Leisurely return after long weekend 

Evil foreign forces take advantage of China’s holiday to engineer another outbreak of ‘smearing’…

In The Atlantic, Timothy McLaughlin laments the local administration’s prioritization of NatSec…

… [CE John] Lee and other city leaders ultimately answer to Beijing, and they are apparently unwilling to make the best of the few remaining elements of the city’s exceptional status. Instead, they are feverishly obsessed with security and with integrating Hong Kong into the mainland. For them, governing appears mainly to consist of mimicking Beijing or trying to predict what it wants from them.

“The biggest obstacle to Hong Kong’s future development is its current political elite,” Wang Xiangwei, an associate professor of practice at Hong Kong Baptist University and a former editor in chief of the South China Morning Post, said on an online talk show last month. Lawmakers should proactively pitch Beijing on their ideas for administering the city, Wang said, and demonstrate that they are capable of taking charge. Instead, he said, “they are trying to guess Beijing’s intentions.”

…Neither lawmakers nor the government is keen to take ownership of Hong Kong’s many problems. In the past, pro-Beijing lawmakers and members of the government blamed the prodemocracy camp for whatever ills befell the city, no matter how scant or nonexistent the evidence. Now the government and lawmakers find themselves with a dilemma of their own making: The old scapegoats are in jail, exiled, or otherwise barred from meaningful political participation, so officials need new culprits to pin their underperformance on.

More often than not, they point to the United States, the West more broadly, or some amalgamation of shadowy outside forces working to destabilize Hong Kong. And they do so by issuing screeds and condemnations whose tone and vocabulary are jarringly incongruous with the government’s past reputation for efficient civil service and lingering British formality. When the U.S. credit-rating agency Moody’s issued a negative outlook for Hong Kong and Macau in December, the city’s No. 2 official went on the radio to claim that the decision was part of a Western-led plot to smear the city as well as the mainland. “Its sole purpose is to use Hong Kong as a means of suppressing the country’s development,” he said. “This is very obvious.”

We don’t know how much the local government’s obsession with NatSec pre-empts rather than follows instructions from Beijing’s officials. In the Mainland, there is a long tradition of overzealous enforcement of orders from Beijing by lower-level bureaucrats afraid of being punished for not going far enough. Perhaps both Mainland officials posted in the city and Hong Kong’s own ministers – some with a background in the disciplined services – feel similar pressure.

In the FT, Stephen Roach of Morgan Stanley fame – a longstanding China bull – reluctantly concludes as a stock investor that Hong Kong is finished….

Hong Kong’s demise reflects the confluence of three factors. First, domestic politics. For the first 20 years after the handover, its political scene was relatively stable. China was a passive Big Brother. The wheels came off in 2019-20 when, under Carrie Lam, the Hong Kong leadership made the mistake of proposing an extradition arrangement with China that sparked massive pro-democracy demonstrations. China’s response, clamping down through the imposition of a new Beijing-centric national security law, shredded any remaining semblance of local political autonomy. The 50-year transition period to full takeover by the People’s Republic of China had been effectively cut in half.

…It all worked out brilliantly, for longer than anyone expected. And now it’s over.

See also an Atlantic Council report on China’s stock market decline…

It is worth recalling that the first shot in the campaign to rein in online companies was fired at the stock market in 2020, when regulators sank Alibaba Group’s plans to launch an IPO for its Ant Financial subsidiary after Alibaba founder Jack Ma publicly criticized regulators. What followed was a campaign under the banner of Xi’s 2021 call for “common prosperity”—a slogan associated with wealth redistribution that ultimately was directed at various unwelcome capitalist practices. The campaign was muted after it was seen to be undermining business confidence, but the latest broadsides from Beijing may prove unsettling to the markets.

Foreign investors tend to avoid commenting on Chinese political developments. But Lazard Asset Management offered a glimpse of their thinking last year when it wrote, “Factoring political risk into investment decisions will likely also be critical in the months and years ahead, given the scale of uncertainties—including the potential consequences of Common Prosperity.”

And a major US law firm is isolating its Hong Kong operations from its international database – reportedly to prevent local authorities from accessing client information…

…Latham & Watkins is cutting off automatic access to its international databases for its Hong Kong-based lawyers, in a sign of how Beijing’s closer control of the territory is forcing global firms to rethink the way they operate.

…Latham & Watkins is now “treating Hong Kong as the same as mainland China”, one of the people said, as US firms grow wary over Beijing’s closer control of the territory. The law firm declined to comment.

…Latham & Watkins is also separating its Hong Kong office database from the rest of Asia — its offices in Seoul, Singapore and Tokyo — to create a new “Greater China” database shared with the Beijing office, the people said.

…“What it means is if you have . . . raids in Hong Kong, law enforcement [can only] access Hong Kong and China databases,” the second person said.

Officially, of course, rule of law and a free flow of information remain 100% intact. In private, however, some establishment figures might concede that things aren’t exactly what they were – but will be adamant that jury-less NatSec courts, the closure of Apple Daily, the jailing of people for books and T-shirts and so on is all about pan-dems and won’t affect bankers, lawyers, accountants and business folk. The problem is that once the pre-2020 line is crossed, there is no longer an absolute guarantee about who it might happen to. International consulting companies in the Mainland have been raided for doing due-diligence research/suspected ’espionage’; why not here? (Constant talk by Hong Kong officials of evil foreign forces and ‘black hands’ is hardly encouraging.)

Even ordinary people might feel some reduced certainty. For example, pre-2020, you could be 100% confident of accessing your MPF retirement funds provided you met certain well-known conditions to do with age, or work or residency status  Then, out of thin air, the authorities barred emigrants using BNO passports from getting their funds. That’s a precedent. Pre-2020, you could be positive that you wouldn’t be arrested for your T-shirt.

On a less gloomy topic, HKFP looks at Hongkongers in Tamsui. I was in the Taipei suburb just a couple of months ago and can confirm that it’s a pleasant area, complete with some excellent Vietnamese food. (Minor quibble: it’s ‘remote’ in the same way Shatin is, being a half-hour metro ride from town – though it does have a volcano/magma dome underneath it.)

And a video: Visit Hong Kong – you probably won’t be arrested.