Beijing Has Finally Run Out Of Patience With Hong Kong

Update (1430ET): After China's National Congress adopted a resolution calling for a new National Security law in Hong Kong, the SCMP spoke with a party insider to offer a more detailed account of how we arrived at this point, where Beijing is finally moving the pieces into place to justify a violent crackdown on dissent in Hong Kong.

Unsurprisingly, Beijing has given up on the idea that Hong Kong can be reformed from within, and that changes to the city-state's "Basic Law" to impose mainland-style censorship and political repression won't ever be undertaken voluntarily.

According to a mainland source familiar with Hong Kong affairs, Beijing had come to the conclusion that it was impossible for the city’s Legislative Council to pass a national security law to enact Article 23 of the city’s Basic Law given the political climate. This was why it was turning to the NPC to take on the responsibility.

Article 23 of the city’s mini-constitution requires the Hong Kong government to enact its own national security law prohibiting acts of “treason, secession, sedition, or subversion”.
“Some opposition politicians have shut the window for Hong Kong to enact its own national security law,” the mainland source said, citing the confrontational approach they had adopted towards Beijing.

“If the national security legislation is not done during the annual session of the NPC or shortly afterwards, is there any guarantee that it can be passed by the Legco in the next two years?

“We can no longer allow acts like desecrating national flags or defacing of the national emblem in Hong Kong."

Notably -as we touched upon earlier - this is all happening at a critical time, as the US has until the end of May to certify HK's "autonomy" under a recent law that has made certain economic and financial links enjoyed by Hong Kong dependent on this certification.

The US has until the end of this month to certify Hong Kong’s autonomy under the Human Rights and Democracy Act of 2019. It will make an assessment on whether Hong Kong remains suitably autonomous from China, a prerequisite for extending the city’s preferential US trading and investment privileges.

In preparation, Secretary of State Mike Pompeo on Wednesday slammed China for crackdowns on Hong Kong dissidents, including Jimmy Lai.

Earlier this week, Pompeo seriously angered Beijing by congratulating Taiwanese leader Tsai Ing-wen following her latest electoral victory - and unprecedented move.

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Update (1120ET): As expected, Chinese state media reported Thursday that lawmakers are reviewing the resolution described below, WSJ reports.

China signaled it will impose new national-security laws on Hong Kong, dealing a blow to the territory’s autonomy as Beijing seeks to stamp out widespread pro-democracy protests that have challenged leader Xi Jinping.

Zhang Yesui, a spokesman for China’s rubber-stamp legislature, which begins meeting on Friday, said lawmakers will review a resolution targeting what he called “secessionist and subversive” activity, foreign interference and terrorism in the city, where millions of people have marched over the past year in opposition to the Communist Party.

The surprise move is likely to send shock waves through a city in the throes of an antigovernment movement and a decimated economy.

As we mentioned earlier, the vote is expected to take place on May 28 (next Thursday).

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A few days ago, Hayman Capital Management founder Kyle Bass published an editorial warning about Beijing's renewed focus on stamping out dissent in Hong Kong now that protesters are beginning to re-emerge as the number of new cases of COVID-19 declines to zero. Specifically, he warned of the possibility that President Xi would adopt new "laws" granting Beijing broad latitude to interfere in Hong Kong's affairs, in explicit violation of the 1984 treaty between the UK and Hong Kong that set the Special Administrative Region on the path back to reunification.

Hong Kong's liberal values have always been at odds with Beijing's demands for unwavering obedience. One PLA officer - clearly an old-line Communist - once told the SCMP that Hong Kong had the worst "social values" of anywhere in China. And while that may be, technically, Hong Kong has another ~27 years to enjoy these freedoms before: According to the "one country, two systems" agreement struck with Britain, China doesn't gain full custody of the de facto independent city state until July 1, 2047, the date marking 50 years since Britain officially handed Hong Kong back to China.

Now, a disturbing story first published by a Hong Kong gossip site has apparently been confirmed by HK's paper of record, the English-language South China Morning Post: During this year's annual Party Congress, Xi and the Standing Committee are expected to draft a resolution calling for a new "national security" law aimed at stamping out all "secessionist" and "subversive" acts, as well as "terrorism" and "foreign influence". Remember, Chinese media regularly referred to the pro-Democracy protesters as terrorists.

Beijing will introduce a draft resolution to allow the National People’s Congress to chart legislation for a new national security law tailor-made for Hong Kong that will proscribe secessionist and subversive activity, foreign interference and terrorism in the city, sources have told the Post.

A Beijing source said the new law would ban all seditious activities aimed at toppling the central government and external interference in Hong Kong’s affairs. It would also target terrorist acts in Hong Kong.

A mainland source familiar with Hong Kong affairs said Beijing had concluded that it was impossible for the city’s Legislative Council to pass a national security law to enact Article 23 given the city’s political climate and hence was turning to the National People’s Congress, the country’s legislature, to take on the responsibility.

SCMP's sources confirmed what many Hong Kong observers likely suspected: Beijing is using its decision to back away from the controversial extradition bill that sparked last year's wave of protests to justify passing its own national security law to effectively criminalize dissent in Hong Kong, in defiance of an international agreement with the UK.

"Some opposition politicians have shut the window for Hong Kong to enact its own national security law," the source said, referring to the confrontational approach they had adopted towards Beijing.

"If the national security legislation is not done during the annual session of the National People’s Congress or shortly afterwards, is there any guarantee that it can be passed by the Legco in the next two years?" the source said.

"We can no longer allow acts like desecrating national flags or defacing of national emblem in Hong Kong."

Bass warned of exactly this in a Newsweek editorial from earlier this week.

China’s biggest political meetings of the year kicked off in Beijing on Thursday, marking a key milestone in President Xi Jinping’s battle against the global coronavirus pandemic. The Chinese People’s Political Consultative Congress, an advisory body with no legal powers, held its official session with Mr Xi and the rest of the Chinese Communist party’s top leadership in attendance. On Friday morning Premier Li Keqiang will address the annual session of China's rubber-stamp parliament, the National People’s Congress, with a closely watched work report that will give details about the government’s plans to revive the world’s second-largest economy.

The "two sessions," normally held in March but delayed by almost three months this year because of the coronavirus, are being held against a backdrop of rapidly deteriorating relations between China and the US.

The Party Congress kicked off on Thursday, but a vote on the resolution - which would authorize the Standing Committee to draft the law - is expected to be held on May 28.

Notably, the law will likely be in effect before elections in the fall for Hong Kong's legislative council - or "Legco" - a vote that pro-democracy lawmakers have been hyping up as a gesture against the increasingly authoritarian tendencies exhibited by Beijing.

Legco is headed for elections in September that opposition parties have vowed as a make-or-break opportunity to get a majority to block all bills put forward by the government, buoyed by their success at last November’s district council elections.

The move to introduce the draft resolution comes as the city’s delegates to the nation’s parliamentary sessions are preparing to meet Xia Baolong, director of the State Council’s Hong Kong and Macau Office (HKMAO) on Thursday evening.

Sources have told the Post that a draft of the resolution will be shared with delegates on Thursday night and presented as a motion to the NPC, on Friday afternoon.

The NPC is then expected to vote on the resolution at the end of the annual session, likely to be on May 28. The resolution will then be forwarded to the Standing Committee of the NPC to chart out the actual details of the legislation.

The Standing Committee is expected to meet again next month, and the law could be drafted and included in Annex 3 of Hong Kong's "Basic Law", which is based on British legal principles.

The Standing Committee, which last met on April 26 to 29, meets every two months and is expected to hold its next meeting as early as June and this could be the earliest date at which the legislation could be approved.

"The NPC decision will delegate the NPC Standing Committee to draft the new legislation for Hong Kong, which would be included in Annex 3 of Hong Kong’s Basic Law," the source said.

"The new law will be introduced in Hong Kong through promulgation, without the need for local legislation."

If the process as outlined by sources is confirmed, Hong Kong will finally have national security laws, 23 years after the handover of the city from British to Chinese rule.

Why is Beijing so eager to make these changes? Because since the British left, Hong Kongers have repeatedly rebuffed efforts by Beijing to crack down on dissent by opposing national security bills, even though the "Basic Law" requires the city-state to adopt one. Now, Beijing has apparently found a work-around to simply impose these restrictions on Hong Kongers.

One thing seems likely: Like Bass, we suspect this doesn't bode well for Hong Kong's reeling economy. Because, as Bass once explained, the reason Hong Kong has functioned as a gateway to China for the west is due to a 'special status' granted to HK by the US government. That status is contingent on Beijing effectively keeping its hands off Hong Kong. Once this 'national security' law has passed, the US will have no choice but to revoke certain special privileges it has accorded Hong Kong.