New Security Law Threatens Hong Kong's Autonomy
Last week at China’s National People’s Congress (NPC), spokesman Zhang Yesui confirmed that the NPC will propose a national security law for Hong Kong. China’s parliament will draft the legislation directly into Hong Kong’s mini-constitution (Basic Law) bypassing the territory’s Legislative Council (LegCo).
Since the announcement of the security law, daily protests have occurred, devolving into mass unrest on 27 May. Over 360 protesters were arrested on 27 May, including people found in possession of petrol bombs. Further violence is expected.
Companies operating in Hong Kong should consider minimizing presence of all non-essential or key personnel due to increased risk of violent protest and even more violent riot-control measures that could be carried out by Chinese security forces, including People's Liberation Army (PLA) soldiers.
This move marks the final blow to China’s “one country, two systems” – ending the semblance of independence of the Hong Kong legal system. The timing for this power grab is key as most countries who would oppose this move are distracted and weakened by the pandemic. Moreover, Chinese officials are worried that Hong Kong’s pro-Beijing camp could lose its majority at the next round of LegCo elections in September. So far, every erosion of Hong Kong’s independent rule of law has been met with mass protest:
- 2003 – Half a million people protested against proposed national security legislation until the issue was dropped.
- 2014 – Beijing proposed electoral reform in Hong Kong which sparked half a year of mass protests.
- 2019-2020 – Plans to allow extradition to mainland China sparked the 2019 mass protests that are ongoing.
This new Chinese national security law has already started to reinvigorate the mass unrest that has plagued Hong Kong for the last year. With rising international efforts to constrain China's economic and political rise, Beijing cannot allow Hong Kong to challenge its authority. Conversely, the Hong Kong independence movement sees this as its last opportunity to fight for independence, adding a sense of desperation to the situation. We see a continued escalation in violence as a likely outcome with the upcoming LegCo elections in September serving as a major inflection point.
The law has also increased the already heated tensions with Washington and a bill in the U.S. Senate is being introduced to sanction Chinese officials as well as banks and businesses involved in enforcing the new laws in Hong Kong. On 27 May, U.S. Secretary of State Pompeo certified before Congress that Hong Kong no longer enjoys a “high degree of autonomy,” opening the door to a suspension of Hong Kong’s special trade status. Ultimately, the reintegration of Hong Kong into China will portend corporate relocation from Hong Kong, emigration, and capital flight, challenging the city’s position as a global financial center.
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