HONG kONG IS marking the halfway point of its 50-year one country, two systems governance with a two-day visit by President Xi Jinping to swear in the city’s new chief executive John Lee (seen above) on July 1, also the anniversary of China’s resumption of sovereignty from the United Kingdom.
Xi’s visit has been wrapped in extensive secrecy, security and Covid protections. It is his first visit outside the mainland since the pandemic began.
He reportedly spent the first night back across the border in Shenzhen and all Hong Kong politicians he is meeting went into quarantine ahead of the visit.
Xi made mention of one country, two systems on his arrival but the overarching theme of the visit is a ‘new era of stability’.
That presages further suppression of dissent, even if Hong Kong remains freer than anywhere else in China.
JOHN LEE HAS been formally elected as Hong Kong’s chief executive. To no one’s surprise. Former chief executive Carrie Lam’s number two was the only candidate before an appointed electorate of 1,500 Beijing loyalists.
Lee has neither the civil service nor the business background of his predecessors in the job. The 64-year old former policeman has risen through the ranks of the police and security apparatus. His choice as leader of the city reflects Beijing’s growing prioritisation of stability and security that is far from limited to Hong Kong.
In 2019, Lee was instrumental as Lam’s Secretary of Security in promoting the ill-fated bill allowing extradition to China that sparked the street demonstrations. He defended heavy-handed police suppression of the protests, saying force was necessary against what he called terrorists and extremists.
He was also responsible for implementing the 2020 National Security Law that gave China sweeping powers over Hong Kong and brought its security regime more in line with the mainland.
How Lee applies the law as chief executive once he takes up the post on July 1 will likely define his term of office. Like all Chinese law, Hong Kong’s National Security Law is broad. Its scope is sketchily defined and retroactive. This allows administrative flexibility but also creates murkiness and uncertainty. Case law that might give clarity is limited.
A national security court allows for a parallel judicial system. That can leave the city’s civil and commercial courts operating independently on principles of British common law but still allows a means of political control over any case where China considers it has a national interest at stake.
The integrity of the legal system is vital for international business confidence in the city. However, the long-term risk is that the city evolves with a generation of lawyers not schooled in the principles of common law but viewing the legal system as an instrument of state administration, who become increasingly influential across the whole legal system.
Lee is likely to extend the Beijing model of national security law by introducing legislation that will give Hong Kong similar cybersecurity, data and privacy and anti-sanctions law to that now in force in the mainland.
These could be separate or part of an enacted Article 23 of the Basic Law, a stated goal for Lee.
The article provides for Hong Kong to write its own laws to prohibit the quartet of treason, secession, sedition and subversion that are already the target of the National Security Law (introduced under Article 18, not 23), as well as theft of state secrets (always a catch-all term in Chinese law) and prohibition of Hong Kong political organisations having foreign ties.
The two previous attempts to enact Article 23, in 2003 and 2019, led to intense street protests that are no longer permissible.
Beijing is convinced that business does not care about democracy in Hong Kong; it just wants stability. That may be true of the local business elite that Lee has taken onto an advisory council he has formed. However, the continuing slow drip of departures of international business executives, regardless of Hong Kong’s locational advantages, would tell a different story.
International businesses also have to worry about getting ensnared in Western sanctions against China as stances in Washington and Brussels harden towards Beijing.
For its part, Beijing may be less concerned by that than many in the West imagine. Increasingly, it sees Hong Kong less as a gateway through which international capital can enter China and more as one through which Chinese capital can make its way into the world.
That would be a fundamental change of purpose for Hong Kong, albeit not the first time the city has had to adapt to a new role in changed circumstances. More international companies, like HSBC, would come under stakeholder pressure to spin off their Hong Kong and China operations from the rest of their business.
CARRIE LAM’S ANNOUNCEMENT that she will not seek a second term as Hong Kong’s chief executive comes as little surprise.
Her assertion that she informed Beijing of her intention a year ago may be an effort to deflect the jumped-or-pushed question. Yet, as this Bystander noted when the 64-year old Lam added a few tearful words to the conclusion of her annual policy speech last October, it seemed clear then that there would be no second term.
She will leave office on June 30, having recorded the lowest public approval rating for the officeholder since London handed Hong Kong back to China in 1997 and as the city emerges from the worst Covid-19 outbreak in China.
Of course, public popularity matters little for candidates for chief executive as a committee of pro-Beijing electors fills the position.
Lam has overseen what history will likely regard as a pivotal period of national security legislation to clamp down on dissent as Beijing tightened its grip on the city’s affairs and systematically dismantled organised opposition to its control.
In 2019, Lam sparked months of anger and discontent by proposing a law to allow extraditions to mainland China. That had to be withdrawn in the face of street protests, but the controversial National Security law followed in 2020, effectively ending Hong Kong’s semi-autonomy.
The election of her successor on May 8 will be the first conducted under last year’s sweeping electoral reforms. These gave local authorities greater powers to vet candidates and ensure that only ‘patriots’ could stand in elections. They also require a loyalty oath from all Hong Kong elected officials, from local councillors to legislators, to screen out pro-democracy candidates.
Lam’s number two, Chief Secretary John Lee, appears to be Beijing’s choice as her successor. Lee, a former deputy police commissioner, was a security official during the 2019 protests and was elevated to the top leadership ranks last year, now seemingly in preparation for taking over.
His appointment would signal Beijing’s intention to sharpen its focus on security and tighter control of Hong Kong’s governance, but with a veneer of competence that was absent in Lam’s ill-starred term.
SUPPLY CHAINS, ALREADY under heightened stress because of the Ukraine conflict, face a new challenge from the latest Covid-19 lockdowns.
Congestion in the Yantian and Shekou container terminals at Shenzhen and the terminal in Hong Kong is at its worst in five months, leading to further delays in shipping to export markets.
Approximately 174 container ships are anchored or loading in Shenzhen and Hong Kong, the most since October 21 last year in the aftermath of Typhoon Kompasu.
The same is shaping up in Shanghai. In the north, the lines of vessels waiting to get into Qingdao port in Shandong were double the length mid-month that they were at the end of February.
The Omicron variant’s challenge to China’s zero-Covid strategy is making the congestion worse than that typically seen around Chinese ports after the Lunar New Year. The delays will have a ripple effect as shippers re-route cargo and loadings to other ports. Longer delays will also push up freight rates.
As well as affecting port operations, lockdowns have hit production, with factories being temporarily shuttered or allowed to operate under strict restrictions.
While Shenzhen has just eased its lockdown, Hong Kong is battling a fearsome outbreak of the Omicron variant. Shanghai, which handles more tonnage than either of the two southern shipping hubs, is still seeing a rise in infections. Although denied by authorities, rumours of a coming complete lockdown are circulating.
THE COVID OUTBREAKS across China are expanding. The National Health Commission on March 14 reported a daily total of 1,337 new locally transmitted cases, including 895 in the northeastern border province of Jilin.
Severe movement restrictions have been imposed on Jilin, the first provincial-wide sealing-off since much of Hubei was locked down in 2020 following the first outbreak in its provincial capital, Wuhan. This broadens the restrictions imposed last week on the provincial capital of Changchun, where most of Jilin’s infections have been reported. Emergency isolation hospitals are being erected. Toyota’s factory there has had to halt production. (Update: Jilin City mayor Wang Lu has been sacked due to ineffective epidemic prevention and control, Xinhua reports.)
In Shanghai, schools have reverted to online teaching, road transport to the city is being restricted. A ban on inbound international flights is reportedly being considered.
The lockdown in central Shenzhen has expanded to cover most of the city’s 17.5 million population, and three rounds of testing have been ordered. High-tech factories such as those of Apple supplier Hon Hai Precision Industry (Foxconn) and Huawei will temporarily stop production. However, the Shenzhen Yantian Port container terminal is still operating, but under strict Covid controls.
The Shenzhen outbreak is likely to be a spillover from the raging infection in neighbouring Hong Kong, where 26,908 new daily cases and 249 deaths were reported on Monday. New infections appear to have plateaued, but deaths are still rising, especially among the unvaccinated elderly.
New cases are also reported in Beijing, Tianjin and cities across Guangdong province.
As of March 9, 14 of China’s provinces had been declared high or medium-risk for the virus. The clusters of outbreaks caused by the fast-spreading Omicron sub-variant BA2 are proving a stiff test of Beijing’s zero-tolerance policy.
No death from the virus has been reported in China since January 2021. However, on Friday, National Health Commissioner Ma Xiaowei said strict controls need to be kept in place.
COVID-19 INFECTIONS IN Hong Kong are unlikely to have peaked despite hitting another record today.
On February 28, city officials reported 34,466 new Covid-19 cases and 87 deaths, many of which were patients in care homes and unvaccinated.
The first of the temporary pre-fab emergency Covid isolation hospitals were due to open on Monday. Workers are being brought in from the mainland to help staff them.
To clear hospital beds, Hong Kong is already discharging patients who have tested positive for the virus and are in stable condition, instructing them to self-isolate at home. Electronic wristbands paired with a tracking app are reportedly issued to monitor compliance.
With Hong Kong’s morgues and overall health infrastructure at breaking point, China’s top Covid containment expert Liang Wannian has arrived in the city to advise on the fight against the virus. Containing the outbreak has become a matter of high concern in Beijing.
Local reports citing the National Health Commission also say that Beijing will draft some 9,000 people to the city to help with the compulsory testing that chief executive Carrie Lam has ordered. Rumours that this would be accompanied by a citywide lockdown, something that Hong Kong has so far avoided, triggered panic food buying on Monday with supermarket shelves being stripped bare.
Guangdong province, which can process up to 1.5 million tests a day, five times Hong Kong’s capacity, will assist with testing, despite dealing with a fresh outbreak of its own of some 50 cases in the Pearl River Delta industrial city of Dongguan.
Shenzhen, too, is seeing its outbreak worsening, with 30 new cases reported on February 28.
ANOTHER SIDELIGHT ON the Omicron surge in Hong Kong: people are fleeing the city in the greatest numbers since the outbreak of the pandemic.
Government data show 27,703 net departures in the week ended February 20. That is a rise of 37% on the previous week.
Thousands of residents have left Hong Kong in the last two years, driven away by the fear of infection and the political crackdown. For the past two years, Hong Kong has seen its population decline at an annual rate of 1.2%.
That also includes a small but significant outflow of staff from international firms reassessing the city as a regional business hub. The city’s strict quarantine policies have made travel in and out of the city a particular problem for the dealmakers at financial firms.
However, the latest rise in people crossing into the mainland via the border crossing rather than the airport suggests that infection fears of residents are the primary motivation at this point.
Hong Kong’s chief executive Carrie Lam has announced that mandatory testing will start next month and the school year curtailed. Elections to her own post have been postponed to May 8 from March 27 so her administration can devote its resources to fighting the outbreak.
The emigration has not reached the point of ‘will the last person to leave Hong Kong, please turn off the lights’, but the city’s allure is dimming amidst the pandemic, which may only accelerate its decline into being just another city in southern China.
WHEN WE TOOK the same snapshot of Hong Kong’s Covid-19 infections just four days ago, the figure for the seven-day rolling average for daily new confirmed cases was 600. It is now more than 1,000.
More than 6,000 new cases were reported on February 22. That is half as many as were recorded over the first two years of the pandemic.
Hong Kong University’s disease modellers’ latest forecast is that infections could peak at 180,000 a day by mid-May, and the death toll top 3,000, ten times the current total. The city’s under-inoculated and vaccine-hesitant elderly population is particularly vulnerable.
Hong Kong’s chief executive, Carrie Lam, is stating the obvious when she says that the quickly worsening epidemic has far exceeded her administration’s ability to tackle it.
The city has tried to follow Beijing’s zero-tolerance policy to contain the virus without the draconian lockdowns, travel restrictions and mass testing deployed on the mainland.
However, with the city’s hospitals and quarantine facilities now overwhelmed by the Omicron variant, Lam has ordered all of the city’s 7.5 million inhabitants to undergo three rounds of mandatory PCR testing starting in mid-March.
The conclusion to be inevitably drawn is that hundreds of thousands if not millions of Hongkongers could be in isolation within weeks. Mass testing also risks diverting resources from the urgent work of vaccinating the elderly.
The rapidity with which the Omicron variant has overwhelmed the city’s public health defences has alarmed Beijing for all the obvious reasons. It is just one of the reasons that it is taking control of Hong Kong’s response and shipping in expertise and additional quarantine facilities, isolation wards and hospital capacity.
AS A CODA to our observations on the surge in Covid infections in Hong Kong, we note the suggestion of Tam Yiu-chung, Hong Kong’s sole deputy on the Standing Committee of the National People’s Congress, that the all-hands-on-deck fight against the outbreak in the city would be a reason for postponing the election of Hong Kong’s chief executive due to be held on March 27.
As it is a thankless job that no one appears to want — there are no announced serious candidatures, not even that of the incumbent Carrie Lam (above) — that could prove convenient all around.
Update: Lam says she will postpone the election to May 8.
HONG KONG HAS is at the point of being overwhelmed by the Omicron variant. President Xi Jinping has ordered Carrie Lam’s city administration to make containing the latest surge its top priority.
At stake is the effectiveness of a zero-tolerance policy to contain the virus — and the global reputation of Beijing’s success in implementing it.
Concerns for authorities on the mainland will include the worry that Hong Kong is a forerunner of what could happen across China. That concern is exacerbated by the relative ineffectiveness of the Sinovac vaccination against Omnicron and the fact that the zero-tolerance policy means China has no herd immunity.
A third concern will be the risk of social instability, alluded to by Xi in his instruction that Hong Kong’s administration must ensure ‘overall social stability’. In North America and Europe, where virus containment measures such as lockdowns have been less draconian than in China, populations are starting to show restlessness against governments.
There are signs of pandemic fatigue among Hong Kong residents who have had to put up with the closure of many public venues and severe travel restrictions.
Beijing will throw what resources are necessary for Hong Kong’s government to tackle the latest outbreak. This will likely include sending medical and other supplies, building temporary isolation and hospital facilities at breakneck speed and tightening up the city’s testing and tracing capabilities. It will probably send teams from the mainland to run the mass testing, which may be made compulsory.
It will also send pandemic-seasoned officials to run the containment operation. An advanced guard of senior epidemiologists has already been dispatched to the city. A pressing task will be to raise Hong Kong’s relatively low vaccination rates, particularly among the elderly.
Hong Kong has confirmed about 26,000 infections since the start of the pandemic and barely 200 deaths, numbers far below other similar-sized cities. However, record levels of more than 6,000 new cases a day — and pictures of infected patients being treated outside crowded hospitals — are not the images of the well-ordered government response to a crisis that Beijing likes to portray.
Xi was prominent in China’s early response to Covid-19 but had stepped back. His latest public intervention is a sign of the seriousness with which Beijing is taking Hong Kong’s situation. Intriguingly, this is all being mentioned sotto voce if at all by mainland state media.
Lam has said that Hong Kong will not impose a citywide lockdown or introduce the strict mass testing that has been the rule on the mainland, relying hitherto on quarantine measures to implement its zero Covid policy, based on mandatory hospitalisation of all cases, regardless of whether the patient is mildly ill or even asymptomatic.
Nonetheless, Xi’s intervention likely implies a tightening of controls. His bluntness can reasonably be interpreted as a rebuke of Hong Kong officials’ handling of the outbreak so far, and of his intent to prevent Hong Kong from becoming a beachhead from which Omicron can invade the mainland.
Update: On February 22, Lam ordered the compulsory testing of all 7.5 million Hong Kong citizens starting in mid-March.