifically Xi Jinping and the National People’s Congress, to crush pro-democracy efforts in Hong Kong, validates the CCP’s second “long march”, this one to achieve global power dominance. The one factor that might moderate the CCP’s rapacious behavior is the legitimate fear of a cash flight from Hong Kong. There are other regional financial safe harbors for China’s banking, such as Singapore, Tokyo, or Kuala Lumpur, but they are not as robust and would limit China’s manipulative free hand. The policy of “one country, two systems” is failing. Beijing has determined it cannot risk a full collapse of its authoritative control over Hong Kong. However, China is not reluctant to ensure its interests and to declare those interests publicly; they’re skilled at “hiding in plain sight.” This move is not just about Hong Kong, it’s a clear message to Taiwan…you’re next.” General Spider Marks

General (ret.) Walsh agrees that this is an opportunistic power grab by Beijing that will have implications for Hong Kong and the region.

“The current moves made by the Chinese government under President Xi Jinping to pass a law that cracks down on the protests in Hong Kong is even more serious than last year’s attempt by China to influence an extradition policy of Hong Kongers to China by the Hong Kong government.  China is taking advantage of the COVID-19 pandemic to begin moves against Hong Kong that many thought would eventually happen.

What we do know is that the Hong Kong protests have been an embarrassment to the Chinese Communist Party and President Xi Jinping and they have been looking for opportunities to move Hong Kong more in line with China’s views and those of the Chinese Communist Party. The current “one country, two systems” approach to Hong Kong is not working to China’s advantage and very few believe that they are willing to wait until 2047 to have it their way. The new law is centered on a national security information campaign for punishing Hong Kongers influenced by outside subversion.

This legislation is another step in taking away the rights of Hong Kongers’ freedom of the press, freedom of speech, and the right to protest that was agreed to in the 1997 China-British Joint Declaration. Whether this is a first step in bringing Hong Kong underneath China’s complete control or just another move to whittle away at Hong Kong’s Democratic rights, is yet to be seen. In the end, this is a very serious move by China and its Communist Party that should be seen as a wakeup call to the world and to Taiwan as to what China is really about.” General Robert Walsh

Bottom Line:

As we have reported previously, the U.S. has labeled China a strategic competitor and expects tensions to rise. In our last edition of Around the World, we commented on the pressure China was putting on our allies as they take advantage of the COVID pandemic globally. We believe that these actions will continue and the U.S. will conduct further freedom of navigation patrols in support of its allies in the region.

Original Post 05/22/2020