U.S. President Joe Biden says he will warn American businesses about the perils of operating in Hong Kong. It is also likely the United States will sanction more officials who have abetted the clampdown on human rights in the city.
The White House confirms that Biden will lodge an official business advisory about the dangers of operating in Hong Kong. It may come as early as here on Friday. There are also ongoing negotiations to ease immigration restrictions for Hong Kongers to settle in the United States.
"The situation in Hong Kong is deteriorating, and the Chinese government is not keeping its commitment that it made how it would deal with Hong Kong," Biden said at a press conference with German Chancellor Angela Merkel.
"And so it is more of an advisory as to what may happen in Hong Kong," Biden added. "It's as simple as that."
The gradual "mainlandisation" of Hong Kong has removed the city's advantages over mainland China, where citizens are under constant supervision, indoctrination and censorship. Among Americans, 42% are considering or planning to leave Hong Kong, according to a May survey conducted by the American Chamber of Commerce in Hong Kong.
It would be the first such warning on Hong Kong from the United States. This time last year, the United States passed the Hong Kong Autonomy Act, giving it the power to impose sanctions on people, entities and banks found to have undermined Hong Kong's special status and rights. The act also declared that Hong Kong was no longer autonomous enough from mainland China to qualify for preferential trade status.
The immediate impetus behind the new advisory is the forced closure last month of the city's most-popular newspaper, the fiercely pro-democracy Apple Daily. It could no longer operate after the Hong Kong government froze its accounts and arrested executives and opinion writers for publishing content in support of sanctions.
There are other legal changes making it trickier for international companies operating here. An Asian industry trade group that represents the likes of Google (GOOGL) , Facebook (FB) and Twitter (TWTR) warned last week that a proposed change to privacy laws in Hong Kong is not in line with international practice and could make their employees liable to "severe sanctions." The Asia Internet Coalition warned such companies may decide to stop operating here.
The Hong Kong police and the administration are also planning a law to criminalize "fake news." The examples they cite indicate they consider any negative news criticizing the Hong Kong or Beijing governments to be "fake."
The United States has already sanctioned 35 Hong Kong and mainland officials for their actions in Hong Kong. They include the city's leader, Chief Executive Carrie Lam, as well as its No. 2 official, John Lee, who previously headed up the Security Bureau.
American companies are prevented from dealing or transacting with those sanctioned "Specially Designated Nationals," a particularly fraught field for banks and other financial institutions. It has led to the comical situation that Lam said in an interview she has stacks of cash sitting around at home because no bank will allow her to deposit her salary.
China last month passed a tit-for-tat law that allows it to punish companies and individuals that comply with foreign sanctions on its companies or officials. Anyone implementing discriminatory measures against Chinese citizens can be blacklisted, have their assets in China frozen or seized, and be prevented from making transactions. Their relatives can also be blacklisted, and Chinese companies can sue such people or companies for damages.
It's a sign of how much Hong Kong has become a police state that the security chief for the first time has taken the No. 2 post in the government. The police chief, Chris Tang, then rose from his post to head the Security Bureau, which also includes other disciplined services such as fire, immigration, customs and corrections. Tang is also on the list of sanctions.
Hong Kong since the mid-1800s has been a free-wheeling base for multinationals to use for getting goods made or sold in the totalitarian environment of mainland China. Recent changes including the draconian, much-hated National Security Law introduced last June and the selective use of the law to target Beijing's critics and pro-democracy lawmakers have eaten away at those advantages.
U.S. says rule of law undermined
U.S. State Department spokesperson Ned Price said earlier this week that the United States would keep trying to call attention to the erosion of the rule of law in Hong Kong and Beijing's attempts to undermine Hong Kong's autonomy, dismantle its democratic institutions and damage existing processes.
"We know that a healthy business community relies on the rule of law, which the national security law that applies to Hong Kong continues to undermine," Price said. "Rule-of-law risks that were formerly limited to mainland China are now increasingly a concern in Hong Kong. That's of great concern to us. It is of great concern to the American business community."
National security police on Friday afternoon raided the student union of the University of Hong Kong, the city's top-ranked tertiary institution. Such investigations are used as a form of "white terror" to intimidate Beijing's critics.
The grounds for the raid are that the student union council passed a motion to "express deep sadness" at the death of Leung Kin-fai, a 50-year-old who killed himself after stabbing a police officer in the back as a means of protest on the politically charged July 1 anniversary of the handover of Hong Kong by the British.
"The Union Council expresses its deep sadness at the death of Mr Leung Kin-fai; offers its sympathy and condolences to his family and friends; appreciates his sacrifice to Hong Kong," the motion read. It has since been withdrawn, and four members of the union's executive committee stepped down.
July 1 has long been a day of protest in Hong Kong, a public holiday on which hundreds of thousands would march to demand greater representation in the government. But such events have been banned the last two years, supposedly on public health grounds, even though the city is averaging at most one new Covid infection per day. It's not clear if such protests will ever be allowed again.
That's how selectively Hong Kong law is being deployed. Anyone who makes critical comments such as suggesting that more sanctions are definitely merited against Hong Kong and mainland officials guilty of clamping down on free speech in the city - which, of course, I would never, ever say is the case - risks being arrested and charged with the ill-defined crimes of "subversion," "secession," "terrorist activities" or "collusion" with a foreign "element."
A foreign element can be anything. Pro-democracy ex-politicians - they have all resigned since it is futile participating in the government - are being investigated for emails they've sent to overseas journalists. I'm sure bodies such as the American Chamber of Commerce in Hong Kong can be construed as an overseas "element." Any contact whatsoever with a foreign politician are grounds for being charged with "collusion."
The Biden warning is therefore apt. Investors need to consider how safe their funds are, too, if invested on the stock exchange in Hong Kong. It retains many advantages over the heavily ring-fenced markets in Shanghai and Shenzhen. But as mainland law becomes Hong Kong law, the safety of Hong Kong holdings is no longer assured.