Big Lychee, Various Sectors

For stats nerds – changes in employment numbers by age group since 1985, courtesy of Joel Chan. A big rise in the number of 60-years-plus in work over the last 20 years. This could reflect an aging population, people remaining active longer due to better health, or older people becoming more desperate financially. Take your pick. The other noticeable change is a fall in the number of younger workers. Among the 20-24s, there is a long-term decline, which could reflect a falling birth rate, more younger people going to college or ‘lying flat’, or emigration. Among the 25-29s (and to some extent 15-19s and 30-34s), the trend really kicks in starting 2019, if that’s a clue. 

Is there another, less-quantifiable, trend going on in Hong Kong – namely a shift towards a more ‘people-first’ style of governance? The post-2019 era has seen Beijing take a more active role in running the city, largely pushing the idea that evil foreign forces were to blame for the protests, necessitating a clampdown in the name of national security. The old-style ‘we know best’ bureaucrats at the top (think Donald Tsang, Carrie Lam and that lot) have been replaced by ex-law enforcement officials who are perhaps more likely to obey orders and not ask questions. As well as having all pan-dems removed, the legislature has had a large increase in its overall numbers, diluting tycoon-dominated functional constituencies with dozens of appointed loyalists.

And at the same time, buried under the massive NatSec campaign, we are seeing a few long-overdue measures that would, let’s say, have been ‘difficult’ in the old days. A focus on long-term supply of housing in the New Territories, and (probably) away from the Lantau reclamation white elephant project. The ejection of better-off tenants from public housing. Some tweaking to improve low-paid workers’ rights. Senior civil servants being kicked up the backside and told to replace crummy water pipes, pronto. Moves towards regularizing Uber at the expense of taxi-licence holders. 

Scratching my head trying to think of more. It’s not much, but there is something.

It’s not illegal to criticize the government. Except when it is. Justice Secretary Paul Lam says it’s OK if you’re suggesting improvement…

“If you’re expressing views with the intent of wishing the government to do better, or making so-called criticism with good intentions, the law states in black and white that these do not amount to [the crime of] seditious intention.”

Lam said according to the Safeguarding National Security Ordinance, it is also legal to suggest improvement to the legal or political system as well as the constitutional order, so long as there’s no intent to incite hatred or contempt.

But…

He also said the law does not require proof of intention to incite violence, when it comes to the offence of seditious intention.

Lam noted there had been instances where some comments “could harm the public’s views towards the government”, causing hatred or enmity, even if they don’t specifically ask people to take up arms to confront the SAR government.

Who decides whether words ‘incite contempt’? How can you tell if they do so? How can you prove a commenter ‘intended’ it? What if the government’s own policies ‘incite hatred’ against itself?

And what if the criticism that incites contempt of the government is produced by AI? An excuse to pass on David Gerard on a study showing that ChatGPT makes you stupid – at least when you write essays with it.

Some of us can sniff out a hub-zone opportunity a mile away. Mike Rowse, in the SCMP, suggests that Hong Kong host a branch of Harvard University, to accommodate the international students Trump has decided to turn away after the school incurred his wrath…

To show that our offer is serious and not a passing whim, we should be prepared to offer Harvard a long lease of the land at a nominal premium, say 50 years with an automatic right of renewal for a further 50 years without payment of an additional premium – the same model adopted for Hong Kong Disneyland. This would send a clear message that we want them here permanently.

We could also give assurances on the issue of student visas. There would be no reason for our immigration authorities to turn away a bona fide Harvard student from any country. Post-graduation employment opportunities could also be discussed. In return, Harvard would have to give comprehensive and binding undertakings on issues such as the deployment of faculty and sharing research findings.

The Disneyland comparison is inevitable. As a civil servant Rowse was, of course, instrumental in putting that deal together over 25 years ago. It is also unfortunate: the Disney resort massively squandered land and money in exchange for attracting tourists we neither need nor want. 

There is also something apt about it. The idea of luring this new high-profile US brand name is another frantic, almost panicky, attempt to find a role for Hong Kong. Like Savannah College of Art and Design (now closed) or the University of Chicago’s campus (still around?), and numerous other attempts to attract glitzy events, sports stars as residents, and company HQs. Why does Hong Kong have to come across as so desperate? Why do its policymakers seem to have so little confidence in their own city? Why not identify and fix that underlying problem?

Another predictable thing about this proposal: there has to be a real-estate angle. One microsecond after wondering if Harvard would want a campus here, and we’re already talking leases and premiums. Can anyone think of something that doesn’t involve land handouts? Why not?

Also, we must assume, Trump will not be around forever, and in a few years Harvard will once again be able to accept overseas students and do its other stuff – long before work begins on a pokey little annex in the New Territories.

Then there is the issue of whether NatSec-era Hong Kong and Harvard would really want each other. Old-style former civil servants might crave a glamorous American institution setting up shop here. But the city’s new leadership might not be so keen. Chief Secretary Eric Chan is more interested in patriotism and national security, and portraying the West as a threat…

[Chan] said the country is coming under attack from western countries led by the United States, in part because they’re envious of China’s many successes, such as in sports, car manufacturing and space endeavours.

…”The people recognise the country’s great success in sports, and that’s led to jealousy from the US and the West, or perhaps they’re worried about the impact from our nation’s strength – that’s why they’d caused so much trouble.”

This doesn’t sound like a warm welcome for the likes of Harvard.

The CS also suggests that Hongkongers spend their money in Shenzhen out of admiration for China’s economic prowess…

The rising number of Hongkongers visiting mainland China shows they are recognising its development, Chan said

“This is just like how many citizens, after realising the good quality and low prices in the mainland, enjoy going north to shop during holidays,” Chan said.

“It all begins with recognising the country’s development – only then do they ‘vote with their feet’ and understand how to show their support,” he added.

Can we be a ‘spending money overseas out of patriotism’ hub?

From HKFP, more details about the Hong Kong and Beijing joint NatSec operation…

Hong Kong police have coordinated with Beijing’s national security office to search the residences of six people suspected of foreign collusion, the first known joint operation between the two entities.

The police force said in a statement on Thursday evening that China’s Office for Safeguarding National Security (OSNS) requested assistance from the police’s National Security Department (NSD) to investigate six people suspected of colluding with “a foreign country or with external elements” to endanger national security from November 2020 to June 2024.

According to the police statement, the NSD obtained court warrants and searched the homes of the six people, as well as the office of a related organisation in Kwai Chung, on Thursday.

Police officers “seized exhibits, including bank documents, devices, etc., for further investigation,” it added.

As well as being the first (or first known) joint operation, it is noteworthy because there have been no arrests or charges. The SCMP story suggests that the case could be the first in which Beijing’s NatSec office assumes jurisdiction, with trials taking place in the Mainland…

It is highly unusual for Hong Kong authorities to publicly announce that “interviews” with law enforcement have been arranged.

…Under [Article 55 of the 2020 NatSec Law], the [OSNS] shall exercise jurisdiction over cases deemed complex due to the involvement of a foreign country or external elements, making it difficult for Hong Kong to proceed.

“Now, it could be a stage when [authorities] want to confirm whether there is such a possibility [to invoke Article 55],” [pro-government lawyer Ronny] Tong said. “We do not rule out that some complicated matters could be beyond [the capabilities] of Hong Kong courts.

“For example, when a case involves acts done by those in the mainland or foreign countries, in which Hong Kong has difficulties in dealing with relevant evidence.”

…Thomas Kellogg, executive director of the Centre for Asian Law at Georgetown University … 

[expects] the subsidiary legislation enacted last month signalled that Beijing’s office “will play an increased role in national security investigations and cases going forward”.

“Complexity or foreign involvement [as written in the law] doesn’t provide meaningful limits on what cases can be sent to the mainland under Article 55…

What is ‘collusion with foreign forces’ (which Joshua Wong, already in prison, has recently been charged with)? It sounds like it should relate to actions involving espionage or sabotage. In practice, it seems to be about expressing the wrong ideas. If you go to Washington DC, meet the US Secretary of State and tell him Hong Kong has perfect rule of law and no human rights violations, that’s not collusion. But if you say Hong Kong has turned authoritarian and you lobby for sanctions against the city’s officials, that is collusion. Maybe this new case will be different.

David Webb says: Ooh, I got a gong! He is now a ‘Member of the Most Excellent Order of the British Empire’.

The Guardian picks up the Reversed Front: Bonfire story…

Downloading the game could lead to players being charged with possessing seditious material, while making in-app purchases could be viewed as providing funding to the developers “for the commission of secession or subversion”, the police said.

Recommending the game could also constitute the offence of “incitement to secession”.

What about thinking about the game? 

It is now illegal to display a piece of cloth with no words or images on it, at least if you are the League of Social Democrats…

During the trial earlier this year, the defendants challenged whether the black cloth should be considered a poster and therefore regulated under the Public Health and Municipal Services Ordinance.

Magistrate Minnie Wat ruled on Thursday that the black cloth, approximately two metres long, had been displayed in an “eye-catching spot” at the street booth. Referring to footage recorded by the police, Wat said the defendants had told the public that they hung a blank black cloth because they could be fined if any words were written on the banner.

Wat sided with the prosecution, saying that the definition of a poster was “broad” and that the purpose of the legislation was to impose “appropriate rules to prevent chaos.” As the black cloth was used to “spread ideas in public” and was displayed for around two hours each time at the street booths, it met the definition of a poster, she said.

“Although the black cloth had no words, it was displayed to express the defendants’ political views and opinions about the government,” the magistrate said in Cantonese.

And a joint operation between Beijing’s Hong Kong NatSec Office and local NatSec police nets ‘six persons and an organisation … suspected of having committed the offence of “collusion with a foreign country or with external elements to endanger national security” ‘.

Transit Jam at an international conference on transport. Financial Secretary Paul Chan ‘talks about “Transit-Oriented Development” and reducing reliance on private cars’. This should be easy in a city where 90% of people don’t have a car, and the 10% who do occupy most of the street space. Unless, perhaps, civil servants account for much of the 10%.

Even when it’s 88 degrees in the shade outside, you can still hike in Hong Kong – inside a mall. Did Pacific Place last weekend. I especially recommend Level 3, which guarantees more solitude than any country park. Its high-end brands are helpfully listed here: Moncler, Louis Vuitton, Armani, Tiffany’s, Blancpain, etc.

Of the 33 shops, only four had any customers, and only Hermes actually had as many customers as staff. (I am reliably informed that Mainlanders like the label because some of its items can be resold at a profit.) In the other 29 of these stores, there were an average of three staff, sitting or standing, staring at their phones, looking thoroughly bored, but presumably decently paid. All the while, the air-conditioning runs and the landlord awaits the next payment of rent.

Meanwhile, several levels down, there are at least people strolling around. The Shake Shack was pretty much full, with people lingering next to soon-to-be-vacated tables, like in dimsum places of yore.

All of which got me thinking about New World’s 11 Skies, which will be significantly bigger than Pacific Place, but stuck all the way out at the airport. 

As things stand, it looks likely to be a monument to the hubris of Hong Kong property developers, who for decades minted money with every project and convinced themselves – and their offspring taking over the reins – that their every decision is one of profit-generating genius. So they loaded up on debt to erect a giant mega-mall, on the assumption that Mainland tourist/shopper thing would go on forever.

A video on the history of the MTR. Some of the history might be a bit iffy, and the explanations of the ‘rail plus property’ financing model rather uncritical (the maker’s dad was in the company). But still an interesting reminder of the way the system was built and paid for. How many levels does Admiralty have?

The Diplomat on the fragility of the CCP…

China’s political leadership operates under the shadow of two persistent threats, both of which ultimately stem from the regime’s fear of itself. When the Chinese Communist Party (CCP) is governed collectively, factions emerge. If those factions grow too powerful, the party’s control over the country is endangered. On the other hand, if a single autocrat dominates, the risk of intra-party purges increases, as a necessarily paranoid ruler begins to see threats everywhere, especially within the ranks of the elite.

…The paradox, [Susan] Shirk argued, is that the more prosperous and advanced China becomes, the more its leaders fear their own population.

The CCP may not fear an American invasion – but it does fear that Washington seeks regime change. As a result, Beijing sees foreign interference behind everything from pro-democracy activism to protests over social issues. This vulnerability extends beyond China’s borders, fueling harsh reactions to criticism from foreign politicians and journalists, and prompting surveillance of Chinese exile groups overseas.

…Autocracy may prevent factional collapse – but it comes with its own mortal risks. Xi, like Mao, now rules for life. He has already jailed or sidelined too many rivals to ever feel secure. In a Leninist system, where no one is safe, the dictator must live in fear not just of the people – but of the CCP itself.

Online game-cum-NatSec threat Reversed Front: Bonfire tops the Hong Kong Google Trends search-monitoring tool after the police issue a stern warning against downloading or supporting it. (Actually, the HKFP screenshot shows that if you add Chinese and English searches for the HK Observatory together, they come out ahead – so maybe the government can take some comfort from beating the secessionist app. Though there’s a tropical cyclone signal up.) 

It’s almost as if the authorities want people to download the hitherto unheard-of game in order to keep the NatSec threats coming.

Another government press release – this one…

…strongly [condemns and opposes] some Western countries, anti-China organisations and anti-China politicians, etc., for making erroneous slanders and smears on the case of Joshua Wong Chi-fung involving the Hong Kong National Security Law (HKNSL) and the HKSAR’s work on safeguarding national security, totally disregarding the spirit of the rule of law.

A spokesman for the HKSAR Government said, “As the legal proceedings of the case involving Joshua Wong Chi-fung are still ongoing, it is inappropriate for any person to comment on the details of the case. The HKSAR Government strongly urges these Western countries, anti-China organisations and anti-China politicians to immediately stop interfering in the HKSAR’s internal affairs and the independent exercise of judicial power by the courts of the HKSAR.

Reuters looks at the new national security conditions applied to food and other businesses licences…

Critics see the move as targeting the Asian financial hub’s many businesses, including cafes and restaurants, that have displayed posters, symbols or images expressing solidarity with its embattled pro-democracy movement.

Numbering in the hundreds, and sometimes called “conscience-driven businesses”, they face growing pressure from authorities, such as greater tax scrutiny and fire safety and customs checks, at a time when many reel from an economic and retail downturn.

“Food and environmental hygiene officers … should place national security as the most important consideration and make appropriate assessments,” John Lee told reporters.

From a couple of years ago, but still relevant: thoughts on the June 12 anniversary. 

The government rejects a proposal to buy back taxi licences for HK$5 million each…

The value of a licence and a taxi has gone from a historic high of HK$7.66 million in 2009 to below HK$3 million in recent months, resulting in significant financial losses for owners.

The licence owners are not, of course, the people who actually drive taxis: they make their effortless income by renting the vehicles out to the old guys trying to make a few hundred bucks per shift. Families that have been sitting on stacks of the permits for decades have – some suspect – notable establishment credentials. Thus, so the theory goes, officials have been reluctant to issue more licences, or to allow Uber to operate legally. But it seems you can only postpone reality for so long. Still, full marks for having the nerve to demand HK$5 million for an artificially scarce piece of paper.

And then it’s back to NatSec…

The Chief Executive defends the inclusion of NatSec conditions for restaurants, funeral homes, etc…

Lee shrugged off worries raised by some businesses in the city that they may run afoul of the law unwittingly.

“Offending conduct means any offence that endangers national security, or acts and events that are contrary to national security and public interest in Hong Kong. It is very clear,” he said in Cantonese.

“Security is the foundation for development, and we will continue to revamp the laws and the mechanisms of safeguarding national security, he added.

Perhaps it is clear: you could lose your restaurant if an off-duty waiter is arrested for – let’s say – playing the wrong computer game.

Yes…

Hong Kong police warn people that downloading a computer game called Reversed Front: Bonfire endangers national security. It has…

…the aim of promoting secessionist agendas such as “Taiwan independence” and “Hong Kong independence”, advocating armed revolution and the overthrow of the fundamental system of the People’s Republic of China established by the Constitution of the People’s Republic of China. It also has an intention to provoke hatred towards the Central Authorities and the Government of the Hong Kong Special Administrative Region. Any person or organisation who knowingly publishes the application or related content, including sharing or recommending the application to others via the Internet, may commit the offence of “incitement to secession” under Article 21 and the offence of “incitement to subversion” under Article 23 of the Hong Kong National Security Law, as well as “offences in connection with seditious intention” under Section 24 of the Safeguarding National Security Ordinance.

…those who have downloaded the application may be regarded as in possession of a publication that has a seditious intention. Under Section 24 of the Safeguarding National Security Ordinance, a person who, without reasonable excuse, possesses a publication that has a seditious intention, commits an offence. A person who provides pecuniary or other financial assistance or property to the application developer, including making payment through in-app purchases, with an intent to provide funding to the relevant developer for the commission of secession or subversion, also commits an offence.

You would probably never have heard of it if they hadn’t issued the press release. It seems players ‘choose to pledge allegiance to Taiwan, Hong Kong, Mongolia, Tibet, Kazakhs, Uyghur, Manchuria or the Rebel Alliance of Cathaysian and Southeast Asia’ to ‘overthrow the regime’. 

Presumably, if you rewrite the app so you keep the female characters’ huge boobs but give the various territories different names – say Atlantis, Camelot, Avalon, etc – it suddenly ceases to threaten national security.

What if you rejig the game so the locations are parts of the Manchu Empire during the late Qing era?

A Bloomberg op-ed claims that Hong Kong’s dollar peg is in practice over. As evidence, the author points to the fact that local benchmark interest rates are significantly lower than US ones. If the past is any guide, this situation should correct itself, at which time we can say the peg is once more not over in practice. But then, if Hong Kong’s interest rates rise closer to the US level, there will be the usual problems like a softer property market. Which brings the author to the basic point: that the 7.8-to-1 peg should be scrapped because of the damage done to the city by tying its currency to a weakening US dollar.

Most of the arguments for ending the peg have been made before whenever US exchange/interest rates are too low or high to suit local conditions, going back several decades. The difference this time is that – to the easily-worried, at least – we are not just seeing the vagaries of economic cycles, but maybe a US and its currency in permanent, even terminal, decline. This essentially assumes that Trump will declare himself ruler for life, the US will default on its debt, etc. 

A quick interlude from David Frum in the Atlantic…

If Trump can incite disturbances in blue states before the midterm elections, he can assert emergency powers to impose federal control over the voting process, which is to say his control. Or he might suspend voting until, in his opinion, order has been restored. Either way, blue-state seats could be rendered vacant for some time.

Cooler/more-naive heads will expect that even the stupidest Americans will notice the drawbacks to Trump’s economic and other chaos, and traditional boring old bumbling governance will be restored in a few years. But if the US goes the way of Rome, the peg would have to be ditched.

What would it be replaced with? As is usually the case with op-eds of this sort, the Bloomberg columnist doesn’t say. She does hint that the trading band could be adjusted to relieve the pressure. The problem with that is that no-one would trust the government not to do the same thing again whenever it feels like it, and everyone would move their cash into other currencies. 

Other options are equally unappealing. Floating the HKD would be the obvious way to go, except the currency would then be at the mercy of local monetary and other policy. Currencies of authoritarian states tend to have a hard time winning confidence. Adopting the RMB is the traditional trendy solution, but that brings its own problems: the Yuan is itself tied to the USD; it isn’t freely convertible; plus authoritarian government. That leaves tying the HKD to a basket of currencies, as Singapore does. That has always been seen as more trouble than it’s worth, but if the ‘US is dead’ predictions prove correct, it starts to look like the least-bad choice. In reality, Beijing would make the call.

CE John Lee says the peg will stay. Of course he does. If the authorities ever decide otherwise, you will be the last to be told.

Already in prison for subversion (participating in the pan-dem primary election), Joshua Wong is charged with another NatSec offence – conspiring to collude with foreign forces…

Wong stands accused of conspiring with self-exiled activist Nathan Law and “other persons unknown” between July 1 and November 23, 2020, to request foreign countries, organisations, or individuals based overseas to impose sanctions, blockades or engage in other hostile activities against Hong Kong or China, according to the charge sheet seen by HKFP.

He also allegedly conspired to request foreign powers or organisations to “seriously disrupt the formulation and implementation of laws and policies” in Hong Kong and China, “which was likely to cause serious consequences,” the charge sheet said.

…Wong has already spent over 1,600 days in prison after he was remanded in custody on November 23, 2020, over a separate case of unauthorised assembly.

Wong is due for release in January 2027, by which time he will still be only 29 years old. The maximum penalty for this additional crime is life imprisonment. Jimmy Lai is being charged for the same offence (plus publishing sedition material). 

Both are among several pan-dem activists currently in prison who could, conceivably, be a focus of significant public attention if or when they are released. Imagine Long Hair, for example, meeting and greeting his many fans on the street if he is allowed out. 

From Brian Kern, a list of NatSec enforcement activity around June 4 this year. Includes police camping overnight at Lion Rock, with equipment delivered by helicopter.

The Standard reports that the government is adding NatSec licensing conditions to restaurants and food shops – even funeral homes. They move seems to make businesses liable for any NatSec transgression by an employee…

The terms stated that authorities may revoke a license if the holder, or “any related persons,” including directors, employees, agents and subcontractors, have engaged or been involved in, or are engaging or being involved in, any “offending conduct.”

“Offending conduct” refers to any act or activity that constitutes, causes, or is likely to cause an offense endangering national security, or is deemed contrary to national security or public interest, according to a government license application guide.

It seems the ‘focus on the economy’ thing will have to wait, as NatSec becomes ‘part of Hong Kong’s culture’…

In an interview with the Beijing-backed newspaper Wen Wei Po, published on Friday, Lee said the government’s effort to safeguard national security was still at its “starting stage.”

Bloomberg on the recent replacement of Beijing’s Liaison Office boss in Hong Kong…

As fraught an exercise political tea-leaf reading may be, the difference in tone between Zheng and Zhou’s first public comments may well speak to Beijing’s shifting priorities for Hong Kong, as well as its growing importance to President Xi Jinping’s administration. (To be sure, Reuters reported that Zheng’s departure in part reflected Beijing’s displeasure over being surprised by CK Hutchison’s plan to sell much of its global ports business, including those in Panama, to a group initially led by BlackRock.)

Consider that the top Chinese diplomat, Wang Yi, was just in town to promote Hong Kong as a global mediation hub. Xia Baolong, director of the Hong Kong and Macau Affairs Office in Beijing, is set to visit the city later this month for the first time in more than a year, the South China Morning Post.

…Meanwhile, the local bourse played host to the world’s biggest listing this year, with CATL’s debut on the city’s exchange last month helping the battery giant raise billions of dollars while navigating complex capital market geopolitics. More high-profile listings are set to follow, underlining the city’s crucial fundraising role for mainland companies that represent China’s industrial and technological prowess.

All this is playing out as relations between Washington and Beijing have deteriorated. … While Beijing is firmly in control, Hong Kong retains some distinctive financial qualities even as political ones have been largely sandpapered away. And, at least for now, the city has been elevated once again to a significant and strategic platform.

…Five years after the worst unrest in decades rocked the city and led to the imposition by Beijing of a national security law, Hong Kong is finding itself refashioned from a restive and recalcitrant outpost — less a pebble in Beijing’s shoe than a cornerstone of its global ambitions. Chief Executive Lee gave a nod to this new chapter over the weekend, noting Hong Kong’s “transition from stability to prosperity.”

Hong Kong’s ‘distinctive financial quality’ is the absence of capital controls. There was a time when people thought/hoped that the city could become Asia’s New York or London. A future where its main purpose is helping Beijing ‘counter the US’ sounds relatively underwhelming.

Desmond Shum discusses China’s ‘century of humiliation’…

A lot of Western politicians, academics, and journalists still repeat the CCP’s line about the “Century of Humiliation” as if it’s some deep, emotional truth shared by all Chinese people. But the reality is—it’s not. It’s a made-up narrative, carefully crafted by the Chinese Communist Party to serve its own political agenda.

We need to call it what it is: a piece of state propaganda designed to reinforce the Party’s hold on power.

In China Books Review, former FT China correspondent Lucy Hornby reads eight official oral histories of Xi Jinping’s life…

Unsurprisingly, these books do not make for gripping reading. It is easy to imagine that their intended audience extracts enough of the general picture to recite a few key lessons at a study meeting, then moves on. That, dear reader, is formalism — one of the deadly sins that transforms a revolutionary Party into a stagnant bureaucracy. Formalism is something that Xi Jinping does not like, and (according to these books at least) has never succumbed to himself.

A close reading of the series, and a healthy dose of context, reveals more about Xi Jinping than the editors may have intended. 

A good read. Includes some interesting background on the role of oral sources in the crafting of official accounts of the past.

A fascinating snippet from a YouTube vid by an gambling expert on a Macau casino scam a few years ago.