Opposition candidates disqualified from running in LegCo elections; Lam government tightens restrictions to harness resurgence of COVID-19 cases; restrictions focused on maritime, aviation and land-based supply chain operators; and diplomatic tensions ratchet up with New Zealand and the European Union entering the fray. We assess the threat in the week ahead.
THE SITUATION NOW
Over the recent monitoring cycle (24-30 July), there was very limited significant public street-level protests, continuing on with a trend of subdued activities after the national security law (NSL) was implemented on 30 June. The resurgence of novel coronavirus (COVID-19) case and the related restrictions on outdoor mobility have also restrained pro-democracy activists from taking to the streets in large numbers.
There was no significant protest activity over the weekend of 25-26 July, and this pause has continued until at least Friday (31 July), when activists through social media are calling on supporters to launch flash-mob style protests. This is another significant date in the pro-democracy calendar. On 31 August 2019, Hong Kong police allegedly attacked protesters and non-participants at Prince Edward MTR station in Mong Kok district, Kowloon. The 31st of every month since then has been commemorated in some form with a rally at the station. However, under the current restrictive conditions, activists have been calling for smaller-scale and highly-mobile gatherings. These gatherings are unlikely to be too disruptive with the emphasis more on propaganda.
Local political dynamics has come to the forefront of security concerns, particularly in light of the government disqualifying the candidacies of 12 pro-democracy figures intending to stand in the Legislative Council (LegCo) elections. Twenty-two other applications of candidates are also under review. The elections were slated to take place on 5 September, but as of Friday (31 July), Chief Executive Carrie Lam invoked emergency powers to postpone it for a year.
Protesters in an illegal march from Victoria Park to Admiralty and Central on 18 August 2019.
Four members of the Civic Party were disqualified from the elections, 31 July 2020/hk01
Another influencer to subdue protesters is the harsh reality that they will be transferred to China for trial and possible incarceration. Earlier in the week, the authorities detained four young protest leaders under the NSL, with the implication that they could be sent to the mainland for judicial hearing. As of Friday, they were released on bail and banned from travelling for six months.
In general, this recent downturn in street-level protest activities largely attributed to the pandemic and the national security law is likely to continue over the next monitoring cycle. However, postponement of the elections is now likely to induce either organised large-scale protests or more flash-mob rallies, including violent ones.
Geopolitics and the local implications
Geopolitical tensions continue to rise between the Hong Kong and Beijing governments and a loose ‘coalition’ of mainly Western governments over China’s increasingly assertiveness and control over the territory. A cycle of retaliatory measures at the diplomatic level is spilling over into the operational risk environment for major multinational companies.
New Zealand on Tuesday (28 July) suspended its extradition treaty with Hong Kong over the national security law. It joined Australia, Canada, and the United Kingdom in doing so. New Zealand will also tighten controls over the export of sensitive goods to the territory that have or may have military applications. New Zealand’s Ministry of Foreign Affairs and Trade also said that there is a heightened risk of arrest and prosecution of New Zealanders for various activities.
On the same day, China’s Ministry of Foreign Affairs announced it was suspending the Hong Kong government’s mutual legal assistance and surrender of fugitive agreements with Australia, Canada, and the United Kingdom, and accused the countries of meddling in China’s internal affairs. The move was made in response to the respective countries’ suspension of their extradition treaties with Hong Kong over the national security law. New Zealand could also be added to this list.
Bernard Chan, convener of the Executive Council, the de facto cabinet that advises Chief Executive Lam, said a US bank recently informed him it was closing his account and reimbursing his funds. Chan said other officials were facing the same problem, without identifying the bank. The developments come as the US government is expected to enact sanctions on Hong Kong and Chinese officials linked to the national security law under the Hong Kong Autonomy Act.
On Wednesday (29 July), the European Union (EU) simplified visa and asylum applications for Hong Kongers seeking to flee the territory and sanctioned Hong Kong by restricting exports of sensitive equipment that can be deployed against demonstrators. China responded by accusing the EU of interfering in China and Hong Kong’s domestic affairs.
UK Foreign Minister Dominic Raab told senior Chinese diplomat Wang Yi that the UK would be closely monitoring Hong Kong’s now-postponed LegCo elections and emphasised that China needed to restore the international community trust in it. Australian Foreign Minister Marise Payne and US Secretary of State Mike Pompeo in a joint statement on 29 July voiced support for the now-delayed elections.
Operational implications from COVID-19
The pandemic has dominated the incident reporting in Hong Kong over the monitoring period as case numbers continue to rise and the Lam government tries to get ahead with containment efforts. Prior to this unabated resurgence, the optics of the situation suggested that Hong Kong had the pandemic under relative control. Foreign vectors were discovered to have spawned another wave, mainly sourced from the maritime shipping, aviation and land-based supply-chain sectors.
It transpired that infected persons classified as ‘essential personnel’ were able to enter the territory without undergoing the mandatory 14-day quarantine for other foreign arrivals. The exemptions related mainly to ship and air crew, as well as drivers of vehicles bringing key supplies into Hong Kong from China.
On 27 July, Hong Kong authorities responded with an announcement about new regulations intended to prevent merchant ships’ crew, who had previously been exempt from most movement controls, from spreading COVID-19. With effect from 29 July only vessels with cargoes destined for Hong Kong are able to change crews in the territory on condition the seamen either travel directly from their vessel to the airport or stay in a designated quarantine venue.
Then on 29 July, there were reports about pilots for the US-based FedEx air cargo carrier requesting the company to suspend flights to Hong Kong due to the territory’s enhanced COVID-19 testing regime that came into force the same day. The new measures demand all aircrew be tested for the virus prior to flying to Hong Kong and requires them to self-isolate in hotel rooms during their stay in the territory. The Airline Pilots Association calling for a suspension of FedEx services follows three of the company’s pilots being quarantined in Hong Kong government isolation facilities after testing positive for COVID-19 on arrival. The International Air Transport Association (IATA) stated that aircrew should not be tested for the virus as a prerequisite for working as they can be readily isolated from the general population, despite evidence individuals have breached existing strictures on movement.
On Thursday (30 July), the Centre for Health Protection (CHP) announced there were 149 new COVID-19 cases. Four were classified as imported cases. The CHP also added 25 restaurants and cafes to its list of where patients have contracted COVID-19 across Hong Kong Island, Kowloon and New Territories. The list includes some well-known international franchises, such as Starbuck on Electric Road, North Point; McDonald’s, Un Chau Street, Cheung Sha Wan; Outback Steakhouse, Prince Edward Road West, Mong Kok and Pizza Hut, Chi Fu Landmark, Pok Fu Lam, among others.
On the same day that these restaurants were listed as places where people had contracted the virus, the authorities reversed the total ban on eating in restaurants imposed the previous day following widespread protest against the measure that proved hugely disruptive given the large number of local households without adequate cooking facilities and such sectoral groups as construction workers who rely on low cost ‘street’ food. The imposition and reversal of the measure indicated the lack of assessment capabilities among the political leadership that is likely to be manifested in other areas as the pandemic progresses.
THE WEEK AHEAD
While there are no calls for planned and/or flash-mob protests in the upcoming monitoring cycle, with the exception of Friday (31 July), there are still plenty of incentives for pro-democracy activists to take to the streets.
By disqualifying pro-democracy candidates for the LegCo elections, it provides more evidence for the opposition that the Hong Kong government intends to stay the course on crowding out opposition voices in government. This only provides more impetus for the pro-democracy movements, including at the grassroots level, to escalate their protest activities in the near term.
The suspension of the elections will increase tension in the territory and test pro-democracy activists’ willingness to deft China’s imposed NSL that came into effect a month ago. International reaction to the suspension of elections is also certain to add to growing divisions between China and many Western and other democracies. Foreign companies viewed as supportive of China’s greatly expanded overt influence in Hong Kong may also come under pressure from activists and their home governments, particularly in the event any renewed protests in the territory lead to mass arrests or clear indications of excessive force by the police. The one-month outlook is critical in this respect as any local reaction is likely to be manifested in this timeframe.
New Zealand’s suspension of its extradition treaty with Hong Kong is almost certain to be met with reprisal measures by Beijing. Reprisals may include heightened scrutiny over New Zealand firms in China, as well as retaliations impacting operations in Hong Kong, including boycotts of New Zealand goods and services, demonstrations by pro-Beijing groups, targeting of personalities of interest, increased cyber-attacks, and delayed cross-border trade, among other actions.
The EU’s measures regarding Hong Kong are almost certain to be met with reprisal measures by Beijing. Firms based in EU member countries 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.
According to current data around 40 air cargo flights a day depart from Hong Kong, six operated by FedEx.The implications of FedEx ceasing operations on the availability of overall cargo space is minimal as other airlines can add capacity to cover any shortfall, but may be high in terms of the movement of business documentation, e-commerce and general mail the company specialises in carrying. Companies should assess their options regarding such movements, bearing in mind any mail or documents sent through China will be delayed due to security and other forms of search.
The surge in new cases has already affected the territory’s 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. Other jurisdictions may impose similar entry conditions unless the number of cases falls in the one-week outlook. It is also probable the local government will extend the period when non-residents are not permitted to enter Hong Kong.
In terms of the local dynamics, these outbreaks and the government’s restrictions will likely continue to suppress large-scale planned protest activities. However, flash-mob protests are possible over the coming week.
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