Orwell Comes to Hong Kong

The multinationals calling HK home would do well to observe the saga of Jack Ma and Ant

The past week has shown to the Chinese people as well as the world the truly absolutist power of Xi Jinping through a tightly-controlled Communist Party backed by an electronic surveillance system which exceeds even George Orwell’s fiction of the future, 1984.

Most significant for the longer term was the final trashing of Hong Kong’s autonomous status under the Sino-British Joint Declaration and the Basic Law supposed due to last till 2047. The Standing Committee of the National People’s Congress issued an order giving the local administration the power to remove elected legislators it deemed to have been “endangering national security.”

Four such legislators were then immediately expelled by Hong Kong’s puppet leader, Chief Executive Carrie Lam. This was done in the full expectation that all other pro-democracy members of the Legislative Council would quit in the face of the message that any of them could be removed without due process at the whim of a chief executive spouting “national security” talk.

It was not as though the government faced any threat from the democrats. They were always a minority in a council stuffed with business interests seeking to trade votes for advantages. Several elected democrats had already been removed by a variety of dubious legal moves and administrative measures. Others had quit what they saw (rightly as it proved) as a charade when legislative elections due in September were postponed for a year. The executive used Covid as an excuse to prevent an election which would have down the depth of its unpopularity.

Now it seems improbable that there will be a meaningful election ever again and the legislature will be even more a rubber stamp with little scope for debating anything much beyond parking fines.

As it was already with the imposition last summer on the territory by Beijing of a National Security Law, the scope for substantive debate was already limited by the wide and vague definition of national security which could mean almost any criticism of central policies.

The Chinese constitution itself commands citizens to “not behave in any way that endangers the motherland’s security, honor or interests.” It also demands the “solidarity of all the country’s ethnic groups” – a way of demanding submission of minorities to Han chauvinism.

The National Security Law has already led to university staff being lectured about its content, a quick way to frighten those in faculties such as politics, history, law, journalism, and social studies. Non-Chinese are not exempt as they can be potentially accused of aiding and abetting talk deemed an offense of the act.

Many in the business and professional communities continue to believe that Beijing’s crackdown on Hong Kong is only aimed at political groups. But the reality is that the law can be used against almost anyone at any time. It reflects Xi’s ambition to enforce the supremacy of the party at all levels, to limit the influence of western-derived institutions, such as Hong Kong’s England-based Common Law legal system. That system cannot last long if frequently over-ruled by fiats from the NPC or prosecutions under the National Security Law.

The head-in-the-sand attitudes of much big business, and the financial sector, in particular, was shown up by the sudden postponement of the public flotation of Ant Financial, the Alibaba associate which promised to be a record-breaker, attracting hundred of billions of dollars of subscription as punters sought to get in on the ground floor of this fintech wonder.

Unluckily for them, the party bosses in Beijing and banking and other regulators decided that Jack Ma, the entrepreneur behind Ant and Alibaba, had become too powerful and too arrogant, daring to criticize the major (government-owned) banks for their pawnshop mentality.

At the last minute, Ma was summoned for criticism and the IPO postponed. It will come back eventually but probably at half the price. Meanwhile, investors could see that this was not just an attack on Ma but intended to rein in other giants of China’s on-line world including Tencent. China wants high tech, but the party is setting stricter limits to the rein it will give to entrepreneurs particularly if they are seen undermining state-owned giants such as the major banks.

Xi’s theory of “Dual Circulation” whereby China will become more important in key fields globally while becoming more self-reliant with less dependence on foreign markets and ideas is a difficult balancing act but one which by implication favors Shenzhen and Shanghai over Hong Kong – even without the latter’s troublesome hopes for democracy. Xi’s devotion to the power of the party is reinforced by his Han focused nationalism.

Exodus of accounts and investment companies from Hong Kong to the likes of Singapore, Switzerland, and assorted offshore island regimes began with the arrival of the national security law. The actions against the legislators and Ant have merely confirmed that the exodus will continue. But Xi and his party are far too big to care.

Indeed, US chaos over Covid and the presidential election have made this an ideal time to send wrecking balls through perceived western influence in the east.

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